1
EXHIBIT 1.1
2,500,000 Shares
Aeroflex Incorporated
Shares of Common Stock
UNDERWRITING AGREEMENT
February __, 1998
CIBC Oppenheimer Corp.
X.X. Xxxxxxx & Sons, Inc.
SoundView Financial Group, Inc.
Ladenburg Xxxxxxxx & Co. Inc.
As representatives of the several Underwriters
named in Schedule I to the Underwriting Agreement
c/o CIBC Xxxxxxxxxxx Corp.
CIBC Oppenheimer Tower
World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Aeroflex Incorporated, a Delaware corporation (the "Company"),
and certain stockholders of the Company listed on Schedule II hereto (the
"Selling Stockholders"), propose, subject to the terms and conditions contained
herein, to sell to you and the other underwriters named on Schedule I to this
Agreement (the "Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 2,500,000 shares (the "Firm Shares") of the
Company's common stock, $.10 par value per share (the "Stock"), of which
2,250,000 shares of Stock will be sold by the Company and 250,000 will be sold
by the Selling Stockholders. The respective amounts of the Firm Shares to be so
purchased by the several Underwriters are set forth opposite their names in
Schedule I hereto, and the respective amounts of Firm Shares to be sold by the
Selling Stockholders are set forth opposite their names in Schedule II hereto.
The Company and the Selling Stockholders are sometimes referred to herein
collectively as the "Sellers." In addition, the Company and certain Selling
Stockholders propose to grant to the Underwriters options to purchase up to
an additional 375,000 shares of Stock (the "Option Shares") for the purpose of
covering over-allotments in connection with the
2
sale of the Firm Shares. The Firm Shares and the Option Shares are together
called the "Shares."
1. Sale and Purchase of the Shares. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) Each of the Sellers agrees to sell to the Underwriters
the number of Firm Shares set forth opposite the name of such Seller on Schedule
II to this Agreement at $______ per share (the "Initial Price"), and each of the
Underwriters agrees, severally and not jointly, to purchase from the Sellers, at
the price set forth above, the number of Firm Shares set forth opposite the name
of such Underwriter on Schedule I to this Agreement. The number of Firm Shares
to be purchased by each Underwriter from each Seller shall be in the same
proportion (adjusted by the Representatives to eliminate fractions) as the
number of Firm Shares to be purchased hereunder by each Underwriter bears to the
total number of Firm Shares being purchased hereunder.
(b) Certificates in negotiable form for the total number of
the Shares to be sold hereunder by each of the Selling Stockholders have been
placed in custody with the [Company], as custodian (the "Custodian"), pursuant
to the Custody Agreement and Power of Attorney (the "Custody Agreement")
executed by each Selling Stockholder for delivery of all Shares to be sold
hereunder by such Selling Stockholder. Each of the Selling Stockholders
specifically agrees that the Shares represented by the certificates held in
custody for such Selling Stockholder under the Custody Agreement are subject to
the interests of the Underwriters hereunder, that the arrangements made by such
Selling Stockholder for such custody are to that extent irrevocable, and that
the obligations of such Selling Stockholder hereunder shall, subject to
applicable law, not be terminable by any act or deed of the Selling Stockholder
(or by any other person, firm or corporation including the Company, the
Custodian or the Underwriters) or by operation of law (including the death of
such Selling Stockholder) or by the occurrence of any other event or events,
except as set forth in the Custody Agreement. If any such event should occur
prior to the delivery to the Underwriters of the Shares to be sold by the
Selling Stockholders hereunder, certificates for the Shares shall, except as set
forth herein or in the Custody Agreement, be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such event has
not occurred. The Custodian is authorized to receive and acknowledge receipt of
the proceeds of sale of the Shares to be sold by the Selling Stockholders held
by each of them against delivery of such Shares.
(c) The Company hereby grants to the several Underwriters
an option to purchase, severally and not jointly, all or any part of up to
346,500 Option Shares at the Initial Price. Certain Selling Stockholders hereby
grant to the several Underwriters an option to purchase all or any part of up
to 28,500 Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option Shares to
be purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such options may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters and
-2-
3
may be exercised in whole or in part at any time on or before 12:00 noon, New
York City time, on the business day before the Firm Shares Closing Date (as
defined below), and on one or more occasions thereafter within 30 days after the
date of this Agreement, in each case upon written, facsimile or telegraphic
notice, or oral or telephonic notice confirmed by written, facsimile or
telegraphic notice, by the Representatives to the Company no later than 12:00
noon, New York City time, on the business day before the Firm Shares Closing
Date or at least two business days before the Option Shares Closing Date (as
defined below), as the case may be, setting forth the number of Option Shares to
be purchased and the time and date (if other than the Firm Shares Closing Date)
of such purchase. Any partial exercise of the options granted hereby shall be
made on a pro rata basis in proportion to the respective maximum number of
Option Shares to be sold by the Company as certain Selling Stockholder. The
number of Option Shares to be purchased by each Underwriter from the Company
and certain Selling Stockholders shall be in the same proportion (adjusted by
the Representatives to eliminate fractions) as the number of Option Shares to
be purchased hereunder by each Underwriter bears to the total number of Option
Shares.
2. Delivery and Payment. Delivery by the Company and the
Custodian of the Firm Shares to the Representatives for the respective accounts
of the Underwriters, and payment of the purchase price therefor to the Sellers
in Federal or other funds immediately available in New York City shall take
place at the offices of CIBC Xxxxxxxxxxx Corp., at Xxxxxxxxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time,
on the [third] [fourth] business day following the date of this Agreement, or at
such time on such other date, not later than 10 business days after the date of
this Agreement, or at such other place, as shall be agreed upon by the Company
and the Representatives (such time and date of delivery and payment are called
the "Firm Shares Closing Date").
In the event the options with respect to the Option Shares are
exercised, delivery by the Company and certain Selling Stockholders of the
Option Shares to the Representatives for the respective accounts of the
Underwriters, and payment of the purchase price to the Company in Federal or
other funds immediately available in New York City, shall take place at the
offices of CIBC Xxxxxxxxxxx Corp. specified above, or at such other place as
shall be agreed upon by the Company and the Representatives, at the time and on
the date (which may be the same date as, but in no event shall be earlier than,
the Firm Shares Closing Date) specified in the notice referred to in Section
1(c) (such time and date of delivery and payment are called the "Option Shares
Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing Date or,
in the case of Option Shares, on the day of notice of exercise of the option as
described in Section l(c) and shall be made available to the Representatives for
checking and packaging, at such place as is designated by the Representatives,
at least 24 hours prior to the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
-3-
4
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-____), including a preliminary prospectus relating to the Shares, and has
filed with the Commission the Registration Statement (as hereinafter defined)
and such amendments thereof as may have been required to the date of this
Agreement. Copies of such Registration Statement (including all amendments
thereof) and of the related preliminary prospectus have previously been
delivered by the Company to you. The term "preliminary prospectus" means any
preliminary prospectus (as described in Rule 430 of the Rules) included at any
time as a part of the Registration Statement. The Registration Statement as
amended at the time and on the date it becomes effective (the "Effective Date"),
including all exhibits (including those exhibits permitted by the Rules to be
incorporated by reference therein) and information, if any, deemed to be part of
the Registration Statement pursuant to Rule 424(b), Rule 434 and Rule 430A of
the Rules, is called the "Registration Statement." The term "Prospectus" means
the prospectus in the form first used to confirm sales of the Shares (whether
such prospectus was included in the Registration Statement at the time of
effectiveness or was subsequently filed with the Commission pursuant to Rule
424(b) of the Rules) or if the Company relies on Rule 434 under the Securities
Act, the "Term Sheet" relating to the Shares, together with the preliminary
prospectus that such Term Sheet supplements. "Term Sheet" means any term sheet
that satisfies the requirements of Rule 434 under the Securities Act.
The Company and each of the Selling Stockholders understand
that the Underwriters propose to make a public offering of the Shares, as set
forth in and pursuant to the Prospectus, as soon after the Effective Date and
the date of this Agreement as the Representatives deem advisable. The Company
and each of the Selling Stockholders hereby confirm that the Underwriters and
dealers have been authorized to distribute or cause to be distributed each
preliminary prospectus and are authorized to distribute the Prospectus (as from
time to time amended or supplemented if the Company or the Selling Stockholders
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company and the
Selling Stockholders.
(a) The Company hereby represents and warrants to each
Underwriter as follows:
(i) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, on the date any post-effective
amendment to the Registration Statement shall become effective, on the
date any supplement or amendment to the Prospectus is filed with the
Commission and on each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the applicable provisions of the
Securities Act and the Rules;
-4-
5
the Registration Statement did not, as of the Effective Date, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and on the other dates referred to above,
neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part
of the Registration Statement or any amendment thereto or pursuant to
Rule 424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material respects
with the applicable provisions of the Securities Act and the Rules and
did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty as to the
paragraph with respect to stabilization on the inside front cover page
of the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus. The Company acknowledges that the
statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of
the several Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus.
(ii) The documents that are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is
so incorporated by reference, when they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable,
and the rules and regulations of the Commission promulgated under the
Securities Act and the Exchange Act, as applicable, except as amended
and superseded by statements made in the Registration Statement; and
any documents so filed and incorporated by reference subsequent to the
Effective Date shall, when they are filed with the Commission, conform
in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission promulgated under the Securities Act and the Exchange Act,
as applicable.
(iii) The consolidated financial statements of the Company
(including all notes and schedules thereto) included in the
Registration Statement and Prospectus present fairly the financial
position, the results of operations and cash flows and the
stockholders' equity and the other information purported to be shown
therein of the Company and its subsidiaries, listed on Schedule III
hereto (the "Subsidiaries"), at the respective dates and for the
respective
-5-
6
periods to which they apply; and such financial statements (including
all notes and schedules thereto) have been prepared in conformity with
generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of the results for such periods have been made. The
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus is accurately presented and,
to the extent such information and data are derived from the financial
statements and books and records of the Company and the Subsidiaries,
are prepared on a basis consistent with such financial statements and
books and records.
(iv) KPMG Peat Marwick LLP, whose report is filed with the
Commission as a part of the Registration Statement, is and, during the
periods covered by its reports, was independent public accountants as
required by the Securities Act and the Rules.
(v) The Company has been duly incorporated and is a validly
existing corporation under the laws of the State of Delaware, and the
Subsidiaries have been duly incorporated and are validly existing
corporations under the laws of their respective jurisdictions. Other
than the Subsidiaries, the Company has no subsidiaries and does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization, except as
described in the Registration Statement and the Prospectus. Each of the
Company and the Subsidiaries is duly qualified and in good standing as
a foreign corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or the
nature of its business makes such qualification necessary except for
such jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business, results
of operations or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole (a "Material Adverse Effect").
Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor the Subsidiaries own, lease or license any
material asset or property or conduct any material business outside the
United States of America. Each of the Company and the Subsidiaries have
all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity, to own, lease and license their assets and properties
and conduct their businesses as now being conducted and as described in
the Registration Statement and the Prospectus except for such
authorizations, approvals, consents, orders, licenses, certificates and
permits the failure to so obtain would not have a Material Adverse
Effect; no such authorization, approval, consent, order, license,
certificate or permit contains a materially burdensome restriction
other than as disclosed in the Registration Statement and the
Prospectus; and the Company has all such corporate power and authority,
and such authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this
Agreement and to issue and
-6-
7
sell the Shares (except as may be required under the Securities Act and
state and foreign Blue Sky laws).
(vi) The Company and the Subsidiaries own or possess adequate and
enforceable rights to use all patents, trademarks, trademark
applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") material to or
necessary for the conduct of their business as described in the
Registration Statement and the Prospectus. Except as disclosed in the
Registration Statement and the Prospectus, neither the Company nor any
of the Subsidiaries have received any notice of, and to their knowledge
are not aware of, any infringement of or conflict with asserted rights
of others with respect to any Intangibles which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could be reasonably expected to have a Material Adverse
Effect, and neither the Company nor the Subsidiaries know of any
reasonable basis therefor. Except as disclosed in the Registration
Statement and the Prospectus, to the knowledge of the Company, no
Intangibles of the Company or the Subsidiaries are in dispute or are in
any conflict with the right of any other person or entity and the
Company and each of the Subsidiaries (A) has or will have the right
(subject to applicable agreements, which agreements provide for use to
the extent necessary and desirable for the conduct of its business as
currently conducted and as proposed to be conducted) to use, free and
clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects, restrictions or equities of any kind whatsoever all
licenses and rights to the Intangibles used in the conduct of their
business as now conducted or proposed to be conducted without
infringing upon or otherwise acting adversely to the right or claimed
right of any other person and (B) is not or will not become, as the
case may be, obligated or in any way liable for any payment by way of
royalties, fees or otherwise and to any owner or licensee of, or other
claimant to, any Intangibles with respect to the use thereof or in
connection with the conduct of their business or otherwise, except in
each case as disclosed in the Prospectus and except for any such
payments, claims, uses, liens, charges, encumbrances, pledges, security
interests, defects, restrictions and equities which would not have a
Material Adverse Effect.
(vii) The Company and the Subsidiaries have good and marketable
title to each of the items of personal property which are reflected in
the financial statements referred to in Section 4(a)(ii) or are
referred to in the Registration Statement and the Prospectus as being
owned by them and valid and enforceable leasehold interests in each of
the items of real and personal property which are referred to in the
Registration Statement and the Prospectus as being leased by them, in
each case free and clear of all liens, encumbrances, claims, security
interests and defects, other than those described in the Registration
Statement and the Prospectus and those which do not and will not have a
Material Adverse Effect.
-7-
8
(viii) Except as described in the Registration Statement and the
Prospectus, there is no litigation or governmental or other proceeding
or investigation before any court or before or by any public body or
board pending or, to the Company's knowledge, threatened (and the
Company does not know of any reasonable basis therefor) against, or
involving the assets, properties or business of, the Company or the
Subsidiaries which, if adversely determined, could be reasonably
expected to have a Material Adverse Effect.
(ix) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, (A) there has not been any material adverse change
in the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company or the
Subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business; (B) neither the Company nor any of
the Subsidiaries has sustained any material loss or interference with
its assets, businesses or properties (whether owned, leased or
licensed) from fire, explosion, earthquake, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree; and
(C) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein,
neither the Company nor any of the Subsidiaries has (x) issued any
securities (other than options or shares issued pursuant to exercise of
employee stock options or warrants described in the Registration
Statement and Prospectus) or incurred any liability or obligation,
direct or contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business, (y) entered
into any transaction not in the ordinary course of business or (z)
declared or paid any dividend or made any distribution on any shares of
its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its stock.
(x) There is no material document or contract of a character
required to be described in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required. Each agreement listed in the Exhibits
to the Registration Statement is in full force and effect or has
terminated in accordance with its terms or by amendment and such
amendment has been filed as an Exhibit to the Registration Statement or
has otherwise been provided to the Representatives and, if not so
terminated, is valid and enforceable in all material respects by and
against the Company or the Subsidiaries, as the case may be, in
accordance with its terms, assuming the due authorization, execution
and delivery thereof by each of the other parties thereto, except as
the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (ii) indemnification
provisions under Federal and state securities laws; and that the remedy
of specific forms of equitable relief may be subject to equitable
defenses and the discretion of the court before which any such action
may be brought. Neither the Company, the
-8-
9
Subsidiaries nor to the Company's knowledge, any other party is in
default in the observance or performance of any term or obligation to
be performed by them under any such agreement, and no event has
occurred which with notice or lapse of time or both would constitute
such a default, in any such case which default or event would have a
Material Adverse Effect. To the Company's knowledge, no default exists,
and no event has occurred which with notice or lapse of time or both
would constitute a default, in the due performance and observance of
any term, covenant or condition, by the Company or the Subsidiaries of
any other agreement or instrument to which the Company or the
Subsidiaries are a party or by which they or their properties or
business may be bound or affected which default or event would have a
Material Adverse Effect.
(xi) Neither the Company nor the Subsidiaries is in violation of
any term or provision of their respective Certificate of Incorporation
and By-laws, in each case as amended to the date hereof, or other
governing documents, or of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of
such violation would have a Material Adverse Effect. Except as
described in the Registration Statement or Prospectus, neither the
Company nor any of the Subsidiaries intends to amend its Certificate of
Incorporation and By-laws.
(xii) Neither the execution, delivery and performance of this
Agreement by the Company or the Subsidiaries nor the consummation of
any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Shares) will
give rise to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach of any term
or provision of, or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets of the
Company or any of the Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which it
or any of its properties or businesses are bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of the Subsidiaries or violate any
provision of the Certificate of Incorporation and By-laws of the
Company or any of the Subsidiaries, except for such consents or waivers
which have already been obtained and are in full force and effect or as
would not have a Material Adverse Effect. No consent, approval,
authorization, order, registration or qualification of or with any
United States court or governmental agency or body is required for the
issue and sale of the Shares or the consummation of the other
transactions contemplated by this Agreement, which have not been
obtained prior to the date hereof, except the registration under the
Securities Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws
-9-
10
in connection with the purchase and distribution of the Shares by the
Underwriters.
(xiii) The authorized, issued and outstanding capital stock of
the Company and the capital stock reserved or committed for issuance is
as set forth under the caption "Capitalization" in the Prospectus. All
of the outstanding shares of Stock have been duly and validly issued
and are fully paid and nonassessable, none of them was issued in
violation of any preemptive or other similar right and, to the
Company's knowledge, since 1991, none of them were issued in violation
of any Federal or state securities laws. The Shares, when issued and
sold pursuant to this Agreement, will be duly and validly issued, fully
paid and nonassessable, none of them will be issued in violation of any
preemptive or other similar right, any contractual right, including,
without limitation, rights of first refusal, and, since 1991, none of
them were issued in violation of any (subject to compliance with
Section 1(c) hereof), Federal or state securities laws. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and there is no commitment, plan or arrangement to issue, any shares of
Common Stock of the Company or any security convertible into, or
exercisable or exchangeable for, such shares of Stock. The shares of
Stock conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. The
Company has a sufficient number of authorized but unissued shares of
Stock to enable the Company to issue, without further stockholder
action, or approve all the Shares to be sold by the Company.
(xiv) As of the date hereof, and as of each Closing Date, all of
the outstanding shares of capital stock of the Subsidiaries are duly
and validly authorized and issued, are fully paid and nonassessable and
are and will be owned by the Company and there is and will be no
outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue any share of capital
stock of the Subsidiaries or any security convertible or exchangeable
or exercisable for capital stock of the Subsidiaries, except as
otherwise described in the Registration Statement and Prospectus.
(xv) Except as set forth in the Registration Statement and
Prospectus, no holder of any security of the Company has the right to
have any security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder during the period ending 90 days after the date of this
Agreement. Each Selling Stockholder and each director and executive
officer of the Company has delivered to the Representatives his written
agreement that he will not, for a period of 90 days after the date of
this Agreement, offer for sale, sell, distribute, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, or
exercise any registration rights with respect to, any shares of Stock
(or any securities convertible into, exercisable for, or exchangeable
for any shares of Stock) owned by him, without the prior written
consent of CIBC Xxxxxxxxxxx Corp.
-10-
11
on behalf of the several Underwriters, or is bound by comparable
restrictions pursuant to an existing agreement with the Company.
(xvi) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of Shares to be
sold by the Company and the sale of the Shares by the Selling
Stockholders. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will
constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
(A) as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
(xvii) Except as set forth in the Registration Statement and
Prospectus, neither the Company nor any of the Subsidiaries is involved
in any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute could have a Material Adverse Effect.
Except as set forth in the Registration Statement and Prospectus, to
the Company's knowledge, neither the Company nor any of the
Subsidiaries has violated any applicable safety or similar law
applicable to its business relating to discrimination in the hiring,
promotion or pay of employees.
(xviii) No transaction has occurred between or among the Company
or any of the Subsidiaries and any of its officers or directors or any
affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the Registration
Statement and the Prospectus. All transactions between the Company and
its Subsidiaries or affiliates are completely and accurately described
in all material respects in the Registration Statement and the
Prospectus.
(xix) Neither the Company nor any of the Subsidiaries has taken,
nor will any of them take, directly or indirectly, any action designed
to or which might reasonably be expected to cause or result in, or
which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
shares of Stock to facilitate the sale or resale of any of the Shares.
(xx) Neither the Company nor any of the Subsidiaries has ever
been denied a license, permit or authorization material to the present
operation of its business, and the operating practices and procedures
of the Company and to the Company's knowledge, the Subsidiaries are in
material compliance with all applicable laws, rules and regulations,
except where such denial or failure to comply would not have a Material
Adverse Effect, and except for applicable Federal and state securities
laws in connection with this offering.
-11-
12
(xxi) The Company and the Subsidiaries have such licenses,
permits and other approvals or authorizations of and from governmental
or regulatory authorities ("Permits") as are necessary under applicable
law to own their respective properties and to conduct the Company's
business in the manner now being conducted and as described in the
Registration Statement and the Prospectus except for those Permits
which the failure to have individually or in the aggregate would not
have a Material Adverse Effect; and the Company and the Subsidiaries
have fulfilled and performed all of their respective obligations with
respect to such Permits, and to the Company's knowledge, no event has
occurred which allows, or after notice or lapse of time or both would
allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such Permits
except such Permits which individually or in the aggregate would not
have a Material Adverse Effect.
(xxii) The Company and the Subsidiaries have timely filed all tax
returns which are required to be filed through the date hereof, or have
received extensions thereof, and have paid all taxes shown on such
returns and all assessments received by them to the extent that the
same are material and have become due. The Company has no knowledge,
nor any reasonable grounds to know, of any tax deficiencies which would
have a Material Adverse Effect; the Company has paid all taxes which
have become due, whether pursuant to any assessment, or otherwise, and
there is no further liability (whether or not disclosed on such
returns) or assessment for any such tax, and no interest or penalties
accrued or accruing with respect thereto, except as may be set forth or
adequately reserved for in the financial statements included in the
Registration Statement and the Prospectus; the amounts currently set up
as provisions for taxes or otherwise by the Company on its books and
records are sufficient for the payment of all its unpaid taxes accrued
through the dates as of which they speak, and for which the Company may
be liable in its own right, or as a transferee of the assets of, or as
successor to any other corporation, association, partnership, joint
venture or other entity.
(xxiii) The Company and the Subsidiaries are insured by insurers
against such losses and risks and in such amounts as are customary in
the businesses in which they are engaged; and neither the Company nor
any of the Subsidiaries has any reason to believe that it will not be
able to renew such existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue the Company's business at a cost that
would not have a Material Adverse Effect.
(xxiv) The books, records and accounts of the Company and the
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and the Subsidiaries. The Company and each
of the Subsidiaries maintains a system of internal accounting controls
sufficient to provide
-12-
13
reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorizations; (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain asset accountability; (C) access to assets is permitted only
in accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxv) The Shares have been duly authorized for listing on the New
York Stock Exchange.
(xxvi) The Company is not an "Investment Company" within the
meaning of the Investment Company Act of 1940.
(xxvii) Neither the Company nor the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any of the
Subsidiaries has made any payment of funds of the Company or received
or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required
to be disclosed in the Registration Statement and Prospectus. Neither
the Company nor any of the Subsidiaries, nor to the Company's
knowledge, any director, officer or employee of the Company or the
Subsidiaries, has, in the course of his actions for, or on behalf of,
the Company and the Subsidiaries, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity or made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds, and neither the Company nor any of the Subsidiaries,
nor to the Company's knowledge, any director, officer, employee, agent
or other person acting on behalf of the Company has, in the course of
his actions for, or on behalf of, the Company, violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977
or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(b) Each Selling Stockholder, severally and not jointly, represents and
warrants to each Underwriter as follows:
(i) Such Selling Stockholder has duly executed and delivered a
Custody Agreement appointing [___________________________,] and each of
them, as attorneys-in-fact with authority to execute and deliver this
Agreement on behalf of such Selling Stockholder and to take certain
other actions with respect hereto, and all authorizations and consents
necessary for the execution and delivery by such Selling Stockholder of
this Agreement and the Custody Agreement on behalf of such Selling
Stockholder have been duly given and received.
(ii) Such Selling Stockholder has and at the applicable Closing
Date will have the sole right to dispose of the Shares to be sold by it
hereunder and
-13-
14
good and valid title to the Shares to be sold by such Selling
Stockholder on the applicable closing Date hereunder, free of any
liens, encumbrances, equities and claims, and full right, power and
authority to effect the sale and delivery of such Shares pursuant to
this Agreement, and good and valid title thereto, free of any liens,
encumbrances, equities and claims, will be transferred to the several
Underwriters. Such Selling Stockholder will have paid all shares
transfer and stamp taxes which are required to be paid in connection
with the sale of the Shares.
(iii) This Agreement and the Custody Agreement have been duly and
validly authorized, executed and delivered by or on behalf of such
Selling Stockholder and constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with their terms, except as the
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (B) indemnification
provisions under Federal and state securities laws; and that the remedy
of specific forms of equitable relief may be subject to equitable
defenses and the discretion of the court before which any such action
may be brought.
(iv) Neither the execution, delivery and performance of this
Agreement or the Custody Agreement by such Selling Stockholder nor the
consummation of any of the transactions contemplated hereby or thereby
(including, without limitation, the sale of the Shares) will give rise
to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or require any
consent or waiver under, or result in the imposition of any lien,
charge or encumbrance upon any properties or assets of such Selling
Stockholder pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument by which such Selling
Stockholder is a party or by which such Selling Stockholder is bound,
or of any order, rule or regulation applicable to such Selling
Stockholder of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction except for
applicable requirements under the Securities Act and state Blue Sky
laws.
(v) Such Selling Stockholder has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of the shares of Stock of the Company to
facilitate the sale or resale of any Shares.
(vi) All information in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, relating to such
Selling Stockholder (including, without limitation, the information
relating to the Selling Stockholders which is set forth in the
Prospectus under the caption "Principal
-14-
15
and Selling Stockholders"), and all representations and warranties of
such Selling Stockholders in the Custody Agreement are true and correct
in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the information in light of the
circumstances in which presented not misleading. The sale of the Shares
by such Selling Stockholder pursuant hereto is not prompted by such
Selling Stockholder's knowledge of any material information concerning
the Company or the Subsidiaries which is not set forth in the
Prospectus or the documents incorporated by reference therein.
5. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares are subject to
each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a)(i) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and
no order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives.
(c) The representations and warranties of the Company and the
Selling Stockholders contained in this Agreement and in the
certificates delivered pursuant to Sections 5(d) and 5(e) shall be true
and correct when made and on and as of each Closing Date as if made on
such date, and the Company and the Selling Stockholders shall have
performed all covenants and agreements and satisfied all the conditions
contained in this Agreement required to be performed or satisfied by
them or it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date
a certificate, addressed to the Representatives and dated such Closing
Date, of the chief executive officer and the chief financial officer of
the Company to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus and this
Agreement and that the representations and warranties of the Company in
this Agreement are true and correct in all material respects on and as
of such Closing Date with the same effect as if made on such Closing
Date and the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date.
-15-
16
(e) The Representatives shall have received on each Closing Date
a certificate, addressed to the Representatives and dated such Closing
Date, of each Selling Stockholder selling Shares on such Closing Date
(or, if such Selling Stockholder is not a natural person, an
authorized officer thereof) to the effect that the representations and
warranties of such Selling Stockholder in this Agreement are true,
correct and complete in all material respects on and as of such
Closing Date with the same effect as if made on such Closing Date and
that such Selling Stockholder has performed all covenants and
agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by such Selling Stockholder at
or prior to such Closing Date.
(f) The Representatives shall have received on the Effective
Date, at the time this Agreement is executed and on each Closing Date a
signed letter from KPMG Peat Marwick LLP addressed to the
Representatives and dated, respectively, the Effective Date, the date
of this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives, confirming that they
are independent accountants within the meaning of the Securities Act
and the Rules, that the response to Item 10 of the Registration
Statement is correct insofar as it relates to them and stating in
effect that:
(i) in their opinion the consolidated financial statements
and the consolidated financial statement schedules included in
the Registration Statement and the Prospectus audited and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Securities Act
and the Rules;
(ii) on the basis of a reading of the amounts included in
the Registration Statement and the Prospectus under the headings
"Summary Financial Data" and "Selected Financial Data," carrying
out certain procedures, including a reading of the latest
available interim financial statements of the Company and the
Subsidiaries (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in
such letter, a reading of the minutes of the meetings of the
directors of the Company, and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company as to transactions and events subsequent
to the date of the latest audited financial statements, except as
disclosed in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to believe that
(A) the amounts in "Summary Financial Data" and "Selected
Financial Data" included in the Registration Statement and the
Prospectus do not agree with the corresponding amounts in the
audited consolidated financial statements from which such amounts
were derived; and (B) during the period from December 31, 1997 to
a specified date not more than five days prior to the date of
such letter there was any change in the consolidated capital
stock or consolidated debt of the Company and its
-16-
17
Subsidiaries, or any decrease in the consolidated current assets
or consolidated total assets or consolidated stockholders' equity
of the Company and its Subsidiary, each as compared with the
amounts shown in the balance sheet as of December 31, 1997
included in the Registration Statement or any decrease from
January 1, 1998 to the specified date, on a proportional basis
with the fiscal quarter ended December 31, 1997, in net sales,
operating income, net income (loss) and net income (loss) per
common share, except in all instances for changes, decreases or
increases which the Registration Statement and the Prospectus
disclose have occurred or may occur and except for such other
changes, decreases or increases which you shall in your sole
discretion accept; and
(iii) they have performed certain other procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and specified by the
Representatives agrees with the accounting records of the Company
and the Subsidiaries.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the
date of the letter.
(g) The Representatives shall have received on each Closing Date
from Blau, Kramer, Wactlar & Xxxxxxxxx, P.C., counsel for the Company
and the Selling Stockholders, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect
that:
(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws
of the State of Delaware. To such counsel's knowledge, the
Company has no subsidiaries other than the Subsidiaries and does
not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business
organization. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
in which the character of the business conducted by it or the
location of the properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where
the failure to so qualify would not have a Material Adverse
Effect. No proceeding has been instituted by the Secretary of
State of Delaware for the dissolution of the Company.
(ii) The Subsidiaries have been duly and validly
incorporated and are validly existing as corporations under the
laws of their respective jurisdictions of incorporation, and are
duly qualified and in good standing in each jurisdiction in which
the character or location of
-17-
18
their assets or properties (owned, leased or licensed) or the
nature of their business makes such qualification necessary,
except for such jurisdictions where the failure to so qualify
would not have a Material Adverse Effect.
(iii) The Company and the Subsidiaries have all requisite
corporate power and authority to own, lease and license their
assets and properties and conduct their business as described in
the Registration Statement and the Prospectus; and each of the
Company and the Subsidiaries has all requisite corporate power
and authority and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits under
applicable law to enter into, deliver and perform this Agreement
and, with respect to the Company, to issue and sell the Shares
(subject to compliance with Section 1(c)) other than those
required under the Securities Act and state and foreign Blue Sky
laws.
(iv) All of the outstanding shares of Stock have been, and
the Shares to be sold by the Company, upon issuance and delivery
and payment therefor in the manner herein described, will be,
duly authorized, validly issued, fully paid and nonassessable,
with no personal liability attaching to the ownership thereof.
There are no preemptive or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of, any
shares of Stock pursuant to the Certificate of Incorporation or
By-laws, or other governing documents or any agreements or other
instruments known to such counsel to which the Company is a party
or by which it is bound except as described in the Registration
Statement and the Prospectus. To such counsel's knowledge, except
as disclosed in the Registration Statement and the Prospectus,
neither the filing of the Registration Statement nor the offering
or sale of the Shares as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of
Stock or other securities of the Company. The Company has all
requisite corporate power and authority to issue, sell and
deliver the Shares in accordance with and upon the terms and
conditions set forth in this Agreement and in the Prospectus. All
corporate action required to be taken by the Company for the due
and proper authorization, issuance, sale and delivery of the
Shares has been duly and validly taken.
(v) All of the outstanding shares of the Subsidiaries are
duly and validly authorized and issued, are fully paid and
nonassessable and, are owned by the Company and, to the
knowledge of counsel, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue any share of capital
stock of the Subsidiaries or any security
-18-
19
convertible or exchangeable or exercisable or capital stock of
the Subsidiaries.
(vi) Upon issuance and delivery of the Shares and payment
therefor in accordance with the terms of this Agreement, each of
the Underwriters will receive good, valid and marketable title to
the Shares being sold by the Company hereunder, free and clear of
any lien, claim, encumbrance, security interest, restrictions on
transfer, stockholders' agreements, voting trusts and other
defects of title whatsoever.
(vii) The certificates for the shares of Stock to be sold
by the Company and the Selling Stockholders and delivered on each
Closing Date are in due and proper form.
(viii) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to perform
its obligations under this Agreement. All necessary corporate
action has been duly and validly taken by the Company to
authorize the execution, delivery and performance of this
Agreement, the issuance and sale of Shares by the Company and the
sale of Shares by the Selling Stockholders. This Agreement has
been duly and validly authorized, executed and delivered by the
Company, and this Agreement constitutes the legal, valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) indemnification provisions
under Federal and state securities laws; and that the remedy of
specific forms of equitable relief may be subject to equitable
defenses and the discretion of the court before which any such
action may be brought.
(ix) Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares) will give
rise to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach of
any material term or provision of, or constitute a material
default (or any event which with notice or lapse of time, or
both, would constitute a material default) under, or require
consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets
of the Company or the Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, note or other agreement or
instrument of which such counsel is aware and which would have a
Material Adverse Effect and to which the Company or the
Subsidiaries are a party or by which they or any of their
properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order,
-19-
20
statute, rule or regulation of which such counsel is aware or
violate any provision of the Certificate of Incorporation or
By-laws of the Company or the Subsidiaries.
(x) The Registration Statement and the Prospectus and their
respective filings with the Commission have been duly authorized
by and on behalf of the Company.
(xi) To the knowledge of such counsel, there are no
contracts, indentures, mortgages, loan agreement, notes, leases
or other agreement or instruments or other documents required to
be described or referred to in the Registration Statement other
than those described or referred to therein or filed as exhibits
thereto. The statements in the Prospectus, insofar as such
statements refer to the Certificate of Incorporation or By-laws
or other governing documents of the Company and contracts,
indentures, mortgages, loan agreements, notes, leases, joint
ventures and other agreements, arrangements or instruments to
which the Company or the Subsidiaries is a party, are adequately
and accurately described in all material respects, and insofar as
such statements refer to statements of United States Federal and
state securities law or legal conclusions, have been reviewed by
such counsel and, in such counsel's opinion, are accurate in all
material respects.
(xii) The Shares have been approved for listing on The New
York Stock Exchange subject to official notice of listing of the
Shares.
(xiii) The statements set forth in the Registration
Statement and the Prospectus describing laws and regulations and
the consequences to the Company and others under such laws and
regulations, including the statements describing law under the
captions "Risk Factors - Anti-Takeover Provisions," "Use of
Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business - Patents and
Trademarks," "Business - Regulation" and "Business - Legal
Proceedings," are fair summaries of the information set forth
therein and are accurate in all material respects. All licenses,
approvals or permits described in the Prospectus as having been
issued by any authority have been duly issued and, to the best
knowledge of such counsel, have not been rescinded or modified
and are in full force and effect; and to the knowledge of such
counsel, no proceedings to rescind or modify such licenses,
approvals or permits have been instituted and are pending or
threatened by any governmental authority.
(xiv) (A) To such counsel's knowledge, the Company and the
Subsidiaries own, possess or have obtained all governmental
licenses, permits, certificates, consents, orders, approvals and
other authorizations and have all requisite corporate power and
authority
-20-
21
necessary, to own or lease, as the case may be, and to operate
their properties and to conduct their business as presently
conducted, where the failure to so own, possess or obtain would
have a Material Adverse Effect and (B) to the knowledge of such
counsel, neither the Company nor any of the Subsidiaries has
received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations.
(xv) To the knowledge of such counsel, there is no tax
deficiency that has been asserted against the Company that would,
if adversely determined have a Material Adverse Effect.
(xvi) To the knowledge of such counsel, there is no action,
suit, investigation or proceeding, governmental or otherwise,
pending or threatened to which the Company or any of the
Subsidiaries is or may be a party or of which the business or
property of the Company is or may be subject that is material to
the Company and which is not disclosed in the Registration
Statement and the Prospectus or that seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance
of the Shares or the execution and delivery of this Agreement or
any of the other transactions contemplated hereby, or that
questions the legality or validity of any of such transactions or
that seeks to recover damages or obtain other relief in
connection with any of such transactions, that would have a
Material Adverse Effect.
(xvii) To such counsel's knowledge, the Company is not in
violation of any term or provision of its Certificate of
Incorporation or By-laws or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse
Effect.
(xviii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or supplement
thereto (except for the financial statements and schedules and
other financial and statistical data included therein, as to
which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Securities
Act and the Rules.
(xix) The Registration Statement has become effective under
the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or to such
counsel's knowledge, are threatened, pending or contemplated; and
any required filing of the Prospectus pursuant to Rule 424(b) of
the Rules has been made in accordance with the provisions
thereof. The Company meets all the conditions necessary for the
use of Form S-3.
-21-
22
(xx) The Company is not and, upon sale of the Shares and
application of the net proceeds as described in the Prospectus
under "Use of Proceeds" will not be, an "Investment Company"
within the meaning of Section 3(a) of the Investment Company Act
of 1940.
(xxi) To such counsel's knowledge, this Agreement and the
Custody Agreement have been executed and delivered by each of the
Selling Stockholders and constitute the legal, valid and binding
obligations of each of the Selling Stockholders enforceable in
accordance with their terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) indemnification provisions
under Federal and state securities laws; and that the remedy of
specific forms of equitable relief may be subject to equitable
defenses and the discretion of the court before which any such
action may be brought.
(xxii) Each Selling Stockholder has full legal right, power
and authority, and any approval required by law (other than as
required by State Securities and Blue Sky laws), to sell, assign,
transfer and deliver the Shares to be sold by such Selling
Stockholder. Upon delivery by the Selling Stockholders against
payment therefor as provided herein by the Underwriters, the
Selling Stockholders will convey good and marketable title to
such Shares free of any liens, charges, encumbrances, equities or
claims. All share transfer and stamp taxes which are required to
be paid in connection with the sale of the Shares have been paid.
(xxiii) To such counsel's knowledge, the sale of the Shares
to the Underwriters by each Selling Stockholder pursuant to this
Agreement, the compliance by such Selling Stockholder with the
other provisions of this Agreement and the provisions of the
Custody Agreement and the consummation of the other transactions
herein or therein contemplated do not give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision
of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the imposition
of any lien, charge or encumbrance upon any properties or assets
of such Selling Stockholder pursuant to the terms of any
indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound, or any franchise,
license, permit, judgment, decree, order, rule or regulation
applicable to such Selling Stockholder.
(xxiv) To such counsel's knowledge, the issuance and sale
by the Company of Shares and the sale by the Selling Stockholders
of Shares
-22-
23
will not violate any right of first refusal or anti-dilution
provision contained in any agreement to which the Company or the
Selling Stockholders are a party or by which they may be bound.
In rendering such opinion, counsel may rely, to the extent such
counsel deems such reliance proper, upon an opinion or opinions, each dated the
Closing Date, of other counsel as to matters governed by the laws of
jurisdictions other than the United States or the States of Delaware or New
York, provided that (i) each such local counsel is acceptable to you and your
counsel, (ii) counsel shall state in its opinion that it believes that it and
you are justified in relying thereon, and (iii) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to you and is in form and substance satisfactory to you and your
counsel. In rendering such opinion, counsel may rely, to the extent such counsel
deems such reliance proper, as to matters of fact upon certificates of officers
of the Company, the Selling Stockholders, and government officials. Copies of
all such certificates shall be acceptable to you and your counsel and furnished
to you and your counsel on the Closing Date.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, the Selling Stockholders, representatives of the Representatives and
representatives of the independent certified public accountants of the Company,
at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
that have caused such counsel to believe that the Registration Statement at the
time it became effective (except with respect to the financial statements and
notes and schedules thereto and other financial and statistical data, as to
which such counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements and notes schedules thereto and other financial data, as to which
such counsel need express no belief) on the date thereof contained or at any
Closing Date 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 the light of the circumstances under which they were made, not
misleading.
(h) All proceedings taken in connection with the sale of the
Shares as herein contemplated shall be reasonably satisfactory in form
and substance to the Representatives and their counsel and the
Underwriters shall have received from Fulbright & Xxxxxxxx L.L.P.,
counsel for the Underwriters, a favorable opinion, addressed to the
Representatives and dated such Closing Date, with respect to the
Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representatives may reasonably request, and the
Company shall have furnished to Fulbright &
-23-
24
Xxxxxxxx L.L.P. such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(i) The Shares to be purchased on Closing Date by the
Underwriters shall have been approved for listing on the New York Stock
Exchange.
(j) Certain stockholders, directors and officers of the Company
shall have agreed in writing, in form and substance satisfactory to the
Representatives, that such person or entity will not, for a period of
90 days after the date of this Agreement directly or indirectly, except
with prior written consent of CIBC Xxxxxxxxxxx Corp. offer, sell, grant
any option to purchase, or otherwise dispose (or announce any offer,
sale, grant of an option to purchase or other disposition) of any
shares of Stock or any securities convertible into, or exchangeable or
exercisable for, such shares of Stock.
(k) The Representatives shall have been furnished with such
additional documents and certificates as the Representatives or counsel
for the Underwriters may reasonably request related to this Agreement
and the transactions contemplated hereby.
All such opinions, certificates, letters and documents shall be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Representatives and to counsel for the Underwriters, in
each case in their reasonable judgment. The Company shall furnish to the
Representatives conformed copies of such opinions, certificates, letters and
other documents in such number as the Representatives shall reasonably request.
6. Covenants of the Company and the Selling Stockholders. (a) The
Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus in a form approved
by the Representatives and file such Prospectus pursuant to Rule 424(b)
or Rule 434 under the Securities Act within the time period required
thereby following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act, and shall promptly advise the Representatives
(A) when any amendment to the Registration Statement shall have become
effective, (B) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (C) of the prevention or suspension of the use of any
preliminary prospectus or the Prospectus or of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (D) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a copy
for their review prior to filing and
-24-
25
shall not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a Prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (i) of this Section 6(a), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iii) For a period of one year, the Company shall make generally
available to its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the 12-month
period beginning at the end of the fiscal quarter of the Company during
which the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement (which
need not be audited) of the Company, covering such 12-month period,
which shall satisfy the provisions of Section 11(a) of the Securities
Act or Rule 158 of the Rules.
(iv) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of each fiscal quarter in each fiscal
year of the Company, a balance sheet of the Company as of the end of
such fiscal quarter and statements of operations and cash flows of the
Company for the portion of such fiscal year ended with the last day of
such fiscal quarter, all in reasonable detail and stating in
comparative form the figures as of the corresponding date and for the
corresponding period in the previous fiscal year, all such material to
be prepared and certified by an authorized financial officer of the
Company.
(v) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) and
to each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the
Securities Act or the Rules, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Representatives may reasonably request.
-25-
26
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
under the laws of such jurisdictions as the Representatives reasonably
may designate and shall maintain such qualifications in effect so long
as required for the distribution of the Shares; provided, however, that
the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(vii) For a period of five years after the date of this
Agreement, the Company shall supply to the Representatives, and to each
other Underwriter who may so request in writing, copies of such
financial statements and other periodic and special reports as the
Company may from time to time distribute generally to the holders of
any class of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to file with
the Commission.
(viii) Without the prior written consent of the CIBC Xxxxxxxxxxx
Corp., on behalf of the Underwriters, for a period of 90 days after the
date of this Agreement, the Company shall not issue, sell or register
with the Commission (other than on Form S-8 or on any successor form),
or otherwise dispose of, directly or indirectly, any equity securities
of the Company (or any securities convertible into or exercisable or
exchangeable for equity securities of the Company), except for the
issuance of the Shares pursuant to the Registration Statement and the
issuance of shares pursuant to the Company's existing stock option
plans or stock purchase plan or upon the exercise of currently
outstanding options and warrants. In the event that during this period,
(A) any shares are issued pursuant to the Company's existing stock
option plans or stock purchase plan or (B) any registration is effected
on Form S-8 or on any successor form, the Company shall use reasonable
efforts to obtain the written agreement of such grantee or purchaser or
holder of such registered securities that, for a period of 90 days
after the date of this Agreement, such person will not, without the
prior written consent of the Representatives, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities convertible
into, exercisable for, or exchangeable for any shares of Common Stock)
owned by such person.
(ix) On or before the Firm Shares Closing Date, the Company shall
make all filings required under applicable securities laws and by the
New York Stock Exchange in order to permit the consummation of the
transactions contemplated hereby.
(x) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of
the obligations of
-26-
27
the Company and the Selling Stockholders under this Agreement including
those relating to: (A) the preparation, printing, filing and
distribution of the Registration Statement including all exhibits
thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and
the printing, filing and distribution of this Agreement; (B) the
preparation and delivery of certificates for the Shares to the
Underwriters; (C) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 6(a)(iv), including the reasonable
fees and disbursements of counsel for the Underwriters in connection
with such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky
memoranda; (D) the furnishing (including costs of shipping and mailing)
to the Representatives and to the Underwriters of copies of each
preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by
this Section to be so furnished, as may be reasonably requested for use
in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold; (E) the filing
fees of the National Association of Securities Dealers, Inc. in
connection with its review of the terms of the public offering; (F) the
furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 6(a)(vii); (G) inclusion of the Shares
for listing on the New York Stock Exchange; and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by
the Company or the Shares by the Selling Stockholders to the
Underwriters. Subject to the provisions of Section 9, the Underwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company pursuant to the
preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters, except as otherwise set
forth herein.
(xi) The Company will not take, directly or indirectly, any
action designed to cause or result in the stabilization or manipulation
of the price of the Stock of the Company to facilitate the sale or
resale of any of the Shares.
(b) Each Selling Stockholder covenants and agrees with the
Company that:
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of
1986, as amended, such Selling Stockholder shall deliver to you on or
prior to the Firms Shares Closing Date a properly completed and
executed United States Treasury Department Form W-9 (or other
applicable statement specified by Treasury Department regulations in
lieu thereof).
-27-
28
(ii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in the stabilization
or manipulation of the price of the shares of Stock of the Company to
facilitate the sale or resale of any of the Shares.
(iii) Such Selling Stockholder will not, for a period of 90 days
from the date of this Agreement, without the prior written consent of
CIBC Xxxxxxxxxxx Corp. on behalf of the Underwriters, sell, grant any
option for the sale of, or otherwise dispose of, directly or
indirectly, any shares (or any securities convertible into, exercisable
for, or exchangeable for any shares of Common Stock) owned by such
Selling Stockholder.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims, damages
or liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein and
provided further, that the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages or liabilities purchased Shares, if 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 or liability. This indemnity agreement
will be in addition to any other liability which the Company may otherwise have.
-28-
29
(b) Each Selling Stockholder agrees, severally and not jointly,
to indemnify and hold harmless each Underwriter, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by such Selling Stockholder
specifically for use therein; provided, however, that the obligation of each
Selling Stockholder to indemnify each Underwriter (including any controlling
person thereof) shall be limited to an amount equal to the net proceeds received
by such Selling Stockholder from such Underwriter from the sale of the Shares
hereunder. This indemnity agreement will be in addition to any other liability
which the Selling Stockholders may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, each director of the Company, and each officer of the Company
who signed the Registration Statement and each Selling Stockholder, to the same
extent as the foregoing indemnity from the Company and each Selling Stockholder
to each Underwriter, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or omission or alleged
untrue statement or omission which was made in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto, with respect to stabilization on the inside front cover page of the
Prospectus and the statements contained under the caption "Underwriting" in the
Prospectus; provided, however, that the obligation of each Underwriter to
indemnify the Company or a Selling Stockholder (including any controlling
person, director or officer thereof) shall be limited to an amount equal to the
net proceeds received by such Underwriter from the sale of the Shares hereunder.
This indemnity agreement will be in addition to any other liability which the
Underwriters may otherwise have.
(d) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a), 7(b) or 7(c) shall be available to any party who shall fail to
give notice as provided in this Section 7(d) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be
-29-
30
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and the approval by the indemnified party of such
counsel, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in writing
by the indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the defense of
such action within a reasonable time after notice of the commencement thereof,
in each of which cases the fees and expenses of counsel shall be at the expense
of the indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a), 7(b) or 7(c) is due in accordance with its terms but for any
reason is held to be unavailable, the Company, the Selling Stockholders and the
Underwriters shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting any contribution
received by the Company or the Selling Stockholders from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who may also be liable for contribution) to which
the Company, the Selling Stockholders and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares or, if such allocation
is not permitted by applicable law in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the relative
fault of the Company or the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Selling Stockholders shall be deemed to be in the same
proportion as (x) the total proceeds from the offering (net of underwriting
discounts but before deducting expenses) received by the Company and the Selling
Stockholders, as set forth in the table on the cover page of the Prospectus,
bear to (y) the total price to the public of the offering as set forth in the
table on the cover page of the Prospectus, and the relative benefits received by
each Underwriter
-30-
31
shall be deemed to be in the same proportion as (x) the underwriting discounts
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to (y) the total price to the public of the offering as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Company or the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 8 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. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter (except as may be provided
in the Agreement Among Underwriters) be liable or responsible for any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder, and (ii) the Company and the Selling Stockholders shall
be liable and responsible for any amount in excess of such underwriting
discount; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company and the Selling Stockholders, subject in
each case to clauses (i) and (ii) in the immediately preceding sentence of this
Section 8. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section, notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to their respective
underwriting commitments, and not joint, and the Selling Stockholders'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective number of Shares sold hereunder, and not joint.
9. Termination. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company and the Selling Stockholders at any time,
-31-
32
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if on or prior to such date, any domestic
or international event or act or occurrence has materially disrupted,
or in the opinion of the Representatives will in the future materially
disrupt, the securities markets; (ii) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representatives,
inadvisable to proceed with the offering; (iii) if there shall be such
a material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of
the Representatives, inadvisable or impracticable to market the Shares;
(iv) if trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock Exchange, Inc. or on the
American Stock Exchange, Inc. has been suspended or limited, or minimum
or maximum ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities have been required, by said
exchanges or by order of the Commission, the National Association of
Securities Dealers, Inc., or any other governmental or regulatory
authority; or (v) if a banking moratorium has been declared by any
state or Federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Sellers shall not be under any liability to any Underwriter, and
no Underwriter shall be under any liability to the Seller, except that (A) if
this Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company to comply in any
material respect with the terms or to fulfill any of the material conditions of
this Agreement, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) incurred by them in connection with the proposed purchase and sale of
the Shares or in contemplation of performing their obligations hereunder and (B)
no Underwriter who shall have failed or refused to purchase the Shares agreed to
be purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination of its obligations under this
Agreement, shall be relieved of liability to the Company or to the other
Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this
-32-
33
Agreement. If no such arrangements have been made by the close of business on
the business day following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing
Date, then each of the nondefaulting Underwriters shall be obligated to
purchase such Shares on the terms herein set forth in proportion to
their respective obligations hereunder; provided, that in no event
shall the maximum number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 10
by more than one-ninth of such number of Shares without the written
consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date,
then the Company shall be entitled to an additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase
such Shares upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company or any Selling
Stockholder and without liability on the part of the Company, except in both
cases as provided in Sections 6(a)(xi), 7, 8 and 9. The provisions of this
Section shall not in any way affect the liability of any defaulting Underwriter
to the Company or any Selling Stockholder or the nondefaulting Underwriters
arising out of such default. A substitute underwriter hereunder shall become an
Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers, the
Selling Stockholders and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Sections 7 and 8
hereof, and shall survive delivery of and payment for the Shares. The provisions
of Sections 6(a)(xi), 7, 8 and 9 shall survive the termination or cancellation
of this Agreement.
-33-
34
This Agreement has been and is made for the benefit of the
Underwriters and the Company and the Selling Stockholders and their respective
heirs, executors, administrators, successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, 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. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
Subject to the provisions of Section 12 hereof, all notices and
communications hereunder shall be in writing and mailed or delivered or by
telephone or telegraph if subsequently confirmed in writing, (a) if to the
Representatives, c/o CIBC Xxxxxxxxxxx Corp., Xxxxxxxxxxx Tower, World Financial
Center, New York, New York 10281 Attention: Syndicate Department, (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement, with a copy to Blau, Kramer, Wactlar &
Xxxxxxxxx, P.C., 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000 and (c) if to
the Selling Stockholders to [____________________].
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
This Agreement (including the Schedules and Exhibits hereto)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and supersedes all other agreements relating
to the subject matter hereof.
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
-34-
35
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
AEROFLEX INCORPORATED
By________________________________
Xxxxxx X. Xxxx
Chief Executive Officer
SELLING STOCKHOLDERS LISTED
IN SCHEDULE II
By________________________________
Attorney-in-fact
Confirmed:
CIBC XXXXXXXXXXX CORP.
X.X. XXXXXXX & SONS, INC.
SOUNDVIEW FINANCIAL GROUP, INC.
LADENBURG XXXXXXXX & CO. INC.
Acting severally on behalf of themselves
and as representatives of the several
Underwriters named in Schedule I annexed hereto.
By: CIBC XXXXXXXXXXX CORP.
By________________________________
Name:
Title:
-35-
36
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
CIBC Xxxxxxxxxxx Corp.............................
X.X. Xxxxxxx & Sons, Inc..........................
SoundView Financial Group, Inc....................
Ladenburg Xxxxxxxx & Co. Inc......................
-----------
Total: 2,500,000
-36-
37
SCHEDULE II
Name Number of Firm Number of Option
Shares to Be Sold Shares to be Sold
Company 2,250,000 346,500
Selling Stockholders: 250,000 28,500
Total _________ _______
2,500,000 375,000
-37-
38
SCHEDULE III
Subsidiaries
------------
STATE OF
COMPANY INCORPORATION
Aeroflex Laboratories,
Inc. Delaware
Aeroflex Systems Corp. Delaware
Aeroflex Lintek Corp. Ohio
Vibration Mountings &
Controls, Inc. New York
MIC Technology
Corporation Texas
Aeroflex International
Inc. Delaware
-38-
39
SCHEDULE IV
Patents
[To Be Completed]
-39-
