EXHIBIT 1.1
3,323,353 Shares
APPLIED FILMS CORPORATION
Common Stock
FORM OF UNDERWRITING AGREEMENT
October , 2001
CIBC World Markets Corp.
FleetBoston Xxxxxxxxx Xxxxxxxx
Xxxxxxx & Company, Inc.
c/o CIBC World Markets Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Applied Films Corporation, a Colorado corporation (the "Company"), and
each of Unaxis Holding AG, Xxxx X. Xxxxxx and the Xxxx Xxxxxx Family Trust (each
a "Selling Shareholder" and collectively the "Selling Shareholders"), propose,
subject to the terms and conditions contained herein, to issue and 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 3,323,353 shares (the "Firm Shares") of the
Company's Common Stock, no par value (the "Common Stock"). Of the 3,323,353 Firm
Shares, 2,500,000 are to be issued and sold by the Company and 823,353 are to be
sold by the Selling Shareholders. The respective amounts of the Firm Shares to
be purchased by each of the several Underwriters are set forth opposite their
names on Schedule I hereto. In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 498,502 shares (the
"Option Shares") of Common Stock from it for the purpose of covering
over-allotments in connection with the 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) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a price of
$_____ per share (the "Initial Price"), the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of Firm Shares to
be Purchased from the Company" on Schedule I to this Agreement, subject to
adjustment in accordance with Section 11 hereof. The Selling Shareholders each
agree to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from each of the Selling Shareholders, at
the Initial Price, the number of Firm Shares set forth opposite the name of such
Underwriter under the column "Number of Firm Shares to be Purchased from the
Selling Shareholder" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 11 hereof.
(b) The Company grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the 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 option
may be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and 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 from time to time thereafter within
30 days after the date of this Agreement, in each case upon written, facsimile
or telegraphic notice, or verbal 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.
2. Delivery and Payment. Payment of the purchase price for, and
delivery of the Firm Shares shall be made at the offices of CIBC World Markets
Corp., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York
City time, on the third business day following the date of this Agreement or at
such time on such other date, not later than ten (10) business days after the
date of this Agreement, 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 addition, in the event that any or all of the Option Shares are
purchased by the Underwriters, payment of the purchase price, and delivery of
the certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each date of delivery as specified in the notice from the
Representatives to the Company (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."
Payment shall be made to the Company and the Selling Shareholders by
wire transfer of immediately available funds or by certified or official bank
check or checks payable in New York Clearing House (same day) funds drawn to the
order of the Company and to the Selling Shareholders for the shares purchased
from each of the Company and the Selling Shareholders, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Shares to be purchased by them.
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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(b) and shall be delivered by or on behalf of the Company to the
Representatives through the facilities of the Depository Trust Company ("DTC")
for the account of such Underwriter. The Company will cause the certificates
representing the Shares to be made available for checking and packaging, at such
place as is designated by the Representatives, on the full business day before
the Firm Shares Closing Date (or the Option Shares Closing Date in the case of
the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The Company
has prepared and filed 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 (as hereinafter defined)
on Form S-1 (No. 333-68476), including a preliminary prospectus relating to the
Shares, 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 (as hereinafter defined) have
heretofore 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 or filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules. The term "Registration Statement" as used
in this Agreement means the initial registration statement (including all
exhibits, financial schedules and information deemed to be a part of the
Registration Statement through incorporation by reference or otherwise), as
amended at the time and on the date it becomes effective (the "Effective Date")
including the information (if any) deemed to be part thereof at the time of
effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement") then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules.
The Company and the Selling Shareholders 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 the
Selling Shareholders 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 furnishes amendments or supplements thereto to the
Underwriters).
4. Representations and Warranties of the Company . The Company
represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any post-effective
amendment to the Registration Statement becomes
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effective, the date any supplement or amendment to the Prospectus is filed with
the Commission and each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will comply with
the applicable provisions of the Securities Act and the Rules and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder. 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 not misleading; and on the Effective Date and 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 not misleading. Each Preliminary Prospectus and the
Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially different,"
as such term is used in Rule 434, from the Prospectus included in the
Registration Statement at the time it became effective. Notwithstanding the
foregoing, none of the representations and warranties in this paragraph 4(a)
shall apply to statements in, or omissions from, the Registration Statement or
the Prospectus made in reliance upon, and in conformity with, information herein
or otherwise furnished in writing by the Representatives on behalf of the
several Underwriters for use in the Registration Statement or the Prospectus.
With respect to the preceding sentence, the Company acknowledges that the only
information furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus is the
statements contained in the 4th, 9th and 11th paragraphs under the caption
"Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of
the Registration Statement or suspending or preventing the use of any Prospectus
has been issued and no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules has been or will be
made in the manner and within the time period required by such Rule 424(b).
(c) The financial statements of the Company and Large Area
Display (including all notes and schedules thereto) included in the Registration
Statement and Prospectus respectively present fairly the balance sheets, the
statements of operations, the statements of cash flows and the statements of
stockholders' equity and statements of assets acquired and liabilities assumed
and statements of revenues and direct costs and the other information purported
to be shown therein of the Company and Large Area Display at the respective
dates and for the respective periods to which they apply; and such financial
statements and related schedules and notes have been prepared in
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conformity with generally accepted, except as otherwise noted, 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 summary and selected financial data included in the
Prospectus present fairly the information shown therein as at the respective
dates and for the respective periods specified and the summary and selected
financial data have been presented on a basis consistent with the consolidated
financial statements so set forth in the Prospectus and other financial
information.
(d) The Pro Forma financial statements of the Company and
Large Area Coating (including all notes and schedules thereto) included in the
Registration Statement and Prospectus comply with the provisions of Regulation
S-X.
(e) Xxxxxx Xxxxxxxx LLP and Ernst & Young, LLP, whose reports
are filed with the Commission as a part of the Registration Statement, are and,
during the periods covered by their reports were, independent public accountants
as required by the Securities Act and the Rules.
(f) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. Each of
the Company's Subsidiaries (as hereinafter defined) is an entity duly organized,
validly existing and in good standing in the jurisdiction of its organization.
The Company and each such subsidiary or other entity controlled directly or
indirectly by the Company (collectively, "Subsidiaries") is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted by it or location of the assets or
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 on the assets or properties, business, results of operations or
financial condition of the Company (a "Material Adverse Effect"). The Company
and each of its Subsidiaries has 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 (collectively, the "Permits"), to own, lease and
license its assets and properties and conduct its business, all of which are
valid and in full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not have a Material Adverse Effect. The
Company and each of its Subsidiaries has fulfilled and performed in all material
respects all of its material obligations with respect to such Permits and no
event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the Company thereunder. Except as may be required under the
Securities Act, no other Permits are required to enter into, deliver and perform
this Agreement and to issue and sell the Shares.
(g) The Company and each of its Subsidiaries has good and
marketable title in fee simple to all items of real property and good and
marketable title to all personal property used by it in the operation of the
business. Any real property and buildings held under lease by the Company or by
any of its Subsidiaries is held by it under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security interests
and defects, except such as are described in the Registration Statement and the
Prospectus or would not have a Material Adverse Effect.
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(h) There are no litigation or governmental proceedings to
which the Company or any of its Subsidiaries is subject or that is pending or,
to the knowledge of the Company, threatened, against the Company or any of its
Subsidiaries, which, individually or in the aggregate, might have a Material
Adverse Effect, affect the consummation of this Agreement or which is required
to be disclosed in the Registration Statement and the Prospectus that is not so
disclosed.
(i) 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 with regard to the
assets or properties, business, results of operations or financial condition of
the Company; (b) neither the Company nor its Subsidiaries has sustained any loss
or interference with its assets, businesses or properties (whether owned or
leased) 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 that could have a Material Adverse
Effect; 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 its Subsidiaries has (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business, (ii)
entered into any transaction not in the ordinary course of business or (iii)
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.
(j) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement that is not described
or filed as required by the Securities Act or Rules. Each description of a
contract, document or other agreement in the Registration Statement and the
Prospectus accurately reflects the terms of the underlying document, contract or
agreement. Each agreement described in the Registration Statement and Prospectus
or listed in the Exhibits to the Registration Statement or incorporated by
reference is in full force and effect and is valid and enforceable by and
against the Company or the Subsidiary, as the case may be, in accordance with
its terms. Neither the Company nor the Subsidiary, if the Subsidiary is a party,
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 it under any such
agreement, and no event has occurred that with notice or lapse of time or both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, could have a Material Adverse Effect. No
default exists, and no event has occurred that 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 Subsidiary, if the Subsidiary
is a party thereto, of any other agreement or instrument to which the Company or
the Subsidiary is a party or by which the Company, the Subsidiary or their
properties or business may be bound or affected which default or event,
individually or in the aggregate, could have a Material Adverse Effect.
(k) The LAC acquisition was completed on December 30, 2000, in
accordance with its terms and the Share Purchase and Exchange Agreement dated
October 18, 2001, as amended (the "Unaxis Agreement") by and between the Company
and Balzers Process Systems GmbH ("Balzers") and its parent company Unaxis
Holdings AG (together with Balzers "Unaxis" or "Seller") pursuant to which the
Company purchased all of the stock of Leybold Coating GmbH &
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Co. KG ("Leybold KG"), Unaxis Agreement and all agreements contemplated thereby
constitute legally binding and enforceable obligations of Unaxis enforceable in
accordance with their respective terms. In the LAC acquisition, Seller
transferred to the Company all assets purported to be transferred and the only
liabilities of Unaxis for which the Company will be liable are those required
under the Unaxis Agreement. No claims now exist against Unaxis except those that
are being considered in connection with determining purchase price adjustments
under the Unaxis Agreement.
(l) Neither the Company nor any of its Subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.
(m) 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 term or provision of, or constitute a default (or an event which with notice
or lapse of time or both could 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 its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or its Subsidiaries is a
party or by which either the Company or any of its Subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its Subsidiaries or violate any provision of the charter or by-laws of the
Company or any of its Subsidiaries, except for such consents or waivers that
have already been obtained and are in full force and effect.
(n) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus (except for
subsequent issuances pursuant to stock option and purchase plans described in
the Prospectus). The certificates evidencing the Shares are in due and proper
legal form and have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive or other
similar rights to subscribe for or to purchase or acquire any shares of Common
Stock of the Company or its Subsidiaries or any such rights pursuant to its
Certificate of Incorporation or by-laws or any agreement or instrument to or by
which the Company or any of its Subsidiaries is a party or bound that is
violated by the sale of the Shares hereunder. The Shares, when issued and sold
pursuant to this Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any preemptive or
other similar right. Except as disclosed in the Registration Statement and the
Prospectus, the Company has no other authorized or outstanding securities, and
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 stock
of the Company or its Subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock. The Preferred Stock, the Common
Stock, the Warrants and the Shares conform in all material respects to all
statements in relation thereto contained in the Registration Statement and the
Prospectus. All outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, and are fully paid and
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nonassessable and are owned directly by the Company or by another wholly-owned
subsidiary of the Company free and clear of any security interests, liens,
encumbrances, equities or claims, other than those described in the Prospectus.
(o) 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, except as described in the Prospectus, to demand registration of any
security owned by such holder during the period ending 90 days after the date of
this Agreement, except rights that have been waived in writing. Each director
and executive officer of the Company has delivered to the Representatives his
enforceable written lock-up agreement in the form attached to this Agreement
("Lock-Up Agreement").
(p) 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 the Shares by the Company. This
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes and will constitute legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its terms,
except 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.
(q) Neither the Company nor any of its 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. The
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which would have a
Material Adverse Effect. The Company is not aware of any threatened or pending
litigation between the Company or any of its Subsidiaries and any of its
officers or key employees which, if adversely determined, could have a Material
Adverse Effect and has no reason to believe that any officers or key employees
will not remain in the employment of the Company.
(r) No transaction has occurred between or among the Company
and any of its officers or directors or five percent shareholders or any
affiliate or affiliates of any such officer or director or five percent
shareholder that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in, or that has constituted or which that reasonably be expected to
constitute, the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of any of the Shares.
(t) The Company and its Subsidiaries have filed all Federal,
state, local and foreign tax returns that are required to be filed through the
date hereof, which returns are true and correct in all material respects or has
received extensions thereof, and has paid all taxes shown on such returns and
all assessments received by it that have become due. There are no tax audits or
investigations pending that, if adversely determined, could have a Material
Adverse Effect; nor are there any material proposed additional tax assessments
against the Company or any of its Subsidiaries.
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(u) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to official Notice of Issuance.
(v) The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq National Market,
nor has the Company received any notification that the Commission or the Nasdaq
National Market is contemplating terminating such registration or quotation.
(w) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and the assets and the results of operations of the Company and
its Subsidiaries. The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with United States generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(x) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks,
in such amounts as is adequate for the conduct of their respective businesses
and the value of their respective properties, and in such amounts as is
customary for companies engaged in the businesses in which they are engaged; all
policies of insurance and fidelity or surety bonds insuring the Company or any
of its Subsidiaries or the Company's or its Subsidiaries' respective businesses,
assets, employees, officers and directors are in full force and effect; the
Company and each of its Subsidiaries are in compliance with the terms of such
policies and instruments; and neither the Company nor any Subsidiary of the
Company has reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business.
Neither the Company nor any Subsidiary has been denied any insurance coverage
that it has sought or for which it has applied.
(y) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company has been
obtained or made and is in full force and effect.
(z) There are no affiliations with the National Association of
Securities Dealers, Inc. (the "NASD") among the Company's officers, directors
or, to the best of the knowledge of the Company, any five percent or greater
shareholder of the Company, except as set forth in the Registration Statement or
otherwise disclosed in writing to the Representatives.
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(aa) (i) Each of the Company and its Subsidiaries is in
compliance in all material respects with all rules, laws and regulation relating
to the use, treatment, storage and disposal of toxic substances and protection
of health or the environment ("Environmental Laws") which are applicable to its
business; (ii) neither the Company nor its Subsidiaries has received any notice
from any governmental authority or third party of an asserted claim under
Environmental Laws; (iii) each of the Company and its Subsidiaries has received
all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance with all terms
and conditions of any such permit, license or approval; (iv) to the Company's
knowledge, no facts currently exist that will require the Company or its
Subsidiaries to make future material capital expenditures to comply with
Environmental Laws; and (v) no property which is or has been owned, leased or
occupied by the Company or its Subsidiaries has been designated as a Superfund
site pursuant to the Comprehensive Environmental Response, Compensation of
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) ("CERCLA")
or otherwise designated as a contaminated site under applicable state or local
law. Neither the Company nor any of its Subsidiaries has been named as a
"potentially responsible party" under CERCLA.
(bb) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its Subsidiaries, in the course of
which the Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that it is not, and will not in the
foreseeable future be, subject to material costs and liabilities associated with
compliance with Environmental Laws.
(cc) The Company and each of its Subsidiaries owns or
possesses, or has enforceable rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, tradenames, trademark
registrations, service xxxx registrations, copyrights, copyright applications,
licenses, know-how applications, inventions, trade secrets and rights and
proprietary knowledge necessary for the conduct of its respective business as
currently carried on and as proposed to be carried on (collectively, the
"Intellectual Property"). Except as described in the Registration Statement and
Prospectus, (i) no third parties have rights to any such Intellectual Property,
other than licenses granted by the Company in the ordinary course and those that
would not have a Material Adverse Effect; (ii) to the Company's knowledge, there
is no infringement by third parties of any such Intellectual Property; (iii)
there is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's or any Subsidiary's
rights in or to any such Intellectual Property, and the Company does not believe
any facts exist that would form a basis for any such claim; (iv) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts that would form a basis for
any such claim; (v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company or any
of its Subsidiaries infringes or otherwise violates, or would infringe or
otherwise violate any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any facts that would
form a basis for any such claim; (vi) to the Company's knowledge there is no
patent or patent application that contains
-10-
claims that may encumber, devalue or invalidate any Intellectual Property owned
by or licensed to the Company or any of the Subsidiaries or that is necessary
for the conduct of their businesses as currently conducted or as contemplated to
be conducted or that interferes with the issued or pending claims of any such
Intellectual Property; and (vii) there is no prior art of which the Company is
aware that may render any patent held by the Company or any of the Subsidiaries
invalid or any patent application held by the Company or any of the Subsidiaries
unpatentable that has not been disclosed to the U.S. Patent and Trademark
Office. None of the technology employed by the Company has been obtained or, to
the Company's knowledge, is being used by the Company in violation of the rights
of any third party. The list of the issued patents owned in whole or in part by
the Company or any Subsidiary previously delivered to the Representatives is
true, complete and correct.
(dd) Neither the Company nor any Subsidiary has sent or
received any notice of termination of any of the contracts or agreements
referred to or described in, or filed or incorporated by reference as an exhibit
to, the Registration Statement, and no such termination has been threatened by
the Company, any Subsidiary or any other party to any such contract or
agreement.
(ee) All statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained written consents to the use
of such data from such sources to the extent required.
(ff) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof as
described in the Prospectus, will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(gg) None of the Company, any of its Subsidiaries or any other
person associated with or acting on behalf of the Company or its Subsidiaries
including, without limitation, any director, officer, agent or employee of the
Company or its Subsidiaries has, directly or indirectly, while acting on behalf
of the Company or its Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(hh) The minutes books of the Company and each of its
Subsidiaries have been made available to the Underwriters and counsel for the
Underwriters, and such books (i) contain a complete summary of all meetings and
actions of the directors and stockholders of the Company and each of its
Subsidiaries since the time of its respective incorporation through the date of
the latest meeting and action, and (ii) accurately in all material respects
reflect all transactions referred to in such minutes.
(ii) The licenses underlying the Commercialization Agreement
for Equipment related to the Application of a Plasma Enhanced Coating to
Containers, effective September 1, 2000, between The Coca-Cola Company
("Coca-Cola") and XXXXXX XX and Balzers, including the license from Plasco GmbH
to Coca-Cola, are adequate for the purposes of the business of Applied
-11-
Films Germany as now conducted or as is contemplated to be conducted in the
future and the Company and/or Applied Films Germany has valid rights to use the
intellectual property that is subject of those licenses
5. Representations and Warranties of the Selling Shareholders. Each of
the Selling Shareholders, severally and not jointly, hereby represents and
warrants to each Underwriter as follows:
(a) The Selling Shareholder has caused certificates for the
number of Shares to be sold by such Selling Shareholder hereunder to be
delivered to Computershare Trust Company (the "Custodian"), endorsed in blank or
with blank stock powers duly executed, with a signature appropriately
guaranteed, such certificates to be held in custody by the Custodian for
delivery, pursuant to the provisions of this Agreement and an agreement dated
__________, 2001 between the Custodian and the Selling Shareholder (the "Custody
Agreement").
(b) The Selling Shareholder has granted an irrevocable power
of attorney (the "Power of Attorney") to the person named therein, on behalf of
the Selling Shareholder, to execute and deliver this Agreement and any other
document necessary or desirable in connection with the transactions contemplated
hereby and to deliver the shares to be sold by the Selling Shareholder pursuant
hereto.
(c) This Agreement, the Custody Agreement, the Power of
Attorney and, with respect only to Xxxx X. Xxxxxx and the Xxxxxx Family Trust
the Lock-Up Agreement, have each been duly authorized, executed and delivered by
or on behalf of the Selling Shareholder and, assuming due authorization,
execution and delivery by the other parties hereto, constitutes the valid and
legally binding agreement of the Selling Shareholder, enforceable against the
Selling Shareholder in accordance with its terms.
(d) The execution and delivery by the Selling Shareholder of
this Agreement and the performance by the Selling Shareholder of its obligations
under this Agreement (i) will not contravene any provision of applicable law,
statute, regulation or filing or any agreement or other instrument binding upon
the Selling Shareholder or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Selling Shareholder, (ii)
does not require any consent, approval, authorization or order of or
registration or filing with any court or governmental agency or body having
jurisdiction over it, (iii) does not and will not violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to the
Selling Shareholder or (iv) will not result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Selling
Shareholder pursuant to the terms of any agreement or instrument to which the
Selling Shareholder is a party or by which the Selling Shareholder may be bound
or to which any of the property or assets of the Selling Shareholder is subject.
(e) The Selling Shareholder has, and on the Firm Shares
Closing Date will have, valid and marketable title to the Shares to be sold by
the Selling Shareholder free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on transfer.
-12-
(f) The Selling Shareholder has, and on the Firm Shares
Closing Date will have, full legal right, power and authorization, and any
approval required by law, to sell, assign, transfer and deliver the Shares to be
sold by the Selling Shareholder in the manner provided by this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by
the Selling Shareholder pursuant to this Agreement, the several Underwriters
will receive valid and marketable title to such Shares free and clear of any
lien, claim, security interest or other encumbrance.
(h) All information relating to the Selling Shareholder
furnished in writing by the Selling Shareholder expressly for use in the
Registration Statement and Prospectus is, and on the Firm Shares Closing Date
will be, true, correct, and complete, and does not, and on the Firm Shares
Closing Date will not, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information not misleading.
(i) The Selling Shareholder has reviewed the Registration
Statement and Prospectus and, although the Selling Shareholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of the Selling Shareholder
that would lead the Selling Shareholder to believe that (i) on the Effective
Date, the Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein in
order to make the statements made therein not misleading and (ii) on the
Effective Date the Prospectus contained and, on the Firm Shares Closing Date
contains, no untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein in order to make the statements
therein, not misleading.
(j) The sale of Shares by the Selling Shareholder pursuant to
this Agreement is not prompted by the Selling Shareholder's knowledge of any
material information concerning the Company or its Subsidiaries that is not set
forth in the Prospectus.
(k) The Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(l) With respect only to Unaxis, the Selling Shareholder has
waived in writing its right to purchase Shares from the Underwriters in this
offering. Such writing is enforceable in accordance with its terms.
(m) The representations and warranties of the Selling
Shareholder in the Custody Agreement are and on the Firm Shares Closing Date
will be, true and correct.
6. 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) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the Prospectus
shall have been timely filed with the Commission in accordance with Section 7(a)
of this Agreement.
-13-
(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 satisfaction of
the Commission and the Representatives. If the Company has elected to rely upon
Rule 430A, Rule 430A information previously omitted from the effective
Registration Statement pursuant to Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed time period
and the Company shall have provided evidence satisfactory to the Underwriters of
such timely filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A. If the Company has elected to rely upon Rule 434, a
term sheet shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) within the prescribed time period.
(c) The representations and warranties of the Company and each
of the Selling Shareholders contained in this Agreement and in the certificates
delivered pursuant to Section 6(d) shall be true and correct when made and with
respect to the Company on and as of each Closing Date as if made on such date
and with respect to each Selling Shareholder, on and as of the Firm Shares
Closing Date as if made on such date. The Company and the Selling Shareholders
shall have performed all covenants and agreements and satisfied all the
conditions contained in this Agreement required to be performed or satisfied by
them 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 or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that (i) 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 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, and (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of their knowledge, no
proceedings for that purpose have been instituted or are pending under the
Securities Act.
(e) The Representatives shall have received on the Firm Shares
Closing Date a certificate, addressed to the Representatives and dated such
Closing Date, of each of the Selling Shareholders, to the effect that such
Selling Shareholder has carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties of
such Selling Shareholder in this Agreement are true and correct on and as of
such Closing Date with the same effect as if made on such Closing Date, and such
Selling Shareholder 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.
(f) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from each of
Xxxxxx Xxxxxxxx LLP and Ernst &
-14-
Young LLP addressed to the Representatives and dated, respectively, the date of
this Agreement and each such Closing Date, in form and substance reasonably
satisfactory to the Representatives containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(g) The Representatives shall have received on each Closing
Date from Varnum, Riddering, Xxxxxxx & Xxxxxxx LLP, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date, and
stating that:
(i) Each of the Company and AFCO GP, Inc. (its "US
Subsidiary") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation or organization. Each of the Company and its US
Subsidiary is duly qualified to transact business 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 businesses makes such qualification necessary, except for
such jurisdictions where the failure to so qualify, individually or in
the aggregate, would not have a Material Adverse Effect.
(ii) Each of the Company and its US Subsidiary has
all requisite corporate power and authority to own, lease and license
its assets and properties and conduct its business as now being
conducted and with respect to the Company to enter into, deliver and
perform its obligations under this Agreement and to issue and sell the
Shares.
(iii) The Company has authorized, issued and
outstanding capital stock as set forth in the Registration Statement
and the Prospectus under the caption "Capitalization"; the certificates
evidencing the Shares are in due and proper legal form and have been
duly authorized for issuance by the Company; all of the outstanding
shares of Preferred Stock and Common Stock of the Company have been
duly and validly authorized and issued and are fully paid and
nonassessable and none of them was issued in violation of any
preemptive or other similar right. The Shares when issued and sold
pursuant to this Agreement will be duly and validly issued, fully paid
and nonassessable and will not have been issued in violation of any
preemptive or other similar right. There are no preemptive or other
rights to subscribe for or to purchase or any restriction upon the
voting or transfer of any securities of the Company pursuant to the
Company's Articles of Incorporation or by-laws or other governing
documents or any agreements or other instruments to which the Company
is a party or by which it is bound, except the preemptive rights of
Unaxis which have been duly waived. 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 no
commitment, plan or arrangement to issue, any share of stock of the
Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Preferred Stock, the Common
Stock, the Shares and the Warrants conform in all material respects to
the descriptions thereof contained in the Registration Statement and
the Prospectus. The issued and outstanding shares of capital stock of
each of the Company's Subsidiaries are owned by the Company or by
another wholly owned subsidiary of the Company, free and clear of any
perfected security interest or, to the knowledge of such counsel, any
other security interests,
-15-
liens, encumbrances, equities or claims, other than those described in
the Registration Statement and the Prospectus.
(iv) 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 the Shares.
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 such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and except as rights to indemnity or contribution may be
limited by federal or state securities laws and public policy
underlying such laws.
(v) 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) or any other agreement
or instrument entered into or to be entered into by the Company in
connection with the transactions contemplated by the Registration
Statement and the Prospectus 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 any event which with notice or lapse of time, or both,
would constitute a default) under, or require consent or waiver under,
or result in the execution or imposition of any lien, charge, claim,
security interest or encumbrance upon any properties or assets of the
Company or any Subsidiary pursuant to the terms of any indenture,
mortgage, deed of trust, note or other agreement or instrument to which
the Company or any Subsidiary is a party or by which either the Company
or any Subsidiary or any of its respective assets or properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, domestic or foreign, or
violate any provision of the charter or by-laws of the Company or any
Subsidiary.
(vi) To the best of such counsel's knowledge, except
as set forth on a schedule to the opinion, no default exists, and no
event has occurred that 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 any Subsidiary of any
indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the Company or any Subsidiary is a party or by
which it or any of its respective assets or properties or businesses
may be bound or affected, where the consequences of such default,
individually or in the aggregate, is required to be disclosed in the
Registration Statement and the Prospectus or that would have a Material
Adverse Effect.
(vii) No "prohibited transaction" (as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time (the "Code")) or "accumulated
funding deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in
-16-
Section 4043(b) of ERISA (other than events with respect to which the
30-day notice requirement under Section 4043 of ERISA has been waived)
has occurred with respect to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) maintained by the Company in the United States
that could have a Material Adverse Effect; each employee benefit plan
is in compliance in all material respects with applicable law,
including ERISA and the Code; the Company has not incurred and does not
expect to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any "pension plan"; and each
"pension plan" (as defined in ERISA) for which the Company would have
any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which could cause the
loss of such qualification.
(viii) Neither the Company nor its US Subsidiary are
in violation of any term or provision of its respective charter or
by-laws or, to the best of such counsel's knowledge, any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
domestic or foreign, where the consequences of such violation,
individually or in the aggregate, would have a Material Adverse Effect.
(ix) No consent, approval, authorization, license,
registration, qualification or order of any court or governmental
agency or regulatory body is required for the due authorization,
execution, delivery or performance of this Agreement by the Company or
the consummation of the transactions contemplated hereby, except such
as have been obtained under the Securities Act.
(x) To the best of such counsel' knowledge, except as
disclosed on a schedule to the opinion, 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 threatened against, or
involving the assets, properties or businesses of, the Company or any
Subsidiary.
(xi) Neither the Company nor any of its Subsidiaries
own any "margin securities" as that term is defined in Regulation U of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and none of the proceeds of the sale of the Shares
will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the
Securities to be considered a "purpose credit" within the meanings of
Regulation T, U or X of the Federal Reserve Board.
(xii) To the best of such counsel's knowledge,
neither the Company nor any of its Subsidiaries is a party to any
contract, agreement of understanding with any person that would give
rise to a claim against the Company or the Underwriters for a brokerage
commission, finder" fee or like payment in connection with the offering
and sale of the Shares.
-17-
(xiii) The statements in the Prospectus under the
captions "Description of Capital Stock," "Management's Discussion and
Analysis of Financial Conditions," "Use of Proceeds," "Risk Factors,"
"Business," "Management," and "Certain Transactions," insofar as such
statements constitute a summary of documents referred to therein or
matters of law, accurately present in all material respects the
information set forth with respect to such documents and matters.
Accurate copies of all contracts and other documents required to be
filed as exhibits to, or described in, the Registration Statement have
been so filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
(xiv) 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 expresses no opinion) comply as to form in all material
respects with the requirements of the Securities Act and the Rules.
(xv) The Registration Statement is effective under
the Securities Act, and no stop order suspending the effectiveness of
the Registration Statement has been issued and to such counsel's
knowledge no proceedings for that purpose have been instituted or are
threatened, pending or contemplated. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period
required by such Rule 424(b).
(xvi) The Company is not an "investment company" or
an entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials. Copies of such certificates shall be furnished to the
Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, 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 lead 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 data, as to which such counsel need express no opinion) 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, notes and schedules thereto and other financial data, as
to which such counsel need express no opinion) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary
-18-
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(h) The Representatives shall have received on each Closing
Date from Xxxx & Storm, special counsel for the Company on intellectual property
matters, an opinion, addressed to the Representatives and dated such Closing
Date, and stating that:
(i) To the best of such counsel's knowledge, there is
no intellectual property impediment to the operations of the Company in
the United States.
(ii) To the best of such counsel's knowledge, there
is no pending or threatened action, suit, proceeding or claim by
governmental authorities or others against the Company.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials. Copies of such certificates shall be furnished to the
Representatives and counsel for the Underwriters.
(i) The Representatives shall have received on each Closing
Date from Schlawien Xxxx Partnerschaft, special counsel for the AFCO GmbH & Co.
KG ("Applied Films Germany"), an opinion, addressed to the Representatives and
dated such Closing Date, and stating that:
(i) Applied Films Germany has been duly organized and
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation or organization. Applied Films
Germany is duly qualified to transact business 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, individually or in
the aggregate, would not have a Material Adverse Effect.
(ii) Applied Films Germany has all requisite
corporate power and authority to own, lease and license its assets and
properties and conduct its business as now being conducted.
(iii) The ownership interests in Applied Films
Germany consist of _____ Shares of __________ all of which have been
duly authorized and validly issued, are fully paid and nonassessable
and are owned by the Company or by another wholly owned subsidiary of
the Company, free and clear of any perfected security interest or, to
the knowledge of such counsel, any other security interests, liens,
encumbrances, equities or claims, other than those described in the
Registration Statement and the Prospectus.
(iv) To the best of such counsel's knowledge, no
default exists, and no event has occurred that 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 Applied Films Germany
of any indenture, mortgage, deed of trust, note or any other agreement
or instrument to which Applied Films Germany is a party or by which it
or any of its assets or
-19-
properties or businesses may be bound or affected, where the
consequences of such default, individually or in the aggregate, is
required to be disclosed in the Registration Statement and the
Prospectus or which would have a Material Adverse Effect.
(v) Applied Films Germany is not in violation of any
term or provision of its charter or by-laws or to the best of such
counsel's knowledge, any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, domestic or foreign, where the
consequences of such violation, individually or in the aggregate, would
have a Material Adverse Effect.
(vi) To the best of such counsel's knowledge, 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
threatened against, or involving the assets, properties or businesses
of, Applied Films Germany.
(vii) Each employee benefit plan is in compliance in
all material respects with applicable law.
(viii) To the best of such counsel's knowledge,
except as described in the Prospectus, (A) Applied Films Germany or the
Company has valid license rights to or ownership of the patents
specified in the opinion (the "Intellectual Property"), and there are
no rights of third parties to any such Intellectual Property; (B) there
is no infringement or other violation by third parties of any of the
Intellectual Property; (C) there is no pending or threatened action,
suit, proceeding or claim by governmental authorities or others
relating to the Intellectual Property, and such counsel is unaware of
any facts which would form a reasonable basis for any such claim; and
(D) there is no pending or threatened action, suit, proceeding or claim
by governmental authorities or others challenging the rights of Applied
Films Germany or the Company in or to, or challenging the scope of, any
Intellectual Property, and such counsel is unaware of any facts which
would form a reasonable basis for any such claim.
(ix) To the best of such counsel's knowledge, the
patent applications of Applied Films Germany specified in the opinion
that are presently on file disclose patentable subject matter, and such
counsel is not aware of any inventorship challenges, any interference
that has been declared or provoked, or any other material fact with
respect to such patent applications of the Applied Films Germany
presently on file that (A) would preclude the issuance of patents with
respect to such applications or (B) would lead such counsel to conclude
that such patents, when issued, would not be valid and enforceable in
accordance with applicable regulations.
(x) Each of (i) the Share Purchase and Exchange
Agreement dated October 18, 2000, as amended (the "Unaxis Agreement")
by and between the Company and Balzers Process Systems GmbH ("Balzers")
and its parent company Unaxis Holdings AG (together with Balzers
"Unaxis") pursuant to which the Company purchased all of the stock of
Leybold Coating GmbH & Co. KG ("Leybold KG"), (ii) the Bravo
Intellectual Property License Agreement dated December 29, 2000, by and
between Balzers and Leybold, and (iii)
-20-
the Newco Intellectual Property License Agreement dated December 29,
2000, by and between Balzers and Leybold, and (iv) any other agreement
consent or license contemplated by or entered into in connection with
the Unaxis Agreement, constitute the valid and binding obligations of
Unaxis and are enforceable against Unaxis in accordance with their
terms.
(xi) The LAD Reorganization as defined in Unaxis
Agreement was effective to transfer to Leybold KG all of the assets and
operations of Unaxis and any of its divisions or subsidiaries used in
the LAD Business, as defined in Unaxis Agreement, and as of the Closing
of the Unaxis Agreement, Leybold KG owned all of the assets, rights,
intellectual property, contracts and permits necessary to operate the
LAD Business, as defined in the Unaxis Agreement, consistent with past
practice and upon closing of the Unaxis Agreement, all such assets and
operations were transferred to Applied Films Germany, subject only to
the Assumed Liabilities. Such assets and operations were transferred
free of any liens, pledges or other encumbrances or any other third
party rights.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of Applied Films Germany
and the Company and public officials and on the opinions of other counsel
satisfactory to the Representatives as to matters which are governed by laws
other than the laws of Germany; provided that such counsel shall state that in
their opinion the Underwriters and they are justified in relying on such other
opinions. Copies of such certificates and other opinions shall be furnished to
the Representatives and counsel for the Underwriters.
(j) The Representatives shall have received on each Closing
Date from Shanghai Zhu & Partners Law Firm, special counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date, and
stating that:
(i) XXXX is a limited liability company duly
organized, validly existing and in good standing under the law of the
People's Republic of China. XXXX has full limited liability company
power and authority to conduct all the activities conducted by it, to
own or lease all the assets owned or leased by it and to conduct its
business as described in the Registration Statement and Prospectus.
XXXX is duly licensed or qualified to do business in all jurisdictions
in which the nature of the activities conducted by it or the character
of the assets owned or leased by it makes such license or qualification
necessary, except to the extent that the failure to be so licensed or
qualified would not have a material and adverse effect on the business
or financial condition of XXXX.
(ii) The Articles of Association and the Joint
Venture Agreement are each enforceable in accordance with its
respective terms.
(iii) The limited liability company interests of the
Company and Nippon Sheet Glass Co., Ltd. ("NSG") in XXXX have been
validly issued and were not issued in violation of and are not subject
to any preemptive or similar right under XXXX'x Articles of Association
or the Joint Venture Agreement. The ownership interests of the Company
and NSG in XXXX are correctly described in the Prospectus, and, to our
knowledge, there are no outstanding rights calling for the issuance of,
and XXXX has no contractual commitments or
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obligations requiring it to issue, additional interests in XXXX or to
change the ownership interests in XXXX.
(k) The Representatives shall have received on the Firm Shares
Closing Date from Xxxxx Xxxx, General Counsel of Unaxis Holdings AG (for
purposes of this section, the "Selling Shareholder"), an opinion, addressed to
the Representatives and dated such Closing Date, and stating that:
(i) This Agreement has been duly and validly executed
and delivered by or on behalf of the Selling Shareholder.
(ii) This Agreement, the Custody Agreement, and the
Power of Attorney each constitute the legal, valid and binding
obligation of the Selling Shareholder enforceable against the Selling
Shareholder in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles; and
the Selling Shareholder has full legal right and authority to enter
into this Agreement and to sell, transfer and deliver in the manner
provided in this Agreement, the Shares to be sold by the Selling
Shareholder hereunder.
(iii) The transfer and sale by the Selling
Shareholder of the Shares to be sold by the Selling Shareholder as
contemplated by this Agreement will not conflict with, result in a
breach of, or constitute a default under any agreement or instrument
known to such counsel to which the Selling Shareholder is a party or by
which the Selling Shareholder or any of its properties may be bound, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation.
(iv) The Selling Shareholder owns the Shares to be
sold hereunder from, clear of all liens, claims, and encumbrances. All
of the Selling Shareholder's rights in the Shares to be sold by the
Selling Shareholder pursuant to this Agreement, have been transferred
to the Underwriters who have severally purchased such Shares pursuant
to this Agreement, free and clear of adverse claims, assuming for
purposes of this opinion that the Underwriters purchased the same in
good faith without notice of any adverse claims.
(v) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or regulatory
agency, authority or body or financial institution is required in
connection with the performance of this Agreement by the Selling
Shareholder or the consummation of the transactions contemplated
hereby, including the delivery and sale of the Shares to be delivered
and sold by the Selling Shareholder.
(vi) The execution and delivery of the Unaxis
Agreement did not, and the performance of Unaxis's obligations under
the Unaxis Agreement did not and will not:
(A) breach of any of the terms, conditions,
or provisions of, or constitute a default
(or with notice or lapse of time, would
constitute a breach or default) under any
agreement applicable to Unaxis or Leybold
KG;
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(B) violate any decree, judgment, or order
applicable to Unaxis or Leybold KG;
(C) violate any law, statute, regulation, or
rule applicable to Unaxis or Leybold KG; or
(D) require consent, approval or
authorization of, or declaration, filing, or
registration with any governmental authority
that was not made or obtained prior to the
closing thereof.
(vii) As of the Closing Date of the Unaxis Agreement,
Leybold KG owned all of the patents, trade and service marks and all
applications for any of the foregoing, and any and all licenses,
related to and necessary for the operation of the LAD Business (the
"Unaxis IP") and all registrations, other filings or fees payable for
such intellectual property rights had been made, filed or paid when
due, and all such intellectual property rights are valid and
enforceable.
To the extent deemed advisable by such counsel, he may rely as to
matters of fact on certificates of the Selling Shareholder. Copies of such
certificates shall be furnished to the Representatives and counsel for the
Underwriters.
(l) The Representatives shall have received on the Firm Shares
Closing Date from Varnum, Riddering, Xxxxxxx & Xxxxxxx LLP, counsel for Xxxx X.
Xxxxxx and the Xxxx Xxxxxx Family Trust (for purposes of this section, the
"Selling Shareholders"), an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) This Agreement has been duly and validly executed
and delivered by or on behalf of the Selling Shareholders.
(ii) This Agreement, the Custody Agreement, the Power
of Attorney and the Lock-Up Agreement each constitute the legal, valid
and binding obligation of the Selling Shareholders enforceable against
the Selling Shareholders in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles; and the Selling Shareholders have full legal right and
authority to enter into this Agreement and to sell, transfer and
deliver in the manner provided in this Agreement, the Shares to be sold
by the Selling Shareholders hereunder.
(iii) The transfer and sale by the Selling
Shareholder of the Shares to be sold by the Selling Shareholder as
contemplated by this Agreement will not conflict with, result in a
breach of, or constitute a default under any agreement or instrument
known to such counsel to which the Selling Shareholder is a party or by
which the Selling Shareholder or any of its properties may be bound, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation.
-23-
(iv) The Selling Shareholder owns the Shares to be
sold hereunder are clear of all liens, claims, and encumbrances. All of
the Selling Shareholder's rights in the Shares to be sold by the
Selling Shareholder pursuant to this Agreement, have been transferred
to the Underwriters who have severally purchased such Shares pursuant
to this Agreement, free and clear of adverse claims, assuming for
purposes of this opinion that the Underwriters purchased the same in
good faith without notice of any adverse claims.
(v) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or regulatory
agency, authority or body or financial institution is required in
connection with the performance of this Agreement by the Selling
Shareholder or the consummation of the transactions contemplated
hereby, including the delivery and sale of the Shares to be delivered
and sold by the Selling Shareholder.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of the Selling Shareholder. Copies of such
certificates shall be furnished to the Representatives and counsel for the
Underwriters.
(m) All proceedings taken in connection with the sale of the
Firm Shares and the Option 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 Xxxxx Xxxxxx & Xxxxxx LLP 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 Xxxxx Xxxxxx & Xxxxxx LLP such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters.
(n) The Representatives shall have received copies of the
Lock-up Agreements executed by each entity or person described in Section 4(o).
(o) The Company and the Selling Shareholders shall have
furnished or caused to be furnished to the Representatives such further
certificates or documents as the Representatives shall have reasonably
requested.
7. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause
the Registration Statement, if not effective at the time of execution
of this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day 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.
(ii) The Company shall promptly advise the
Representatives in writing (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any
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request by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional information, (iii) 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 (iv)
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 or any document
incorporated by reference in the Registration Statement unless the
Company has furnished the Representatives a copy for its review prior
to filing and 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.
(iii) 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 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 (ii) of this Section 7(a), an
amendment or supplement which shall correct such statement or omission
or an amendment which shall effect such compliance.
(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 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.
(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.
If applicable, the copies of the Registration Statement and Prospectus
and each amendment and supplement thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
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(vi) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify the Shares
for offer and sale in connection with the offering under the laws of
such jurisdictions as the Representatives 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) The Company, during the period when the
Prospectus is required to be delivered under the Securities Act and the
Rules or the Exchange Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the Exchange
Act within the time periods required by the Exchange Act and the
regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC
World Markets Corp., for a period of 90 days after the date of this
Agreement, the Company and each of its individual directors and
executive officers 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, exercisable for or
exchangeable for equity securities of the Company), except for (i) 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 (ii) the registration for resale of shares of Common Stock
purchased on exercise of warrants or conversion of Preferred Stock, in
each case as described in the Registration Statement and the
Prospectus. In the event that during this period, (i) any shares are
issued pursuant to the warrants outstanding and to officers or
directors of the Company pursuant to the exercise of currently
outstanding stock options during such 90 day period or (ii) any
registration is effected on Form S-8 or on any successor form relating
to shares that are purchasable upon exercise of stock options during
such 90 period, the Company shall 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 CIBC World Markets Corp.,
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 completion of this offering, the
Company shall make all filings required under applicable securities
laws and by the Nasdaq National Market (including any required
registration under the Exchange Act).
(x) Prior to the Closing Date, the Company will issue
no press release or other communications directly or indirectly and
hold no press conference with respect to the Company, the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company, or the offering of the Shares without the
prior written consent of the Representatives unless in the judgment of
the Company and its counsel, and after notification to the
Representatives, such press release or communication is required by
law.
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(xi) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of Proceeds"
in the Prospectus.
(b) 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 the
Company and the Selling Shareholders under this Agreement including those
relating to: (i) 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 any document incorporated by reference therein,
and the printing, filing and distribution of this Agreement; (ii) the
preparation and delivery of certificates for the Shares to the Underwriters;
(iii) 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; (iv) the
filing fees of the NASD in connection with its review of the terms of the public
offering and reasonable fees and disbursements of counsel for the Underwriters
in connection with such review; (v) inclusion of the Shares for quotation on the
Nasdaq National Market; and (vi) all transfer taxes, if any, with respect to the
sale and delivery of the Shares by the Company and the Selling Shareholders to
the Underwriters. Subject to the provisions of Section 10, 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.
8. 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 (i) 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, or (ii) in whole or
in part upon any breach of the representations and warranties set forth in
Section 4 hereof; or (iii) in whole or in part upon any failure of the Company
to perform any of its obligations hereunder or under law; 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
-27-
Prospectus, or such amendment or supplement thereto 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. This
indemnity agreement will be in addition to any liability that the Company may
otherwise have.
(b) Each of the Selling Shareholders agree, 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 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 (i) 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 by such Selling Shareholder, or
(ii) in whole or in part upon any breach of the representations and warranties
set forth in Section 5 hereof; or (iii) in whole or in part upon any failure of
the Selling Shareholder to perform its obligations hereunder or under law;
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
thereto in reliance upon and in conformity with information furnished in writing
to the Selling Shareholders by the Representatives on behalf of any Underwriter
specifically for use therein. Notwithstanding the foregoing, the liability of
the Selling Shareholders pursuant to the provisions of Section 8(a) shall be
limited to an amount equal to the aggregate net proceeds received by such
Selling Shareholder from the sale of the Shares sold by the Selling Shareholder
hereunder. This indemnity will be in addition to any liability that any of the
Selling Shareholders may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Shareholders and 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 signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company and the Selling
Shareholders 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 that was made in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, based on written information provided
by such Underwriter for use in the Registration Statement; provided, however,
that the obligation of each Underwriter to indemnify the Company or the Selling
Shareholders (including any controlling person, director or officer thereof)
shall be limited to the net proceeds received by the Company from such
Underwriter.
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(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 8(a) or 8(b) shall be available to any party who shall
fail to give notice as provided in this Section 8(c) 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 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 party, (ii)
the indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party (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 party. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent, which consent shall
not be unreasonably withheld or delayed.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8(a) or 8(b) is due in accordance with its terms but for any reason is
held to be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party 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 any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters on the other from the offering of the Shares
or, if such allocation is not permitted by applicable law or indemnification is
not available as a result of the indemnifying party not having received notice
as provided in Section 8 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Selling Shareholders on the one hand and the
-29-
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, the Selling Shareholders and the Underwriters 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 Shareholders, as set forth in the table on the cover page of the
Prospectus, bear to (y) the underwriting discounts received by the Underwriters,
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Shareholders 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 and the Selling Shareholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 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 9, (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; (ii) the Company shall be liable and responsible for any amount in
excess of such underwriting discount; and (iii) in no case shall the Selling
Shareholders be liable and responsible for any amount in excess of the aggregate
net proceeds of the sale of Shares received by the Selling Shareholders;
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 9, 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, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 9. 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 Underwriter's
obligations to contribute pursuant to this Section 9 are several in proportion
to their respective underwriting commitments and not joint.
10. 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 Shareholders at any time
-30-
(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 could in the future materially disrupt, the
securities markets; (ii) if there has occurred any new outbreak or 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 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., the American Stock Exchange, Inc. or the Nasdaq National Market
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 (vi) if, in the judgment of the Representatives,
there has occurred a Material Adverse Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
neither the Company nor the Selling Shareholders shall be under any liability to
any Underwriter, and no Underwriter shall be under any liability to the Company
or the Selling Shareholders, except that (y) if this Agreement is terminated by
the Representatives or the Underwriters because of any failure, refusal or
inability on the part of the Company or the Selling Shareholders to comply with
the terms or to fulfill any of the 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 (z) 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, the Selling Shareholders or to the other Underwriters
for damages occasioned by its failure or refusal.
11. Substitution of Underwriters. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 10) 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 Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
-31-
(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 11 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 one 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 the Selling
Shareholders and without liability on the part of the Company, except in both
cases as provided in Sections 7(b), 8, 9 and 10. The provisions of this Section
shall not in any way affect the liability of any defaulting Underwriter to the
Company or the Selling Shareholders or the non-defaulting Underwriters arising
out of such default. A substitute underwriter hereunder shall become an
Underwriter for all purposes of this Agreement.
12. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers, of
the Selling Shareholders 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 the
Selling Shareholders or any of the officers, directors or controlling persons
referred to in Sections 8 and 9 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 7(b), 8, 9 and 10 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
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 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.
-32-
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 World Markets Corp., 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ___________, with a copy to Xxxxx
Xxxxxx & Xxxxxx LLP, 0000 00xx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000 and (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 Varnum, Riddering,
Xxxxxxx & Xxxxxxx LLP, 000 Xxxxxx Xxxxxx, X.X., Xxxxx Xxxxxx, Xxxxxxxx 00000,
(c) if to Unaxis Holdings AG to Xxxxxxxxxxxxxxxxx 000, X.X. Xxx 0000, XX-0000,
Xxxxxx, Xxxxxxxxxxx, and (d) if to Xxxx X. Xxxxxx and the Xxxx Xxxxxx Family
Trust, 0000 X-00 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, with a copy to Varnum,
Riddering, Xxxxxxx & Xxxxxxx LLP.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, applicable to agreements made and to be fully
performed therein.
-33-
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.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
APPLIED FILMS CORPORATION
By
--------------------------------------
Title:
UNAXIS HOLDINGS AG
By
--------------------------------------
Title:
XXXX X. XXXXXX
----------------------------------------
XXXX XXXXXX FAMILY TRUST
By
--------------------------------------
Title:
-34-
Confirmed:
CIBC WORLD MARKETS CORP.
FleetBoston Xxxxxxxxx Xxxxxxxx
Xxxxxxx & Company, Inc.
Acting severally on behalf of themselves and as representatives of the several
Underwriters named in Schedule I annexed hereto.
By CIBC WORLD MARKETS CORP.
By
-------------------------------------
Title:
-35-
SCHEDULE I
NUMBER OF FIRM
SHARES TO BE
PURCHASED FROM NUMBER OF FIRM SHARES TO BE PURCHASED FROM THE
NAME THE COMPANY SELLING SHAREHOLDERS
------------------------- --------------- ----------------------------------------------
Unaxis Xxxx X. The Xxxx Xxxxxx
Holdings XX Xxxxxx Family Trust
----------- ------- ----------------
CIBC World Markets Corp.
FleetBoston Xxxxxxxxx
Xxxxxxxx, Inc.
Xxxxxxx & Company, Inc.
--------------- ---------------- ---------------------------
TOTAL
=============== ================ ===========================
TOTAL
===========================
