OPTIMAL ROBOTICS CORP.
COMMON STOCK
UNDERWRITING AGREEMENT
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__________________, 2000
XXXXXX XXXXXX XXXXXXXX & CO., INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
XXXXXXX XXXXX & ASSOCIATES, INC.
As representatives of the several
Underwriters named in Schedule I hereto,
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Optimal Robotics Corp., a Canadian corporation (the "Company") proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I (the "Underwriters") 1,325,000 Class "A"
shares, without par value ("Common Shares"), of the Company and certain
shareholders of the Company named in Schedule II hereto (the "Selling
Shareholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of 675,000 additional Common Shares in the
respective amounts set forth opposite their names in Schedule II hereto (said
aggregate of 2,000,000 shares are herein called the "Firm Shares"). In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to 300,000 additional common shares (the "Optional Shares"), as
provided in Section 2 hereof. The Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 2 hereof are collectively
called the "Shares."
1. (a) Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form F-3 (File No. 333-
_________) with respect to the Shares, including a prospectus subject
to completion, has been filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), and one or more amendments to such
registration statement may have been so filed. After the execution of
this Agreement, the Company will file with the Commission one or more
of the following: (A) if such registration statement, as it may have
been amended, has become effective under the Act and information has
been omitted therefrom in accordance with Rule 430A under the Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no such amendment shall have been filed,
in such registration statement) with such changes or insertions as are
required by Rule 430A or permitted by Rule 424(b) under the Act and as
have been provided to and approved you, in your capacity as
representatives of the Underwriters (the "Representatives"), or (B) if
such registration statement, as it may have been amended, has not
become effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment
has been provided to and approved by the Representatives prior to the
execution of this Agreement or (C) if such initial Registration
Statement, as it may have been amended, has become effective under the
Act and the number of Shares to be offered has subsequently been
increased, a registration statement (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Act and as has
been provided to and approved by the Representatives. As used in this
Agreement, the term "Registration Statement" means such registration
statement, as amended at the time when it was or is declared effective,
including all financial statement schedules and exhibits thereto
together with any Rule 462(b) Registration Statement, and including any
information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term
"Preliminary Prospectus" means each prospectus subject to completion
included in such registration statement or any amendment or post-
effective amendment thereto (including the prospectus subject to
completion, if any, included in the Registration Statement at the time
it was or is declared effective); and the term "Prospectus" means the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act or, if no prospectus is required to be so filed, such
term means the prospectus included in the Registration Statement. Any
reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated therein by reference pursuant to Form F-3
under the Act, as from time to time amended or supplemented pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Act or otherwise. For purposes of the following representations and
warranties, to the extent reference is made to the Prospectus and at
the relevant time the Prospectus is not yet in existence, such
reference shall be deemed to be to the most recent Preliminary
Prospectus.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission or the
securities authority of any state or other jurisdiction. If the
Registration Statement has become effective under the Act, no stop
order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceeding for that purpose has
been instituted or threatened or, to the best knowledge of the Company,
contemplated by the Commission or the securities authority of any state
or other jurisdiction.
(iii) When any Preliminary Prospectus was filed with the
Commission it (A) contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement
or any amendment thereto was or is declared effective, and at each Time
of Delivery (as hereinafter defined), it (A) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder
and (B) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any amendment
or supplement thereto is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or such amendment or supplement is not
required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and at each Time of Delivery,
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the Prospectus, as amended or supplemented at any such time, (A)
contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The foregoing provisions of this paragraph (iii) do not apply to
statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or
any amendment or supplement thereto in reliance upon and in conformity
with written information furnished to the Company by any Underwriter
through you specifically for use therein. The Company and the
Underwriters hereby acknowledge that the following constitutes the only
information furnished in writing to the Company by the Underwriters
specifically for use in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any such amendment or supplement: (i)
the statements in the last paragraph on the cover page of the
Prospectus; and (ii) the statements under the caption "Underwriting" in
the Prospectus. The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, conformed or will conform in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, and none of such documents
contained or will contain an untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(iv) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings or contracts
and other documents are accurate and fairly present , in all material
respects, the information required to be shown under the Act and the
rules and regulations of the Commission; and there are no statutes or
legal or governmental proceedings required under the Act and the rules
and regulations of the Commission to be described in the Registration
Statement or the Prospectus that are not described as required and no
contracts or documents of a character that are required under the Act
and the rules and regulations of the Commission to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described and filed as
required.
(v) The Company was duly incorporated pursuant to the
Business Corporations Act (Ontario) and was continued and is validly
existing as a corporation in good standing under the Canada Business
Corporation Act and has full power and authority (corporate and other)
to own or lease its properties and conduct its business as described in
the Prospectus. The Company has full power and authority (corporate and
other) to enter into this Agreement and to perform its obligations
hereunder. The Company is duly qualified to transact business as a
foreign corporation 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, except where the
failure to so qualify would not have a material adverse effect on the
financial position, results of operations or business of the Company.
(vi) The Company's authorized, issued and outstanding
capital stock is as disclosed in the Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and conform to the
description of the Common Shares contained in the Prospectus. None of
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the issued shares of capital stock of the Company has been issued or is
owned or held in violation of any preemptive rights of shareholders,
and no person or entity (including any holder of outstanding shares of
capital stock of the Company) has any preemptive or other rights to
subscribe for any of the Shares. The description of the Company's
option, and other stock incentive plans or arrangements, and the
options or other rights granted or to be granted thereunder, set forth
in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options
and rights.
(vii) Except as disclosed in the Prospectus, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any partnership interest in any
partnership, joint venture or other association.
(viii) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company convertible
into or exchangeable for any capital stock of the Company, (B)
warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company to issue
any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.
(ix) Since the date of the most recent audited financial
statements included in the Prospectus, the Company has not sustained
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 disclosed in or contemplated by the
Prospectus.
(x) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and other than
as disclosed in or contemplated by the Registration Statement and the
Prospectus, (A) the Company has not incurred any liabilities or
obligations, direct or contingent, or entered into any transactions,
not in the ordinary course of business, that are material to the
Company, (B) the Company has not purchased any of its outstanding
capital stock or declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock, (C) there has not been
any material change in the capital stock, long-term debt or short-term
debt of the Company, (D) there has not been 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, in each case other than as disclosed in or
contemplated by the Prospectus and (E) there has not been any material
transaction entered into or any material transaction that is probable
of being entered into by the Company, other than transactions in the
ordinary course of business.
(xi) The Shares to be sold by the Company hereunder have
been duly authorized and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
nonassessable and will conform to the description of the Common Shares
contained in the Prospectus; the Shares to be sold by the Selling
Shareholders hereunder have been duly authorized and validly issued and
are fully paid and nonassessable; and the certificates evidencing the
Shares will comply with all applicable requirements of Canadian law.
The Underwriters will receive good title to
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the Shares to be issued and delivered hereunder, in good delivery form
and free and clear of all pledges, liens, hypothecations, encumbrances,
claims, security interests, restrictions, agreements, voting trusts and
adverse interests whatsoever. The Firm Shares to be sold by the Company
and the Optional Shares have been approved for inclusion on the Nasdaq
National Market, subject only to official notice of issuance. The Firm
Shares to be sold by the Selling Shareholders are included on the
Nasdaq National Market.
(xii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement (or any such right has been
effectively waived) or any securities being registered pursuant to any
other registration statement filed by the Company under the Act.
(xiii) All offers and sales by the Company of the Company's
capital stock prior to the date hereof were at all relevant times duly
registered under the Act or exempt from the registration requirements
of the Act and were duly registered or the subject of an available
exemption from the registration requirements of the applicable state
securities or blue sky laws.
(xiv) The Company is not, nor with the giving of notice or
passage of time or both would be, in violation of its Articles of
Incorporation or Bylaws or in default in any material respect under any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company is a party or to which any
of its properties or assets are subject.
(xv) The issuance of the Firm Shares being sold by the
Company and the Optional Shares and the sale of the Shares and the
performance of this Agreement and the consummation of the transactions
herein contemplated will not conflict with, or (with or without the
giving of notice or the passage of time or both) 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, lease or
other material agreement or instrument to which the Company is a party
or to which any of its properties or assets is subject, nor will such
action conflict with or violate any provision of the Articles of
Incorporation or Bylaws of the Company or any statute, rule or
regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over the Company or any
of its properties or assets.
(xvi) The Company owns no real property; has good title to
all personal property owned by it, free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and
defects, except such as are disclosed in the Prospectus or such as do
not materially and adversely affect the value of such property and do
not interfere with the use made or proposed to be made of such property
by the Company; and any real property and buildings held under lease by
the Company are held under valid, subsisting and enforceable leases,
with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company.
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(xvii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing with,
any court or governmental agency or body is required for the sale of
the Shares or the consummation of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act (which,
if the Registration Statement is not effective as of the time of
execution hereof, shall be obtained as provided in this Agreement) and
such as may be required from the National Association of Securities
Dealers, Inc. (the "NASD") and under state or provincial securities
laws in connection with the offer, sale and distribution of the Shares
by the Underwriters.
(xviii) Other than as disclosed in the Prospectus, there is
no litigation, arbitration, claim, proceeding (formal or informal) or
investigation pending or, to the best of the Company's knowledge,
threatened (or any basis therefor) in which the Company is a party or
of which any of its properties or assets are the subject which, if
determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on the financial position,
results of operations or business of the Company. The Company is not in
violation of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except such as do not and will
not individually or in the aggregate have a material adverse effect on
the financial position, results of operations or business of the
Company, and the Company is not required to take any action in order to
avoid any such violation or default.
(xix) The Company is conducting its business in compliance
with all the laws, rules and regulations of the jurisdictions in which
it is conducting business, except where the failure to so comply would
not have, individually or in the aggregate, a material adverse effect
on the business or financial condition of the Company. Without limiting
the foregoing, the Company holds and is operating in compliance with
all licenses, authorizations, consents, approvals, certificates and
permits (individually, a "Permit") from any regulatory body or
administrative agency or other governmental body having jurisdiction
that are applicable to the operations of the Company as now conducted
or proposed to be conducted as described in the Prospectus, all of
which Permits are current, except where the failure to so hold or
comply with any Permit would not have, individually or in the
aggregate, a material adverse effect on the business or financial
condition of the Company. The Company is not aware of, nor has it
received any notice of, any pending or threatened proceedings, or any
circumstances which could lead it to believe that any such proceedings
are imminent, relating to the revocation or modification of any such
Permit or Approval which, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the
business or financial condition of the Company.
(xx) To the best of the Company's knowledge,
PricewaterhouseCoopers, who have audited certain financial statements
of the Company, are, and were during the periods covered by their
reports included in the Prospectus, independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
(xxi) The financial statements and schedules (including the
related notes) of the Company included or incorporated by reference in
the Registration Statement or the Prospectus were prepared in
accordance with generally accepted accounting principles in Canada
consistently applied throughout the periods involved and present
fairly, in all material respects, the financial condition, results of
operations, cash
6
flows and changes in shareholders' equity of the Company, at the dates
and for the periods presented. All adjustments necessary for a fair
presentation of results for such periods have been made. No other
financial statements are required to be included or incorporated by
reference in the Registration Statement. No supporting schedules are
required to be included in the Registration Statement other than those
so included. The selected financial data, the tables and financial and
statistical data set forth in the Prospectus fairly present, on the
basis stated in the Prospectus, the information included therein on a
basis consistent with that of the audited financial statements
contained in the Registration Statement and the books and records of
the Company. The financial statements and schedules included or
incorporated by reference in the Registration Statement and the
Prospectus conform to the requirements of Regulation S-X of the
Commission applicable thereto and present fairly, in all material
respects, the information presented therein for the periods shown. The
Company has no material contingent obligations that are required to be
disclosed in the Company's financial statements in accordance with
generally accepted accounting principles in Canada which have not been
so disclosed in the financial statements included or incorporated by
reference in the Registration Statement.
(xxii) This Agreement has been duly authorized, executed
and delivered by the Company and each of the Selling Shareholders and
constitutes the valid and binding agreement of each of them enforceable
against each of them in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws relating to or affecting the enforcement
of creditors' rights generally and to general equitable principles.
(xxiii) Neither the Company nor any of its officers,
directors or affiliates has (A) taken, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased or paid anyone any compensation
for soliciting purchases of, the Shares or (2) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
other securities of the Company. The Company and, to the best of the
Company's knowledge, its officers, directors and employees have
complied with Section 5 of the Act and no one has been authorized by
the Company or any person purporting to act in the name or on behalf of
the Company to give any information or to make any representations or
warranties with respect to any matters described in the Prospectus
other than those contained in the Prospectus.
(xxiv) The Company has obtained for the benefit of the
Company and the Underwriters from each of the Company's directors and
officers (as identified in the Prospectus) a written agreement that (i)
for a period of 90 days from the date of the Prospectus with respect to
all of the Company's officers and directors other than the Selling
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Shareholders, and (ii) until February 24, 2001 with respect to the
Selling Shareholders, such director or officer will not, without the
prior written consent of Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc., which
consent shall not be unreasonably withheld, directly or indirectly (A)
sell, pledge, offer to sell, solicit an offer to buy, contract to sell,
grant any option, right or warrant to purchase, sell any option or
contract to purchase, or otherwise transfer or dispose of, directly or
indirectly, any Common Shares, or any securities convertible into or
exercisable or exchangeable for Common Shares (including, without
limitation, Common Shares or securities convertible into or exercisable
or
7
exchangeable for Common Shares which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations
of the Securities and Exchange Commission), (B) enter into any swap or
other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of the Common Shares
(regardless of whether any of the transactions described in clause (A)
or (B) is to be settled by the delivery of Common Shares, or such other
securities, in cash or otherwise), or (C) make any demand for or
exercise any right with respect to the registration of any Common
Shares or any securities convertible into or exercisable or
exchangeable for Common Shares; provided, however, that such consent
shall not be required for dispositions pursuant to Section 2 hereof or
for Common Shares disposed of as bona fide gifts so long as each donee
agrees in writing to be bound by the terms of such agreement.
(xxv) Neither the Company nor any director, officer, agent,
employee or other person associated with or acting on behalf of the
Company has, directly or indirectly, used any funds of the Company for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
made any bribe, unlawful rebate, payoff, influence payment, kickback or
other unlawful payment.
(xxvi) (a) The operations of the Company with respect to
any real property currently leased or owned or by any means controlled
by the Company (the "Real Property") are in material compliance with
all federal, state, and local laws, ordinances, rules, and regulations
relating to occupational health and safety and the environment
(collectively, "Laws"), except where the failure to so comply would not
have a material adverse effect on the Company's business or results of
operations, (b) the Company has all licenses, permits and
authorizations necessary to operate under all Laws and are in
compliance with all terms and conditions of such licenses, permits and
authorizations, except where such failure would not have a material
adverse effect on the Company's business or results of operations; (c)
the Company has not authorized or conducted, nor has it knowledge of,
the generation, transportation, storage, use, treatment, disposal or
release of any hazardous substance, hazardous waste, hazardous
material, hazardous constituent, toxic substance, pollutant,
contaminant, petroleum product, natural gas, liquefied gas or synthetic
gas defined or regulated under any environmental law on, in or under
any Real Property in violation of any laws except where such violation
would not have a material adverse effect on the Company's business or
results of operations; and (d) there is no pending or, to the best of
the Company's knowledge, threatened claim, litigation or any
administrative agency proceeding, nor has the Company received any
written or oral notice from any governmental entity or third party,
that: (A) alleges a violation of any Laws by the Company; (B) alleges
the Company is a liable party under the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. (S) 9601 et seq.
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or any state superfund law; (C) alleges possible contamination of the
environment by the Company; or (D) alleges possible contamination of
the Real Property, except as to each of the above for any violation,
liability or contamination that would not have a material adverse
effect on the Company's business or results of operations.
(b) The Company owns or possesses, or is licensed or
otherwise has the legal right to utilize, the patents, patent rights,
licenses, inventions, copyrights, know-how, trademarks (including,
without limitation, the right to use the marks "U-SCAN" and
8
"U-SCAN EXPRESS") service marks, trade names and other intangible
property (collectively, the "Intellectual Property Rights") presently
employed by it in connection with the business now operated by it
except where the failure to so own or possess such legal rights could
not reasonably be expected to have a material adverse effect on the
business of the Company, and the Company has not received any notice
other than as disclosed in the Prospectus, nor is it otherwise aware of
any infringement of or conflict with asserted rights of others with
respect to any intellectual property rights or other proprietary rights
which, singularly or in the aggregate, if the subject of an unfavorable
final determination, could reasonably be expected to have a material
adverse effect on the business of the Company.
(xxvii) The Company has delivered or made available to you,
or your counsel, prior to the date the Registration Statement was
declared effective copies of all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, all other
written employee programs, arrangements or agreements, all medical,
vision, dental or other health plans, all life insurance plans and all
other employee benefit plans or fringe benefit plans, including,
without limitation, "employee benefit plans" as that term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), adopted, maintained, sponsored in whole or in part
or contributed to by the Company, or its predecessors for the benefit
of employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors or other
beneficiaries are eligible to participate (collectively, the "Company
Benefit Plans").
The Company (and each of its predecessors that adopted or
contributed to a Company Benefit Plan) has maintained all Company
Benefit Plans (including filing all reports and returns required to be
filed with respect thereto) in accordance with their terms and is in
compliance in all material respects with all presently applicable
provisions of ERISA, the Internal Revenue Code and any other applicable
federal and state laws. Each Company Benefit Plan which is intended to
be qualified under Section 401(a) of the Internal Revenue Code has
either received a favorable determination letter from the Internal
Revenue Service or will timely request such a letter prior to the
expiration of any remedial amendment period applicable without penalty
to the Company Benefit Plan under the Internal Revenue Code and has at
all times been maintained in accordance with Section 401 of the
Internal Revenue Code. The Company has not engaged in a transaction
with respect to any Company Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject
the Company to a tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA.
The Company is not obligated to provide post-retirement
medical benefits or any other unfunded post-retirement welfare
benefits. Neither the Company nor any member of a group of trades or
businesses under common control (as defined in ERISA Sections
4001(a)(14) and 4001(b)(1)) with the Company, have at any time within
the last six years sponsored, contributed to or been obligated under
Title I or IV of ERISA to contribute to a "defined benefit plan" (as
defined in ERISA Section 3(35)). Within the last six years, neither the
Company nor any member of a group of trades or businesses under common
control (as defined in ERISA Sections 4001(a)(14) and 4001(b)(1)) with
the Company, have had an "obligation to contribute" (as defined in
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ERISA Section 4212) to a "multiemployer plan" (as defined in ERISA
Sections 4001(a)(3) and 3(37)(A)).
(xxviii) No labor dispute exists or, to the knowledge of
the Company, is imminent with the Company's employees which could
reasonably be expected to materially adversely affect the financial
condition, results of operations or business or the Company.
(xxix) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is
engaged; and the Company has no knowledge of any facts or circumstances
that would prevent the renewal of its existing insurance coverage as
and when such coverage expires or the obtaining of similar coverage
from similar insurers as may be necessary to continue its business at a
comparable cost.
(xxx) The Company makes and keeps accurate books and
records reflecting its assets and maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of the
Company's financial statements in accordance with generally accepted
accounting principles in Canada and to maintain accountability for the
assets of the Company, (C) access to the assets of the Company is
permitted only in accordance with management's authorization, (D) the
recorded accountability for assets of the Company is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences, and (E) such controls would prevent or
detect errors or irregularities in amounts that would be material in
relation to the Company's financial statements.
(xxxi) The Company's business systems, including its
computer hardware and software, (i) correctly processes date
information at all times, including the year 2000; and (ii) did not
suffer any abends, aborts, improper operation, invalid or incorrect
results or other interruptions in operation as a result of the approach
or reaching of any particular date or the improper process of any date.
"Processing" of date information includes, but is not limited to,
accepting input of dates without error, outputting all dates in an
error-free form, and performing calculations, comparisons or operations
or taking actions or making decisions using dates, portions of dates,
or time periods. The concept of Year 2000 Compliance includes all
issues relating to the handling of dates or time periods. The Company
is in compliance with the "Statement of the Commission Regarding
Disclosure of Year 2000 Issues and Consequences by Public Companies,
Investment Advisers, Investment Companies and Municipal Securities
Issuers" (Release No. 33-7558, July 29, 1998) and Release No. 33-7609,
------------------- -------------------
November 9, 1998, related to Year 2000 compliance.
(xxxii) The Company has filed all Canadian, United States,
provincial, state and local tax returns that are required to be filed
by it and has paid (if due) all taxes shown as due on such returns as
well as all other material taxes, assessments and governmental charges
that are due and payable, and, to the knowledge of the Company, no
material deficiency with respect to any such return has been assessed
or proposed. All applicable income and employment taxes have been
withheld and paid (if due) for any individuals who would be considered
common law employees of the Company for federal income and employment
tax withholding purposes. The Company has prepared or filed all tax
information reports, currency transaction reports and secured all IRS
W-9
10
forms or begun back-up withholding as may be required by law, except
where the failure to so file is not reasonably likely to have a
material adverse effect. There is no tax deficiency that has been
asserted against the Company that is reasonably likely to have a
material adverse effect on the Company.
(xxxiii) There are no related-party transactions involving
the Company or any other person, which transactions are required to be
described in the Prospectus and which have not been described as
required.
(xxxiv) The Common Shares are registered pursuant to
Section 12(g) of the Exchange Act and are qualified as a Nasdaq
National Market security of The Nasdaq Stock Market, Inc. The Company
has taken no action designed to terminate, or likely to have the effect
of terminating, the registration of the Common Shares under the
Exchange Act or qualification of the Common shares on the Nasdaq
National Market, nor has the Company received any notification that the
Commission or the NASD is contemplating terminating such registration
or qualification.
(xxxv) Any certificate signed by an officer of the Company
and delivered to the Representatives or to counsel for the Underwriters
pursuant to this Agreement shall be deemed to be a representation and
warranty by the Company to each Underwriter as to the matters set forth
therein.
(xxxvi) Except as disclosed in the financial statements
included in the Prospectus, the Company does not have any liabilities,
whether accrued, absolute, contingent or otherwise due or to become due
other than liabilities incurred in the ordinary course of business
consistent with past practice since the date of such financial
statements and which could not have, individually or in the aggregate,
a material adverse effect on the Company.
(xxxvii) No statement, certificate, instrument, or other
writing furnished or to be furnished by the Company to the
Representatives pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain
any untrue statement of material fact. No document to be filed by the
Company with any regulatory authority in connection with the
transactions contemplated hereby will, at the time such document is
filed, be false or misleading with respect to any material fact, or
contain any untrue statement of a material fact. All documents that the
Company is responsible for filing with any regulatory authority in
connection with the transactions contemplated hereby will comply as to
form in all material respects with the provisions of applicable law.
(xxxviii) The Company is not, will not become as a result of
the transactions contemplated hereby, and does not intend to conduct
its business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940 as amended.
(b) Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder, severally, and not jointly, represents and warrants to, and
agrees with, each of the several Underwriters and the Company that:
11
(i) Such Selling Shareholder has the legal capacity to enter
into this Agreement, the Power of Attorney and the Custody Agreement
(as hereinafter defined) and to sell, assign, transfer and deliver to
the Underwriters the Shares to be sold by such Selling Shareholder
hereunder.
(ii) Such Selling Shareholder has duly executed and
delivered this Agreement, the Power of Attorney and the Custody
Agreement, and each constitutes the valid and binding agreement of
such Selling Shareholder enforceable against such Selling Shareholder
in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, reorganization and moratorium laws
and other laws relating to or affecting the enforcement of creditors'
rights generally and to general equitable principles.
(iii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing with,
any court or governmental agency or body is required for the sale of
the Shares to be sold by such Selling Shareholder or the consummation
of the transactions contemplated by this Agreement, the Power of
Attorney or the Custody Agreement, except the registration of such
Shares under the Act (which, if the Registration Statement is not
effective as of the time of execution hereof, shall be obtained as
provided in this Agreement) and such as may be required under state or
provincial securities laws in connection with the offer, sale and
distribution of such Shares by the Underwriters.
(iv) The sale of the Shares to be sold by such Selling
Shareholder and the performance of this Agreement, the Power of
Attorney and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with,
or (with or without the giving of notice or the passage of time or
both) result in a breach of violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, lease or other material agreement or
instrument to which such Selling Shareholder is a party or to which
any of his properties or assets is subject except for such breaches or
violations as would not have a material adverse effect on the
Company's financial condition or results of operations, nor will such
action conflict with or violate any statute, rule or regulation or any
order, judgment or decree of any court or governmental agency or body
having jurisdiction over such Selling Shareholder or any of such
Selling Shareholder's properties or assets except such conflicts or
violations as would not have a material adverse effect on the
Company's financial condition or results of operations.
(v) Such Selling Shareholder has, and immediately prior to
Time of Delivery (as defined in Section 4 hereof), such Selling
Shareholder will have, good and valid title to the Shares to be sold
by such Selling Shareholder hereunder, free and clear of all liens,
security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of any
nature whatsoever; and, upon delivery of such Shares against payment
therefor as provided herein, good and valid title to such Shares, free
and clear of all liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting trusts,
equities or claims of any nature whatsoever, will pass to the several
Underwriters.
(vi) Such Selling Shareholder has not (A) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any
12
security of the Company to facilitate the sale or resale of the Shares
or (B) since the filing of the Registration Statement (l) sold, bid
for, purchased or paid anyone any compensation for soliciting
purchases of, the Shares or (2) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other
securities of the Company.
(vii) When any Preliminary Prospectus was filed with the
Commission it (A) contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the
Commission thereunder, and (B) did not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. When the Registration
Statement or any amendment thereto was or is declared effective and at
each Time of Delivery, it (A) contained or will contain all statements
required to be stated therein in accordance with, and complied or will
comply in all material respects with the requirements of, the Act and
the rules and regulations of the Commission thereunder and (B) did not
or will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading. When the Prospectus or any amendment or supplement
thereto is filed with the Commission pursuant to Rule 424(b) (or, if
the Prospectus or such amendment or supplement is not required to be
so filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is
declared effective), and at each Time of Delivery, the Prospectus, as
amended or supplemented at any such time, (A) contained or will
contain all statements required to be stated therein in accordance
with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (vii) do not apply to
statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or
any amendment or supplement thereto in reliance upon and in conformity
with written information furnished to the Company by any Underwriter
through you specifically for use therein.
(viii) Such Selling Shareholder, without undertaking any
independent investigation, is not aware that any of the
representations and warranties set forth in Section 1(a) above is
untrue or inaccurate in any material respect.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the First Time of Delivery
(as hereinafter defined) a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
Each of the Selling Shareholders represents and warrants that certificates
in negotiable form representing all of the Shares to be sold by such Selling
Shareholder hereunder will be placed in custody under a Custody Agreement, in
the form heretofore furnished to and approved by you, duly executed and
delivered by such Selling Shareholder to Xxxxxxx Xxxxxxxx & Xxxxxxxx, as
custodian (the "Custodian"), and that such Selling Shareholder has duly executed
and delivered a Power of Attorney, in the form heretofore furnished to and
approved by you, appointing the persons indicated in Schedule II hereto as
13
such Selling Shareholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Shareholder, to determine the purchase price to be paid by the Underwriters to
the Selling Shareholders as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Shareholder hereunder and
otherwise to act on behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
Each of the Selling Shareholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Shareholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Shareholder for such
custody, and the appointment by such Selling Shareholder of the Attorneys-in-
Fact by the Power of Attorney, are irrevocable. Each of the Selling
Shareholders specifically agrees that the obligations of such Selling
Shareholder hereunder shall not be terminated by operation of law, whether by
the death or incapacity of such Selling Shareholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or the
termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by the
occurrence of any other event.
2. Purchase and Sale of Shares. Subject to the terms and conditions
herein set forth, (a) the Company agrees to issue and sell to the several
Underwriters, 1,325,000 of the Firm Shares and (b) each of the Selling
Shareholders agrees, severally and not jointly, to sell to the Underwriters, the
number of Firm Shares set forth next to the name of such Selling Shareholder on
Schedule II hereto. The Underwriters agree, severally and not jointly, to
purchase from the Company and the Selling Shareholders, respectively, the Firm
Shares. The purchase price per share to be paid by the several Underwriters to
the Company and the Selling Shareholders respectively, shall be $_____ per
share. The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 3,125,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule I hereto
bears to the total number of Firm Shares. The obligation of each Underwriter to
the Selling Shareholders shall be to purchase from the Selling Shareholders that
number of full shares which (as nearly as practicable, as determined by you)
bears to 675,000 the same proportion as the number of shares set forth opposite
the name of such Underwriter in Schedule I hereto bears to the total number of
Firm Shares. The Company and the Selling Shareholders shall each pay to the
Underwriters, on account of their underwriting discount, $_____ per share
purchased from them (which amount, in the case of the Selling Shareholders,
shall be set off against the purchase price of $_____ per share payable by the
Underwriters).
The Company hereby grants to the Underwriters the right to purchase at
their election in whole or in part from time to time up an aggregate of 300,000
Optional Shares upon the terms and at the purchase price per share set forth in
the paragraph above, for the sole purpose of covering over-allotments in the
sale of Firm Shares. Any such election to purchase Optional Shares may be
exercised by written notice from you to the Company given from time to time
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 hereinafter defined) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
In the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares, 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 the
paragraph above, 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 300,000 by a fraction, the
numerator of which is the maximum number of Optional Shares that such
14
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 that all of the Underwriters are entitled to
purchase hereunder.
In the event you elect to purchase all or a portion of the Optional Shares,
the Company agrees to furnish or cause to be furnished to you the certificates,
letters and opinions, and to satisfy all conditions, set forth in Section 7
hereof at each Subsequent Time of Delivery (as hereinafter defined).
3. Offering by the Underwriters. Upon the authorization by you of the
release of the Shares, the several Underwriters propose to offer the Shares for
sale upon the terms and conditions disclosed in the Prospectus.
4. Delivery of Shares; 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 Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. may request
upon at least 48 hours' prior notice to the Company and/or the Attorneys-in-
Fact, as applicable, shall be delivered by or on behalf of the Company and/or
the Selling Shareholders, as applicable, to you for the account of such
Underwriter, against payment by such Underwriter on its behalf of the purchase
price therefor by wire transfer or certified or official bank check or checks
(payable in same day funds) payable to the order of the Company and/or the
Custodian, as their interests may appear, in next-day available funds. The
closing of the sale and purchase of the Shares shall be held at the offices of
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, Promenade II, Suite 3100, 0000 Xxxxxxxxx Xxxxxx,
X.X., Xxxxxxx, Xxxxxxx 00000-0000, except that physical delivery of such
certificates shall be made at the office of The Depository Trust Company, 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, at 9:00 a.m. Eastern Time, on
the third (or if the Firm Shares are priced, as contemplated by Rule 15c6-1(c)
promulgated pursuant to the Exchange Act, after 4:30 p.m., Eastern Time, the
fourth) full business day after this Agreement is executed or at such other time
and date not less than the seventh full business day thereafter as you and the
Company may agree upon in writing, and, with respect to the Optional Shares, at
9:00 a.m., Eastern Time, on the date and location specified by you in the
written notice given by you of the Underwriters' election to purchase all or
part of the 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 any Optional Shares, if not the First Time of Delivery, is herein
called a "Subsequent Time of Delivery," and each such time and date for delivery
is herein called a "Time of Delivery." The Company will make such certificates
available for checking and packaging at least 24 hours prior to each Time of
Delivery at the office of The Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other location in New York, New York specified
by you in writing at least 48 hours prior to such Time of Delivery.
5. (a) Covenants of the Company. The Company covenants and agrees with
each of the Underwriters:
(i) If the Registration Statement has been declared effective
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by you,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the date on which the Registration
Statement is declared effective. The Company will advise you promptly of
any such filing pursuant to Rule 424(b).
(ii) The Company will not file with the Commission the
Prospectus or the amendment referred to in the second sentence of Section
l(a)(i) hereof, any amendment or
15
supplement to the Prospectus or any amendment to the Registration Statement
unless you have received a reasonable period of time to review any such
proposed amendment or supplement and consented to the filing thereof and
will use its best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. Upon the
request of the Representatives or counsel for the Underwriters, the Company
will promptly prepare and file with the Commission, in accordance with the
rules and regulations of the Commission, any amendments to the Registration
Statement or amendments or supplements to the Prospectus that may be
necessary or advisable in connection with the distribution of the Shares by
the several Underwriters and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective as
promptly as possible. If required, the Company will file any amendment or
supplement to the Prospectus with the Commission in the manner and within
the time period required by Rule 424(b) under the Act. The Company will
advise the Representatives, promptly after receiving notice thereof, of the
time when the Registration Statement or any amendment thereto has been
filed or declared effective or the Prospectus or any amendment or
supplement thereto has been filed and will provide evidence to the
Representatives of each such filing or effectiveness.
(iii) If the Company elects to file a Rule 462(b) Registration
Statement, the Company shall file it with the Commission in compliance with
Rule 462(b) by 10:00 p.m. Eastern Time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act.
(iv) The Company will advise you promptly after receiving notice
or obtaining knowledge of (A) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
part thereof or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (B) the suspension of the qualification of the Shares for offer or
sale in any jurisdiction or of the initiation or threatening of any
proceeding for any such purpose, or (C) any request made by the Commission
or any securities authority of any other jurisdiction for amending the
Registration Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its best efforts to prevent
the issuance of any such stop order and, if any such stop order is issued,
to obtain the withdrawal thereof as promptly as possible.
(v) If the delivery of a prospectus relating to the Shares is
required under the Act at any time prior to the expiration of nine months
after the date of the Prospectus and if at such time any events 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, not
misleading, or if for any reason it is necessary during such same period to
amend or supplement the Prospectus to comply with the Act or the rules and
regulations thereunder, the Company will promptly notify you and upon your
request (but at the Company's expense) prepare and file with the Commission
an amendment or supplement to the Prospectus that corrects such statement
or omission or effects such compliance and will furnish without charge to
each Underwriter and to any dealer in securities as many copies of such
amended or supplemented Prospectus as you may from time to time reasonably
request. If the delivery of a prospectus relating to the Shares is
required under the Act at any time nine months or more after the date of
the Prospectus, upon your request but at the expense of such Underwriter,
the Company will 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. Neither your
16
consent to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 7.
(vi) The Company promptly from time to time will take such
action as you may reasonably request to qualify the Shares for offering and
sale under the securities laws of such jurisdictions in the United States
or, on a basis that is exempt from the prospectus requirement in the
Canadian provinces of Ontario and Quebec, as you may request and will
continue such qualifications in effect 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.
(vii) The Company will promptly provide you, without charge, (A)
two manually executed copies of the Registration Statement as originally
filed with the Commission and of each amendment thereto, (B) for each other
Underwriter a conformed copy of the Registration Statement as originally
filed and of each amendment thereto, without exhibits, and (C) so long as a
prospectus relating to the Shares is required to be delivered under the
Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as you may reasonably request.
(viii) As soon as practicable, but in any event not later than
45 days after the end of the Company's fiscal quarter in which the first
anniversary of the effective date of the Registration Statement occurs, the
Company will make generally available to its security holders an earnings
statement of the Company and its subsidiaries, if any, covering a period of
at least 12 months beginning after the effective date of the Registration
Statement (which need not be audited) complying with Section 11(a) of the
Act and the rules and regulations thereunder.
(ix) During the period beginning on the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, the Company will not, without the prior written consent of
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc., which consent shall not be unreasonably
withheld, offer, pledge, issue, sell, contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of (or announce any
of the foregoing, directly or indirectly), any Common Shares or securities
convertible into, exercisable or exchangeable for, Common Shares, except as
provided in Section 2 and except that the Company may (A) grant options
pursuant to the Company's stock option plans as described in the
Registration Statement; and (B) issue Common Shares upon the exercise of
any of the Company's outstanding stock options as described in the
Registration Statement or stock options granted under clause (A) above.
(x) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to you and, upon request,
to each of the other Underwriters, without charge, (A) copies of all
reports or other communications (financial or other) furnished to
shareholders, (B) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission, the NASD or
any national securities exchange, and (C) such additional information
concerning the business and financial condition of the Company and its
subsidiaries, if any, as you may reasonably request.
(xi) Neither the Company nor any of its officers, directors or
affiliates will (A) take, directly or indirectly, prior to the termination
of the underwriting syndicate contemplated by this Agreement, any action
designed to cause or to result in, or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Shares, (B)
sell, bid for, purchase or
17
pay anyone any compensation for soliciting purchases of, the Shares or (C)
pay or agree to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
6. Expenses. The Company will pay all costs and expenses incident to the
performance by the Company and the Selling Shareholders of their respective
obligations under this Agreement, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated pursuant to Section 10
hereof, including, without limitation, all costs and expenses incident to (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, if applicable, filing
of the Registration Statement (including all amendments thereto), any
Preliminary Prospectus, the Prospectus and any amendments and supplements
thereto, this Agreement and any blue sky memoranda; (ii) the delivery of copies
of the foregoing documents to the Underwriters; (iii) the filing fees of the
Commission and the NASD relating to the Shares and the related reasonable fees
and disbursements of counsel for the Underwriters in connection with filings
with the NASD; (iv) the preparation, issuance and delivery to the Underwriters
of any certificates evidencing the Shares, including transfer agent's and
registrar's fees; (v) the qualification of the Shares for offering and sale
under state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto; (vi) any listing
of the securities on the Nasdaq National Market and (vii) any expenses for
travel, lodging and meals incurred by the Company and any of its officers,
directors and employees in connection with any meetings with prospective
investors in the Shares. It is understood, however, that, except as provided in
this Section, Section 8 and Section 10 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 relating to the offer and sale of the Shares.
7. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject to the accuracy of the representations
and warranties of the Company and the Selling Shareholders contained herein as
of the date hereof and as of such Time of Delivery, to the accuracy of the
statements of Company officers made pursuant to the provisions hereof, to the
performance by the Company and the Selling Shareholders of their respective
covenants and agreements hereunder which are to be performed as of such Time of
Delivery, and to the following additional conditions precedent:
(a) If the registration statement as amended to date has not become
effective prior to the execution of this Agreement, such registration statement
shall have been declared effective not later than 11:00 a.m., Eastern Time, on
the date following the date of this Agreement or such later date and/or time as
shall have been consented to by you in writing. The Prospectus and any
amendment or supplement thereto shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing and in accordance with Section 5(a) of this Agreement; if the Company has
elected to file a registration statement under Rule 462(b), it shall have become
effective by 10:00 p.m. Eastern Time, on the date of this Agreement; no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceedings for that purpose shall have
been instituted, threatened or, to the knowledge of the Company and the
Representatives, contemplated 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) Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the incorporation of the Company, the validity of the
Shares being delivered at such Time of Delivery, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and the
Company
18
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(c) You shall have received an opinion, dated such Time of Delivery,
of Xxxxxxx Xxxxxxxx & Xxxxxxxx, counsel for the Company, in form and substance
satisfactory to you and your counsel, to the effect that:
(i) The Company was duly incorporated pursuant to the Business
Corporations Act (Ontario) and was continued and is validly existing as a
corporation in good standing under the Canada Business Corporations Act and
has the corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus and to enter into this Agreement and perform its obligations
hereunder. The Company is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of certain states to be
specifically enumerated.
(ii) The Company's authorized, issued and outstanding capital
stock is as disclosed in the Prospectus. All of the issued shares of
capital stock of the Company (including the Shares to be sold by the
Selling Shareholders) have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description of the Common
Shares contained in the Prospectus. To such counsel's knowledge, none of
the issued shares of capital stock of the Company has been issued or is
owned or held in violation of any preemptive rights of shareholders, and,
to such counsel's knowledge, no person or entity (including any holder of
outstanding shares of capital stock of the Company) has any preemptive or
other rights to subscribe for any of the Shares.
(iii) Except as disclosed in the Prospectus, to such counsel's
knowledge, the Company does not own, directly or indirectly, any capital
stock or other equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association.
(iv) Except as disclosed in the Prospectus, to such counsel's
knowledge, there are no outstanding (A) securities or obligations of the
Company convertible into or exchangeable for any capital stock of the
Company, (B) warrants, rights or options to subscribe for or purchase from
the Company any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company to issue any
shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(v) The Shares to be issued and sold by the Company have been
duly authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
and will conform to the description of the Common Shares contained in the
Prospectus; the certificates evidencing the Shares comply with all
applicable requirements of Canadian law; the Firm Shares to be sold by the
Company and the Optional Shares have been listed on the Nasdaq National
Market subject to notice of issuance. To such counsel's knowledge, none of
the authorized or outstanding Common Shares is subject to any preemptive or
similar right to purchase any Common Shares. The Underwriters will receive
good title to the Shares to be issued and delivered by the Company
hereunder, in good delivery form and free and clear of all pledges, liens,
hypothecations, encumbrances, claims, security interests, restrictions,
agreements, voting trusts and adverse interests whatsoever.
(vi) Except as disclosed in the Prospectus, to such counsel's
knowledge, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with
19
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement (or any such
right has been effectively waived) or in any securities being registered
pursuant to any other registration statement filed by the Company under the
Act.
(vii) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered under the Act
or exempt from the registration requirements of the Act and were duly
registered or the subject of an available exemption from the registration
requirements of the applicable provincial or state securities laws.
(viii) The Company is not, nor with the giving of notice or
passage of time or both, would it be, with respect to any event or omission
known to such counsel having occurred to the date hereof, in violation of
its Articles of Incorporation [Continuance] or Bylaws or in default in any
material respect under any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument known to such counsel to
which the Company is a party or to which any of its properties or assets is
subject.
(ix) The issue and sale of the Shares being issued at such Time
of Delivery and the performance of this Agreement and the consummation of
the transactions herein contemplated will not conflict with, or (with or
without the giving of notice or the passage of time or both) 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,
lease or other agreement or instrument known to such counsel to which the
Company is a party or to which any of its properties or assets is subject,
nor will such action conflict with or violate any provision of the Articles
of Incorporation [Continuance] or Bylaws of the Company or any statute,
rule or regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over the Company or any of
its properties or assets.
(x) Any real property and buildings which are, to such counsel's
knowledge, held under lease by the Company are held by the Company under
valid, subsisting and enforceable leases with such exceptions as are
disclosed in the Prospectus or are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company.
(xi) No consent, approval, authorization, order or declaration of
or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act and such as
may be required from the NASD or under provincial or state securities laws.
(xii) To such counsel's knowledge and other than as disclosed in
or contemplated by the Prospectus, there is no litigation, arbitration,
claim, proceeding (formal or informal) or investigation pending or
threatened (or any basis therefor) in which the Company is a party or of
which any of its properties or assets is the subject which, if determined
adversely to the Company, would individually or in the aggregate have a
material adverse effect on the financial position, results of operations or
business of the Company; and, to such counsel's knowledge, the Company is
not in violation of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except as described in the
Prospectus, nor is the Company required to take any action in order to
avoid any such violation or default.
20
(xiii) To the knowledge of such counsel and except where the
failure to own or possess such rights could not reasonably be expected to
have a material adverse effect on the business of the Company, the Company
owns or has the right to use all patents, trademarks, trade names, service
marks, copyrights, and applications therefor; franchises; trade secrets;
proprietary or other confidential information and intangible properties and
assets (collectively, "Intangibles"), including, but not limited to, the
right to use the marks "U-SCAN" and "U-SCAN EXPRESS" and certain related
marks and logos presently employed by it in connection with its business as
presently conducted or as the Prospectus indicates the Company proposes to
conduct; to the knowledge of such counsel, the Company has not infringed
and is not infringing, nor will the conduct of the Company's business as
proposed in the Prospectus infringe, except as disclosed in the Prospectus,
and the Company has not received notice of infringement with respect to
asserted Intangibles of others, and, to the knowledge of such counsel,
except where the alleged infringement is not reasonably likely to have a
material adverse effect on the business of the Company, and to the
knowledge of such counsel, there is no infringement by others of
Intangibles of the Company.
(xiv) The Company has full legal right and corporate power and
authority to enter into this Agreement and to issue, sell and deliver the
Shares to be sold by it to the Underwriters as provided herein; and this
Agreement has been duly authorized, executed and delivered by the Company,
and assuming due authorization, execution and delivery by the
Representatives, constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(xv) The Registration Statement and the Prospectus and each
amendment or supplement thereto (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), as of their respective effective or issue dates, complied as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder. The descriptions in the Registration
Statement and the Prospectus of statutes, legal and governmental
proceedings or contracts and other documents are accurate and fairly
present the information required to be shown; and such counsel do not know
of any statutes or legal or governmental proceedings required to be
described in the Registration Statement or Prospectus that are not
described as required or of any contracts or documents of a character
required to be described in the Registration Statement or Prospectus or to
be filed as exhibits to the Registration Statement which are not described
and filed as required.
(xvi) The documents incorporated by reference in the Prospectus
(except for any financial statements and schedules included in such
documents, as to which such counsel need express no opinion), when they
were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
(xvii) The Registration Statement has been declared effective by
the Commission under the Act; any required filing of the Prospectus
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and to such counsel's knowledge no stop
order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or threatened or are
contemplated by the Commission.
(xviii) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company," or a company
21
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940.
Such counsel shall also state that, based upon the participation of such
counsel in the preparation of the Registration Statement and the Prospectus,
and the review and discussion of the content thereof, nothing has come to the
attention of such counsel which gives them reason to believe that (i) the
Registration Statement, or any further amendment thereto made prior to such Time
of Delivery, on its effective date and as of such Time of Delivery, contained or
contains any untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) that the Prospectus, or any amendment
or supplement thereto made prior to such Time of Delivery, as of its issue date
and as of such Time of Delivery, contained or contains any untrue statement of a
material fact or omitted or omits 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 (provided that such counsel need express no belief
regarding the financial statements and related schedules and other financial
data contained in the Registration Statement, any amendment thereto, or the
Prospectus, or any amendment or supplement thereto).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the jurisdiction of
incorporation of the Company, to the extent satisfactory in form and scope to
counsel for the Underwriters, upon the opinion of such other counsel as shall be
acceptable to the Underwriters and their counsel, provided that such counsel
states such counsel believes that the Underwriters are justified in relying upon
such opinion and copies of such opinion are delivered to the Representatives and
counsel for the Underwriters.
(d) You shall have received an opinion, dated such Time of Delivery,
of Xxxxxxx Xxxxxxxx & Xxxxxxxx, counsel for the Selling Shareholders in form and
substance satisfactory to you and your counsel, to the effect that:
(i) Each of the Selling Shareholders has the legal capacity to
enter into this Agreement, the Power of Attorney and the Custody Agreement
and to sell, assign, transfer and deliver to the Underwriters the Shares to
be sold by such Selling Shareholder hereunder.
(ii) This Agreement, a Power of Attorney and a Custody Agreement
have been duly executed and delivered by such Selling Shareholder, each of
which is enforceable against such Selling Shareholder in accordance with
its terms subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles.
(iii) The sale of the Shares to be sold by such Selling
Shareholder at such Time of Delivery and the performance of this Agreement,
the Power of Attorney and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with, or
(with or without the giving of notice or the passage of time or both)
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, lease or other agreement or instrument known to such counsel to
which such Selling Shareholder is a party or to which any of his properties
or assets is subject, nor will such action conflict with or violate any
statute, rule or regulation or any order, judgment or decree of any court
or governmental agency or body having jurisdiction over such Selling
Shareholder or any of such Selling Shareholder's properties or assets.
22
(iv) No consent, approval, authorization, order or declaration of
or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares being sold by such Selling Shareholder or the consummation of the
transactions contemplated by this Agreement, the Power of Attorney or the
Custody Agreement, except the registration of such Shares under the Act and
such as may be required under provincial or state securities laws in
connection with the offer, sale and distribution of such Shares by the
Underwriters.
(v) Upon delivery to the Underwriters, good and valid title to
the Shares to be sold by such Selling Shareholder hereunder, free and clear
of all liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever, will have
been transferred to the Underwriters (whom such counsel may assume to be
bona fide purchasers) who have purchased Shares hereunder. To the best of
such counsel's knowledge, there are no such liens, encumbrances, equities,
claims, restrictions, security interests, voting trusts or other defects of
title.
(vi) The Firm Shares to be sold by the Selling Shareholders are
listed on the Nasdaq National Market.
(e) You shall have received opinions, dated such Time of Delivery, of
(i) Xxxxxx & Xxxxx LLP and (ii) Xxxxxx & Xxxxxx LLP, each special counsel to the
Company, satisfactory in form and substance to counsel for the Underwriters.
(f) You shall have received from PricewaterhouseCoopers LLP letters
dated, respectively, the date hereof (or, if the Registration Statement has been
declared effective prior to the execution and delivery of this Agreement, dated
such effective date and the date of this Agreement) and each Time of Delivery,
in form and substance satisfactory to you, to the effect set forth in Annex I
hereto. In the event that the letters referred to in this Section 7(f) set
forth any changes, decreases or increases in the items specified in paragraphs
(iv)(B) and (C) of Annex I, it shall be a further condition to the obligations
of the Underwriters that (i) such letters shall be accompanied by a written
explanation by the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in your sole judgment, make it impracticable or
inadvisable to proceed with the purchase, sale and delivery of the Shares being
delivered at such Time of Delivery as contemplated by the Registration
Statement, as amended as of the date of such letter.
(g) Since the date of the latest audited financial statements included
in the Prospectus, the Company shall not have sustained (i) any loss or
interference with its business from fire, explosion, flood, hurricane 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 disclosed in or
contemplated by the Prospectus, or (ii) any change, or any development involving
a prospective change (including without limitation a change in management or
control of the Company), in or affecting the condition (financial or otherwise),
results of operations, net worth or business prospects of the Company, otherwise
than as disclosed in or contemplated by the Prospectus, the effect of which, in
either such case, is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the purchase, sale and delivery of
the Shares being delivered at such Time of Delivery as contemplated by the
Registration Statement, as amended as of the date hereof.
(h) Subsequent to the date hereof there shall not have occurred any of
the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or in the Common Shares by the Commission or the
Nasdaq National Market; (ii) a moratorium on commercial banking activities in
New York declared
23
by either federal or state authorities; (iii) any outbreak or escalation of
hostilities involving the United States, declaration by the United States of a
national emergency or war or any other national or international calamity or
emergency if the effect of any such event specified in this clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the purchase,
sale and delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement, as amended as of the date hereof;
(iv) the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects or may materially and adversely
affect the business or operations of the Company; or (v) the taking of any
action by any governmental body or agency in respect of its monetary or fiscal
affairs which in your reasonable opinion has a material adverse effect on the
securities markets in the United States.
(i) The Company shall have furnished to you at such Time of Delivery
certificates of officers of the Company and certificates of the Selling
Shareholders, satisfactory to you, as to the accuracy of the representations and
warranties of the Company and such Selling Shareholders herein at and as of such
Time of Delivery, as to the performance by the Company and such Selling
Shareholders of all of their respective 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 certificates as to the matters set forth in subsections (a) and (g) of
this Section 7, and as to such other matters as you may reasonably request.
(j) The Firm Shares to be sold by the Company and the Optional Shares
shall be listed on the Nasdaq National Market, subject to notice of
issuance. The Firm Shares to be sold by the Selling Shareholders shall be
listed on Nasdaq National Market.
(k) The lock-up agreements described herein at Section 1(a)(xxiv)
shall be in full force and effect.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and the directors, officers,
employees, counsel and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of the Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter 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: (i) any untrue statement or alleged untrue statement made
by the Company in Section 1(a) of this Agreement; (ii) any untrue statement or
alleged untrue statement of any material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto or in any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, (B)
any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares
under the securities or blue sky laws thereof or filed with the Commission or
any securities association or securities exchange (each an "Application"); or
(C) any audio or visual materials, approved by the Company and derived solely
from information supplied by the Company to be used in connection with the
marketing of the Shares, including without limitation, slides, videos, films or
tape recordings; (iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or in any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, or any Application, a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iv) any failure of
the Company to perform its obligations hereunder or under law, and will
reimburse upon demand each Underwriter or controlling person or representative
of such Underwriter for any legal or other expenses reasonably incurred by such
24
Underwriter in connection with investigating, defending against or appearing as
a third-party witness in connection with any such loss, claim, damage, liability
or action whether or not such Underwriter or controlling person or
representative of such Underwriter is a party to any action or proceeding;
provided, however, that the Company shall not be liable in any such case to the
-------- -------
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through you expressly
for use therein (provided that the Company and the Underwriters hereby
acknowledge that the following constitutes the only information furnished in
writing to the Company by the Underwriters specifically for use in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
such amendment or supplement: (i) the statements in the last paragraph on the
cover page of the Prospectus; and (ii) the statements under the caption
"Underwriting" in the Prospectus); provided, further, that with respect to any
-------- -------
Preliminary Prospectus, the foregoing indemnity agreement shall not inure to the
benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling such
underwriter, if copies of the Prospectus were timely delivered to the
Underwriter and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense, unless the failure to deliver such Prospectus was
the result of the Company's non-compliance with its obligations under Sections
5(a)(ii) and 5(a)(vii) hereof. The Company will not, without the prior written
consent of each Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding (or
related cause of action or portion thereof) in respect of which indemnification
may be sought hereunder (whether or not such Underwriter is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of such Underwriter from all liability
arising out of such claim, action, suit or proceeding (or related cause of
action or portion thereof).
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter and the directors, officers,
employees, counsel and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of the Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter 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: (i) any untrue statement or alleged untrue statement made
by such Selling Shareholder in Section 1(b) of this Agreement; or (ii) any
untrue statement or alleged untrue statement of any material fact regarding such
Selling Shareholder contained in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto or in any documents filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus, or any Application
regarding such Selling Shareholder 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, and
will reimburse upon demand each Underwriter or controlling person or
representative of such Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action whether or not such Underwriter or controlling
person or representative of such Underwriter is a party to any action or
proceeding; provided, however, that no such Selling Shareholder shall be liable
-------- -------
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
25
amendment or supplement thereto or in any documents filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus, or any
Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you expressly for use
therein (provided that the Company and the Underwriters hereby acknowledge that
the following constitutes the only information furnished in writing to the
Selling Shareholders by the Underwriters specifically for use in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any such amendment
or supplement: (i) the statements in the last paragraph on the cover page of the
Prospectus; and (ii) the statements under the caption "Underwriting" in the
Prospectus); provided, further, that with respect to any Preliminary Prospectus,
-------- -------
the foregoing indemnity agreement shall not inure to the benefit of any
Underwriter from whom the person asserting any loss, claim, damage, liability or
expense purchased Shares, or any person controlling such underwriter, if copies
of the Prospectus were timely delivered to the Underwriter and a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or expense, unless
the failure to deliver such Prospectus was the result of the Company's non-
compliance with its obligations under Sections 5(a)(ii) and 5(a)(vii) hereof;
provided, further, however, that such Selling Shareholder shall be liable
-------- ------- -------
hereunder in any case only to the extent of the total net proceeds from the
offering (before deducting expenses) received by such Selling Shareholder from
the Underwriters for the Shares sold by such Selling Shareholder hereunder
unless 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 the Registration Statement or any amendment or supplement thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
any Application in reliance upon and conformity with written information
furnished to the Company by such Selling Shareholder expressly for use therein,
in which case such limitation of the liability of such Selling Shareholder shall
not apply. The parties agree that the only information furnished to the Company
by the Selling Shareholders is the information relating to the Selling
Shareholders contained in the section "Principal and Selling Shareholders." No
Selling Shareholder will, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such Underwriter from all liability arising out of such
claim, action, suit or proceeding (or related cause of action or portion
thereof).
(c) Each Underwriter, severally but not jointly, agrees to indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of the Act or the Exchange Act, each director of the Company
and each officer of the Company who signs the Registration Statement and each
Selling Shareholder against any losses, claims, damages or liabilities to which
the Company or any Selling Shareholder 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 any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or any Application 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,
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 reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein (provided that the Company,
the Selling Shareholders and the Underwriters hereby acknowledge that the
following constitutes the only information furnished in writing to the Company
and the Selling
26
Shareholders by the Underwriters specifically for use in the Preliminary
Prospectus, the Registration Statement or the Prospectus, or any such amendment
or supplement: (i) the statements in the last paragraph on the cover page of the
Prospectus; and (ii) the statements under the caption "Underwriting" in the
Prospectus); and will reimburse the Company and each Selling Shareholder for any
legal or other expenses reasonably incurred by the Company or such Selling
Shareholder in connection with investigating or defending any such loss, claim,
damage, liability or action. In addition, in a situation when an Underwriter is
an indemnifying party under this subsection (c), the Underwriter will not,
without the prior written consent of the Company and such Selling Shareholder,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification may be sought hereunder
(whether or not the Company or such Selling Shareholder is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Company and such Selling
Shareholder from all liability arising out of such claim, action, suit or
proceeding (or related cause of action or portion thereof).
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action or any claim,
demand, default or alleged default which could create a right of indemnity
hereunder, 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; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection,
except to the extent the indemnifying party is prejudiced thereby. 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); provided, however, that if the defendants in any such
-------- -------
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party and such indemnified party shall have the
right to select separate counsel to defend such action on behalf of such
indemnified party. After such notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, which separate counsel shall be
designated by the Representatives in the case of indemnity arising under
paragraphs (a) or (b) of this Section 8) or (ii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Nothing in this Section 8(d) shall preclude an
indemnified party from participating at its own expense in the defense of any
such action so assumed by the indemnifying party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) 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
27
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 and the Selling Shareholders 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 (d)
above, then 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 and the Selling Shareholders on the one hand and the Underwriters on the
other in connection with the statements or omissions that 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 and the Selling Shareholders 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
and the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault 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 Selling
Shareholders 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, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) 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 (e). 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 (e) 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 (e), 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. Further,
notwithstanding the provisions of this subsection (e), no Selling Shareholder
shall be required to contribute any amount that, together with the amount of any
damages which such Selling Shareholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, exceeds the limit on such Selling Shareholder's liability prescribed
by Section 8(b). 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 Selling
Shareholders' contribution obligations in this subsection (e) are several and
not joint. The Underwriters' obligations in this subsection (e) to contribute
are several in proportion to their respective underwriting obligations and not
joint.
(f) The obligations of the Company and the Selling Shareholders under
this Section 8 shall be in addition to any liability which the Company or such
Selling Shareholders 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 any Selling Shareholder and to each
person, if any, who controls the Company or any Selling Shareholder within the
meaning of the Act.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
28
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, or to any Selling Shareholder shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
9. Default of Underwriters. (a) If any Underwriter defaults in its
obligation to purchase Shares 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 (36) hours after such default by
any Underwriter you do not arrange for the purchase of such Shares, the Company
and the Selling Shareholders shall be entitled to a further period of thirty-six
(36) 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 and the Selling
Shareholders that you have so arranged for the purchase of such Shares, or the
Company and the Selling Shareholders notify you that they have so arranged for
the purchase of such Shares, you or the Company and the Selling Shareholders
shall have the right to postpone a 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 that 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
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed 10% of the
aggregate number of Shares to be purchased at such Time of Delivery, then the
Company and the Selling Shareholders 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.
10. Termination. (a) This Agreement may be terminated with respect to
the Firm Shares or any Optional Shares in the sole discretion of the
Representatives by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that (i)
any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied, or (ii) the Company or the Selling Shareholders
shall have failed, refused or been unable to deliver the Shares or to perform
all obligations and satisfy all conditions on their respective parts to be
performed or satisfied hereunder at or prior to such Time of Delivery, in either
case other than by reason of a default by any of the Underwriters. If this
Agreement is terminated pursuant to this Section 10(a), the Company, and the
Selling Shareholders if they are at fault, pro rata in accordance with the
number of Shares proposed to be sold hereunder will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Shares. Neither the Company nor any Selling
Shareholder shall in any event be liable to any of the Underwriters for the loss
of anticipated profits from the transactions covered by this Agreement.
29
(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
and the Selling Shareholders as provided in Section 9(a), the aggregate number
of such Shares which remains unpurchased exceeds 10% of the aggregate number of
Shares to be purchased at such Time of Delivery, or if the Company and the
Selling Shareholders shall not exercise the right described in Section 9(b) to
require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to a
Subsequent Time of Delivery, the obligations of the Underwriters to purchase and
of the Company or the Selling Shareholders to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter, the Company or the Selling Shareholders, except for the expenses to
be borne by the Company, the Selling Shareholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
11. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company, its officers, the Selling
Shareholders 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 referred to in Section 8(e) or the Company, any Selling
Shareholder or any officer or director or controlling person of the Company or
any Selling Shareholder referred to in Section 8(e), and shall survive delivery
of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement, for such time as is necessary to exceed the appropriate
statute of limitations.
12. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed, delivered or telegraphed and
confirmed in writing to you in care of Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc., 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department
(with a copy to Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, Promenade II, Suite 3100, 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000, Attention: Xxxxxx Xxx
Xxxxxxxx, Esq.); if to any Selling Shareholder shall be sufficient in all
respects if delivered or sent by registered mail to counsel for such Selling
Shareholder at its address set forth in Schedule II hereto; and if sent to the
Company, shall be mailed, delivered or telegraphed and confirmed in writing to
the Company at 0000 xx xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx X0X 0X0,
Attention: Holden X. Xxxxxx.
13. Representatives. You will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by you jointly or by Xxxxxx Xxxxxx Xxxxxxxx & Co.,
Inc. will be binding upon all the Underwriters. The Representatives hereby
represent and warrant that they are so authorized to act on behalf of the
several Underwriters.
14. Binding Effect. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Shareholders and to the extent provided in Sections 8 and 10 hereof, the
officers and directors and controlling persons referred to therein 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.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
provisions regarding conflicts of laws.
16. Counterparts. 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.
30
17. General Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understanding and negotiations with respect
to the subject matter hereof. This Agreement may not be amended or modified
unless in writing by all the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us one of the counterparts hereof, and upon the
acceptance hereof by Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc., on behalf of each of
the Underwriters, this letter will constitute a binding agreement among 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 the Master Agreement among underwriters, a copy 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.
Very truly yours,
OPTIMAL ROBOTICS CORP.
By:_____________________________
Name: Holden X. Xxxxxx
Title: Co-Chairman
SELLING SHAREHOLDERS
By:_______________________________
Holden X. Xxxxxx, as Attorney-in-Fact
for the Selling Shareholders
[SIGNATURES CONTINUED ON NEXT PAGE]
31
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above at New York, New York.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
XXXXXXX XXXXX & ASSOCIATES, INC.
By: Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
By:___________________________________
(Authorized Representative)
On behalf of each of the Underwriters
32
SCHEDULE I
Underwriter Total Number
----------- of Firm Shares
to be
Purchased
--------------
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc............................
The Xxxxxxxx-Xxxxxxxx Company, LLC...........................
Xxxxxxx Xxxxx & Associates, Inc..............................
Total................................................... 1,325,000
=========
33
SCHEDULE II
Total Number
of Firm Shares
Selling Shareholders(1) to be Sold
---------------------- --------------
Xxxx X. Xxxxxxxx.................................. 200,000
Holdin X. Xxxxxx.................................. 200,000
Xxxxx X. Xxxx..................................... 200,000
Xxxx Xxxxxxxx..................................... 75,000
-------
Total........................................ 675,000
=======
_________________________
(1) Each of the Selling Shareholders has executed and delivered a Power of
Attorney appointing Xxxx X. Xxxxxxxx and Holden X. Xxxxxx such Selling
Shareholder's Attorneys-in-Fact and is represented by Xxxxxxx Xxxxxxxx &
Vineberg, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement,
PricewaterhouseCoopers LLP shall furnish letters to the Underwriters to the
effect that:
(i) they are independent public accountants with respect to the
Company within the meaning the Act and the applicable published rules and
regulations thereunder;
(ii) in their opinion, the financial statements and schedules audited
by them and included in the Prospectus and the Registration Statement and
in any documents incorporated by reference in the Prospectus comply as to
form in all material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related published rules and
regulations thereunder with respect to Registration Statements on Form F-3;
(iii) the unaudited summary and selected financial information
included in the Preliminary Prospectus and the Prospectus under the
captions "Prospectus Summary," "Selected Financial Data" and
"Capitalization" agrees with the corresponding amounts in the audited
financial statements included in the Prospectus or previously reported on
by them;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the latest available interim financial statements of the
Company, inspection of the minute books of the Company since the date of
the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company responsible for financial accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) the unaudited financial statements, if any, of the Company
included in the Registration Statement and the Prospectus do not
comply in 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 principles applied on the basis substantially consistent with
that of the audited consolidated financial statements included in the
Registration Statement and the Prospectus;
(B) as of a specified date not more than five (5) days prior to
the date of such letter, there were any changes in the capital stock
(other than the issuance of capital stock upon exercise of options
which were outstanding on the date of the latest balance sheet
included in the Prospectus) or any increase in inventories or the
long-term debt or short-term debt of the Company, or any decreases in
net current assets or net assets or other items specified by 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
(C) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (B) there were any decreases in revenues or operating
income or the total or per share amounts of 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 increases or decreases which the Prospectus discloses have
occurred or may occur which are described in such letter; and
(v) In addition to the audit referred to in their report included in
the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraph (iv) above, they
have carried out certain specified procedures, not constituting an audit 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, included in the Registration Statement and the Prospectus and
in documents incorporated by reference in the Prospectus, or which appear
in Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives, and have compared and agreed such
amounts, percentages and financial information with the accounting records
of the Company or to analyses and schedules prepared by the Company from
its detailed accounting records.
References to the Registration Statement and the Prospectus in this Annex I
shall include any amendment or supplement thereto at the date of such letter.
