CUNO INCORPORATED
2,000,000 Shares of Common Stock*
UNDERWRITING AGREEMENT
----------------------
April ____, 1997
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXXX, SACHS & CO.
XXXXXX GULL XXXXXXX & XXXXXXXX INC.
As Representatives of the Several Underwriters
Identified in Schedule I Annexed Hereto
c/o Xxxxxx X. Xxxxx & Co. Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
1. Introductory. CUNO Incorporated, a Delaware corporation (the
"Company"), proposes to sell an aggregate of 2,000,000 shares (the "Firm
Shares") of common stock, $.001 par value per share (the "Common Stock"), to the
several underwriters identified in Schedule I annexed hereto (the
"Underwriters"), who are acting severally and not jointly. In addition, the
Company has agreed to grant to the Underwriters an option to purchase up to an
aggregate of 300,000 additional shares of Common Stock (the "Optional Shares")
as provided in section 5 hereof. The Firm Shares and, to the extent such option
is exercised, the Optional Shares are hereinafter collectively referred to as
the "Shares."
You, as representatives of the Underwriters (the "Representatives"), have
advised the Company that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon hereafter as in your judgment is
advisable and that the public offering price of the shares initially will be
[$____] per share.
The Company hereby confirms its agreements with the Underwriters as
follows:
_________________
* Plus as option to acquire up to an aggregate of 300,000 additional shares of
Common Stock from the Company to cover over-allotments.
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters, and shall be deemed
to represent and warrant to the several Underwriters on each Closing Date (as
hereinafter defined), that:
(a) Each of the Company and the subsidiaries of the Company that are
listed on Exhibit 21 of the Registration Statement (as hereinafter defined)
(individually, a "Subsidiary" and collectively, the "Subsidiaries") has
been duly incorporated and is validly existing as a corporation and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and described in the
Prospectus (as hereinafter defined) and the Registration Statement (as
hereinafter defined); each of the Company and the Subsidiaries is duly
qualified to do business as a foreign corporation under the laws of, and is
in good standing as such in, each jurisdiction in which such qualification
is required, except where the failure to so qualify would not have a
material adverse effect on the condition (financial or other), business,
property, net worth, results of operations or prospects of the Company and
the Subsidiaries, taken as a whole ("Material Adverse Effect"); and no
proceeding has been instituted in any such jurisdiction revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. Complete and correct copies of the certificate
of incorporation or articles of incorporation and by-laws, as amended or
restated ("Certificate of Incorporation" and "By-laws," respectively), of
the Company and each of the Subsidiaries as in effect on the date hereof
have been delivered to the Representatives, and no changes thereto will be
made on or subsequent to the date hereof and prior to each Closing Date.
(b) The shares of Common Stock issued and outstanding immediately
prior to the issuance and sale of the Shares as set forth in the Prospectus
have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus and the Registration Statement. There are no preemptive,
preferential or, except as described in the Prospectus, other rights to
subscribe for or purchase any shares of Common Stock (including the
Shares), and no shares of Common Stock have been issued in violation of
such rights. The Shares to be issued and sold to the Underwriters have been
duly authorized and, when issued, delivered and paid for pursuant to this
Agreement, will be validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the Prospectus and the
Registration Statement. The delivery of certificates for the Shares to be
issued and sold hereunder and payment therefor pursuant to the terms of
this Agreement will pass valid title to such Shares to the Underwriters,
free and clear of any lien, claim, encumbrance or defect in title. Except
as described in the Prospectus, there are no outstanding options, warrants
or other rights of any description, contractual or otherwise, entitling any
person to be issued any class of security by the Company or any Subsidiary,
and there are no holders of Common Stock or other securities of the Company
or any Subsidiary, or of securities that are convertible or exchangeable
into Common Stock or
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other securities of the Company or any Subsidiary, that have rights to the
registration of such Common Stock or securities under the Securities Act of
1933, as amended, and the regulations thereunder (together, the "Act") or
the securities laws or regulations of any of the states (the "Blue Sky
Laws").
(c) Except for the Subsidiaries, and as otherwise set forth in the
Prospectus, the Company has no subsidiaries and does not own any equity
interest in or control, directly or indirectly, any other corporation,
limited liability company, partnership, joint venture, association, trust
or other business organization. The Company owns directly all of the issued
and outstanding capital stock of each Subsidiary, free and clear of any and
all liens, claims, encumbrances or security interests, and all such capital
stock has been duly authorized and validly issued and is fully paid and
nonassessable. There are no outstanding options, warrants or other rights
of any description, contractual or otherwise, entitling any person to
subscribe for or purchase any shares of capital stock of any Subsidiary.
(d) The Company has corporate power and authority to enter into and
perform this Agreement, and the execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations
hereunder and the consummation of the transactions described herein, have
been duly authorized with respect to the Company by all necessary corporate
action and will not: (i) violate any provisions of the Certificate or
Incorporation or By-laws of the Company or any Subsidiary; (ii) violate any
provisions of, or result in the breach, modification or termination of, or
constitute a default under, any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary, or any property owned or
leased by the Company or any Subsidiary, may be bound or affected; (iii)
violate any statute, ordinance, rule or regulation applicable to the
Company or any Subsidiary, or order or decree of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of
the United States or other country or jurisdiction having jurisdiction over
the Company or any Subsidiary; or (iv) result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary. No consent, approval, authorization or other
order of any court, regulatory or governmental body, arbitrator,
administrative agency or instrumentality of the United States or other
country or jurisdiction is required for the execution and delivery of this
Agreement by the Company, the performance of its obligations hereunder or
the consummation of the transactions contemplated hereby, except for
compliance with the Act, the Securities Exchange Act of 1934, as amended,
and the regulations thereunder (together, the "Exchange Act"), the Blue Sky
Laws applicable to the public offering of the Shares by the several
Underwriters and the clearance of such offering and the underwriting
arrangements evidenced hereby with the National Association of Securities
Dealers, Inc. (the "NASD"). This Agreement has been duly executed and
delivered by and on behalf of the Company and is a valid and binding
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agreement of the Company enforceable against the Company in accordance with
its terms.
(e) A registration statement on Form S-1 (Reg. No. 333-22447) with
respect to the Shares, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the Act and
has been filed with the Securities and Exchange Commission (the
"Commission"). Such registration statement, as finally amended and revised
at the time such registration statement was or is declared effective by the
Commission (including the information contained in the form of final
prospectus, if any, filed with the Commission pursuant to Rule 424(b) and
Rule 430A under the Act and deemed to be part of the registration statement
if the registration statement has been declared effective pursuant to Rule
430A(b)) and as thereafter amended by post-effective amendment, if any, is
herein referred to as the "Registration Statement." The related final
prospectus in the form first filed with the Commission pursuant to Rule
424(b) or, if no such filing is required, as included in the Registration
Statement, or any supplement thereto, is herein referred to as the
"Prospectus." The prospectus subject to completion in the form included in
the Registration Statement at the time of the initial filing of the
Registration Statement with the Commission, and each such prospectus as
amended from time to time until the date of the Prospectus, is referred to
herein as the "Preliminary Prospectus." The Company has prepared and filed
such amendments to the Registration Statement since its initial filing with
the Commission, if any, as may have been required to the date hereof, and
will file such additional amendments thereto as may hereafter be required.
There have been delivered to the Representatives three signed copies of the
Registration Statement and each amendment thereto, if any, together with
three copies of each exhibit filed therewith, and such number of conformed
copies for each of the Underwriters of the Registration Statement and each
amendment thereto, if any (but without exhibits), and of each Preliminary
Prospectus and of the Prospectus as the Representatives have reasonably
requested.
(f) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any preliminary
Prospectus, nor, to the knowledge of the Company, have any proceedings for
that purpose been initiated or threatened, and each Preliminary Prospectus
filed with the Commission as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto complied
when so filed with the requirements of the Act and, as of its date, did 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. As of the effective date of the Registration
Statement, and at all times subsequent thereto up to each Closing Date, the
Registration Statement and the Prospectus contained or will contain all
statements that are required to be stated therein in accordance with the
Act and conformed or will conform in all respects to the requirements of
the Act, and neither the Registration Statement nor the Prospectus included
or will include any untrue statement of a material fact or omitted or will
omit to state a material fact required to be stated
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therein or necessary to make the statements therein not misleading. The two
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Preliminary Prospectus or the Prospectus based
upon written information furnished by the Representatives to the Company
pursuant to Section 4 of this Agreement. Neither the Company, nor any
person that controls, is controlled by (including the Subsidiaries) or is
under common control with the Company, has distributed or will distribute
prior to each Closing Date any offering material in connection with the
offering and sale of the Shares other than a Preliminary Prospectus, the
Prospectus, the Registration Statement or other material permitted by the
Act and provided to the Representatives.
(g) Ernst & Young LLP, which has expressed its opinion with respect to
the consolidated financial statements and schedules filed with the
Commission and included as a part of each Preliminary Prospectus, the
Prospectus or the Registration Statement are independent accountants as
required by the Act.
(h) The consolidated financial statements and the related notes
thereto included in each Preliminary Prospectus, the Prospectus and the
Registration Statement present fairly the financial position, results of
operations and cash flows of the Company as of their respective dates or
for the respective periods covered thereby, all in conformity with
generally accepted accounting principles consistently applied throughout
the periods involved. The financial statement schedules, if any, included
in the Registration Statement present fairly the information required to be
stated therein on a basis consistent with the consolidated financial
statements of the Company contained therein. The Company had an outstanding
capitalization as set forth in the Registraton Statement and under
"Capitalization" in the Prospectus as of the date indicated therein, and
there has been no material change thereto since such date except as
disclosed in the Prospectus. The financial and statistical information and
data relating to the Company in each Preliminary Prospectus, the Prospectus
and the Registration Statement are accurately presented and prepared on a
basis consistent with the audited consolidated financial statements and
books and records of the Company. The consolidated financial statements and
schedules and the related notes thereto included in each Preliminary
Prospectus, the Prospectus or the Registration Statement are the only such
financial statements and schedules required under the Act to be set forth
therein.
(i) Neither the Company nor any Subsidiary is, nor with the giving of
notice or passage of time or both, would be, in violation or in breach of:
(i) its respective Certificate of Incorporation or By-laws; (ii) any
statute, ordinance, order, rule or regulation applicable to the Company or
such Subsidiary; (iii) any order or decree of any court, regulatory body,
arbitrator, administrative agency or other instrumentality of the United
States or other country or jurisdiction having jurisdiction over the
Company or such Subsidiary; or (iv) any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or such Subsidiary is
a party or by which any property owned or
5
leased by the Company or such Subsidiary is bound or affected. Neither the
Company nor any Subsidiary has received notice of any violation of any
applicable statute, ordinance, order, rule or regulation applicable to the
Company or any Subsidiary. The Company and each Subsidiary have obtained
and hold, and are in compliance with, all permits, certificates, licenses,
approvals, registrations, franchises, consents and authorizations of
governmental or regulatory authorities required under all laws, rules and
regulations necessary to conduct their business as described in the
Prospectus (hereinafter "permit" or "permits"), and all of such permits are
in full force and effect, except where the failure to have such permits
would not have a Material Adverse Effect; and the Company and each
Subsidiary have fulfilled and performed all of their respective obligations
with respect to each such permit and no event has occurred which would
result in, or after notice or lapse of time would result in, revocation or
termination of any such permit or result in any other impairment of the
rights of the holder of such permit, except where the revocation or
termination of such permit or other impairment would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary is or has been (by
virtue of any action, omission to act, contract to which it is a party or
other occurrence) in violation of any applicable foreign, federal, state,
municipal or local statutes, laws, ordinances, rules, regulations or orders
(including those relating to environmental protection, occupational safety
and health and equal employment practices) heretofore or currently in
effect, except where such violation would not have a Material Adverse
Effect.
(j) There are no legal or governmental proceedings or investigations
pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary is or may be a party or to which any property
owned or leased by the Company or any Subsidiary is or may be subject,
including, without limitation, any such proceedings that are related to
environmental or employment discrimination matters, which are required to
be described in the Registration Statement or the Prospectus which are not
so described. Except as described in the Registration Statement or the
Prospectus, neither the Company nor any Subsidiary: (i) is in violation of
any statute, ordinance, rule or regulation, or any decision, order or
decree of any court, regulatory body, arbitrator, administrative agency or
other instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company or such Subsidiary relating to the
use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environmental or human exposure to
hazardous or toxic substances (collectively, "environmental laws"); (ii)
owns or operates any real property contaminated with any substance that is
subject to any environmental laws; (iii) is liable for any off-site
disposal or contamination pursuant to any environmental laws; or (iv) is
subject to any claim relating to any environmental laws, except where such
violation, contamination, liability or claim would not have a Material
Adverse Effect.
(k) There is no transaction, relationship, obligation, agreement or
other document required to be described in the Registration Statement or
the Prospectus or to
6
be filed or deemed to be filed as an exhibit to the Registration Statement
by the Act, which has not been described or filed as required. All such
contracts or agreements to which the Company or any Subsidiary is a party
have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary, and are enforceable by and against the Company or such
Subsidiary, in accordance with the respective terms thereof.
(l) The Company or a Subsidiary has good and valid title to all
property and assets reflected as owned by the Company or such Subsidiary in
the Company's consolidated financial statements included in the
Registration Statement (or elsewhere in the Registration Statement or the
Prospectus), free and clear of all liens, claims, mortgages, security
interests or other encumbrances of any kind or nature whatsoever except
those, if any, reflected in such financial statements (or elsewhere in the
Registration Statement or the Prospectus) or statutory liens for sums not
yet due or which are being contested in good faith by appropriate
proceedings or liens which do not materially affect the value or use of
such property. All property (real and personal) held or used by the Company
or a Subsidiary under leases, licenses, franchises or other agreements is
held by the Company or such Subsidiary under valid, subsisting, binding and
enforceable leases, franchises, licenses or other agreements.
(m) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in
the Registration Statement or the Prospectus: (i) neither the Company nor
any Subsidiary has incurred any liability or obligation, direct or
contingent, or entered into any transaction, that is material to the
Company, except as in the ordinary course of business; (ii) the Company has
not paid or declared any dividend or other distribution with respect to
its capital stock and neither the Company nor any Subsidiary is delinquent
in the payment of principal or interest on any outstanding debt obligation;
and (iii) there has not been any change in the capital stock, any material
change in the indebtedness of the Company or any Subsidiary, or any change
or development involving or which could be expected to involve, a Material
Adverse Effect, whether or not arising from transactions in the ordinary
course of business.
(n) The Company or a Subsidiary owns or possesses adequate rights to
use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights and
licenses presently used in or necessary for the conduct of its business or
ownership of its properties, and neither the Company nor any Subsidiary has
received notice of violation, infringement or conflict with the asserted
rights of others, in respect thereof.
(o) The Company or a Subsidiary has in place and effective such
policies of insurance, with limits of liability in such amounts, as
management of the Company
7
believes are normal and prudent in the ordinary course of the business of
the Company and its Subsidiaries.
(p) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent, and
neither the Company nor any Subsidiary, except as described in the
Prospectus, is a party to any collective bargaining agreement and, to the
knowledge of the Company, no union organizational attempts have occurred or
are pending. There has been no change in the relationship of the Company or
any Subsidiary with any of its principal suppliers, manufacturers,
contractors or customers resulting in or that could result in a Material
Adverse Effect.
(q) Neither the Company nor any Subsidiary is an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended.
(r) Except for the Company's plans set forth on Schedule II hereto
(collectively, the "Plans"), neither the Company nor any Subsidiary is a
participating employer or plan sponsor with respect to any employee pension
benefit plan as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any employee welfare benefit
plan as defined in Section 3(1) of ERISA, including, without limitation,
any multiemployer welfare or pension plan. With respect to the Plans, the
Company is in substantial compliance with all applicable regulations,
including ERISA and the Code. With respect to each defined benefit
retirement plan, such plan does not have benefit liabilities (as defined in
Section 4001(a)(16) of ERISA) exceeding the assets of the plan. The Company
or the administrator of each of the Plans, as the case may be, has timely
filed the reports required to be filed by ERISA and the Code in connection
with the maintenance of the Plans, and no facts, including, without
limitation, any "reportable event" as defined by ERISA and the regulations
thereunder, exist in connection with the Plans which, under applicable law,
would constitute grounds for the termination of any of the Plans by the
Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any of
the Plans.
(s) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of consolidated 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 authorizations; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
8
(t) The Common Stock has been registered pursuant to Section 12(g) of
the Exchange Act. The Shares have been listed on the National Market System
of The Nasdaq Stock Market ("Nasdaq"), subject to notice of issuance.
(u) Neither the Company, any Subsidiary nor any affiliate of the
Company or such Subsidiary does business with the government of Cuba or
with any person or affiliate located in Cuba within the meaning of Section
517.075 of the Florida Statutes.
(v) All offers and sales of the securities of the Company and each
Subsidiary prior to the date hereof were made in compliance with the Act
and all other applicable state and federal laws or regulations.
A certificate signed by any officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby. A certificate delivered by the Company to its counsel for
purposes of enabling such counsel to render the opinion referred to in section
8(d) will also be furnished to the Representatives and counsel for the
Underwriters.
3. Representation of Underwriters. The Representatives will act as the
representatives for the several Underwriters in connection with the public
offering of the Shares, and any action under or in respect of this Agreement
taken by the Representatives will be binding upon all of the Underwriters.
4. Information Furnished by the Underwriters. The information set forth
in the last paragraph on the outside front cover page of the Prospectus
concerning the terms of the offering by the Underwriters, the paragraphs on the
inside front cover page of the Prospectus relating to stabilization practices
and passive market making, and the concession and reallowance amounts appearing
under the caption "Underwriting" in the Prospectus and the information contained
in the seventh paragraph under the caption "Underwriting" constitute all of the
information furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Registration Statement and the
Prospectus, as such information is referred to in this Agreement.
5. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to the Underwriters identified in Schedule I
annexed hereto an aggregate of 2,000,000 Firm Shares, and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Company the number of Firm Shares as hereinafter set forth at the price per
share of $__________. The obligation of each Underwriter to the Company
shall be to purchase from the Company that number of full Firm Shares which
(as nearly as practicable in full shares as determined by the
Representatives) bears the same proportion
9
to the number of Firm Shares to be sold by the Company as the number of
shares set forth opposite the name of such Underwriter in Schedule I
annexed hereto bears to the total number of Firm Shares to be purchased by
all of the Underwriters under this Agreement.
(b) On the First Closing Date (as hereinafter defined), the Company
will deliver to the Representatives, at the offices of Xxxxxx X. Xxxxx &
Co. Incorporated, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or
through the facilities of The Depository Trust Company, for the accounts of
the several Underwriters, certificates representing the Firm Shares to be
sold by it against payment in Milwaukee, Wisconsin of the purchase price
therefor by wire transfer of immediately available funds to the Company
with respect to the Firm Shares being sold by the Company. As referred to
in this Agreement, the "First Closing Date" shall be on the third full
business day after the date of the Prospectus, at 9:00 a.m., Milwaukee,
Wisconsin time, or at such other date or time not later than ten full
business days after the date of the Prospectus as the Representatives and
the Company may agree. The certificates for the Firm Shares to be so
delivered will be in denominations and registered in such names as the
Representatives request by notice to the Company, prior to the First
Closing Date, and such certificates will be made available for checking and
packaging at 9:00 a.m., Milwaukee, Wisconsin time on the first full
business day preceding the First Closing Date at a location to be
designated by the Representatives.
(c) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein
set forth, the Company hereby agrees to sell to the Underwriters, and the
Underwriters, severally and not jointly, shall have the right at any time
within thirty days after the date of the Prospectus to purchase up to an
aggregate of 300,000 Optional Shares from the Company at the purchase price
per share to be paid for the Firm Shares, for use solely in covering any
over-allotments made by the Underwriters in the sale and distribution of
the Firm Shares. The option granted hereunder may be exercised upon written
notice by the Representatives to the Company, within thirty days after the
date of the Prospectus setting forth the aggregate number of Optional
Shares to be purchased by the Underwriters and sold by the Company, the
names and denominations in which the certificates for such shares are to be
registered and the date and place at which such certificates will be
delivered. Such date of delivery (the "Second Closing Date") shall be
determined by the Representatives, provided that the Second Closing Date,
which may be the same as the First Closing Date, shall not be earlier than
the First Closing Date and, if after the First Closing Date, shall not be
earlier than three nor later than ten full business days after delivery of
such notice to exercise. Certificates for the Optional Shares will be made
available for checking and packaging at 9:00 a.m., Milwaukee, Wisconsin
time, on the first full business day preceding the Second Closing Date at a
location to be designated by the Representatives. The manner of payment for
and delivery of (including the denominations of and the names in which
certificates are to be registered) the Optional Shares shall be the same as
for the Firm Shares. If any Optional Shares are to
10
be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Optional Shares (as nearly as practicable in full
Shares as determined by the Representatives) that bears the same proportion
to the total number of Optional Shares to be purchased as the number of
Firm Shares in Schedule I annexed hereto bears to the total number of Firm
Shares.
(d) The Representatives have advised the Company that each Underwriter
has authorized the Representatives to accept delivery of the Shares and to
make payment therefor. It is understood that the Representatives,
individually and not as representatives of the Underwriters, may (but shall
not be obligated to) make payment for any Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representatives
by the First Closing Date or the Second Closing Date, as the case may be,
for the account of such Underwriter, but any such payment shall not relieve
such Underwriter from any obligation under this Agreement. As referred to
in this Agreement, "Closing Date" shall mean either the First Closing Date
or the Second Closing Date.
6. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, the Company will use its
best efforts to cause the Registration Statement to become effective at the
earliest possible time and, upon notification from the Commission that the
Registration Statement has become effective, will so advise the
Representatives and counsel to the Underwriters promptly and any Prospectus
included in the Registration Statement shall be in a form approved by the
Representatives. If the effective time of the Registration Statement is
prior to the execution and delivery of this Agreement and any information
shall have been omitted therefrom in reliance upon Rule 430A, the Company,
at the earliest possible time, will furnish the Representatives with a copy
of the Prospectus to be filed by the Company with the Commission to comply
with Rule 424(b) and Rule 430A under the Act and, if the Representatives do
not object to the contents thereof, will comply with such Rules. Upon
compliance with such Rules, the Company will so advise the Representatives
promptly. The Company will advise the Representatives and counsel to the
Underwriters promptly of the issuance by the Commission or any state
securities commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose, or of any notification of the suspension of qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceedings for that purpose, and will also advise the Representatives and
counsel to the Underwriters promptly of any request of the Commission for
amendment or supplement of the Registration Statement, of any Preliminary
Prospectus or of the Prospectus, or for additional information, and the
Company will not file any amendment or supplement to the Registration
Statement (either before or after it becomes effective), to any Preliminary
Prospectus or to the Prospectus (including a prospectus filed pursuant
11
to Rule 424(b)) if the Representatives have not been furnished with a copy
prior to such filing (with a reasonable opportunity to review such
amendment or supplement) or if the Representatives object to such filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact, or would omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to supplement the Prospectus to comply with the Act,
the Company promptly will advise the Representatives and counsel to the
Underwriters thereof and will promptly prepare and file with the
Commission, at its expense, an amendment to the Registration Statement
which will correct such statement or omission or an amendment which will
effect such compliance; and, if any Underwriter is required to deliver a
prospectus after the effective date of the Registration Statement, the
Company, upon request of the Representatives, will prepare promptly such
prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act. The Company consents to
the use in accordance with the provisions of the Act of each Preliminary
Prospectus.
(c) Except as described in the Prospectus, neither the Company nor any
Subsidiary will, prior to the Second Closing Date, if any, incur any
liability or obligation, direct or contingent, or enter into any material
transaction, other than in the ordinary course of business, or enter into
any transaction with an "affiliate," as defined in Rule 405 under the Act,
which is required to be described in the Prospectus pursuant to Item 404 of
Regulation S-K under the Act.
(d) Neither the Company nor any Subsidiary will, prior to the Second
Closing Date, if any, acquire any of the Common Stock nor will the Company
declare or pay any dividend or make any other distribution upon its Common
Stock payable to stockholders of record on a date prior to such earlier
date, except as described in the Prospectus.
(e) The Company will make generally available to its security holders
and the Representatives an earnings statement as soon as practicable, but
in no event later than sixty days after the end of its fiscal quarter in
which the first anniversary of the effective date of the Registration
Statement occurs, covering a period of twelve consecutive calendar months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the
Act and Rule 158 promulgated thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company
will furnish to the Representatives, at the expense of the Company, copies
of the Registration Statement, the
12
Prospectus, any Preliminary Prospectus and all amendments and supplements
to any such documents, in each case as soon as available and in such
quantities as the Representatives may reasonably request.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Prospectus, and will timely file Form SR, and any amendments thereto, as
required by Rule 463 under the Act.
(h) The Company shall promptly prepare and file with the Commission,
from time to time, such reports as may be required to be filed by the Act
and the Exchange Act.
(i) During the period of three years from the date of the Prospectus,
the Company will furnish to each of the Representatives and to each of the
other Underwriters who may so request, as soon as available, each report,
statement or other document of the Company or its Board of Directors mailed
to its stockholders or filed with the Commission.
(j) The Company shall deliver the requisite notice of issuance to
Nasdaq and shall take all necessary or appropriate action within its power
to maintain the authorization for trading of the Common Stock as a Nasdaq
National Market security, or take such action to authorize the Common Stock
for listing on the New York Stock Exchange or the American Stock Exchange,
for a period of the shorter of thirty-six months after the date of the
Prospectus or until the Company is no longer subject to the requirements of
the Exchange Act.
(k) Except for the issuance and sale by the Company of Common Stock
upon exercise of presently existing outstanding stock options, the sale of
the Shares to be sold by the Company pursuant to this Agreement, and the
grant of stock options, restricted stock, performance shares and stock
appreciation rights pursuant to the Company's 1996 Stock Incentive Plan and
Non-Employee Directors' Stock Plan, copies of which are filed as exhibits
to or incorporated by reference in the Registration Statement, in the
ordinary course consistent with past practice, and provided that none of
such instruments shall be exercisable during the 90-day period herein
described, the Company shall not, for a period of 90 days after the date of
the Prospectus, without the prior written consent of Xxxxxx X. Xxxxx & Co.
Incorporated ("Baird"), directly or indirectly, offer, sell or otherwise
dispose of, contract to sell or otherwise dispose of, or cause or in any
way permit to be sold or otherwise disposed of, any: (i) shares of Common
Stock or any other Company capital stock; (ii) rights to purchase shares of
Common Stock or other Company capital stock; or (iii) securities or
instruments that are convertible or exchangeable into shares of Common
Stock or other Company capital stock.
(l) The Company will maintain a transfer agent and, if required by law
or the rules of The Nasdaq Stock Market or any national securities exchange
on which the
13
Common Stock is listed, a registrar (which, if permitted by applicable laws
and rules, may be the same entity as the transfer agent) for its Common
Stock.
(m) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which, in
the opinion of Baird, the market price of the Common Stock has been or is
likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to the Prospectus), the
Company will, after written notice from Baird advising the Company of any
of the matters set forth above, promptly consult with Baird concerning the
advisability and substance of, and, if the Company and Baird determine that
it is appropriate, disseminate, a press release or other public statement
responding to or commenting on, such rumor, publication or event.
(n) The Company will comply or cause to be complied with the
conditions to the obligations of the Underwriters in section 8 hereof.
(o) The Company agrees to comply with Section 517.075 of the Florida
Statutes if, prior to the completion of the distribution of the Shares, the
Company, any Subsidiary or any affiliate of the Company or such Subsidiary
commences doing business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of such Section.
7. Payment of Expenses. Whether or not the transactions contemplated
hereunder are consummated or this Agreement becomes effective, or if this
Agreement is terminated for any reason, the Company will pay the costs, fees and
expenses incurred in connection with the public offering of the Shares. Such
costs, fees and expenses to be paid by the Company include, without limitation:
(a) All costs, fees and expenses (excluding the expenses incurred by
the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in
subsection (b) of this section 7) incurred in connection with the
performance of the Company's obligations hereunder, including without
limiting the generality of the foregoing: the registration fees related to
the filing of the Registration Statement with the Commission; the fees and
expenses related to the quotation of the Shares on Nasdaq or other national
securities exchange; the fees and expenses of the Company's counsel,
accountants, transfer agent and registrar; the costs and expenses incurred
in connection with the preparation, printing, shipping and delivery of the
Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all agreements and
supplements provided for herein, this Agreement including, without
limitation, shipping expenses via overnight delivery, and/or courier
service to comply with applicable prospectus delivery requirements; and the
costs and expenses associated with the production of materials
14
related to, and travel expenses incurred by the management of the Company
in connection with, the various meetings to be held between the Company's
management and prospective investors. The Representatives shall pay their
own travel expenses related to such meetings.
(b) All registration fees and expenses, including reasonable legal
fees and disbursements of counsel for the Underwriters incurred in
connection with qualifying or registering all or any part of the Shares for
offer and sale under the Blue Sky Laws and the clearing of the public
offering and the underwriting arrangements evidenced hereby with the NASD;
provided, however, that in no event shall such legal fees and disbursements
exceed $3,000.
(c) All fees and expenses related to printing of the certificates for
the Shares, and all transfer taxes, if any, with respect to the sale and
delivery of the Shares.
8. Conditions to the Obligations of the Underwriters. The obligations of
the several Underwriters under this Agreement shall be subject to the accuracy
of the representations and warranties on the part of the Company herein set
forth as of the date hereof and as of each Closing Date, to the accuracy of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder, and to the
following additional conditions, unless waived in writing by the
Representatives:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m., Washington, D. C. time, prior to
the date of this Agreement, or such later time as shall have been consented
to by the Representatives, which consent shall be deemed to have been given
if the Registration Statement shall have been declared effective on or
before the date and time requested in the acceleration request submitted on
behalf of the Representatives pursuant to Rule 461 under the Act; all
filings required by Rules 424(b) and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission or any state securities
commission nor, to the knowledge of the Company, shall any proceedings for
that purpose have been initiated or threatened; and any request of the
Commission or any state securities commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to the satisfaction of the Representatives.
(b) Since the dates as of which information is given in the
Registration Statement:
(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a Material Adverse
Effect, whether or not arising from transactions in the ordinary
course of business;
15
(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court
or governmental action, order or decree; and
(iii) there shall not have occurred any change in the long-term
debt or capital stock of the Company.
the effect of which on the Company, in any such case described in clause
(i), (ii) or (iii) above, is in the written opinion of the Representatives
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares on the terms
and in the manner contemplated in the Registration Statement and the
Prospectus.
(c) The Representatives shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the reasonable opinion of the Representatives or counsel for
the Underwriters, is material, or omits to state a fact that, in the
reasonable opinion of the Representatives or such counsel, is material and
is required to be stated therein or necessary to make the statements
therein not misleading.
(d) The Representatives shall have received an opinion of Xxxxxx
Xxxxxx & Xxxxx, counsel for the Company addressed to the Representatives,
as the representatives of the Underwriters, and dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect that:
(i) The Company has been duly incorporated and is existing as a
corporation in good standing under the laws of the State of Delaware
and has corporate power and authority to own its properties and
conduct its business as described in the Prospectus. The Company has
been duly qualified as a foreign corporation and is in good standing
in California, Colorado, Connecticut, Florida, Illinois, Indiana,
Kansas, Louisiana, Maine, Massachusetts, New Jersey, North Carolina,
Ohio, Oklahoma, Pennsylvania, South Carolina, Texas and Washington.
(ii) The authorized and outstanding capital stock of the Company
conforms as to legal matters in all material respects to the
descriptions thereof in the Prospectus and the Registration Statement;
(iii) The issued and outstanding capital stock of the Company is
duly authorized and validly issued, fully paid and nonassessable and
free of preemptive rights under Delaware law or granted by the Company
under its Certificate of Incorporation, By-laws or any contract known
to such counsel;
(iv) The certificates for the Shares to be delivered hereunder
conform to the requirements of Delaware law; and when duly
countersigned by the
16
Company's transfer agent, and delivered to the Representatives or upon
the order of the Representatives against payment of the agreed
consideration therefor in accordance with the provisions of this
Agreement, the Shares to be sold by the Company represented thereby
will be duly authorized and validly issued, fully paid and
nonassessable, and free of any preemptive or similar rights under
Delaware law or granted by the Company under its Certificate of
Incorporation, By-laws or any contract known to such counsel;
(v) The Registration Statement has become effective under the
Act, and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or are threatened
under the Act , the Registration Statement (including the information
deemed to be a part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) if applicable), the Prospectus
and any amendment or supplement thereto (except for the financial
statements and other statistical or financial data included therein as
to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act; to such
counsel's knowledge, there are no legal or governmental proceedings
pending or threatened, including, without limitation, any such
proceedings that are related to environmental or employment
discrimination matters, required to be described in the Registration
Statement or the Prospectus which are not so described or which
question the validity of this Agreement or any action taken or to be
taken pursuant thereto, nor is there any transaction, relationship,
agreement, contract or other document of a character required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement by the Act, which is
not described or filed as required;
(vi) The Company has corporate power and authority to enter into
and perform this Agreement; the performance of the Company's
obligations hereunder and the consummation of the transactions
described herein have been duly authorized by the Company by all
necessary corporate action and this Agreement has been duly executed
and delivered by and on behalf of the Company; no consent, approval,
authorization or other order or decree of any court, regulatory or
governmental body, arbitrator, administrative agency or other
instrumentality of the United States is required for the execution and
delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement (except for compliance with the Act,
the Exchange Act, applicable Blue Sky Laws and the clearance of the
underwriting arrangements by the NASD);
(vii) The execution, delivery and performance of this Agreement
by the Company will not: (A) violate any provisions of the Certificate
or Articles of Incorporation or By-laws of the Company or any
Subsidiary; (B) violate any
17
provisions of, or result in the breach, modification or termination
of, or constitute a default under, any agreement, lease, franchise,
license, indenture, permit, mortgage, deed of trust, other evidence of
indebtedness or other instrument to which the Company or any
Subsidiary is a party or by which the Company or such Subsidiary, or
any of their respective owned or leased property is bound, and which
is filed as an exhibit to the Registration Statement; (C) violate any
applicable laws, administrative rules or regulations of the type
normally applicable to transactions such as those contemplated by this
Agreement; or (D) violate any judgment, order or decree known to such
counsel of any court or governmental agency or body to which the
Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective property is expressly bound;
(viii) To such counsel's knowledge, except as described in the
Prospectus, no person has the right, contractual or otherwise, to
cause the Company to register pursuant to the Act any shares of
capital stock or other securities in connection with the issue and
sale of the Shares to be sold to the Underwriters pursuant to this
Agreement;
(ix) The Common Stock is a National Market Security on The Nasdaq
Stock Market and is registered under the Exchange Act;
(x) Neither the Company nor any Subsidiary is, nor with the
giving of notice or passage of time or both would be, in violation of
its respective Certificate of Incorporation or By-laws;
(xi) Neither the Company nor any Subsidiary is an "investment
company", or person "controlled by" an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended;
(xii) The description in the Registration Statement and the
Prospectus of statutes, laws, regulations, legal and governmental
proceedings, and contracts and other legal documents described therein
fairly and correctly present, in all material respects, the
information required to be included therein by the Act; and
(xiii) All offers and sales by the Company of its capital stock
known to such counsel before the date hereof were at all relevant
times duly registered under or exempt from the registration
requirements of the Act, and were duly registered under or the subject
of an available exemption from the registration requirements of any
applicable Blue Sky Laws.
18
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Underwriters and counsel for the Underwriters, at which
the contents of the Registration Statement and the Prospectus and related
matters were discussed, and although they are not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, on basis of the
foregoing, no facts have come to the attention of such counsel that lead them to
believe that (except for the financial statements and notes thereto, the
financial statement schedule and other financial data included therein as to
which such counsel need express no opinion) either the Registration Statement
(including the information deemed to be a part of the Registration Statement at
the time of its effectiveness pursuant to Rule 430A(b)) at the time the
Registration Statement become effective contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto, as of the date thereof or as
of the date of such counsel's opinion, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
For purposes of such opinion, such counsel for the Company may rely, to the
extent they deem such reliance proper, as to matters of fact upon certificates
of officers of the Company and of governmental officials, and copies of all such
certificates shall be furnished to the Representatives for the Underwriters on
or before each Closing Date.
(e) The Representatives shall have received an opinion of Xxxxxxx,
Carton & Xxxxxxx, counsel for the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, with respect to the
issuance and sale of the Shares by the Company, the Registration Statement
and other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they request for the purpose
of enabling them to pass upon such matters.
(f) The Representatives shall have received on each Closing Date, a
certificate of the chief executive officer or the chief operating officer
and the chief financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company set forth
in section 2 hereof are true and correct as of the date of this
Agreement and as of the date of such certificate, and the Company has
complied with all the agreements and satisfied all the conditions to
be performed or satisfied by it at or prior to the date of such
certificate;
19
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to
the knowledge of the respective signatories, no proceedings for that
purpose have been initiated or are pending or contemplated under the
Act or under the Blue Sky Laws of any jurisdiction;
(iii) Each of the respective signatories has examined the
Registration Statement and the Prospectus, and any amendment or
supplement thereto, and such documents are true and correct in all
material respects; and
(iv) Since the date on which the Registration Statement was
declared effective with the Commission, there shall not have occurred
any change or development involving, or which could be expected to
involve, a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as disclosed
in the Prospectus and the Registration Statement as heretofore amended
or (but only if the Representatives expressly consent thereto in
writing) as disclosed in an amendment or supplement thereto filed with
the Commission and delivered to the Representatives after the
execution of this Agreement; since such date and except as so
disclosed or in the ordinary course of business, the Company has not
incurred any liability or obligation, direct or indirect, or entered
into any transaction which is material to the Company; since such date
and except as so disclosed, there has not been any change in the
outstanding capital stock of the Company, or any change that is
material to the Company in the short-term debt or long-term debt of
the Company; since such date and except as so disclosed, the Company
has not acquired any of the Common Stock or other capital stock of the
Company nor has the Company declared or paid any dividend, or made any
other distribution, upon its outstanding Common Stock payable to
stockholders of record on a date prior to such Closing Date; since
such date and except as so disclosed, the Company has not incurred any
material contingent obligations, and no material litigation is pending
or threatened against the Company; and, since such date and except as
so disclosed, the Company has not sustained any material loss or
interference from any strike, fire, flood, windstorm, accident or
other calamity (whether or not insured) or from any court or
governmental action, order or decree.
The delivery of the certificate provided for in this subsection (f)
shall be and constitute a representation and warranty of the Company as to
the facts required in the immediately foregoing clauses (i), (ii), (iii)
and (iv) to be set forth in said certificate.
(g) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Representatives a letter addressed to
the Representatives, as representatives of the Underwriters, from Ernst &
Young LLP, the Company's
20
independent accountants, the first letter to be dated the date of this
Agreement, the second letter to be dated the First Closing Date and the
third letter (if applicable) to be dated the Second Closing Date, which
shall be in form and substance satisfactory to the Representatives and
shall contain information as of a date within five days of the date of such
letter. There shall not have been any change or decrease set forth in any
of the letters referred to in this subsection (g) which makes it
impracticable or inadvisable in the judgment of the Representatives to
proceed with the public offering or purchase of the Shares as contemplated
hereby.
(h) The underwriting terms and arrangements for the offering shall
have been cleared by the NASD, and the Shares shall have been designated
for inclusion as a Nasdaq National Market Security on the Nasdaq Stock
Market.
(i) Such further certificates and documents as the Representatives
may reasonably request (including certificates of officers of the Company).
(j) Each of the officers and directors of the Company set forth on
Schedule III hereto has entered into an agreement for the benefit of the
Underwriter and enforceable by Baird that for a period of 90 days after the
date of the Prospectus, such persons will not, without the prior written
consent of Baird, directly or indirectly, offer, sell or otherwise dispose
of, contract to sell or otherwise dispose of, or cause or in any way permit
to be sold or otherwise disposed of, any shares of Common Stock or any
other Company capital stock, rights to purchase Common Stock or any other
Company capital stock or securities or instruments convertible into or
exchangeable for Common Stock or other Company capital stock.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Representatives and to Xxxxxxx, Carton & Xxxxxxx, counsel for the
Underwriters. The Company shall furnish the Representatives with such manually
signed or conformed copies of such opinions, certificates, letters and documents
as the Representatives may reasonably request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at either Closing Date is not so satisfied, this Agreement at the
election of the Representatives will terminate upon notification to the Company
without liability on the part of any Underwriter, including the Representatives,
the Company except for expenses to be paid by the Company pursuant to section 7
hereof and except to the extent provided in section 10 hereof.
9. Maintain Effectiveness of Registration Statement. The Company will
use its reasonable efforts to prevent the issuance of any stop order suspending
the effectiveness of the Registration Statement, and, if such stop order is
issued, to obtain as soon as possible the lifting thereof.
21
10. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act or the Exchange Act, from and against any losses,
claims, damages, expenses, liabilities or actions in respect thereof
("Claims"), joint or several, to which such Underwriter or each such
controlling person may become subject under the Act, the Exchange Act, Blue
Sky Laws or other federal or state statutory laws or regulations, at common
law or otherwise (including payments made in settlement of any litigation,
if such settlement is effected with the written consent of the Company),
insofar as such Claims arise out of or are based upon any breach of any
representation, warranty or covenant made by the Company in this Agreement,
or any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, 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 not misleading. The Company agrees to reimburse each Underwriter
and each such controlling person for any reasonable legal fees or other
expenses incurred by such Underwriter or any such controlling person in
connection with investigating or defending any such Claim; provided,
however, that the Company will not be liable in any such case to the extent
that any such Claim arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
supplement thereto or in reliance upon and in conformity with the written
information furnished by the Representatives to the Company pursuant to
section 4 of this Agreement as required by this Agreement; and provided,
further that the Company shall not be liable to any Underwriter under the
indemnity agreement in this subsection (a) with respect to any Preliminary
Prospectus to the extent that any such loss, claim, damage or liability of
such Underwriter results from the fact that such Underwriter sold Shares to
a person as to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus as then amended or
supplemented (if the Company shall have furnished any amendments or
supplements thereto) where such delivery is required by law if the Company
has previously furnished copies thereof in sufficient quantity to such
Underwriter and the loss, claim, damage or liability of such Underwriter
results from an untrue statement or omission of a material fact contained
in the Preliminary Prospectus which was identified in writing at such time
to such Underwriter and corrected in the Prospectus as then amended or
supplemented (if the Company shall have furnished any amendments or
supplements thereto). The indemnification obligations of the Company as
provided above are in addition to and in no way limit any liabilities the
Company may otherwise have.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its officers
who signs the Registration Statement, and each person, if any, who controls
the Company within the
22
meaning of the Act or the Exchange Act against any Claim to which the
Company, or any such director, officer or controlling person may become
subject under the Act, the Exchange Act, Blue Sky Laws or other federal or
state statutory laws or regulations, at common law or otherwise (including
payments made in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter and Baird), insofar
as such Claim arises out of or is based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or arises out of or is 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 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 the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance solely upon and in conformity with the
written information furnished by the Representatives to the Company
pursuant to section 4 of this Agreement. The indemnification obligations of
each Underwriter as provided above are in addition to any liabilities any
such Underwriter may otherwise have. Notwithstanding the provisions of this
section, no Underwriter shall be required to indemnify or reimburse the
Company, or any officer, director or controlling person in an aggregate
amount in excess of the total price at which the Shares purchased by any
such Underwriter hereunder were offered to the public, less the amount of
any damages such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action in respect of a Claim, such
indemnified party will, if a Claim in respect thereof is to be made against
an indemnifying party under this section, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve an indemnifying party from any
liability it may have to any indemnified party under this Section 10 or
otherwise. In case any such action is brought against any indemnified
party, and such indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in and, to the extent that he, she or it may wish, jointly with
all other indemnifying parties, similarly notified, to assume the defense
thereof, with counsel (who shall not, except with consent of the
indemnified party, be counsel to the indemnifying party) reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and any
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to the indemnified
party and/or other indemnified parties which are different from or
additional to those available to any indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. No indemnifying
party shall without the written consent of
23
the indemnified party effect a 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 an admission of fault, culpability or failure to
act, by or on behalf of any indemnified party.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will not
be liable to such indemnified party under this section for any legal fees
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with
the proviso to the penultimate sentence of subsection (c) of this
section;
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the
action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(e) If the indemnification provided for in this section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) hereof in respect of any Claim referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified
party, shall, subject to the limitations hereinafter set forth, contribute
to the amount paid or payable by such indemnified party as a result of such
Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Underwriters from
the offering of the Shares; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i)
above, but also the relative fault of the Company and the Underwriters
in connection with the statements or omissions which resulted in such
Claim, as well as any other relevant equitable considerations.
24
The relative benefits received by each of the Company and the Underwriters
shall be deemed to be in such proportion so that the Underwriters are
responsible for that portion represented by the percentage that the amount of
the underwriting discounts and commissions per share appearing on the cover page
of the Prospectus bears to the public offering price per share appearing
thereon, and the Company (including its officers and directors and controlling
persons) is responsible for the remaining portion. The relative fault of the
Company and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
Claims referred to above shall be deemed to include, subject to the limitations
set forth in subsections (c) and (d) of this section, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
(f) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this section were determined by
pro rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method or allocation which
does not take into account the equitable considerations referred to in
subsection (e) of this section. Notwithstanding the other provisions of
this section, no Underwriter shall be required to contribute any amount
that is greater than 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 to contribute
pursuant to this section are several in proportion to their respective
underwriting commitments and not joint.
11. Default of Underwriters. It shall be a condition to the obligations
of each Underwriter to purchase the Shares in the manner as described herein,
that, except as hereinafter provided in this section, each of the Underwriters
shall purchase and pay for all the Shares agreed to be purchased by such
Underwriter hereunder upon tender to the Representatives of all such Shares in
accordance with the terms hereof. If any Underwriter or Underwriters default in
their obligations to purchase Shares hereunder on either the First Closing Date
or the Second Closing Date and the aggregate number of Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed ten percent (10%) of the total number of Shares which the Underwriters
are obligated to purchase on such Closing Date, the Representatives may make
arrangements for the purchase of such Shares by other persons, including any of
the Underwriters, but if no such arrangements are made by such Closing Date the
nondefaulting Underwriters shall be obligated severally, in proportion to their
respective commitments
25
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Shares with respect to which such default or
defaults occur is greater than ten percent (10%) of the total number of Shares
which the Underwriters are obligated to purchase on such Closing Date, and
arrangements satisfactory to the Representatives for the purchase of such Shares
by other persons are not made within thirty-six hours after such default, this
Agreement will terminate without liability on the part of any nondefaulting
Underwriter or the Company, except for the expenses to be paid by the Company
pursuant to section 7 hereof and except to the extent provided in section 10
hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, for not more than seven business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
12. Effective Date. This Agreement shall become effective upon the
execution and delivery of this Agreement by the parties hereto. Such execution
and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
13. Termination. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof, this Agreement may be terminated by the
Representatives prior to or on the First Closing Date and the over-allotment
option from the Company referred to in section 5 hereof, if exercised, may be
canceled by the Representatives at any time prior to or on the Second Closing
Date, if in the judgment of the Representatives, payment for and delivery of the
Shares is rendered impracticable or inadvisable because:
(a) additional 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 the American Stock Exchange,
or trading in securities generally shall have been suspended or materially
limited on either such exchange or on The Nasdaq Stock Market or a general
banking moratorium shall have been established by either federal or state
authorities in New York or Wisconsin;
(b) any event shall have occurred or shall exist which makes untrue
or incorrect in any material respect any statement or information contained
in the Registration Statement or which is not reflected in the Registration
Statement but should
26
be reflected therein to make the statements or information contained
therein not misleading in any material respect;
(c) an outbreak or escalation of hostilities in which the United
States is involved or other national or international calamity or any
substantial change in political, financial or economic conditions shall
have occurred or shall have accelerated to such extent, in the judgment of
the Representatives, as to have a material adverse effect on the financial
markets of the United States, or to make it impracticable or inadvisable to
proceed with completion of the sale of and payment for the Shares as
provided in this Agreement; or
(d) a downgrade shall have occurred in the rating accorded the
Company's debt securities or preferred stock by any "nationally recognized
statistical rating organization" as that term is defined by the Securities
and Exchange Commission for purposes of Rule 436(g)(2) under the Act or
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
the Company's debt securities or preferred stock.
Any termination pursuant to this Section shall be without liability on the
part of any Underwriter to the Company, or on the part of the Company to any
Underwriter, except for expenses to be paid by the Company pursuant to section 7
hereof or except as to indemnification to the extent provided in section 10
hereof.
14. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties, covenants and other
statements of the Company, of its officers or directors, and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, officers, directors
or any controlling person, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder.
15. Notices. All communications hereunder will be in writing and, if sent
to the Representatives, will be mailed, delivered, telecopied (with receipt
confirmed) or telegraphed and confirmed to Xxxxxx X. Xxxxx & Co. Incorporated at
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxx X.
Xxxxxxxx, Managing Director, with a copy to Xxxxx X. Xxxxxxxx, Esq., Xxxxxxx,
Carton & Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; and if sent to
the Company, will be mailed, delivered, telecopied (with receipt confirmed) or
telegraphed and confirmed to the Company at 000 Xxxxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, with a copy to Xxxxx X. Xxxxxxx,
Esq., Xxxxxx Xxxxxx & Zavis, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000.
16. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors, personal
representatives and assigns, and to the
27
benefit of the officers and directors and controlling persons referred to in
section 10 hereof and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Shares
as such from any of the Underwriters merely by reason of such purchase.
17. Partial Unenforceability. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
18. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois without
reference to conflict of law principles thereunder. This Agreement may be signed
in various counterparts which together shall constitute one and the same
instrument, and shall be effective when at least one counterpart hereof shall
have been executed by or on behalf of each party hereto.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters,
including the Representatives, all in accordance with its terms.
Very truly yours,
CUNO INCORPORATED
By:
----------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
and Chief Financial Officer
28
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXXX, XXXXX & CO.
XXXXXX GULL XXXXXXX & XXXXXXXX INC.
By: XXXXXX X. XXXXX & CO. INCORPORATED
Acting as Representatives of the several
Underwriters (including themselves) identified
in Schedule I annexed hereto.
By:
-------------------------------------------
Authorized Representative
29
Cuno Incorporated
Schedule I
----------
Number of Firm
Shares to
Name of Underwriter be Purchased
------------------- --------------
Xxxxxx X. Xxxxx & Co. Incorporated...........................
Xxxxxxx, Sachs & Co..........................................
Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc...........................
---------
Total 2,000,000
30
Schedule II
-----------
CUNO Incorporated Pension Plan
CUNO Incorporated Pension Plan for Organized Employees
Pension Plan for Salaried Employees of CUNO Incorporated
CUNO Incorporated Savings and Retirement Plan
Voluntary Accident Insurance Plan for Employees at CUNO Incorporated
Health Plan for Employees of CUNO Incorporated
CUNO Incorporated Flex Choice Plan
Travel Accident Plan of CUNO Incorporated
Life and Accident Plan of CUNO Incorporated
Long Term Disability Plan of CUNO Incorporated
CUNO Incorporated Salaried Employees Severance Pay Plan
31
Schedule III
------------
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. XxXxxxxxx
C. Xxxxxx Xxxxxxx
Xxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxx X. Xxxxxx
32
