2,000,000 Shares*
inTEST Corporation
Common Stock
UNDERWRITING AGREEMENT
, 2000
XXXXXXX & COMPANY, INC.
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXX XXXXXXXXXX XXXXX LLC
As Representatives of the several underwriters named in Schedule I hereto
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
inTEST Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell 1,000,000 shares (the "Company Firm Shares") of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), and the
stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders," which term shall include the Selling Stockholder Insiders as
defined below) propose to sell an aggregate of 1,000,000 shares (the "Selling
Stockholder Firm Shares") of Common Stock, in each case to you and to the
several other underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company has also agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 300,000
shares of Common Stock, on the terms and for the purposes set forth in Section
1(b) (the "Option Shares"). The Company Firm Shares and the Selling Stockholder
Firm Shares are referred to collectively herein as the "Firm Shares," and the
Firm Shares and the Option Shares are referred to collectively herein as the
"Shares." The several Underwriters propose to offer the Shares as set forth in
the Prospectus (as defined below).
The Company and each of the Selling Stockholders confirm as follows
their respective agreements with the Representatives and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of
the Company and the Selling Stockholders herein contained and subject to all the
terms and conditions of this Agreement, (i) the Company agrees to issue and sell
the Company Firm Shares to the several Underwriters, (ii) each Selling
Stockholder, severally and not jointly, agrees to sell to the several
Underwriters the respective number of Selling Stockholder Firm Shares set forth
opposite that Selling Stockholder's name on Schedule II hereto and (iii) each of
the Underwriters, severally and not jointly, agrees to purchase from the Company
and the Selling Stockholders the respective number of Firm Shares set forth
opposite that Underwriter's name in Schedule I hereto, at the purchase price of
$____ for each Firm Share. The number of Firm Shares to be purchased by each
Underwriter from the Company and each Selling Stockholder shall be as nearly as
practicable in the same proportion to the total number of Firm Shares being sold
by the Company and each Selling Stockholder as the number of Firm Shares being
purchased by each Underwriter bears to the total number of Firm Shares to be
sold hereunder.
-------------------
* Plus an option to purchase up to an additional 300,000 shares to cover
over-allotments.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally and
not jointly, up to the maximum number of Option Shares at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time, and from time
to time, on or before the 30th day after the date of this Agreement. Each time
for the delivery and payment for the Option Shares being herein referred to as
an "Option Closing Date" shall be determined upon written or telegraphic notice
(the "Option Shares Notice") by the Representatives to the Company no later than
12:00 noon, New York City time, at least two and no more than five business days
before the date specified for closing in the Option Shares Notice, setting forth
the aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, the Company will issue and sell to
the Underwriters the number of Option Shares set forth in the Option Shares
Notice, and each Underwriter will purchase such percentage of the Option Shares
as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
the Representatives for the accounts of the Underwriters against payment of the
purchase price by wire transfer payable in same-day funds to the order of the
Company for the Company Firm Shares to be sold by it and to Fleet National Bank,
as custodian for the Selling Stockholders (the "Custodian"), for the Selling
Stockholder Firm Shares at the office of Xxxxxxx & Company, Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the
third (or, if the purchase price set forth in Section 1(a) hereof is determined
after 4:30 p.m., Washington D.C. time, the fourth) business day following the
commencement of the offering contemplated by this Agreement, or at such time on
such other date, not later than seven business days after the date of this
Agreement, as may be agreed upon by the Company and the Representatives (such
date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place, from time to time, at the offices specified above for the Closing Date at
the time and date (which may be the Closing Date) specified in the Option Shares
Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps and other transfer taxes, if any,
in connection with the issuance and delivery of the Firm Shares and Option
Shares by the Company or the Selling Stockholders, respectively, to the
respective Underwriters shall be borne by the Company and such Selling
Stockholders, as the case may be. The Company and such Selling Stockholders, as
the case may be, will pay and save each Underwriter and any subsequent holder of
the Shares harmless from any and all liabilities with respect to or resulting
from any failure or delay in paying Federal and state stamp and other transfer
taxes, if any, which may be payable or determined to be payable in connection
with the original issuance or sale to such Underwriter of the Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-37604) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus, including the documents incorporated by reference therein, as
contemplated by Rule 430 or Rule 430A of the Rules and Regulations included at
any time as part of the registration statement. Copies of such registration
2
statement and amendments and of each related preliminary prospectus have been
delivered to the Representatives. If such registration statement has not become
effective, a further amendment to such registration statement, including a form
of final prospectus, necessary to permit such registration statement to become
effective will be filed promptly by the Company with the Commission. If such
registration statement has become effective, a final prospectus containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Rules and Regulations will be filed promptly by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including all documents
incorporated by reference therein, financial statements and all exhibits and
schedules thereto and any information deemed to be included by Rule 430A and
includes any registration statement relating to the offering contemplated by
this Agreement and filed pursuant to Rule 462(b) of the Rules and Regulations.
The term "Prospectus" means the prospectus, including the documents incorporated
by reference therein, as first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations or, if no such filing is required, the form of
final prospectus, including the documents incorporated by reference therein,
included in the Registration Statement at the Effective Date. Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the Effective Date,
the date of any preliminary prospectus or the date of the Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(b) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and no stop order suspending the
effectiveness of the Registration Statement (including any related registration
statement filed pursuant to Rule 462(b) under the Act) or any post-effective
amendment thereto has been issued, and no proceeding for that purpose has been
initiated or threatened by the Commission. On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), the Closing Date and, if later, the Option Closing Date and when any
post-effective amendment to the Registration Statement becomes effective or any
amendment or supplement to the Prospectus is filed with the Commission, the
Registration Statement and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included in the Prospectus, did and
will comply with all applicable provisions of the Act, the Exchange Act, the
rules and regulations under the Exchange Act (the "Exchange Act Rules and
Regulations"), and the Rules and Regulations and will contain all statements
required to be stated therein in accordance with the Act, the Exchange Act, the
Exchange Act Rules and Regulations, and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement, the
Prospectus or any such amendment or supplement thereto did or will contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission and at the Closing
Date and, if later, the Option Closing Date, the Prospectus did not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or omissions made
in reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement or Prospectus or any amendment or
supplement thereto. The Company acknowledges that the concession and reallowance
figures in the second paragraph under the heading "Underwriting" and the
information in the sixth paragraph and first sentence of the seventh paragraph
under the heading "Underwriting" in the Prospectus constitute the only
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement.
(c) The documents that are incorporated by reference in the preliminary
prospectus and the Prospectus or from which information is so incorporated by
reference, when they became or become effective or were or are filed with the
Commission, as the case may be, complied or will comply in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
Rules and Regulations or the Exchange Act Rules and Regulations, as applicable;
and any documents so filed and incorporated by reference subsequent to the
Effective Date shall, when they are filed with the Commission, comply in all
material respects with the requirements of the Act or the Exchange Act, as
applicable, and the Rules and Regulations or the Exchange Act Rules and
Regulations, as applicable.
3
(d) The Company does not own, and at the Closing Date and, if later,
the Option Closing Date, will not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any corporation, firm, partnership, joint venture,
association or other entity, other than the subsidiaries listed in Exhibit 21 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, Temptronic Test Systems, Ltd., Temptronic International Corporation and
inTest Gmbh (the "Subsidiaries"). The Company and each of its Subsidiaries is,
and at the Closing Date and, if later, the Option Closing Date, will be, a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. The Company and each of its Subsidiaries
has, and at the Closing Date and, if later, the Option Closing Date, will have,
full 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 the Prospectus. The Company and each
of its Subsidiaries is, and at the Closing Date and, if later, the Option
Closing Date, will be, duly licensed or qualified to do business and in good
standing as a foreign corporation 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 qualified or be in good standing would not materially and
adversely affect the Company and its Subsidiaries taken as a whole or their
business, properties, business prospects, condition (financial or other) or
results of operations. All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable, and owned by the Company free and clear of all claims, liens,
charges and encumbrances; there are no securities outstanding that are
convertible into or exercisable or exchangeable for capital stock of any
Subsidiary. The Company and its Subsidiaries are not, and at the Closing Date
and, if later, the Option Closing Date, will not be, engaged in any discussions
or a party to any agreement or understanding, written or oral, regarding the
acquisition of an interest in any corporation, firm, partnership, joint venture,
association or other entity where such discussions, agreements or understandings
would require amendment to the Registration Statement pursuant to applicable
securities laws. Complete and correct copies of the certificate or articles of
incorporation, bylaws or other organizational documents of the Company and each
of its Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(e) All of the outstanding shares of capital stock of the Company
(including the Selling Stockholder Firm Shares to be sold by the Selling
Stockholders under this Agreement) have been duly authorized, validly issued and
are fully paid and nonassessable and were issued in compliance with all
applicable state and federal securities laws; the Company Firm Shares and the
Option Shares have been duly authorized and when issued and paid for as
contemplated herein will be validly issued, fully paid and nonassessable; no
preemptive or similar rights exist with respect to any of the Shares or the
issue and sale thereof. The description of the capital stock of the Company in
the Registration Statement and the Prospectus is, and at the Closing Date and,
if later, the Option Closing Date, will be, complete and accurate in all
respects. Except as set forth in the Prospectus, the Company does not have
outstanding, and at the Closing Date and, if later, the Option Closing Date,
will not have outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of capital stock, or any
such warrants, convertible securities or obligations. No further approval or
authority of stockholders or the Board of Directors of the Company will be
required for the transfer and sale of the Selling Stockholder Firm Shares or the
issuance and sale of the Company Firm Shares and the Option Shares as
contemplated herein.
(f) The financial statements and schedules included or incorporated by
reference in the Registration Statement or the Prospectus present fairly the
financial condition of the Company and its consolidated Subsidiaries (including,
for the purposes of the financial statements and schedule referred to in the
following sentence, Temptronic Corporation, a Delaware corporation) as of the
respective dates thereof and the results of operations and cash flows of the
Company and its consolidated Subsidiaries for the respective periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The financial statements and schedules included in
the Registration Statement or the Prospectus conform to the requirements of Item
11(b)(iii) of Form S-3 under the Act and Regulation S-X of the Rules and
Regulations and no other financial statements or schedule of the Company are
required by the Act, the Exchange Act, the Exchange Act Rules and Regulations or
the Rules and Regulations to be included in the Registration Statement or the
Prospectus. KPMG LLP (the "Accountants"), who have reported on certain of such
financial statements and schedules, are independent accountants with respect to
the Company as required by the Act and the Rules and Regulations. The summary
consolidated financial data included in the Registration Statement present
4
fairly the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented in the Registration
Statement.
(g) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, except as set forth in or contemplated
by the Registration Statement and the Prospectus, (i) there has not been and
will not have been any change in the capitalization of the Company (other than
in connection with the exercise of options to purchase the Company's Common
Stock granted pursuant to the Company's stock option plan from the shares
reserved therefor as described in the Registration Statement), or any material
adverse change in the business, properties, business prospects, condition
(financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole, arising for any reason whatsoever, (ii) neither
the Company nor any of its Subsidiaries has incurred nor will any of them incur,
except in the ordinary course of business as described in the Prospectus, any
material liabilities or obligations, direct or contingent, nor has the Company
or any of its Subsidiaries entered into nor will any of them enter into, except
in the ordinary course of business as described in the Prospectus, any material
transactions other than pursuant to this Agreement and the transactions referred
to herein and (iii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock.
(h) The Company is not, will not become as a result of the transactions
contemplated hereby, and will not conduct its business in a manner that would
cause it to become, an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company, or any of
its Subsidiaries, or any of its or their officers in their capacity as such, nor
to the Company's knowledge is there any basis therefor, before or by any Federal
or state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding could reasonably be expected to materially and adversely affect the
business, properties, business prospects, condition (financial or other) or
results of operations of the Company and its Subsidiaries taken as a whole.
(j) The Company and each Subsidiary has, and at the Closing Date and,
if later, the Option Closing Date, will have, performed all the required
obligations required to be performed by it hereunder, and is not, and at the
Closing Date, and, if later, the Option Closing Date, will not be, in default,
under any contract or other instrument to which it is a party or by which its
property is bound or affected, which default could be expected to materially and
adversely affect the business, properties, business prospects, condition
(financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole. To the knowledge of the Company, no other party
under any contract or other instrument to which it or any of its Subsidiaries is
a party is in default in any respect thereunder, which default might reasonably
be expected to materially and adversely affect the business, properties,
business prospects, condition (financial or other) or results of operations of
the Company and its Subsidiaries taken as a whole. Neither the Company nor any
of its Subsidiaries is, and at the Closing Date and, if later, the Option
Closing Date, will be, in violation of any provision of its certificate or
articles of organization or bylaws or other organizational documents.
(k) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part contemplated herein,
except such as have been obtained under the Act or the Rules and Regulations and
such as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution by the Underwriters of the Shares.
(l) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with the terms hereof. The
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or give any party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, the certificate or articles of incorporation, bylaws or other
organizational documents of the Company or any of its Subsidiaries, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
5
contract or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of its or their properties is bound or affected, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the business or properties of
the Company or any of its Subsidiaries.
(m) The Company and its Subsidiaries have good and marketable title to
all properties and assets described in the Prospectus as owned by them, free and
clear of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material to the business of the Company
and its Subsidiaries taken as a whole. The Company and its Subsidiaries have
valid, subsisting and enforceable leases for the properties described in the
Prospectus as leased by them. The Company and its Subsidiaries own or lease all
such properties as are necessary to their operations as now conducted or as
proposed to be conducted, except where the failure to so own or lease would not
materially and adversely affect the business, properties, business prospects,
condition (financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole.
(n) There is no document, contract, permit or instrument of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required. All such contracts to which the Company or any of its
Subsidiaries is a party have been duly authorized, executed and delivered by the
Company or such Subsidiary, constitute valid and binding agreements of the
Company or such Subsidiary and are enforceable against and by the Company or
such Subsidiary in accordance with the terms thereof.
(o) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
Section 6 of this Agreement to be delivered to the Representatives was or will
be, when made, inaccurate, untrue or incorrect.
(p) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date or, if later, the Option Closing Date, and
(ii) completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any preliminary
prospectuses, the Prospectus, the Registration Statement and other materials, if
any, permitted by the Act. Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares.
(q) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement, which rights have not been waived by the holder thereof
as of the date hereof.
(r) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The Company has filed an application to list the Shares to be sold
by the Company hereunder on the Nasdaq National Market ("NNM"), and has received
notification that the listing has been accepted, subject to notice of issuance
of such Shares. The Shares to be sold by the Selling Stockholders hereunder are
listed on the NNM.
(s) Except as disclosed in or specifically contemplated by the
Prospectus (i) the Company and its Subsidiaries have sufficient trademarks,
trade names, patents, patent rights, mask works, copyrights, licenses, approvals
and governmental authorizations to conduct their businesses as now conducted and
to the Company's knowledge, none of the foregoing intellectual property rights
owned or licensed by the Company is invalid or unenforceable, (ii) the Company
has no knowledge of any infringement by it or any of its Subsidiaries of
trademarks, trade name rights, patents, patent rights, mask work rights,
copyrights, licenses, trade secrets or other similar rights of others, where
such infringement could reasonably be expected to have a material and adverse
effect on the business, properties, business prospects, condition (financial or
other) or results of operations of the Company and its Subsidiaries taken as a
whole, (iii) the Company is not aware of any infringement, misappropriation or
violation by others of, or conflict by others with rights of the Company with
respect to, any of the foregoing intellectual property rights of the Company and
its Subsidiaries where such infringement could reasonably be expect to have a
material and adverse effect on the business, properties, business prospects,
6
conditions (financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole and (iv) there is no claim being made against the
Company or any of its Subsidiaries, or to the knowledge of the Company, any
employee of the Company or any of its Subsidiaries, regarding trademark, trade
name, patent, mask work, copyright, license, trade secret or other infringement
which could reasonably be expected to have a material and adverse effect the
business, properties, business prospects, condition (financial or other) or
results of operations of the Company and its Subsidiaries taken as a whole.
(t) The Company and each of its Subsidiaries has filed all federal,
state, local and foreign income tax returns which have been required to be filed
and has paid all taxes and assessments received by it to the extent that such
taxes or assessments have become due. Neither the Company nor any of its
Subsidiaries has any tax deficiency which has been or, to the knowledge of the
Company, might be asserted or threatened against it which could have a material
and adverse effect on the business, properties, business prospects, condition
(financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole.
(u) The Company and its Subsidiaries owns or possesses all
authorizations, approvals, orders, licenses, registrations, other certificates
and permits of and from all governmental regulatory officials and bodies,
necessary to conduct their respective businesses as contemplated in the
Prospectus, except where the failure to own or possess all such authorizations,
approvals, orders, licenses, registrations, other certificates and permits would
not materially and adversely affect the business, properties, business
prospects, condition (financial or other) or results of operations of the
Company and its Subsidiaries taken as a whole. There is no proceeding pending
or, to the Company's knowledge, threatened (or any basis therefor known to the
Company) which may cause any such authorization, approval, order, license,
registration, certificate or permit to be revoked, withdrawn, cancelled,
suspended or not renewed; and the Company and each of its Subsidiaries is
conducting its business in compliance with all laws, rules and regulations
applicable thereto (including, without limitation, all applicable federal, state
and local environmental laws and regulations) except where such noncompliance
would not materially and adversely affect the Company, any of its Subsidiaries
or the business, properties, business prospects, condition (financial or other)
or results of operations of the Company and its Subsidiaries taken as a whole.
(v) The Company and each of its Subsidiaries maintains insurance of the
types and in the amounts it reasonably believes to be adequate for its business,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and its Subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(w) Neither the Company nor any of its Subsidiaries has nor, to the
Company's knowledge, any of its or their respective employees or agents at any
time during the last five years (i) made any unlawful payment or contribution to
or for the benefit of any foreign official, or failed to disclose fully any
payment or contribution in violation of law, or (ii) made any payment to any
federal or state governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
(x) Neither the Company nor any of its Subsidiaries is in violation of
any statute, any rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any environmental
laws, which violation, contamination, liability or claim could reasonably be
expected to have a material adverse effect on the business, properties, business
prospects, condition (financial or other) or results of operations of the
Company and its Subsidiaries taken as a whole; and the Company is not aware of
any pending investigation which might lead to such a claim.
4. Representations, Warranties and Covenants of the Selling
Stockholders. Each Selling Stockholder, severally and not jointly, represents,
warrants and covenants to each Underwriter that:
7
(a) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement and the
Power of Attorney (the "Power of Attorney") and related Custody Agreement (the
"Custody Agreement"), each in the form heretofore furnished to you, and for the
sale and delivery of the Selling Stockholder Firm Shares to be sold by such
Selling Stockholder hereunder, have been obtained; and such Selling Stockholder
has full right, power and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement, to make the representations, warranties and
agreements hereunder and thereunder, and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Stockholder hereunder.
(b) Certificates in negotiable form representing all of the Selling
Stockholder Firm Shares to be sold by such Selling Stockholder have been placed
in custody under the Custody Agreement, duly executed and delivered by such
Selling Stockholder to the Custodian, and such Selling Stockholder has duly
executed and delivered the Power of Attorney appointing Xxxxxx X. Xxxxxxxxxx and
Xxxx X. Xxxxx, Xx., and each of them, as such Selling Stockholder's
attorney-in-fact (the "Attorneys-in-Fact") with authority to execute and deliver
this Agreement on behalf of such Selling Stockholder, to determine (subject to
the provisions of the Power of Attorney) the purchase price to be paid by the
Underwriters to the Selling Stockholders as provided in Section 2 hereof, to
authorize the delivery of the Selling Stockholder Firm Shares to be sold by such
Selling Stockholder hereunder and otherwise to act on behalf of such Selling
Stockholder in connection with the transactions contemplated by this Agreement,
the Power of Attorney and the Custody Agreement.
(c) Such Selling Stockholder specifically agrees that the Selling
Stockholder Firm Shares represented by the certificates held in custody for such
Selling Stockholder under the Custody Agreement are held for the benefit of and
coupled with and subject to the interests of the Underwriters, the Custodian,
the Attorneys-in-Fact, each other Selling Stockholder and the Company, that the
arrangements made by such Selling Stockholder for such custody, and the
appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of
Attorney, are irrevocable except as provided in paragraph 2(b) of the Power of
Attorney, and that the obligations of such Selling Stockholder hereunder shall
not be terminated by operation of law, whether by the death, disability,
incapacity, liquidation or dissolution of any Selling Stockholder or by the
occurrence of any other event. If any individual Selling Stockholder or any
executor or trustee for a Selling Stockholder should die or become
incapacitated, or if any Selling Stockholder that is an estate or trust should
be terminated, or if any Selling Stockholder that is a partnership or
corporation should be dissolved, or if any other such event should occur, before
the delivery of the Selling Stockholder Firm Shares hereunder, certificates
representing the Selling Stockholder Firm Shares shall be delivered by or on
behalf of the Selling Stockholders in accordance with the terms and conditions
of this Agreement and of the Custody Agreement, and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if
such death, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or
any of them, shall have received notice of such death, incapacity, termination,
dissolution or other event.
(d) This Agreement, the Power of Attorney and the Custody Agreement
have each been duly authorized, executed and delivered by such Selling
Stockholder and each such document constitutes a valid and binding obligation of
such Selling Stockholder, enforceable in accordance with its terms.
(e) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the sale of the Selling Stockholder Firm Shares by such Selling
Stockholder or the consummation by such Selling Stockholder of the transactions
on its part contemplated by this Agreement, the Power of Attorney and the
Custody Agreement, except such as have been obtained under the Act or the Rules
and Regulations and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution by the Underwriters of the
Shares to be sold by such Selling Stockholder.
(f) The sale of the Selling Stockholder Firm Shares to be sold by such
Selling Stockholder hereunder and the performance by such Selling Stockholder of
this Agreement, the Power of Attorney and the Custody Agreement and the
consummation of the transactions contemplated hereby and thereby will not result
in the creation or imposition of any lien, charge or encumbrance upon any of the
assets of such Selling Stockholder pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which such Selling Stockholder is a
8
party or by which such Selling Stockholder or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to such Selling Stockholder or, if such Selling Stockholder is a
corporation, partnership or other entity, the organizational documents of such
Selling Stockholder.
(g) Such Selling Stockholder has, and at the Closing Date will have,
good and marketable title to the Selling Stockholder Firm Shares to be sold by
such Selling Stockholder hereunder, free and clear of all liens, encumbrances,
equities or claims whatsoever; and, upon delivery of such Selling Stockholder
Firm Shares and payment therefor pursuant hereto, good and marketable title to
such Selling Stockholder Firm Shares, free and clear of all liens, encumbrances,
equities or claims whatsoever, will be delivered to the Underwriters.
(h) On the Closing Date all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold by such Selling Stockholder to the several
Underwriters hereunder will have been fully paid or provided for by such Selling
Stockholder and all laws imposing such taxes will have been fully complied with.
(i) Other than as permitted by the Act and the Rules and Regulations,
such Selling Stockholder has not distributed and will not distribute any
preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares. Such Selling Stockholder
has not taken and will not at any time take, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result in, or which
will constitute, stabilization of the price of shares of Common Stock to
facilitate the sale or resale of any of the Shares.
(j) All information with respect to such Selling Stockholder contained
in the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto complied or will comply in all material respects
with all applicable requirements of the Act and the Rules and Regulations and
does not and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(k) Such Selling Stockholder has no knowledge of any material fact or
condition not set forth in the Registration Statement or the Prospectus that has
adversely affected, or may adversely affect, the business, properties, business
prospects, condition (financial or other) or results of operations of the
Company and its Subsidiaries, and the sale of the Shares proposed to be sold by
such Selling Stockholder is not prompted by any such knowledge taken as a whole.
(l) Such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 3 hereof are
not true and correct.
(m) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
5. Agreements of the Company and the Selling Stockholders. Each of the
Company and the Selling Stockholders respectively covenants and agrees with the
several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Representatives promptly, and
9
will confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening of any event
during the period mentioned in the second sentence of Section 5(e) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any representative or attorney
of the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations, the
Company will comply with the provisions of and make all requisite filings with
the Commission pursuant to said Rule 430A and notify the Representatives
promptly of all such filings. If the Company elects to rely upon Rule 462(b)
under the Act, the Company shall file a registration statement under Rule 462(b)
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for such Rule 462(b)
registration statement or give irrevocable instructions for the payment of such
fee pursuant to the Rules and Regulations.
(c) The Company will furnish to each Representative, without charge,
one signed copy of each of the Registration Statement and of any pre-effective
or post-effective amendment thereto, including financial statements and
schedules, and all exhibits thereto and will furnish to the Representatives,
without charge, for transmittal to each of the other Underwriters, a copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies of such
supplement or amendment to the Prospectus as the Representatives may reasonably
request. The Company will not file any document under the Exchange Act or the
Exchange Act Rules and Regulations before the termination of the offering of the
Shares by the Underwriters, if such document would be deemed to be incorporated
by reference into the Prospectus, that is not approved by the Representatives
after reasonable notice thereof.
(f) Prior to any public offering of the Shares, the Company will
cooperate with the Representatives and counsel to the Underwriters in connection
with the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Representatives may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject.
(g) The Company will, so long as required under the Rules and
Regulations, furnish to its stockholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flow of the Company and its consolidated
Subsidiaries, if any, certified by independent public accountants) and, as soon
10
as practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of the
Company and its Subsidiaries, if any, for such quarter in reasonable detail.
(h) During the period of five years commencing on the Effective Date,
the Company will furnish to the Representatives and each other Underwriter who
may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(i) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the
Availability Date (as defined below), an earning statement covering a period of
at least 12 months beginning after the Effective Date, and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 of the Rules and
Regulations). For the purpose of the preceding sentence, "Availability Date"
means the 45th day after the end of the fourth fiscal quarter following the
fiscal quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year, "Availability
Date" means the 90th day after the end of such fourth fiscal quarter.
(j) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company and, unless otherwise
paid by the Company, the Selling Stockholders will pay or reimburse if paid by
the Representatives, in such proportions as they may agree upon themselves, all
costs and expenses incident to the performance of the obligations of the Company
and the Selling Stockholders under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits to it, each preliminary prospectus,
Prospectus and any amendment or supplement to the Registration Statement or
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement Among Underwriters,
any Selected Dealer Agreements, any Underwriters' Questionnaires, the
Stockholders' Agreements, any Underwriters' Powers of Attorney, and any
invitation letters to prospective Underwriters, (iv) furnishing (including costs
of shipping and mailing) such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments and supplements
thereto, as may be 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, (v) the
listing of the Shares on the NNM, (vi) any filings required to be made by the
Underwriters with the National Association of Securities Dealers, Inc. and the
fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (vii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 5(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, not to exceed $2,500, (viii) fees, disbursements and other charges of
counsel to the Company (but not those of counsel for the Underwriters, except as
otherwise provided herein) and (ix) the transfer agent for the Shares. The
Underwriters may deem the Company to be the primary obligor with respect to all
costs, fees and expenses to be paid by the Company and the Selling Stockholders;
provided, however, that in the event the Company fails to pay the costs and
expenses set forth herein, the Selling Stockholders' obligations under this
Section 5(j) shall be several and in proportion to their individual number of
Shares sold. The Selling Stockholders will pay (directly or by reimbursement)
all fees and expenses incident to the performance of their obligations under
this Agreement that are not otherwise specifically provided for herein,
including but not limited to any fees and expenses of counsel for such Selling
Stockholders, any fees and expenses of the Attorneys-in-Fact and the Custodian,
and all expenses and taxes incident to the sale and delivery of the Shares to be
sold by such Selling Stockholders to the Underwriters hereunder.
(k) The Company will not at any time, directly or indirectly, take any
action designed or which might reasonably be expected to cause or result in, or
which will constitute, stabilization of the price of the shares of Common Stock
to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and sale
of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
11
(m) During the period beginning from the date hereof and continuing to
and including the date 90 days after the date of the Prospectus (the "lock-up
period") , without the prior written consent of Xxxxxxx & Company, Inc., the
Company will not offer, sell, contract to sell, pledge, grant options, warrants
or rights to purchase or otherwise dispose of (collectively, a "transfer") any
equity securities of the Company or any other securities convertible into or
exchangeable for its Common Stock or other equity security (other than pursuant
to the employee stock option plan disclosed in the Prospectus or pursuant to the
conversion of convertible securities or the exercise of warrants in each case
outstanding on the date of this Agreement or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of shares of Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise; provided,
however, that during the lock-up period, the Company may transfer equity
securities of the Company or any other securities convertible into or
exhangeable for its Common Stock in connection with an acquisition of a business
or assets of a third party provided that the transferee agrees to be bound by
the terms and restrictions provided for in this Section 5(m).
(n) During the lock-up period, the Company will not, without the prior
written consent of Xxxxxxx & Company, Inc., grant options to purchase shares of
Common Stock (other than as disclosed in the Prospectus or pursuant to the
employee stock option plan disclosed in the Prospectus and provided that all
such grants have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant and are not exercisable during the
lock-up period). During the period of 90 days after the date of the Prospectus,
the Company will not file with the Commission or cause to become effective any
registration statement relating to any securities of the Company without the
prior written consent of Xxxxxxx & Company, Inc.
(o) The Selling Stockholders will, and the Company will cause each of
its executive officers and directors to, enter into lock-up agreements with the
Representatives to the effect that they will not, without the prior written
consent of Xxxxxxx & Company, Inc., sell, contract to sell or otherwise dispose
of any shares of Common Stock or rights to acquire such shares according to the
terms set forth in Schedule III hereto or as otherwise agreed by the
Representatives.
6. Conditions of the Obligations of the Underwriters. The obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Representatives not later than 5:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representatives and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made. If the
Company has elected to rely upon Rule 462(b), the registration statement filed
under Rule 462(b) shall have become effective by 10:00 P.M., Washington, D.C.
time, on the date of this Agreement.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities, and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representatives and the Representatives do not object thereto
in good faith, and the Representatives shall have received certificates, dated
the Closing Date and, if later, the Option Closing Date and signed by the Chief
Executive Officer and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii) of this paragraph.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or other) or results of operations
12
of the Company or any of its Subsidiaries, whether or not arising from
transactions in the ordinary course of business, in each case other than as
described in or contemplated by the Registration Statement and the Prospectus,
and (ii) the Company shall not have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not
described in the Registration Statement and the Prospectus, if in the judgment
of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company, any of its Subsidiaries, or
any of its or their officers or directors in their capacities as such, before or
by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would, in
the judgment of the Representatives, materially and adversely affect the
business, properties, business prospects, condition (financial or other) or
results of operations of the Company and its Subsidiaries taken as a whole.
(e) Each of the representations and warranties of the Company and the
Selling Stockholders contained herein shall be true and correct in all material
respects at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, and all covenants and agreements contained herein to be
performed on the part of the Company or the Selling Stockholders and all
conditions contained herein to be fulfilled or complied with by the Company or
the Selling Stockholders at or prior to the Closing Date and, with respect to
the Option Shares, at or prior to the Option Closing Date, shall have been duly
performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and counsel for the
Underwriters from Saul, Ewing, Xxxxxx & Xxxx LLP, counsel to the Company and the
Selling Stockholders, with respect to the following matters (except that the
matters set forth in subparagraphs (xix)-(xxi) need not be addressed in the
opinion delivered at the Option Closing Date, if later than the Closing Date):
(i) Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation; has full corporate 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; and is duly licensed or
qualified to do business and is in good standing as a foreign
corporation 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 and where the failure to
be so licensed or qualified would have a material and adverse effect on
the business or financial condition of the Company.
(ii) All of the outstanding shares of capital stock of the Company
(including the Selling Stockholder Shares) have been duly authorized,
validly issued and are fully paid and nonassessable, are not subject to
preemptive rights and have not been issued in violation of any
statutory preemptive rights or to such counsel's knowledge similar
contractual rights;
(iii) The certificate evidencing the Common Stock delivered to the
Underwriters is in due and proper form under Delaware law, the Shares
to be sold by the Company hereunder have been duly authorized and, when
issued and paid for as contemplated by this Agreement, will be validly
issued, fully paid and nonassessable, are not subject to preemptive
rights and, when issued, will not have been issued in violation of any
statutory preemptive rights or, to such counsel's knowledge, similar
contractual rights.
(iv) All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable, and owned by the Company free and clear of all
claims, liens, charges and encumbrances; to such counsel's knowledge,
there are no securities outstanding that are convertible into or
exercisable or exchangeable for capital stock of any Subsidiary.
(v) The authorized and outstanding capital stock of the Company is
as set forth in the Registration Statement and the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
13
subsequent issuances, if any, pursuant to this Agreement or pursuant to
options outstanding referred to in the Prospectus). To such counsel's
knowledge, except as disclosed in or specifically contemplated by the
Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and no commitments, plans or arrangements
to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of
the Company. The description of the capital stock of the Company in the
Registration Statement and the Prospectus is complete and accurate in
all material respects.
(vi) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its Subsidiaries is a party or to which any of their respective
properties is subject that are required to be described in the
Registration Statement or the Prospectus but are not so described.
(vii) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required for the consummation by the Company of the transactions on its
part contemplated under this Agreement, except such as have been
obtained or made under the Act or the Rules and Regulations and such as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution by the Underwriters of the Shares.
(viii) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company.
(ix) The execution and delivery of this Agreement, the compliance
by the Company with all of the terms hereof and the consummation of the
transactions contemplated hereby does not contravene any provision of
applicable law or certificate or articles of incorporation, bylaws or
other organizational documents of the Company or any of its
Subsidiaries, and to such counsel's knowledge will not result in the
creation or imposition of any lien, charge or encumbrance upon any of
the assets of the Company or any of its Subsidiaries pursuant to the
terms and provisions of, result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or give any
party a right to terminate any of its obligations under, or result in
the acceleration of any obligation under, any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other
agreement or instrument known to such counsel to which the Company or
any of its Subsidiaries is a party or by which the Company, any of its
Subsidiaries, or any of their respective properties is bound or
affected, or violate or conflict with (i) any judgment, ruling, decree
or order known to such counsel or (ii) any statute, rule or regulation
of any court or other governmental agency or body applicable to the
business or properties of the Company or any of its Subsidiaries.
(x) To such counsel's knowledge, there is no document or contract
of a character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed or incorporated by reference
as required, and each description of such contracts and documents that
is contained in the Registration Statement and Prospectus fairly
presents in all material respects the information required under the
Act and the Rules and Regulations.
(xi) The statements in the Prospectus or incorporated therein by
reference, insofar as they constitute a summary of documents referred
to therein or matters of law, are accurate summaries and fairly
present, in all material respects, the information required to be
disclosed in such documents and matters.
(xii) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(xiii) The Selling Stockholder Shares are duly listed on the NNM
and the Company Shares have been duly authorized for listing on the
NNM, subject to notice of issuance.
14
(xiv) To such counsel's knowledge, no holder of securities of the
Company has rights, which have not been waived or satisfied, to require
the registration with the Commission shares of Common Stock or other
securities, as part of the offering contemplated hereby.
(xv) The Registration Statement has become effective under the Act,
and to such counsel's knowledge, (i) no stop order suspending the
effectiveness of the Registration Statement has been issued and (ii) no
proceeding for that purpose has been instituted or is pending,
threatened or contemplated.
(xvi) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements of the Act and the
Rules and Regulations (other than the financial statements, schedules
and other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus, as to which such counsel need
express no opinion).
(xvii) Such counsel has participated in the preparation of the
Registration Statement and Prospectus and has no reason to believe
that, as of the Effective Date, the Registration Statement, or any
amendment or supplement thereto, (other than the financial statements,
schedules and other financial data contained or incorporated by
reference therein, 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, or any
amendment or supplement thereto, as of its date and the Closing Date
and, if later, the Option Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading (other
than the financial statements, schedules and other financial data
contained or incorporated by reference therein, as to which such
counsel need express no opinion).
(xviii) The documents incorporated by reference in the Prospectus
(other than the financial statements, schedules and other financial
data contained therein, as to which such counsel need express no
opinion), when they were filed with the Commission, complied as to form
in all material respects with the requirements of the Exchange Act and
the Exchange Act Rules and Regulations.
(xix) This Agreement, the Power of Attorney and the Custody
Agreement have each been duly executed and delivered by or on behalf of
each Selling Stockholder, and each constitutes a valid and binding
agreement of such Selling Stockholder in accordance with its terms,
except as enforceability may be limited by the application of
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity; the Attorneys-in-Fact and
the Custodian have been duly authorized by such Selling Stockholder to
deliver the Shares on behalf of such Selling Stockholder in accordance
with the terms of this Agreement; and to such counsel's knowledge the
sale of the Shares to be sold by such Selling Stockholder hereunder,
the performance by such Selling Stockholder of this Agreement, the
Power of Attorney and the Custody Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, or give any party a right to terminate any of its
obligations under, or result in the acceleration of any obligation
under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument to which
such Selling Stockholder is a party or by which such Selling
Stockholder or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable
to such Selling Stockholder or, if such Selling Stockholder is a
corporation, partnership or other entity, the organizational documents
of such Selling Stockholder.
(xx) To such counsel's knowledge, no consent, approval,
authorization or order of, or any filing or declaration with, any court
or governmental agency or body is required for the consummation by the
Selling Stockholders of the transactions on their part contemplated by
this Agreement, except such as have been obtained or made under the Act
or the Rules and Regulations and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution by the Underwriters of the Shares.
15
(xxi) Each Selling Stockholder has full legal right, power and
authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement and to sell, assign, transfer and deliver the Shares
to be sold by such Selling Stockholder hereunder and, upon payment for
such Shares and assuming that the Underwriters are purchasing such
Shares in good faith and without notice of any other adverse claim
within the meaning of the Uniform Commercial Code, the Underwriters
will have acquired all rights of such Selling Stockholder in such
Shares free of any adverse claim, any lien in favor of the Company and
any restrictions on transfer imposed by the Company.
In rendering such opinion, such counsel may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Representatives and counsel for the Underwriters, provided that the opinion of
counsel to the Company and the Selling Stockholders shall state that they are
doing so, that they have no reason to believe that they and the Underwriters are
not entitled to rely on such opinions and that copies of such opinions are to be
attached to the opinion.
(g) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and counsel to the
Underwriters, from Xxxxxx & Xxxxxxx P.C., patent counsel for the Company, with
respect to the following matters:
(i) The statements in the Prospectus under the headings "Risk
Factors - "If we are not able to obtain patents on or otherwise
preserve and protect our proprietary technologies, our business may
suffer"; "Risk Factors - Claims of intellectual property infringement
by or against us could seriously harm our businesses"; and "Business -
Patents and Other Proprietary Rights"; insofar as such statements
constitute summary descriptions of the legal matters, documents,
proceedings or descriptions referred to therein, fairly present the
information called for with respect to such legal matters, documents,
proceedings or descriptions. To such counsel's knowledge, neither the
Company nor any of its Subsidiaries has received any notice of
infringement of or conflict with (and we know of no infringement of or
conflict with) asserted rights of others in any patents, trade secrets,
copyrights, trademarks, service marks or trade names. To such counsel's
knowledge, except as described in the Prospectus, there is no
infringement or violation by others of any of the Company's patents,
trade secrets, copyrights, trademarks, service marks or trade names. To
such counsel's knowledge there are no legal or governmental proceedings
pending or threatened related to patents, trade secrets, copyrights,
trademarks, service marks or trade names of others to which the Company
or any of its subsidiaries is a party or, except for ordinary
proceedings initiated by the Company or any of its subsidiaries seeking
statutory rights, registrations or certifications from governmental
authorities, to which any intellectual property of the Company or any
of its Subsidiaries is subject.
(ii) To such counsel's knowledge there is no contract or other
document relating to patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks or trade names of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Prospectus that is not filed or
described as required.
(iii) Attached to the opinion is an accurate and complete list
describing all patents issued to, and all patent applications filed on
behalf of, the Company or any of its Subsidiaries with the U.S. Patent
and Trademark Office or with patent authorities in other countries. It
is such counsel's opinion, based on the declarations of the named
inventor(s) in the applications and our investigation of the facts
concerning the inventions by such inventor(s), the named inventor(s)
are the original and first inventor(s) of the subject matter which is
claimed. Such counsel is not aware of any other patents issued to, or
patent applications filed by or on behalf of, the Company or any of its
Subsidiaries. On the basis of such counsel's review of assignments
executed by the inventors, it is such counsel's opinion that all the
inventors have assigned to the Company or its Subsidiaries all their
right, title and interest in the applications and the patents listed on
the attachment to such counsel's opinion. It is such counsel's opinion
that the patents so listed are valid and enforceable and such counsel
is not aware of any information that would render the patents, or any
of the claims therein, invalid or unenforceable. Further, such counsel
is not aware of any actions brought or threatened by any party alleging
the invalidity or unenforceability of the patents listed on Schedule A.
16
(iv) To such counsel's knowledge: (i) the Company and its
subsidiaries own, or are licensed or otherwise possess adequate rights
to use, all patents, trademarks, trademark registrations, service
marks, service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights (collectively "Intellectual
Property") which are used in or necessary for the conduct of their
respective businesses as described in the Prospectus, except as
disclosed in the Prospectus, no claims have been asserted by any person
to the use of any Intellectual Property or challenging or questioning
the validity or effectiveness of any Intellectual Property; and (ii)
the use, in connection with the business and operations of the Company
and its Subsidiaries, of any Intellectual Property does not infringe on
the rights of any person to the extent that an unfavorable decision,
ruling or finding as to such infringement could materially adversely
affect the business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
(h) The representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Xxxxxx, Xxxxx & Xxxxxxx, LLP,
counsel to the Underwriters, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to the Representatives.
(i) Concurrently with the execution and delivery of this Agreement, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company and its Subsidiaries as required by the
Act and the Exchange Act and the Rules and Regulations and with respect to
certain financial and other statistical and numerical information contained, or
incorporated by reference, in the Registration Statement. At the Closing Date
and, as to the Option Shares, the Option Closing Date, the Accountants shall
have furnished to the Representatives a letter, dated the date of its delivery,
which shall meet the requirements of the preceding sentence and shall confirm as
of a date not more than three days prior to the date of delivery, the statements
made in the letters delivered pursuant to the preceding sentence.
(j) Concurrently with the execution and delivery of this Agreement and
at the Closing Date and, as to the Option Shares, the Option Closing Date, there
shall be furnished to the Representatives a certificate of the Company, dated
the date of its delivery, signed by each of the Chief Executive Officer and the
Chief Financial Officer of the Company, in form and substance satisfactory to
the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents
filed under the Exchange Act and deemed to be incorporated by reference
into the Prospectus) and (A) as of the date of such certificate, such
documents are true and correct in all material respects and do not omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein not untrue or misleading and (B)
in the case of the certificate delivered at the Closing Date and the
Option Closing Date, since the Effective Date no event has occurred as
a result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein not untrue or misleading.
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct.
(iii) Each of the covenants required to be performed by the Company
herein on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
satisfied or fulfilled on or prior to the date of such certificate has
been duly, timely and fully satisfied or fulfilled.
(k) Concurrently with the execution and delivery of this Agreement and
at the Closing Date there shall be furnished to the Representatives a
certificate, dated the date of its delivery, signed by the Selling Stockholders
(or the Attorneys-in-Fact on their behalf), in form and substance satisfactory
to the Representatives, to the effect that the representations and warranties of
the Selling Stockholders contained herein are true and correct in all material
respects on and as of the date of such certificate as if made on and as of the
17
date of such certificate, and each of the covenants and conditions required
herein to be performed or complied with by the Selling Stockholders on or prior
to the date of such certificate has been duly, timely and fully performed or
complied with.
(l) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 5(o).
(m) The Shares shall be qualified for sale in such jurisdictions as the
Representatives may reasonably request and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
or the Option Closing Date.
(n) Prior to the Closing Date, the Shares shall have been duly
authorized for listing on the NNM upon official notice of issuance.
(o) The Company and the Selling Stockholders shall have furnished to
the Representatives such certificates, in addition to those specifically
mentioned herein, as the Representatives may have reasonably requested as to the
accuracy and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company and the Selling Stockholders herein, as to the
performance by the Company and the Selling Stockholders of its and their
respective obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Representatives.
7. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, liabilities, expenses and damages (including any and all investigative,
legal and other expenses reasonably 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 Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on 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 or supplement to the Registration
Statement or the Prospectus, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading in the light of the circumstances in which
they were made, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained herein
or any failure of the Company to perform its obligations hereunder or under law
in connection with the transactions contemplated hereby; provided, however, that
(i) the Company will not be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Shares in the public
offering to any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representatives, on behalf of any Underwriter, expressly for
inclusion in the Registration Statement, the preliminary prospectus or the
Prospectus; (ii) the Company will not be liable to any Underwriter, the
directors, officers, employees or agents of such Underwriter or any person
controlling such Underwriter with respect to any loss, claim, liability,
expense, or damage arising out of or based on any untrue statement or omission
or alleged untrue statement or omission or alleged omission to state a material
fact in the preliminary prospectus which is corrected in the Prospectus if the
person asserting any such loss, claim, liability, charge or damage purchased
Shares from such Underwriter but was not sent or given a copy of the Prospectus
at or prior to the written confirmation of the sale of such Shares to such
person and if copies of the Prospectus were timely delivered to such Underwriter
pursuant to Section 5 hereof. The Company acknowledges that the concession and
reallowance figures in the second paragraph under the heading "Underwriting" and
the information in the sixth paragraph and first sentence of the seventh
paragraph under the heading "Underwriting" in the Prospectus constitute the only
information relating to any Underwriter furnished in writing to the Company by
the Representatives on behalf of the Underwriters expressly for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.
18
(b) (i) Each of the Selling Stockholders, severally and not
jointly, will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, liabilities, expenses and damages
(including any and all investigative, legal and other expenses
reasonably 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 Act, the
Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities,
expenses or damages arise out of or are based in whole or in part on
(x) any inaccuracy in the representations and warranties of such
Selling Stockholder contained herein, (y) an untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or any amendment or
supplement to the Registration Statement or the Prospectus, or the
omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make any statements in it
not misleading in light of the circumstances in which they were made,
where such untrue statement, omission or alleged untrue statement or
omission was made in reliance on and in conformity with information
relating to such Selling Stockholder furnished in writing to the
Company by or on behalf of such Selling Stockholder for inclusion in
the Prospectus, or (z) any failure of such Selling Stockholder to
perform his, her or its obligations hereunder or under law in
connection with the transactions contemplated hereby.
(ii) Each of the Selling Stockholder Insiders (as identified
below), severally and not jointly, will indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, liabilities,
expenses and damages (including any and all investigative, legal and
other expenses reasonably 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
Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or
the Prospectus or any alleged omission to state in such document a
material fact required to be stated in it or necessary to make the
statements in it not misleading in the light of the circumstances in
which they were made. The "Selling Stockholder Insiders" are Xxxx X.
Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxx, X. Xxxxxx, Hakuto America
Holdings, Inc., Xxxx X. Xxxx, X. X. Xxxx, X. X. Xxxxxxxxxxx, Xxxxxx X.
Xxxxxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxx.
(iii) Notwithstanding the foregoing.
(A) The Selling Stockholders will not be liable to
the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares in the public offering to
any person by an Underwriter and is based on an untrue
statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the
Company by the Representatives, on behalf of the Underwriters
expressly for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus;
(B) The Selling Stockholders will not be liable to
any Underwriter, the directors, officers, employees or agents
of such Underwriter or any person controlling such Underwriter
with respect to any loss, claim, liability, expense, or damage
arising out of or based on any untrue statement or omission or
alleged untrue statement or omission or alleged omission to
state a material fact in the preliminary prospectus which is
corrected in the Prospectus if the person asserting any such
loss, claim, liability, charge or damage purchased Shares from
such Underwriter but was not sent or given a copy of the
Prospectus at or prior to the written confirmation of the sale
of such Shares to such person and if copies of the Prospectus
were timely delivered to such Underwriter pursuant to Section
5 hereof; and
(C) The liability of each Selling Stockholder under
this Section 7(b) shall be limited to an amount equal to the
lesser of (x) such Selling Stockholder's pro rata portion of
19
the total of all losses, claims liabilities, expenses and
damages indemnified against (such pro rata portion being equal
to the number of Shares sold by such Selling Stockholder,
divided by the total number of Shares sold by the Company and
all of the Selling Stockholders), or (y) the product of the
purchase price for each Share set forth in Section 1(a) hereof
multiplied by the number of Shares sold by such Selling
Stockholder hereunder.
This indemnity agreement will be in addition to any liability that the
Company and the Selling Stockholder might otherwise have.
(c) Each Underwriter will indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and each Selling
Stockholder to the same extent as the foregoing indemnity from the Company and
each Selling Stockholder to each Underwriter, as set forth in Sections 7(a) and
7(b), but only insofar as losses, claims, liabilities, expenses or damages arise
out of or are based on any untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives, on behalf of such Underwriter, expressly for use in the
Registration Statement, the preliminary prospectus or the Prospectus. The
Company and the Selling Stockholders acknowledge that the concession and
reallowance figures in the second paragraph under the heading "Underwriting" and
the information in the sixth paragraph and first sentence of the seventh
paragraph under the heading "Underwriting" in the Prospectus constitute the only
information relating to any Underwriter furnished in writing to the Company by
the Representatives on behalf of the Underwriters expressly for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. This
indemnity will be in addition to any liability that each Underwriter might
otherwise have.
(d) Any party that proposes to assert the right to be indemnified under
this Section 7 shall, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 7, notify each such
indemnifying party in writing of the commencement of such action, enclosing with
such notice a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 7 unless,
and only to the extent that, such omission results in the loss of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time for all
such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified party from
20
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an indemnified party. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld or
delayed).
(e) If the indemnification provided for in this Section 7 is applicable
in accordance with its terms but for any reason is held to be unavailable to or
insufficient to hold harmless an indemnified party under paragraphs (a), (b),
(c) and (d) of this Section 7 in respect of any losses, claims, liabilities,
expenses and damages referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company or the Selling Stockholders from persons
other than the Underwriters, such as persons who control the Company within the
meaning of the Act, officers of the Company who signed the Registration
Statement and directors of the Company, who also may be liable for contribution)
by such indemnified party as a result of such losses, claims, liabilities,
expenses and damages in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders, on the
one hand, and the Underwriters, on the other hand. The relative benefits
received by the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other hand, with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Selling Stockholders or
the Representatives on behalf of the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(e) were to be 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 into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 7(e) shall be deemed to
include, for purposes of this Section 7(e), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7(e), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts received by it and no person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 7(e) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 7(e), any
person who controls a party to this Agreement within the meaning of the Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against any such party in respect of which a claim for
contribution may be made under this Section 7(e), will notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 7(e). No party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
(f) The indemnity and contribution agreements contained in this Section
7 and the representations and warranties of the Company and the Selling
Stockholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Shares and payment therefor or (iii)
any termination of this Agreement.
21
8. Reimbursement of Certain Expenses. In addition to its other
obligations under Section 7(a) of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon,
in whole or in part, any statement or omission or alleged statement or omission,
or any inaccuracy in the representations and warranties of the Company or the
Selling Stockholder contained herein or failure of the Company or the Selling
Stockholders to perform its or their respective obligations hereunder or under
law, all as described in Section 7(a) and 7(b), notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 8 and the possibility that such payment might later be held
to be improper; provided, however, that, to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them.
9. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company and the Selling Stockholders from the Representatives,
without liability on the part of any Underwriter to the Company if, prior to
delivery and payment for the Firm Shares or Option Shares, as the case may be,
in the sole judgment of the Representatives, (i) trading in any of the equity
securities of the Company shall have been suspended by the Commission or by The
Nasdaq Stock Market, (ii) trading in securities generally on the New York Stock
Exchange or The Nasdaq Stock Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such exchange
or market, or additional material governmental restrictions, not in force on the
date of this Agreement, shall have been imposed upon trading in securities
generally by such exchange or market, by order of the Commission or any court or
other governmental authority, (iii) a general banking moratorium shall have been
declared by either Federal, New York State or New Jersey authorities or (iv) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States or
any outbreak or material escalation of hostilities or other calamity or crisis
shall have occurred, the effect of which is such as to make it, in the sole
judgment of the Representatives, impracticable or inadvisable to proceed with
completion of the public offering or the delivery of and payment for the Shares.
If this Agreement is terminated pursuant to Section 10 hereof, neither
the Company nor any Selling Stockholder shall be under any liability to any
Underwriter except as provided in Sections 5(j), 7 and 8 hereof. In addition, if
for any other reason the purchase of the Shares by the Underwriters is not
consummated or if for any reason the Company shall be unable to perform its
obligations hereunder, the several Underwriters shall be responsible for their
out-of-pocket expenses, including those associated with meetings with the
brokerage community and institutional investors, other than the Company's travel
expenses, and the fees and expenses of Underwriters' counsel (other than fees
and expenses relating to Blue Sky matters and the filings required to be made
with the National Association of Securities Dealers, Inc).
10. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it or
they have agreed to purchase hereunder, and the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares which
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares which
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of such number of
Firm Shares without the prior written consent of such Underwriter. In any such
case either the Representatives or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. If any Underwriter or
Underwriters shall fail or refuse to purchase any Firm Shares and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase exceeds one-tenth of the aggregate number of
the Firm Shares and arrangements satisfactory to the Representatives and the
Company for the purchase of such Firm Shares are not made within 48 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders for the
22
purchase or sale of any Shares under this Agreement. Any action taken pursuant
to this Section 10 shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
11. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company or the Selling Stockholders, at the
office of the Company, 0 Xxx Xxx Xxxx, Xxxxxx Xxxx, XX 00000, Attention: Xxxx X.
Xxxxx, Xx., with a copy to Xxxxxxx X. Xxxx, Esq., Saul, Ewing, Xxxxxx & Xxxx,
LLP, Centre Square West, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx, XX
00000-0000, or (b) if to the Underwriters, to the Representatives at the offices
of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Corporate Finance Department, with a copy to Xxxx Xxxxxx, Esq.,
Xxxxxx, Xxxxx & Bockius, LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000-0000.
Any such notice shall be effective only upon receipt. Any notice under Section 9
or 10 hereof may be made by telecopier or telephone, but if so made shall be
subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, the Selling Stockholders and the controlling
persons, directors and officers referred to in Section 7, 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" as used
in this Agreement shall not include a purchaser, as such purchaser, of Shares
from any of the several Underwriters.
Any action required or permitted to be made by the Representatives
under this Agreement may be taken by them jointly or by Xxxxxxx & Company, Inc.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby waive any right they may
have to a trial by jury in respect of any claim based upon or arising out of
this Agreement or the transactions contemplated hereby.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
inTEST Corporation
By:
-------------------------------------
Title:
SELLING STOCKHOLDERS
(named in Schedule II hereto)
By:
-------------------------------------
Attorney-in-Fact
23
Confirmed as of the date first above mentioned:
XXXXXXX & COMPANY, INC.
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXX XXXXXXXXXX XXXXX LLC
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereto.
By: XXXXXXX & COMPANY, INC.
By:
--------------------------------------
Title:
24
SCHEDULE I
UNDERWRITERS
Number of Firm
Underwriters Shares to be Purchased
------------ ----------------------
Xxxxxxx & Company, Inc. ...........
Xxxxx, Xxxxxxxx & Xxxx, Inc. ......
Xxxxxx Xxxxxxxxxx Xxxxx LLC ...........................
--------
Total ....................................... 2,000,000
=========
SCHEDULE II
SELLING STOCKHOLDERS
Number of Selling
Stockholder Firm
Name of Stockholder Shares to be Sold
------------------- -----------------
Xxxx X. Xxxxxxx 8,733
Xxxxxxx X. Xxxxxx 34,046
X. Xxxxxx 8,169
Xxxxxx X. Xxxxxx 82,023
Hakuto America Holdings, Inc. 170,629
Xxxx X. Xxxx 300,000
The Xxxx Charitable Remainder Trust 115,000
X.X. Xxxx 61,554
X.X. Xxxxxxxxxxx 16,501
Xxxxxx X. Xxxxxxxxxxx 16,449
Xxxx X. Xxxxx, Xx. 11,052
X.X. Xxxxx 11,052
Xxxxxxx X. Xxxxxxx 8,372
Xxxxxxx X. Xxxxx 156,465
---------
1,000,000
SCHEDULE III
FORM OF LOCK-UP AGREEMENT
The undersigned is a holder of securities of inTEST Corporation, a
Delaware corporation (the "Company"), and wishes to facilitate the public
offering of shares of the Common Stock (the "Common Stock") of the Company (the
"Offering"). The undersigned recognizes that such Offering will be of benefit to
the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby agrees that
he, she or it will not, without the prior written approval of Xxxxxxx & Company,
Inc., acting on its own behalf and/or on behalf of other representatives of the
underwriters, directly or indirectly, sell, contract to sell, make any short
sale, pledge, or otherwise dispose of, or enter into any hedging transaction
that is likely to result in a transfer (collectively, a "transfer") of, any
shares of Common Stock, options to acquire shares of Common Stock or securities
exchangeable for or convertible into shares of Common Stock of the Company which
he, she or it may own, for a period commencing as of the date hereof and ending
on the date which is ninety (90) days after the date of the final Prospectus
relating to the Offering; provided, however, that the undersigned may transfer
shares of Common Stock as a bona fide gift for estate planning purposes provided
that the transferee agrees to be bound by the terms herein and executes an
agreement substantially in the form of this Agreement. The undersigned confirms
that he, she or it understands that the underwriters and the Company will rely
upon the representations set forth in this Agreement in proceeding with the
Offering. The undersigned further confirms that the agreements of the
undersigned are irrevocable and shall be binding upon the undersigned's heirs,
legal representatives, successors and assigns. The undersigned agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of securities held by the undersigned except in
compliance with this Agreement.
This Agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns.
