1
EXHIBIT 1.1
DRAFT OF 3/19/98
PCD Inc.
Common Stock
($.01 par value per share)
Underwriting Agreement
, 1998
Xxxxx, Xxxxxxxx & Xxxx, Inc.
X.X. Xxxxxxx & Sons, Inc.
As representatives of the several
Underwriters named in Schedule I hereto,
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
PCD Inc., a Massachusetts corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to you and
the several Underwriters named in Schedule I hereto (collectively, the
"Underwriters") for whom you are acting as representatives (the
"Representatives"), an aggregate of 2,000,000 shares (the "Firm Shares") and, at
the election of the Underwriters, up to 300,000 additional shares (the "Optional
Shares") of Common Stock, $.01 par value per share of the Company ("Common
Stock"). The Firm Shares and the Optional Shares which the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares."
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-46137)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement, including any
pre-effective amendments thereto and any post-effective amendment
thereto, each in the form heretofore delivered to you, and, excluding
exhibits thereto, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act
2
of 1933, as amended (the "Act"), which became effective upon filing, no
other document with respect to the Initial Registration Statement has
heretofore been filed with the Commission; and no stop order suspending
the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or, to the Company's knowledge, threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement and incorporated by reference in the Rule 462(b)
Registration Statement, if any, or filed with the Commission pursuant
to Rule 424(a) of the rules and regulations of the Commission under the
Act is hereinafter called a "Preliminary Prospectus"; the various parts
of the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 6(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was
declared effective or the Rule 462(b) Registration Statement, if any,
at the time it became effective, each as amended at the time such part
of such registration statement became effective, are hereinafter
collectively called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the
Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, nor has the
Commission instituted proceedings for that purpose. Each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of an Underwriter expressly for use therein (as set forth in
Section 8(b));
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto and at all times subsequent thereto up to and at the
First Time of Delivery (as hereinafter defined) and at the Second Time
of Delivery (as hereinafter defined), contain
-2-
3
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of an Underwriter expressly for use in
the Registration Statement (as set forth in Section 8(b));
(d) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to
the Registration Statement by the Act or by the rules and regulations
thereunder which have not been described or filed as required; the
contracts so described in the Prospectus to which the Company or any of
its subsidiaries (the "Subsidiaries") is a party have been duly
authorized, executed and delivered by the Company or its Subsidiaries,
constitute valid and binding agreements of the Company or its
Subsidiaries and are enforceable against and by the Company or its
Subsidiaries in accordance with their respective terms, and, to the
extent any party has any remaining or future obligation thereunder or
otherwise remains bound thereby, are in full force and effect on the
date hereof; and neither the Company nor any of its Subsidiaries nor,
to the best of the Company's knowledge, any other party is or with the
giving of notice or the lapse of time or both will be in breach of or
default under any of such contracts, except to the extent that such
breach or default would not have a material adverse effect on the
financial position, stockholders' equity or results of operations of
the Company and its Subsidiaries; and neither the Company nor any of
its Subsidiaries is or with the giving of notice or lapse of time or
both will be in violation of or default under its Articles of
Organization (or other similar governing document) or bylaws;
(e) Neither the Company nor any of its Subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or
material increase in the long-term debt of the Company or any of its
Subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business, and there has not been any material transaction
entered into or any material transaction that is
-3-
4
probable of being entered into by the Company or any Subsidiary, other
than transactions in the ordinary course of business and other than
transactions set forth or contemplated in the Prospectus;
(f) The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, charges, encumbrances, restrictions or defects except such
as are described in the Prospectus or such as do not materially affect
the value of such property and do not interfere in any material respect
with the use made and proposed to be made of such property by the
Company and its Subsidiaries; and any real property and buildings held
under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere in any material respect with the use
made and proposed to be made of such property and buildings by the
Company and its Subsidiaries; the Company and its Subsidiaries own or
lease all such properties as are necessary to their operations as now
conducted or as proposed to be conducted, except where the failure to
so own or lease would not result in a material adverse change in or
affecting the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries taken as a whole;
(g) Each of the Company and its Subsidiaries have been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of organization, each
with full power and authority (corporate or otherwise) to own its
properties, or conduct its business as described in the Prospectus; and
the Company and each of its Subsidiaries has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(h) The Company has an authorized capitalization as set forth
under the caption "Capitalization" in the Prospectus, and all the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
conform to the description of the Common Stock contained in the
Prospectus; all of the issued shares of capital stock of each
Subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims; except
as disclosed in or contemplated by the Prospectus and the financial
statements of the Company and the related notes thereto included in the
Prospectus, neither the
-4-
5
Company nor any Subsidiary has outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase
any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations; and the
description of the Company's stock option and stock purchase plans and
the options or other rights granted and exercised thereunder set forth
in the Prospectus accurately and fairly presents, in all material
respects, the information required to be shown with respect to such
plans, options and rights;
(i) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and non-
assessable and will conform to the description of the Common Stock
contained in the Prospectus; except for the ________ shares of Common
Stock reserved for sale to Xxxxxxx Electric Co. as described in the
Prospectus, no preemptive rights or other rights to subscribe for or
purchase exist with respect to the Shares or the issuance and sale
thereof pursuant to this Agreement; no stockholder of the Company has
any right which has not been duly and validly waived or satisfied to
require the Company to register the sale of any shares of capital stock
owned by such stockholder under the Act in the public offering
contemplated by this Agreement; and no further approval or authority of
the stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares to be sold by the
Company as contemplated herein;
(j) The Company has full legal right, and corporate power and
authority, to enter into this Agreement and perform the transactions
contemplated hereby. The Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding
obligation of the Company and is enforceable against the Company in
accordance with its terms;
(k) The issue and sale of the Firm Shares by the Company and
the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries
is subject, nor will such action result in any violation of the
provisions of the Restated Articles of Organization or Bylaws of the
Company or of the charter or by-laws of any Subsidiary or any statute
or any order, rule
-5-
6
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws or the by-laws
and rules of the National Association of Securities Dealers, Inc.
("NASD") in connection with the purchase and distribution of the Shares
by the Underwriters;
(l) Except as disclosed in or specifically contemplated by the
Prospectus, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge,
threatened to which the Company or any of its Subsidiaries is or may be
a party or of which property owned or leased by the Company or any of
its Subsidiaries is or may be the subject, or related to environmental
or discrimination matters, which actions, suits or proceedings are
required to be described in the Registration Statement by the Act or
the rules and regulations thereunder or which are reasonably likely to
prevent or adversely affect the transactions contemplated by this
Agreement or result in a material adverse change in or affecting the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole; no labor disturbance by the employees of
the Company or any of its Subsidiaries exists or, to the knowledge of
the Company, is imminent which is reasonably likely to materially
adversely affect the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole; and
neither the Company nor any of its Subsidiaries is a party or subject
to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other
governmental body;
(m) The Company and its Subsidiaries possess all licenses,
certificates, authorizations or permits issued by the appropriate
governmental or regulatory agencies or authorities that are necessary
to enable them to own, lease and operate their respective properties
and to carry on their respective businesses as presently conducted
which, with respect to any of the foregoing, are material to the
Company and its Subsidiaries, and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such license, certificate, authority
or permit which, singly or in the aggregate, is expected to materially
and adversely affect the business, assets, management, financial
position,
-6-
7
stockholders' equity or results of operations of the Company and its
Subsidiaries;
(n) Each of Coopers & Xxxxxxx L.L.P. and KPMG Peat Marwick
LLP, who have certified certain of the consolidated financial
statements of the Company filed with the Commission as part of the
Registration Statement have advised the Company that they are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(o) The financial statements and schedules of the Company and
its Subsidiaries, and the related notes thereto, included in the
Registration Statement and the Prospectus present fairly the financial
position of the Company and its Subsidiaries as of the respective dates
of such financial statements and schedules; and the results of
operations and cash flows of the Company for the respective periods
covered thereby; such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis as certified by the independent public
accountants named in paragraph (n) above; no other financial statements
or schedules are required to be included in the Registration Statement;
the selected and summary financial data set forth in the Prospectus
under the captions "Prospectus Summary", "Capitalization" and "Selected
Consolidated Financial Data" fairly present the information set forth
therein on the basis stated in the Registration Statement;
(p) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its Subsidiaries own or possess adequate
rights to use all trademarks, trade names, patents, patent rights, mask
works, copyrights, inventions, trade secrets, know how, licenses,
approvals and governmental authorizations that are necessary to conduct
their business as described in the Registration Statement and
Prospectus; the expiration of any trademarks, trade names, patents,
patent rights, mask works, copyrights, inventions, trade secrets, know
how, licenses, approvals and governmental authorizations would not have
a material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a
whole; the Company has no knowledge of any material infringement or
misappropriation by the Company of any trademark, tradename rights,
patents, patent rights, mask works, copyrights, inventions, know how,
licenses, trade secret or other similar rights of others, and there is
no claim being made against the Company regarding trademark, trade
name, patent, mask work, copyright, license, trade secret or other
infringement which is reasonably likely to have a material adverse
effect on the business, assets, management, financial position,
stockholders' equity or results of operations of the Company and its
-7-
8
Subsidiaries; the only patents and patent applications that are
material to the Company or its Subsidiaries or that are necessary to
the conduct of the Company's business as now or proposed to be
conducted by the Company as described in the Prospectus are listed on
Schedule II attached hereto;
(q) The Company and each of its Subsidiaries have filed all
necessary federal, state, local and foreign income and franchise tax
returns and have paid all taxes shown as due thereon; and the Company
has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company or any of its Subsidiaries
which could materially and adversely affect the business, assets,
management, financial position, stockholders' equity or results of
operation of the Company;
(r) Neither the Company nor any of its Subsidiaries is an
"investment company" or an "affiliated person" of, or "promotor" or
"principal underwriter" for an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the
Commission thereunder;
(s) Each of the Company and its Subsidiaries maintains
insurance of the types and in the amounts which is adequate for its
business and consistent with industry practice, including, but not
limited to, insurance covering all real and personal property owned or
leased by the Company and its Subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(t) Neither the Company nor any of its Subsidiaries has at any
time during the last five years (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
foreign, federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof;
(u) Neither the Company nor, to the Company's best knowledge,
any of its affiliates, has taken or may take, directly or indirectly,
any action which is designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(v) The Common Stock of the Company has been registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Company is not required to take
any further action
-8-
9
for the inclusion of the Shares on the Nasdaq National Market of The
Nasdaq Stock Market;
(w) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences;
(x) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification;
(y) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida Department
of Banking and Finance (the "Department"), whichever date is later, or
if the information reported or incorporated by reference in the
Prospectus, if any, concerning the Company's business with Cuba or with
any person or affiliate located in Cuba changes in any material way,
the Company will provide the Department notice of such business or
change, as appropriate, in a form acceptable to the Department;
(z) The Company has not distributed and will not distribute
prior to the later of (i) the First Time of Delivery, or any date on
which Optional
-9-
10
Shares are to be purchased, as the case may be, and (ii) completion of
the distribution of the Shares, any offering material in connection
with the offering and sale of the Shares other than any Preliminary
Prospectuses, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act and the rules and regulations
thereunder;
(aa) Each officer and director of the Company and each
beneficial owner of 10% or more of the issued and outstanding shares of
Common Stock (determined prior to the offering contemplated hereby),
has agreed in writing that such person will not, for a period of 90
days from the date that the Registration Statement is declared
effective by the Commission (the "Lock-up Period"), offer to sell,
contract to sell, or otherwise sell, dispose of, loan, pledge or grant
any rights with respect to (collectively, a Disposition") any shares of
Common Stock, any options or warrants to purchase any shares of Common
Stock or any securities convertible into or exchangeable for shares of
Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person
has or hereafter acquires the power of disposition, otherwise than (i)
if an individual, as a bona fide gift or gifts to or in trust for a
person or entity who or which agrees in writing to be bound by this
restriction, (ii) if a partnership, as a distribution, without
consideration, to partners of such entity in accordance with such
partnership's partnership agreement, provided that the distributees
thereof agree in writing to be bound by the terms of this restriction,
or (iii) with the prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc.
The foregoing restriction is expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a
Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without
limitation, any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect
to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person will also agree and consent to the
entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Securities held by such person except in
compliance with this restriction. The Company has provided to counsel
for the Underwriters a complete and accurate list of all
securityholders of the Company and the number and type of securities
held by each securityholder. The Company has provided to counsel for
the Underwriters true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and shareholders
have agreed to such or similar restrictions (the "Lock-up Agreements")
presently in effect or effected hereby. The Company hereby represents
and warrants that it will not, prior to the expiration of the
-10-
11
Lock-Up Period release any of its officers, directors or other
shareholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of Xxxxx, Xxxxxxxx
& Hill, Inc.
(bb) Except as set forth in the Registration Statement, (i)
the Company is in compliance with all rules, laws and regulations
relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, (ii) the Company has
received no notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus, (iii) the
Company will not be required to make future material capital
expenditures to comply with Environmental Laws and (iv) no property
which is owned, leased or occupied by the Company has been designated
as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.
sec. 9601, et seq), or otherwise designated as a contaminated site
under applicable state or local law; and
(cc) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any
of the officers or directors of the Company or any of the members of
the families of any of them, except as disclosed in the Registration
Statement and the Prospectus.
2. Shares Subject to Sale. On the basis of the representations,
warranties and agreements of the Company contained herein, and subject to the
terms and conditions herein set forth, (a) the Company agrees, to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price per share of $______,
the number of Firm Shares as set forth opposite the name of such Underwriter in
Schedule I hereto, and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Shares as provided below, the
Company agrees to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the purchase
price per share set forth in clause (a) of this Section 2, that portion of the
number of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction, the numerator of which
is the maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
hereto, and the denominator of which is the maximum number of the Optional
Shares which all of the Underwriters are entitled to purchase hereunder.
-11-
12
The Company hereby grants to the Underwriters the right to purchase at
their election up to 225,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than three business days after the date of such exercise.
3. Offering. Upon the authorization by you of the release of the Firm
Shares and after the Registration Statement becomes effective, the several
Underwriters propose to offer the Firm Shares for sale upon the terms and
conditions set forth in the Prospectus.
4. Closing. Certificates in definitive form for the Shares to be
purchased by each Underwriter hereunder, and in such denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company, shall be delivered by or on
behalf of the Company to you for the account of such Underwriter, against
payment by such Underwriter or on its behalf of the purchase price therefor by
wire transfer of same day funds, all at the office of Xxxxx, Xxxxxxxx & Xxxx,
Inc., 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m.,
Boston time, on the third (3rd) full business day following the first day that
Shares are traded or such other time and date as you and the Company may agree
upon in writing, and, with respect to the Optional Shares, 9:30 a.m.., Boston
time, on the date specified by you in the written notice given by you, pursuant
to Section 2, of the Underwriters' election to purchase such Optional Shares, or
at such other time and date as you and the Company may agree upon in writing.
Such time and date for delivery of the Firm Shares is herein called the "First
Time of Delivery," such time and date for delivery of the Optional Shares, if
not the First Time of Delivery, is herein called the "Second Time of Delivery,"
and each such time and date for delivery is herein called a "Time of Delivery."
Such certificates will be made available for checking and packaging at least
twenty four hours prior to each Time of Delivery at such location as you may
specify.
5. Covenants of the Company. The Company agrees with each of the
Underwriters:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become
-12-
13
effective as promptly as possible; the Company will use its best
efforts to cause any abbreviated registration statement pursuant to
Rule 462(b) of the Commission's rules and regulations under the Act as
may be required subsequent to the date the Registration Statement is
declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice
thereof, of the time when the Registration Statement, any subsequent
amendment to the Registration Statement or any abbreviated registration
statement has become effective or any supplement to the Prospectus has
been filed; if the Company omitted information from the Registration
Statement at the time it was originally declared effective in reliance
upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed, with
the Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of
the Rules and Regulations or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is
declared effective by the Commission; if for any reason the filing of
the final form of Prospectus is required under Rule 424(b)(3) of the
Rules and Regulations, it will provide evidence satisfactory to you
that the Prospectus contains such information and has been filed with
the Commission within the time period prescribed; it will notify you
promptly of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare and
file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel
for the several Underwriters ("Underwriters' Counsel"), may be
necessary or advisable in connection with the distribution of the
Shares by the Underwriters; it will promptly prepare and file with the
Commission, and promptly notify you of the filing of, any amendments or
supplements to the Registration Statement or Prospectus which may be
necessary to correct any statements or omissions, if, at any time when
a prospectus relating to the Shares is required to be delivered under
the Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in
effect would include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
in case any Underwriter is required to deliver a prospectus nine (9)
months or more after the effective date of the Registration Statement
in connection with the sale of the Shares, it will prepare promptly
upon request, but at the expense of such Underwriter, such amendment or
amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act; and it will file no
amendment or supplement to the Registration Statement or Prospectus
which shall not previously have been submitted to you a reasonable time
prior
-13-
14
to the proposed filing thereof or to which you shall reasonably object
in writing, subject, however, to compliance with the Act and the
Commission's rules and regulations thereunder and the provisions of
this Agreement; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such United States jurisdictions as you may
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process;
(c) To furnish the Underwriters with copies of the
Registration Statement (three of which will be signed and which will
contain all exhibits), each Preliminary Prospectus, the Prospectus and
any amendments or supplements to such documents, including any
prospectus prepared to permit compliance with Section 10(a)(3) of the
Act, in such quantities as you may from time to time reasonably
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issuance of
the Prospectus in connection with the offering or sale of the Shares
and if at such time any events shall have occurred as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
in order to comply with the Act, to notify you and upon your request to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
-14-
15
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than the forty-fifth (45th)
day following the end of the fiscal quarter first occurring after the
first anniversary of the effective date of the Registration Statement
(as defined in Rule 158(c)), an earnings statement of the Company and
its Subsidiaries (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations of the Commission
thereunder (including at the option of the Company Rule 158);
(e) During the Lock-up Period, the Company will not, without
the prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc., effect the
Disposition of, directly or indirectly, any Securities other than (i)
the sale of the Shares to be sold by the Company hereunder, (ii) the
Company's issuance of options or Common Stock under the Company's
presently authorized 1992 Stock Option Plan, 1996 Stock Plan and 1996
Eligible Directors Stock Plan and (iii) shares of capital stock issued
in connection with the acquisition by the Company of the assets or
capital stock of another person or entity, whether directly, through
merger or consolidation or otherwise, or of technology or a product
from another person or entity, if the terms of such issuance provide
that such shares of capital stock shall not be resold for a period of
90 days following the date of the Prospectus; provided, however, that
the Company shall not release any party from such resale restriction
without the prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc.
(f) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flow of
the Company and its consolidated Subsidiaries audited by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), to furnish or make available to its stockholders (within
the meaning of Rule 158(b) under the Act) consolidated summary
financial information of the Company and its Subsidiaries, if any, for
such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other
-15-
16
communications (financial or other) furnished to stockholders
generally, and deliver to you (i) as soon as they are available, copies
of any reports and financial statements furnished to or filed with the
Commission, the Nasdaq National Market or any national securities
exchange on which any class of securities of the Company is listed; and
(ii) such additional information concerning the business and financial
condition of the Company as you may from time to time reasonably
request (such financial statements to be on a combined or consolidated
basis to the extent the accounts of the Company and its Subsidiaries
are combined or consolidated in reports furnished to its stockholders
generally or to the Commission);
(h) To use the net proceeds acquired by it from the sale of
the Shares in the manner specified in the Prospectus under the caption
"Use of Proceeds" and in a manner such that the Company will not become
an "investment company" as that term is defined in the Investment
Company Act;
(i) The Company will use its best efforts (i) to maintain the
inclusion of its Common Stock on the Nasdaq National Market or a
national securities exchange and (ii) to provide the services of an
independent transfer agent and registrar to its stockholders;
(j) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its
Common Stock;
(k) Not to accelerate the vesting of any option issued under
any stock option plan during the 90 days from the date of the
Prospectus.
6. Expenses. The Company covenants and agrees with the Underwriters
that (a) the Company will pay or cause to be paid (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memoranda and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) the filing fees incident to securing any required review by the NASD of the
terms of the sale of the Shares; (v) the cost of preparing stock certificates;
(vi) the cost and charges of any transfer agent or registrar; and (vii) all
-16-
17
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, Section 8 and
Section 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. Conditions of Underwriters, Obligations. The obligations of the
Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company herein are,
at and as of such Time of Delivery, true and correct, the condition that the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or, to the knowledge of the Company or any Underwriter,
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with
to your reasonable satisfaction;
(b) Xxxx and Xxxx LLP, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to this Agreement, the Registration Statement,
the Prospectus, and other related matters as you may reasonably
request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon
such matters;
(c) Hill & Xxxxxx, a Professional Corporation, counsel for the
Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, with
respect to the matters set forth in Annex A hereto;
(d) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
satisfactory to you, as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, and as to such
other matters as you may reasonably request and the Company shall have
furnished or caused to be furnished
-17-
18
certificates as to the matters set forth in subsections (a) and (f) of
this Section, and as to such other matters as you may reasonably
request.;
(e) Xxxxx & Xxxx, special litigation counsel for the Company,
shall have furnished to you their written opinion, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that
they serve as patent counsel to the Company and further to the effect
set forth in Annex B-1 hereto;
(f) Xxxxxxx, Xxxxx & Xxxxx, patent counsel and special
litigation counsel for the Company, shall have furnished to you their
written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that they serve as patent counsel to
the Company and further to the effect set forth in Annex B-2 hereto;
(g) Xxxxx & Xxxxxxx, patent counsel and special litigation
counsel for the Company, shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that they serve as patent counsel to
the Company and further to the effect set forth in Annex B-3 hereto;
(h) At 10:00 a.m., Boston time, on the effective date of the
Registration Statement and the effective date of the most recently
filed post-effective amendment to the Registration Statement and also
at each Time of Delivery, Coopers & Xxxxxxx L.L.P. and KPMG Peat
Marwick LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex C-1 and Annex C-2
hereto, respectively; none of the foregoing letters shall have
disclosed any change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and
its Subsidiaries considered as one enterprise from that set forth in
the Registration Statement or Prospectus, which, in your sole judgment,
is material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus; and you shall have received
from Coopers & Xxxxxxx L.L.P. a letter addressed to the Company and
made available to you for the use of the Underwriters stating that
their review of the Company's system of internal accounting controls,
to the extent they deemed necessary in establishing the scope of their
examination of the Company's consolidated financial statements as of
December 31, 1997, did not disclose any weaknesses in internal controls
that they considered to be material weaknesses;
(i) (i) Neither the Company nor any of its Subsidiaries have
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire,
-18-
19
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus, and (ii) since the respective dates as of which information
is given in the Prospectus there shall not have been any change in the
capital stock or material increase in the long-term debt of the Company
or any material change, or any development reasonably likely to result
in a material change, in or affecting the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and its
Subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(j) On or after the date hereof there shall not have occurred
any of the following: (i) additional material governmental
restrictions, not in force and effect on the date hereof, shall have
been imposed upon trading in securities generally or minimum or maximum
prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by
the NASD, or a general banking moratorium shall have been established
by federal or New York authorities, (ii) an outbreak of major
hostilities or other national or international calamity or any
substantial change in political, financial or economic conditions shall
have occurred or shall have accelerated or escalated to such an extent,
as, in the judgment of the Representatives, to affect adversely the
marketability of the Shares, (iii) there shall be any action, suit or
proceeding pending or threatened, or there shall have been any
development or prospective development involving particularly the
business or properties or securities of the Company or any of its
Subsidiaries or transactions contemplated by this Agreement, which, in
the judgment of the Representatives, may materially and adversely
affect the Company's business or earnings and make it impracticable or
inadvisable to offer or sell the Shares or (iv) there shall be any
change in the management of the Company which, in the judgment of the
Representatives, may materially and adversely affect the Company's
business or earnings and make it impracticable or inadvisable to offer
or sell the Shares;
(k) The Company shall have obtained and delivered to you an
agreement in writing from each officer and director of the Company, and
each beneficial owner of 10% or more of the issued and outstanding
shares of Stock (determined prior to the offering contemplated hereby)
that such person will
-19-
20
not, during the Lock-up Period, effect the Disposition of any
Securities now owned or hereafter acquired directly by such person or
with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts to or
in trust for a person or entity who or which agrees in writing to be
bound by this restriction, (ii) if a partnership, as a distribution,
without consideration, to partners of such entity in accordance with
such partnership's partnership agreement, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of Xxxxx, Xxxxxxxx
& Hill, Inc. The foregoing restriction is expressly agreed to preclude
the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-up Period, even
if such Securities would be disposed of by someone other than the such
holder. Such prohibited hedging or other transactions would including,
without limitation, any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its
value from Securities. Furthermore, such person will have also agreed
and consented to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of the Securities held by
such person except In compliance with this restriction;
(l) You shall have received on each Time of Delivery a
certificate of the Company, dated such Time of Delivery, signed by the
Chief Executive Officer and Chief Financial Officer of the Company, to
the effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of such
Time of Delivery, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Time of Delivery;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery of
such certificate, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, contained all material
information required to be included therein by the Act and the rules
and regulations thereunder and in all
-20-
21
material respects conformed to the requirements of the Act and the
rules and regulations thereunder, the Registration Statement, and any
amendment or supplement thereto, did not and does not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, the Prospectus, and any amendment or supplement
thereto, did not and does not include any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and, since the effective date of the
Registration Statement, there has occurred no event required to be set
forth in an amended supplemented Prospectus which has not been so set
forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one
enterprise, (b) any transaction that is material to the Company and its
subsidiaries considered as one enterprise, except transactions entered
into in the ordinary course of business, (c) any obligation, direct or
contingent, that is material to the Company and its subsidiaries
considered as one enterprise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding
indebtedness of the Company or any of its subsidiaries that is material
to the Company and its subsidiaries considered as one enterprise, (e)
any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or any of its subsidiaries, or (f) any
loss or damage (whether or not insured) to the property of the Company
or any of its subsidiaries which has been sustained or will have been
sustained which has a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one
enterprise.
8. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter and each person, if any, who controls such
Underwriter, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or controlling person may become subject,
under the Act or otherwise (including, without limitation, in its capacity as an
Underwriter or as a "qualified independent underwriter" within the meaning of
Schedule E of the Bylaws of the NASD), insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of
-21-
22
the circumstances in which they were made, not misleading, and will reimburse
each Underwriter and each person, if any, who controls such Underwriter for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter expressly for use
therein.
(b) Each Underwriter will indemnify and hold harmless the Company and
each person, if any, who controls the Company against any losses, claims,
damages or liabilities to which the Company or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Underwriter expressly for use
therein; and will reimburse the Company and each person, if any, who controls
the Company for any legal or other expenses reasonably incurred by the Company
or such controlling person in connection with investigating or defending any
such action or claim as such expenses are incurred.
The Company acknowledges that the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), under the graphics on page 2, concerning stabilization and
over-allotment by the Underwriters, and under the first, second, third, fifth,
seventh, eighth, ninth and tenth paragraphs under the caption "Underwriting" in
any Preliminary Prospectus and in the final form of Prospectus filed pursuant to
Rule 424(b) constitutes the only information furnished in writing by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Prospectus or the Registration Statement, and you, on behalf of the respective
Underwriters, represent and warrant to the Company that the statements made
therein do not include any untrue statement of a material fact or omit to state
a material fact required to be
-22-
23
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; no indemnification shall be available hereunder to any
party who shall fail to give notice as provided in the preceding clause if the
party to whom such notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the notice would have related and
was prejudiced by the failure to give such notice, but the omission so to notify
such indemnifying party shall not relieve it from any liability which it may
have to any indemnified party on account of such indemnity agreement. In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then
-23-
24
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
-24-
25
9. Termination. (a) If any Underwriter shall default in its obligation
to purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company that you
have so arranged for the purchase of such Shares, or the Company notify you that
they have so arranged for the purchase of such Shares, you or the Company shall
have the right to postpone such Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in
-25-
26
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, the
Company or any officer or director or controlling person of the Company and
shall survive delivery of and payment for the Shares.
11. Expenses of Termination. If this Agreement shall be terminated
pursuant to Section 9 hereof, the Company shall not then be under any liability
to any Underwriter except as provided in Section 6 and Section 8 hereof; but, if
for any other reason this Agreement is terminated, the Company will reimburse
the Underwriters through you for all out-of-pocket expenses approved in writing
by you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company shall then be under no further
liability to any Underwriter in respect of the Shares not so delivered except as
provided in Section 6 and Section 8 hereof.
12. Notice. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf of you
as the Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of Xxxxx, Xxxxxxxx
& Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx; if
to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: President; however, that any notice to an Underwriter
pursuant to Section 8(d) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriter's Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company by you on request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. Miscellaneous. (a) This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person
-26-
27
who controls the Company, or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
(b) Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-27-
28
Very truly yours,
PCD INC.
By:_________________________________
Xxxx X. Xxxxxx, Xx.
Chairman of the Board, President
and Chief Executive Officer
or
Xxxx X. Xxxxxxxxx
Chief Financial Officer, Vice
President, Finance and Administration and
Treasurer
Accepted as of the date
hereof at Boston, Massachusetts
XXXXX, XXXXXXXX & XXXX, INC.
X.X. XXXXXXX & SONS, INC.
By:_________________________________
(Xxxxx, Xxxxxxxx & Xxxx, Inc.
On behalf of each of the Underwriters)
-28-
29
SCHEDULE I
Number of
Optional Shares
Total Number of to be Purchased
Firm Shares if Maximum
Underwriter to be Purchased Option Exercised
----------- --------------- -----------------
X.X. Xxxxxxx & Sons, Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
TOTAL: 2,000,000 300,000
30
SCHEDULE II
Patents:
Patent Applications:
31
ANNEX A
1. The Company and each Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of incorporation as identified in the Registration Statement. The
Company and each Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction, if any, in which the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or be in good standing would not have a material
adverse effect on the condition (financial or otherwise), earnings, operations
or business of the Company and the Subsidiaries taken together. To our
knowledge, the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the Subsidiaries identified
in Exhibit 21.1 to the Registration Statement.
2. The Company and each Subsidiary has the corporate power and
corporate authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.
3. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of the
dates stated therein. All the issued and outstanding shares of the Common Stock
are duly authorized, validly issued, fully paid and nonassessable, and to our
knowledge, were not issued in violation of or subject to any preemptive right,
co-sale right, right of first refusal or other similar right. To our knowledge,
except for the _________ shares of Common Stock reserved for sale to Xxxxxxx
Electric Co. as described in the Prospectus, no holder of any currently
outstanding shares of the Common Stock has any preemptive right, co-sale right,
right of first refusal or other similar right to subscribe for or purchase any
shares of the Common Stock. To our knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or other
securities of the Company have registration rights with respect to securities of
the Company and, except as set forth in the Registration Statement and
Prospectus, all holders of securities of the Company having rights known to such
counsel to registration of such shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company have, with
respect to the offering contemplated thereby, waived such rights or such rights
have expired by reason of lapse of time following notification of the Company's
intent to file the Registration Statement. All issued and outstanding shares of
capital stock of each Subsidiary of the Company have been duly authorized and
validly issued and are fully paid and non-assessable, and, to our knowledge,
have not been issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar right and are
owned by the Company free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest.
X-0
00
0. The Company has the corporate power and authority to enter into the
Underwriting Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by it thereunder. The Underwriting Agreement has
been duly authorized, executed and delivered by the Company. The Shares to be
issued by the Company pursuant to the terms of the Underwriting Agreement have
been duly authorized and, upon issuance and delivery against payment therefor in
accordance with the terms thereof, will be duly and validly issued and fully
paid and nonassessable, and will not have been issued in violation of or subject
to any preemptive right, co-sale right, registration right, right of first
refusal or other similar right of shareholders pursuant to the Company's
Articles of Organization or by-laws and, to our knowledge, any agreement to
which the Company is a party.
5. The Registration Statement has become effective under the Act and,
to our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act. The Prospectus has been
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
under the Act within the time period required thereby. The Registration
Statement, as of its effective date, the Prospectus, as of its date, and each
amendment or supplement thereto complied as to form in all material respects to
the requirements of the Act and the rules and regulations thereunder, except
that in each case we express no opinion as to the financial statements,
including the notes and schedules thereto and other financial, accounting and
statistical data included or incorporated by reference therein or excluded
therefrom.
6. No authorization, approval, consent or order of any court or
governmental authority, body or agency having jurisdiction over the Company or
any of its Subsidiaries or over any of their properties or operations is
necessary in connection with the transactions contemplated by the Company under
the Underwriting Agreement (except such as have been obtained under the Act and
the rules and regulations thereunder or such as may be required under state or
foreign securities laws or by the rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD")); and the issuance and sale
of the Shares being delivered at the Time of Delivery by the Company, the
execution and delivery of the Underwriting Agreement, the compliance by the
Company with all of the provisions of the Underwriting Agreement and the
consummation by the Company of the transactions contemplated therein will not
(with or without the giving of notice or passing of time or both) conflict with
or result in any violation or breach of, or constitute a default under, (A) any
agreement or instrument filed as an exhibit to the Registration Statement or the
Company's periodic reports filed pursuant to the Securities Exchange Act of
1934, (B) the Restated Articles of Organization or By-laws of the Company, (C)
the Massachusetts General Laws or the laws of the United States of America or
(D) any order, writ or decree of any court or governmental authority or agency
having jurisdiction over the Company or any of its Subsidiaries or over
A-2
33
any of their properties or operations, which conflict, violation, breach or
default is material to the business or financial condition of the Company and
its Subsidiaries taken as a whole.
7. Based solely upon work performed by our firm in connection with the
Company over the last two years and upon inquiries of responsible officers of
the Company and review of specified documents furnished to us by the Company in
connection with this offering, we do not know of any contracts or documents
required to be described in or filed as exhibits to the Registration Statement
which are not described or filed as required, to our knowledge, the contracts so
described in the Prospectus are in full force and effect on the date hereof and
the consummation of the transactions contemplated by the Underwriting Agreement
will not cause a breach of or default under any such contract.
8. To our knowledge (based solely upon work performed by our firm in
connection with the Company over the last two years and upon inquiries of
responsible officers of the Company and our review of specified documents
supplied to us by the Company in connection with this Offering), other than as
described or contemplated in the Prospectus, there are no legal or governmental
actions, suits or proceedings pending or threatened against the Company or any
of its Subsidiaries or to which the Company or any of its Subsidiaries or any of
the properties owned or leased by the Company or any of its Subsidiaries is
subject, or related to environmental or discrimination matters, which actions,
suits or proceedings, might, individually or in the aggregate, prevent or
adversely affect the transactions contemplated by the Underwriting Agreement;
and neither the Company nor any of its Subsidiaries is a party or subject to the
provisions of any material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or governmental body.
9. The Shares conform in all material respects to the description of
the Common Stock contained in the Prospectus under the caption "Description of
Capital Stock."
10. The statements contained in the Prospectus under the captions
"Description of Common Stock", to the extent that such statements purport to
summarize provisions of the statutes and regulations referred to therein, fairly
summarize such provisions in all material respects; and the statements contained
in the Prospectus under the captions "Management Stock Awards" and "Management
-- Director Compensation" to the extent that such statements purport to
summarize provisions of the Company's 1992 Stock Option Plan, as amended, 1996
Stock Plan and 1996 Eligible Directors Stock Plan referred to therein, fairly
summarize such provisions in all material respects. The forms of certificates
evidencing the Common Stock and filed as exhibits to the Registration Statement
comply with the applicable law of the Commonwealth of Massachusetts.
X-0
00
00. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company" as defined in the Investment Company Act.
12. The Shares have been duly authorized for inclusion on the Nasdaq
National Market System, subject to notice of issuance.
In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent accountants
for the Company, representatives of the Underwriters and representatives of the
Underwriters' counsel at which the contents of the Registration Statement and
the Prospectus and related matters were discussed and, although such counsel is
not passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of, the statements contained in the Registration
Statement or the Prospectus and have made no independent check or verification
thereof, solely on the basis of the foregoing, no facts have come to our
attention that have caused us to believe that the Registration Statement, at the
time it became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, as of its
date and as of the date hereof, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that we do not express any belief with respect to the
financial statements, including the notes and schedules thereto and other
financial, accounting and statistical data included or incorporated by reference
therein or excluded therefrom.
A-4
35
[Opinion of Xxxxx & Xxxx, P.A.]
ANNEX B-1
(i) The statements in the Registration Statement and
Prospectus (x) in the first paragraph, the fourth sentence of the
second paragraph and the third paragraph under the caption "Risk
Factors -- Patent Litigation;" and (y) in the first paragraph, the
fourth through sixth sentences of the second paragraph and the third
paragraph under the caption "Business -- Legal Proceedings" insofar as
such statements constitute summaries of matters of law, are accurate
and complete statements or summaries of the matters set forth therein.
In addition, such counsel shall state that although they have not
verified the accuracy or completeness of the statements contained in the
Prospectus, nothing has come to the attention of such counsel that caused them
to believe that, at the time the Registration Statement became effective, or at
any Time of Delivery, as the case may be, the Prospectus (i) under the caption
"Risk Factors -- Patent Litigation;" and (ii) under the caption "Business --
Legal Proceedings" contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
B-1-1
36
[Opinion of Xxxxxxx, Xxxxx & Xxxxx]
ANNEX B-2
(i) The statements in the Registration Statement and
Prospectus (x) under the caption "Risk Factors -- Proprietary
Technology and Product Protection;" and (y) under the caption "Business
-- Intellectual Property" insofar as such statements constitute
summaries of matters of law, are accurate and complete statements or
summaries of the matters set forth therein with respect to the Company
(excluding Xxxxx).
(ii) To such counsel's knowledge, except as set forth in the
Prospectus there are no legal or governmental proceedings pending
(other than patent applications pending) relating to patents, patent
applications, patent rights, inventions, trade secrets, know-how,
trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights or other information
(collectively, "Intellectual Property") owned or used by the Company,
and to such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or others, except as set forth
in the Prospectus.
(iii) Such counsel has no knowledge of any facts which would
preclude the Company from having valid license rights or clear title to
the patents and patent applications set forth on a schedule attached to
its opinion (the "Patent Schedule"). Based on representations by the
Company that no interests have been conveyed to third parties which
have not been recorded in the United States Patent and Trademark
Office, the Company has clear record title to the Company's United
States patents and patent applications identified in the Patent
Schedule. To the best of such counsel's knowledge, the Company has
complied with the PTO duty of candor and disclosure for each of the
United States patent applications set forth on the Patent Schedule.
Such counsel has no knowledge of any facts that the Company lacks or
will be unable to obtain any rights or licenses to use all Intellectual
Property necessary to the conduct of its business as now or proposed to
be conducted by the Company as described in the Prospectus, except as
described in the Prospectus. Such counsel has no knowledge of any facts
which form a basis for a finding of unenforceability or invalidity of
any of the patent rights owned or licensed by the Company. Such counsel
is unaware of any facts which would preclude the grant of a patent from
each of the patent applications set forth on the Patent Schedule. To
the best of such counsel's knowledge, the Company has not received any
notice of infringement or of conflict with rights or claims of others
with respect to any Intellectual Property owned or used by it which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, could result in any material adverse effect upon the
B-2-1
37
Company, except as described in the Prospectus. Such counsel has no
knowledge of any patent rights of others which are or would be
infringed by specific products or processes referred to in the
Prospectus in such a manner as to materially and adversely affect the
Company, except as described in the Prospectus.
(iv) Such counsel provided a written opinion to the Company
that in such counsel's opinion, based on a review of material including
U.S. Patent No. 4,491,377 to Xxxxx X. Xxxxx and of the Company's quad
flat pack sockets as they were then and are as of this date made, no
valid claim of U.S. Patent No. 4,491,377 is infringed by such quad flat
pack sockets. Such counsel has no knowledge of any facts which would
preclude such counsel now from giving the same opinion, except as set
forth in the Prospectus.
(v) The Company is listed in the records of the appropriate
patent office(s) as the owner of record of the patents and patent
applications set forth in the Patent Schedule.
(vi) To such counsel's knowledge, no contracts or other
documents relating to Intellectual Property of a character required to
be filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or Prospectus that are not
filed or described as required.
In addition, such counsel shall state that although they have not
verified the accuracy or completeness of the statements contained in the
Prospectus, nothing has come to the attention of such counsel that caused them
to believe that, at the time the Registration Statement became effective, or at
any Time of Delivery, as the case may be, the Prospectus (i) under the caption
"Risk Factors -- Proprietary Technology and Product Protection;" and (ii) under
the captions "Business -- Intellectual Property" and "-- Legal Proceedings"
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
B-2-2
38
[Opinion of Xxxxx & Xxxxxxx]
ANNEX B-3
(i) The statements in the Registration Statement and
Prospectus (x) in the second paragraph, with the exception of the
fourth sentence thereof, and the third paragraph under the caption
"Risk Factors -- Proprietary Technology and Product Protection;" and
(y) in the second paragraph, with the exception of the fourth through
sixth sentences thereof, and the third paragraph under the caption
"Business -- Intellectual Property" insofar as such statements
constitute summaries of matters of law, are accurate and complete
statements or summaries of the matters set forth therein with respect
to Xxxxx.
(ii) To such counsel's knowledge, except as set forth in the
Prospectus there are no legal or governmental proceedings pending
(other than patent applications pending) relating to patents, patent
applications, patent rights, inventions, trade secrets, know-how,
trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights or other information
(collectively, "Intellectual Property") owned or used by the Company,
and to such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or others, except as set forth
in the Prospectus.
(iii) Such counsel has no knowledge of any facts which would
preclude the Company from having valid license rights or clear title to
the patents and patent applications set forth on a schedule attached to
its opinion (the "Patent Schedule"). Based on representations by the
Company that no interests have been conveyed to third parties which
have not been recorded in the United States Patent and Trademark
Office, the Company has clear record title to the Company's United
States patents and patent applications identified in the Patent
Schedule. To the best of such counsel's knowledge, the Company has
complied with the PTO duty of candor and disclosure for each of the
United States patent applications set forth on the Patent Schedule.
Such counsel has no knowledge of any facts that the Company lacks or
will be unable to obtain any rights or licenses to use all Intellectual
Property necessary to the conduct of its business as now or proposed to
be conducted by the Company as described in the Prospectus, except as
described in the Prospectus. Such counsel has no knowledge of any facts
which form a basis for a finding of unenforceability or invalidity of
any of the patent rights owned or licensed by the Company. Such counsel
is unaware of any facts which would preclude the grant of a patent from
each of the patent applications set forth on the Patent Schedule. To
the best of such counsel's knowledge, the Company has not received any
notice of infringement or of conflict with rights or claims of others
with respect to any Intellectual Property owned or used by
B-3-1
39
it which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in any material adverse
effect upon the Company, except as described in the Prospectus. Such
counsel has no knowledge of any patent rights of others which are or
would be infringed by specific products or processes referred to in the
Prospectus in such a manner as to materially and adversely affect the
Company, except as described in the Prospectus.
(iv) Such counsel provided a written opinion to the Company
that in such counsel's opinion, based on a review of material including
U.S. Patent No. 4,491,377 to Xxxxx X. Xxxxx and of the Company's
burn-in sockets as they were then and are as of this date made, no
valid claim of U.S. Patent No. 4,491,377 is infringed by such burn-in
sockets. Such counsel has no knowledge of any facts which would
preclude such counsel now from giving the same opinion, except as set
forth in the Prospectus.
(v) The Company is listed in the records of the appropriate
patent office(s) as the owner of record of the patents and patent
applications set forth in the Patent Schedule.
(vi) To such counsel's knowledge, no contracts or other
documents relating to Intellectual Property of a character required to
be filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or Prospectus that are not
filed or described as required.
In addition, such counsel shall state that although they have not
verified the accuracy or completeness of the statements contained in the
Prospectus, nothing has come to the attention of such counsel that caused them
to believe that, at the time the Registration Statement became effective, or at
any Time of Delivery, as the case may be, the Prospectus (i) under the caption
"Risk Factors -- Proprietary Technology and Product Protection;" and (ii) under
the captions "Business -- Intellectual Property" and "-- Legal Proceedings"
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
B-3-2
40
ANNEX C-1
Pursuant to Section 7(h) of the Underwriter Agreement, Coopers &
Xxxxxxx L.L.P. shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its Subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
pro forma financial statements) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder and they
have made a review in accordance with standards specified by the
American Institute of Certified Public Accountants of the consolidated
financial statements, selected financial data, pro forma financial
information and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the representatives of the Underwriters (the
Representatives");
(iii) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years;
(v) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters
C-1-1
41
and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believed
that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations thereunder, or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with the basis for the audited
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated long-term debt
of the Company and its subsidiaries, or any decreases in
consolidated net current assets or net assets or other items
specified by
C-1-2
42
the representatives, or any increases in any items specified
by the representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the representatives, or any increases
in any items specified by the representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vi) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (iv) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
C-1-3
43
ANNEX C-2
Pursuant to Section 7(h) of the Underwriter Agreement, KPMG Peat
Marwick LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its Subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
pro forma financial statements) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder.
(iii) The audited selected financial information with respect
to Xxxxx Electronics, Inc. for the 52 weeks ended June 3, 1995, 48
weeks ended April 27, 1996, 53 weeks ended May 3, 1997 and 34 weeks
ended December 26, 1997 included in the Prospectus agrees with the
corresponding amounts in the audited financial statements of Xxxxx
Electronics, Inc. for such periods;
(iv) They have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the representatives, which are
derived from the general accounting records of Xxxxx Electronics, Inc.
and its subsidiaries, which appear in the Prospectus, or in Part II of,
or in exhibits and schedules to, the Registration Statement specified
by the representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
Xxxxx Electronics, Inc. and its subsidiaries and have found them to be
in agreement.
C-2-1
