EXHIBIT 1.1
2,150,000 SHARES
EPITAXX, INC.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
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____________ ___, 1998
XXXXX & COMPANY
CIBC XXXXXXXXXXX CORP.
DAIWA SECURITIES AMERICA INC.
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1 Introductory. EPITAXX, Inc., a Delaware corporation (the "Company"), an
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indirect, wholly-owned subsidiary of Nippon Sheet Glass Co., Ltd. (the
"Parent"), proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
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an "Underwriter"), an aggregate of 2,150,000 shares of Class A Common Stock, par
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value $.01 (the "Common Stock"), of the Company. The aggregate of 2,150,000
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shares so proposed to be sold is hereinafter referred to as the "Firm Stock".
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The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 4, up to an additional 322,500 shares of Common
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Stock (the "Optional Stock"). The Firm Stock and the Optional Stock are
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hereinafter collectively referred to as the "Stock". Xxxxx & Company ("Cowen"),
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CIBC Xxxxxxxxxxx Corp. ("Xxxxxxxxxxx") and Daiwa Securities America Inc.
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("Daiwa") are acting as Representatives of the several Underwriters and in such
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capacity are hereinafter referred to as the "Representatives".
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2 Representations and Warranties of the Company and the Parent.
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(i) The Company and the Parent, jointly and severally, represent and
warrant to, and agree with, the several Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-4484[3]), as
amended by one or more pre-effective amendments thereto, including any
preeffective prospectuses included as part of the registration statement as
originally filed or as part of any amendment, copies of which registration
statement and amendment(s) have heretofore been delivered to the
Representatives, has been carefully prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Rules and
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Regulations") of the Securities and Exchange Commission (the "Commission")
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thereunder, and has been filed with the Commission under the Securities Act.
The term "Registration Statement" as used in this Agreement means such
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registration, including all financial statement schedules and exhibits, as
heretofore amended (or, if not yet effective, in the form in which it shall
become effective) and, if any post-effective amendment thereto is filed,
such registration statement as so amended, together with any information
permitted to be omitted from the registration statement when it becomes
effective pursuant to Rule 430A under the Securities Act and deemed to be
included therein as provided by said Rule 430A. The term "Registration
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Statement" as used in this Agreement shall also include any registration
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statement relating to the Stock that is filed and declared effective
pursuant to Rule 462(b) under the Securities Act. The term "Prospectus" as
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used in this Agreement means the prospectus in the form included in the
Registration Statement, or, (A) if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the
Securities Act and such information is included in a prospectus filed with
the Commission pursuant to Rule 424(b) under the Securities Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
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included in the Registration Statement as supplemented by the addition of
the Rule 430A information contained in the prospectus filed with the
Commission pursuant to Rule 424(b) and (B) if prospectuses that meet the
requirements of Section 10(a) of
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the Securities Act are delivered pursuant to Rule 434 under the Securities
Act, then (i) the term "Prospectus" as used in this Agreement means the
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"prospectus subject to completion" (as such term is defined in Rule 434(g)
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under the Securities Act) as supplemented by (a) the addition of Rule 430A
information or other information contained in the form of prospectus
delivered pursuant to Rule 434(b)(2) under the Securities Act or (b) the
information contained in the term sheet described in Rule 434(b)(3) under
the Securities Act, and (ii) the date of such prospectus shall be deemed to
be the date of the term sheet. The term "Preeffective Prospectus" as used in
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this Agreement means the prospectus subject to completion in the form
included in the Registration Statement at the time of the initial filing of
the Registration Statement with the Commission, and as such prospectus shall
have been amended from time to time prior to the date of the Prospectus.
(ii) The Commission has not issued or threatened to issue any order
preventing or suspending the use of any Preeffective Prospectus, and, at its
date of issue, each Preeffective Prospectus conformed in all material
respects with the requirements of the Securities Act and did not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
and, when the Registration Statement became or becomes effective and at all
times subsequent thereto up to and including the Closing Dates (as defined
below), the Registration Statement and the Prospectus and any amendments or
supplements thereto contained and will contain all material statements and
information required to be included therein by the Securities Act and
conformed and will conform in all material respects to the requirements of
the Securities Act; and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing representations,
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warranties and agreements shall not apply to information contained in or
omitted from any Preeffective Prospectus or the Registration Statement or
the Prospectus or any such amendment or
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supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter,
directly or through the Representatives, specifically for use in the
preparation thereof; there is no franchise, lease, contract, agreement or
document required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described therein or filed as required; and all descriptions of any
such franchises, leases, contracts, agreements or documents contained in the
Registration Statement are accurate and fair descriptions of such documents
in all material respects. The Company acknowledges and agrees that the only
information furnished to the Company by or on behalf of any Underwriter
specifically for use in any Preeffective Prospectus, the Registration
Statement, the Prospectus or any amendment or supplement thereto is that
information contained in the last paragraph on the cover page of the
Prospectus, the stabilization legend on the inside front cover of the
Prospectus and the information in the third paragraph, the first sentence of
the seventh paragraph and the eighth paragraph under the caption
"Underwriting" in the Prospectus.
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(iii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as set forth
or contemplated in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent, not in the ordinary course of business or entered into any
transaction not in the ordinary course of business, and there has not been
any material adverse change in the condition (financial or otherwise),
properties, business, management, prospects, net worth or results of
operations of the Company and its subsidiaries taken as a whole or any
change in the capital stock or short-term or long-term debt of the Company
or any of its subsidiaries.
(iv) The financial statements, together with the related notes and
schedules, set forth in the Prospectus and elsewhere in the Registration
Statement fairly present, on the basis stated in the Registration Statement,
the financial position and the results of operations and changes in
financial position of the entities shown thereby at the respective dates and
for the respective periods therein specified. Such financial statements and
related notes and
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schedules have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as may be set forth in the Prospectus. The selected and
summary financial and statistical data set forth in the Prospectus and
elsewhere in the Registration Statement fairly present the information set
forth therein and have been compiled on a basis substantially consistent
with the financial statements presented therein.
(v) KPMG Peat Marwick LLP, who has expressed its opinion on the
audited financial statements and schedules included in the Registration
Statement and the Prospectus, are independent public accountants as required
by the Securities Act and the Rules and Regulations.
(vi) The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing as corporations
under the laws of their respective jurisdictions of organization, with full
power and authority (corporate and other) to own or lease their respective
properties and to conduct their respective businesses as described in the
Prospectus; the Company and each of its subsidiaries are in possession of
and operating in compliance with all material franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and
orders required for the conduct of their respective business as described in
the Prospectus, all of which are valid and in full force and effect; and the
Company and each of its subsidiaries are duly qualified to do business and
in good standing as foreign corporations in all other jurisdictions where
their ownership or leasing of properties or the conduct of their respective
businesses as described in the Prospectus requires such qualification except
where the failure to so qualify would not have a material adverse effect on
the condition (financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole. The Company and each of its subsidiaries have
all requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits
of and from all public regulatory or governmental agencies and bodies to
own, lease and operate their respective properties and to conduct their
respective businesses as now being conducted and as described in the
Registration Statement and
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the Prospectus, and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. The Company is the sole stockholder of EPITAXX
FSC Inc., a U.S. Virgin Islands foreign sales corporation ("EPITAXX FSC"),
and owns all of the capital stock of EPITAXX FSC free and clear of all
liens, encumbrances and defects. Other than EPITAXX FSC, the Company does
not own or control, directly or indirectly, any other corporation,
association or other entity.
(vii) The Company's authorized and outstanding capital stock is on the
date hereof, and will be on the Closing Dates, as set forth under the
heading "Capitalization" in the Prospectus; the outstanding shares of
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capital stock conform to the description thereof in the Prospectus, have
been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of or subject to any
preemptive rights or similar rights to subscribe for or purchase securities.
Except as disclosed in or contemplated by the Prospectus, the Company does
not have outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase any securities or
obligations convertible into, or any contracts or commitments to issue or
sell shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock option
plans, the options granted or exercised thereunder and any other outstanding
stock options or warrants issued by the Company as set forth in the
Prospectus, accurately and fairly presents the information required to be
shown with respect to such plans, options and warrants.
(viii) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive
rights, co-sale rights, registration rights, rights of first refusal or
other similar rights and will conform to the description thereof in the
Prospectus. The Stock has been approved for quotation on the Nasdaq National
Market, subject to official notice of issuance.
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(ix) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or to which any property of the Company or any of
its subsidiaries is subject, which, if determined adversely to the Company
or any such subsidiary, might individually or in the aggregate (i) prevent
the Company from performing its obligations under this Agreement, (ii)
suspend the effectiveness of the Registration Statement, (iii) prevent or
suspend the use of the Prospectus in any jurisdiction or (iv) result in a
material adverse change in the condition (financial or otherwise),
properties, business, management, prospects, net worth or results of
operations of the Company or any of its subsidiaries; and to the Company's
and the Parent's knowledge, no such proceedings are threatened or
contemplated against the Company or any of its subsidiaries by governmental
authorities or others. Neither the Company nor any of its subsidiaries is a
party to or subject to the provisions of any injunction, judgment, decree or
order of any court, regulatory body or other governmental agency or body.
Neither the Company nor any of its subsidiaries is a party or otherwise
subject to any legal or governmental proceedings required to be disclosed in
the Registration Statement or Prospectus that is not so disclosed. The
description of any litigation to which the Company or any of its
subsidiaries is a party or otherwise subject as set forth under the heading
"Business -- Legal Proceedings" in the Prospectus is accurate and fair and
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complies with the Rules and Regulations.
(x) The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not result in
(A) a breach or violation of any of the terms or provisions of or constitute
a default under (x) any lease, contract, indenture, mortgage, deed of trust,
note agreement 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 their respective properties is or may be bound, (y)
the Restated Certificate of Incorporation, Amended and Restated By-laws or
other organizational documents of the Company or any of its subsidiaries or
(z) any law, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company, any of its subsidiaries or any
of their respective properties, or (B) the creation of a lien on any of the
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assets or properties of the Company or any of its subsidiaries.
(xi) No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required for the consummation by
the Company of the transactions contemplated by this Agreement, except such
as may be required by the National Association of Securities Dealers, Inc.
(the "NASD") or under the Securities Act or the securities or "Blue Sky"
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laws of any jurisdiction in connection with the purchase and distribution of
the Stock by the Underwriters.
(xii) The Company has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder (including to
issue, sell and deliver the Stock), and this Agreement has been duly and
validly authorized, executed and delivered by the Company and is a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject to general principles
of equity, and except to the extent that rights to indemnity and
contribution hereunder may be limited by federal or state securities laws or
the public policies underlying such laws.
(xiii) The Company and each of its subsidiaries are in all material
respects in compliance with, and conduct their respective businesses in all
material respects in conformity with, all applicable laws, orders, rules,
regulations, judgments and decrees of any federal, state, local or foreign
court, government or governmental agency or body, and, to the knowledge of
the Company and the Parent, otherwise than as set forth in the Registration
Statement and the Prospectus, no prospective change in any of such laws,
orders, rules, regulations, judgments or decrees has been adopted which,
when made effective, would have a material adverse effect on the operations
of the Company and its subsidiaries, taken as a whole.
(xiv) The Company and each of its subsidiaries have timely filed all
necessary federal, state, local and foreign income, payroll, franchise and
other tax returns and have paid all taxes shown as due thereon, and there is
no
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tax deficiency that has been or, to the knowledge of the Company and the
Parent, might be asserted against the Company, any of its subsidiaries or
any of their respective properties or assets that would materially adversely
affect the condition (financial or otherwise), properties, business,
prospects, net worth or results of operations of the Company or any of its
subsidiaries.
(xv) Except as disclosed in the Registration Statement and the
Prospectus, the Company and each of its subsidiaries is in compliance with
all applicable existing federal, state, local and foreign laws and
regulations relating to the protection of human health or the environment or
imposing liability or requiring standards of conduct concerning any
Hazardous Materials ("Environmental Laws"), except for such instances of
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noncompliance which, either singly or in the aggregate, would not have a
material adverse effect on the condition (financial or otherwise),
properties, business, prospects, net worth or results of operations of the
Company or any of its subsidiaries. The term "Hazardous Material" means (i)
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any "hazardous substance" as defined by the Comprehensive Environmental
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Response, Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery Act,
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as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(xvi) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company or any of its
subsidiaries because of the filing or effectiveness of the Registration
Statement or otherwise.
(xvii) Neither the Company, the Parent nor any of their subsidiaries
nor any of their respective officers or directors has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or
resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company.
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(xviii) The Company has provided the Representatives with all financial
statements of the Company since March 31, 1994 to the date hereof that are
available to the officers of the Company, including financial statements for
the [ ]-month periods ended [________, 1997 and ___________, 1998].
(xix) The Company and its subsidiaries own or possess adequate rights
to use all patents, trademarks, trademark registrations, service marks,
service xxxx registrations, trade names, copyrights, copyright
registrations, licenses, inventions, trade secrets and other intellectual
property or franchise rights described in the Prospectus as being owned or
used by them or any of them or which are necessary for the conduct of their
respective businesses, and, except as described in the Prospectus, the
Company and the Parent are not aware of any claim to the contrary or any
challenge or infringement by any other person with respect to the rights of
the Company and its subsidiaries with respect to the foregoing. Each person
or entity to whom or to which any confidential information related to the
foregoing has been disclosed has entered into a related confidentiality and
nondisclosure agreement with the Company or a subsidiary thereof. The
businesses of the Company and each of its subsidiaries as now and previously
conducted and as proposed to be conducted do not and will not infringe or
conflict with in any material respect the patents, trademarks, trademark
registrations, service marks, service xxxx registrations, trade names,
copyrights, copyright registrations, licenses, inventions, trade secrets or
other intellectual property or franchise rights of any person. Except as
described in the Prospectus, neither the Company, the Parent nor any of
their subsidiaries has received any notice alleging the infringement by the
Company or any of its subsidiaries of any patent, trademark, trademark
registration, service xxxx, service xxxx registration, trade name,
copyright, copyright registration, license, invention, trade secret or other
intellectual property or franchise right of any person.
(xx) Neither the Company nor any of its subsidiaries is in violation
of, or in default in the performance or observation of any material
obligation, agreement, covenant or condition contained in, its Restated
Certificate of Incorporation or Amended and Restated By-laws or any material
lease, contract, indenture, mortgage, deed
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of trust, note agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or any of their respective properties or assets may be
bound; nor has the Company, the Parent or any of their subsidiaries received
any notice of any such violation or default; nor, to the best knowledge of
the Company and the Parent, is any other party to any such agreement or
instrument in violation or breach thereof. All contracts required by Item
601(b)(10) of Regulation S-K under the Securities Act to be filed as
exhibits to the Registration Statement have been so filed. All contracts and
any other agreements to which the Company or any of its subsidiaries is a
party that are described in the Prospectus are valid agreements, enforceable
in accordance with their respective terms, except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally
or by general equitable principles and neither the Company nor any of its
subsidiaries, nor, to the knowledge of the Company or the Parent, each other
party to any such contract or other agreement, is in default under or in
breach of any such contract or other agreement.
(xxi) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor is any such dispute threatened. Neither the Company,
the Parent nor any of their subsidiaries is aware that (A) any executive,
key employee or significant group of employees of the Company or any of its
subsidiaries plans to terminate employment with the Company or such
subsidiary or (B) any such executive or key employee is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreement that would be violated by the present or proposed business
activities of the Company or any of its subsidiaries. Neither the Company
nor any of its subsidiaries has or expects to have any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any of its subsidiaries
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makes or ever has made a contribution and in which any employee of the
Company or any of its subsidiaries is or has ever been a participant. With
respect to such plans, the Company and each of its subsidiaries are in
compliance in
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all material respects with all applicable provisions of ERISA.
(xxii) The Company has obtained the written agreements in the form of
Exhibit I hereto from each of its officers and directors and from the
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holders of those securities of the Company representing in the aggregate no
less than 100% of the outstanding Common Stock of the Company on an as-
converted basis, which holders include, without limitation, those persons
and entities set forth on Schedule B hereto.
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(xxiii) The Company and each of its subsidiaries have, and as of the
Closing Dates will have, good and marketable title to all personal property
owned or proposed to be owned by them which is material to their respective
businesses, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Prospectus; and any real
property and buildings held under lease by the Company or any of its
subsidiaries are, and will be as of the Closing Dates, held by them under
valid, subsisting and enforceable leases, in each case except as described
in the Prospectus.
(xxiv) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
and propose to engage; and neither the Company nor any of its subsidiaries
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not materially and adversely affect the condition
(financial or otherwise), properties, business, prospects, net worth or
results of operations of the Company or such subsidiary, as the case may be,
except as described in or contemplated by the Prospectus.
(xxv) Except as contemplated by this Agreement, there is no broker,
finder or other party that is entitled to receive from the Company or any of
its subsidiaries any brokerage or finder's fee or other fee or commission as
a result of any of the transactions contemplated by this Agreement.
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(xxvi) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to its financial assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxvii) Except as set forth in the Prospectus, to the knowledge of the
Company and the Parent, neither the Company nor any of its subsidiaries nor
any officer, director, employee or agent of the Company or any of its
subsidiaries has made any payment of funds of the Company or any of its
subsidiaries or received or retained any funds in violation of any law, rule
or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(xxviii) Neither the Company nor any of its subsidiaries is an
"investment company" or an entity "controlled" by an "investment company" as
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such terms are defined in the Investment Company Act of 1940, as amended.
(ii) Each certificate signed by any officer of the Company, the Parent or any of
their subsidiaries and delivered pursuant to this Agreement to the Underwriters
or counsel for the Underwriters shall be deemed to be a representation and
warranty by the Company or the Parent, as the case may be, as to the matters
covered thereby.
3 Representations and Warranties of the Parent. The Parent represents and
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warrants to, and agrees with, the several Underwriters that:
(i) The Parent has been duly organized and is validly existing and in good
standing as a corporation under the laws of its jurisdiction of organization,
with full power and authority to own or lease its properties and to conduct its
business; the Parent is in possession of and operating in
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compliance with all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect, except where the
failure to have any such franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders individually and in the aggregate
would not have a material adverse effect on the financial condition of the
Parent; and the Parent is duly qualified to do business and is in good standing
as a foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the financial condition of the Parent. The Parent has all
requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits of
and from all public regulatory or governmental agencies and bodies to own, lease
and operate its properties and conduct its business as now being conducted,
except where failure to have any such consents, approvals, authorizations,
orders, registrations, qualifications, licenses or permits individually and in
the aggregate would not have a material adverse effect on the financial
condition of the Parent.
(ii) The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a breach
or violation of any of the terms or provisions of or constitute a default under
any lease, contract, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which the Parent is a party or by which it or any of
its properties is or may be bound, the Certificate of Incorporation, the By-
laws, or other organizational documents of the Parent, or any law, order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Parent or any of its properties or the creation of a lien on any of the
assets or properties of the Parent, except for such liens that individually and
in the aggregate would not have a material adverse effect on the financial
condition of the Parent.
(iii) No consent, approval, authorization or order of any court or governmental
agency or body is required for the consummation by the Parent of the
transactions contemplated by this Agreement, except such as may be required by
the NASD or under the Securities Act or the securities or "Blue Sky" laws of
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any jurisdiction in connection with the purchase and distribution of the Common
Stock by the Underwriters.
(iv) The Parent has the full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and this Agreement has been
duly and validly authorized, executed and delivered by the Parent and is a valid
and binding obligation of the Parent, enforceable against the Parent in
accordance with its terms, except to the extent that rights to indemnity and
contribution hereunder may be limited by federal or state securities laws or the
public policy underlying such laws.
4 Purchase by, and Sale and Delivery to, Underwriters -- Closing Dates. The
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Company agrees to sell to the Underwriters the Firm Stock, and on the basis of
the representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase the Firm Stock from the Company, the
number of shares of Firm Stock to be purchased by each Underwriter being set
forth opposite its name in Schedule A hereto, subject to adjustment in
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accordance with Section 13.
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The purchase price per share to be paid by the Underwriters to the
Company will be $[___] per share (the "Purchase Price").
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The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 Noon, New York Time, on the second full business day preceding the
First Closing Date (as defined below) or, if no such direction is received, in
the names of the respective Underwriters or in such other names as the
Representatives may designate (solely for the purpose of administrative
convenience) and in such denominations as the Representatives may determine), at
the offices of X'Xxxxxxxx Graev & Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, against payment of the aggregate Purchase Price
therefor in same day funds to the Company or its designees. The time and date
of the delivery and closing shall be at 10:00 A.M., New York Time, on
[________________], 1998, in accordance with Rule 15c6-1 of the Exchange Act.
The time and date of such payment and delivery are herein referred to as the
15
"First Closing Date". The First Closing Date and the location of delivery of,
-------------------
and the form of payment for, the Firm Stock may be varied by agreement between
the Company and the Representatives. The First Closing Date may be postponed
pursuant to the provisions of Section 13.
----------
The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters not later than
10:00 A.M., New York Time, on the business day preceding the First Closing Date
at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that each of Cowen, Xxxxxxxxxxx and Daiwa,
individually and not as a Representative of the several Underwriters, may (but
shall not be obligated to) make payment to the Company on behalf of any
Underwriter or Underwriters, for the Stock to be purchased by such Underwriter
or Underwriters. Any such payment by Cowen, Xxxxxxxxxxx or Daiwa shall not
relieve such Underwriter or Underwriters from any of its or their other
obligations hereunder.
The several Underwriters agree to make an initial public offering of
the Firm Stock at $[________] per share as soon after the effectiveness of the
Registration Statement as in their judgment is advisable. The Representatives
shall promptly advise the Company of the making of the initial public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Company hereby grants to the Underwriters an option to purchase, severally and
not jointly, up to an aggregate of 322,500 shares of Optional Stock. The price
per share to be paid for the Optional Stock shall be the Purchase Price. The
option granted hereby may be exercised as to all or any part of the Optional
Stock at any time, and from time to time, not more than thirty (30) days after
the date the Firm Stock is initially offered to the public. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by the Underwriters to the Company.
The option granted hereby may be exercised by the Underwriters by
giving written notice from the Representatives to the Company setting forth the
number of shares of Optional Stock
16
to be purchased by them and the date and time for delivery of and payment for
the Optional Stock. The date and time for delivery of and payment for the
Optional Stock (which may be the First Closing Date, but not earlier) is herein
called the "Option Closing Date" and shall in no event be earlier than two (2)
-------------------
business days nor later than ten (10) business days after written notice is
given. (The Option Closing Date and the First Closing Date are herein called the
"Closing Dates".) Optional Stock shall be purchased for the account of each
-------------
Underwriter in the same proportion as the number of shares of Firm Stock set
forth opposite such Underwriter's name in Schedule A hereto bears to the total
----------
number of shares of Firm Stock (subject to adjustment by the Underwriters to
eliminate odd lots). Upon exercise of the option by the Underwriters, the
Company agrees to sell to the Underwriters the number of shares of Optional
Stock set forth in the written notice of exercise, and the Underwriters agree,
severally and not jointly and subject to the terms and conditions herein set
forth, to purchase the number of such shares determined as aforesaid.
The Company will deliver the Optional Stock to the Underwriters (in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company given at or prior to 12:00 Noon, New York Time, on the second full
business day preceding the Option Closing Date or, if no such direction is
received, in the names of the respective Underwriters or in such other names as
the Representatives may designate (solely for the purpose of administrative
convenience) and in such denominations as the Representatives may determine),
against payment of the aggregate Purchase Price therefor by certified or
official bank check or checks in New York Clearing House funds (next day funds),
payable to the order of the Company, all at the offices of X'Xxxxxxxx Graev &
Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
Option Closing Date and the location of delivery of, and the form of payment
for, the Optional Stock may be varied by agreement between the Company and the
Representatives. The Option Closing Date may be postponed pursuant to the
provisions of Section 13.
----------
5 Covenants and Agreements of the Company. The Company covenants and agrees
---------------------------------------
with the several Underwriters that:
(i) The Company will (A) if the Company and the Representatives have determined
not to proceed pursuant to Rule 430A, use its best efforts to cause the
Registration
17
Statement to become effective, (B) if the Company and the Representatives have
determined to proceed pursuant to Rule 430A, use its best efforts to comply with
the provisions of and make all requisite filings with the Commission pursuant to
Rule 430A and Rule 424 of the Rules and Regulations and (C) if the Company and
the Representatives have determined to deliver Prospectuses pursuant to Rule 434
of the Rules and Regulations, to use its best efforts to comply with all the
applicable provisions thereof. The Company will advise the Representatives
promptly as to the time at which the Registration Statement becomes effective,
will advise the Representatives promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose, and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible the lifting thereof, if issued. The Company will advise the
Representatives promptly of the receipt of any comments of the Commission or any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information and will not at any
time file any amendment to the Registration Statement or supplement to the
Prospectus which shall not previously have been submitted to the Representatives
a reasonable time prior to the proposed filing thereof or to which the
Representatives shall reasonably object in writing or which is not in compliance
with the Securities Act and the Rules and Regulations.
(ii) The Company will prepare and file with the Commission, promptly upon the
request of the Representatives, any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the
Representatives may be necessary to enable the several Underwriters to continue
the distribution of the Stock and will use its best efforts to cause the same to
become effective as promptly as possible.
(iii) If at any time after the effective date of the Registration Statement when
a prospectus relating to the Stock is required to be delivered under the
Securities Act any event relating to or affecting the Company occurs as a result
of which the Prospectus or any other prospectus as then in effect would include
an untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the
18
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representatives thereof and will prepare an
amended or supplemented prospectus which will correct such statement or
omission; and in case any Underwriter is required to deliver a prospectus
relating to the Stock nine (9) months or more after the effective date of the
Registration Statement, the Company upon the request of the Representatives and
at the expense of such Underwriter will prepare promptly such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act.
(iv) The Company will deliver to the Representatives, at or before the Closing
Dates, signed copies of the Registration Statement, as originally filed with the
Commission, and all amendments thereto including all financial statements and
exhibits thereto, and will deliver to the Representatives such number of copies
of the Registration Statement, including such financial statements but without
exhibits, and all amendments thereto, as the Representatives may reasonably
request. The Company will deliver or mail to or upon the order of the
Representatives, from time to time until the effective date of the Registration
Statement, as many copies of the Preeffective Prospectus as the Representatives
may reasonably request. The Company will deliver or mail to or upon the order of
the Representatives on the date of the initial public offering, and thereafter
from time to time during the period when delivery of a prospectus relating to
the Stock is required under the Securities Act, as many copies of the
Prospectus, in final form or as thereafter amended or supplemented as the
Representatives may reasonably request; provided, however, that the expense of
-------- -------
the preparation and delivery of any prospectus required for use nine (9) months
or more after the effective date of the Registration Statement shall be borne by
the Underwriters required to deliver such prospectus.
(v) The Company will make generally available to its stockholders as soon as
practicable, but not later than fifteen (15) months after the effective date of
the Registration Statement, an earnings statement which will be in reasonable
detail (but which need not be audited) and which will comply with Section 11(a)
of the Securities Act,
19
covering a period of at least twelve (12) months beginning after the "effective
---------
date" (as defined in Rule 158 under the Securities Act) of the Registration
----
Statement.
(vi) The Company will cooperate with the Representatives to enable the Stock to
be registered or qualified for offering and sale by the Underwriters and by
dealers under the securities laws of such jurisdictions as the Representatives
may designate and at the request of the Representatives will make such
applications and furnish such consents to service of process or other documents
as may be required of it as the issuer of the Stock for that purpose; provided,
--------
however, that the Company shall not be required to qualify to do business or to
-------
file a general consent (other than that arising out of the offering or sale of
the Stock) to service of process in any such jurisdiction where it is not now so
subject. The Company will, from time to time, prepare and file such statements
and reports as are or may be required of it as the issuer of the Stock, to
continue such qualifications in effect for so long a period as the
Representatives may reasonably request for the distribution of the Stock. The
Company will advise the Representatives promptly after the Company becomes aware
of the suspension of the qualifications or registration of (or any such
exception relating to) the Common Stock of the Company for offering, sale or
trading in any jurisdiction or of any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any orders suspending such
qualifications, registration or exception, the Company will, with the
cooperation of the Representatives, use its best efforts to obtain the
withdrawal thereof.
(vii) The Company will furnish to its stockholders annual reports containing
financial statements certified by independent public accountants and with
quarterly summary financial information in reasonable detail which may be
unaudited. During the period of five (5) years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the other
Underwriters, (A) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance sheet of the
Company as of the close of such fiscal year and statements of income,
stockholder's equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public accountants; (B) as soon as
practicable after the filing
20
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Report on Form 8-K or other report or financial statements
furnished to or filed with the Commission, the NASD, the Nasdaq Stock Market or
any securities exchange; and (C) as soon as available, copies of any report or
communication (financial or otherwise) of the Company mailed generally to
holders of its Common Stock and (D) from time to time such other information
concerning the Company as the Representatives may reasonably request. So long as
the Company has active subsidiaries, such financial statements will be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally. Separate financial statements shall be furnished for all subsidiaries
whose accounts are not consolidated but which at the time are significant
subsidiaries as defined in the Rules and Regulations.
(viii) The Company will use its best efforts to list, subject to official notice
of issuance, and to maintain the listing of, the Stock on the Nasdaq National
Market.
(ix) The Company will maintain a transfer agent and registrar for its Common
Stock.
(x) Prior to filing its quarterly statements on Form 10-Q, the Company will have
its independent auditors perform a limited quarterly review of its quarterly
numbers.
(xi) Without the prior written consent of Cowen, the Company will not offer,
sell, assign, transfer, encumber, pledge, contract to sell, grant an option to
purchase or otherwise dispose of any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for shares of Common Stock during the 180
days following the date on which the Firm Stock is initially offered to the
public, other than (A) shares of Common Stock to be sold by the Company
hereunder, (B) shares of Common Stock issuable upon the conversion of any of the
securities of the Company which are outstanding on the date hereof and described
in the Prospectus, (C) options issued by the Company under the Company's
presently authorized stock
21
option plans and (D) shares of Common Stock issuable under the Company's
presently outstanding stock options.
(xii) The Company will apply the net proceeds from the sale of the Stock as set
forth in the description under "Use of Proceeds" in the Prospectus, which
---------------
description complies in all respects with the requirements of Item 504 of
Regulation S-K.
(xiii) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Stock under the Securities Act.
(xiv) Prior to each Closing Date, the Company will furnish to the
Representatives, as soon as they have been prepared, as many copies as the
Representatives may reasonably request of any unaudited interim financial
statements of the Company for any periods subsequent to the periods covered by
the financial statements appearing in the Registration Statement and the
Prospectus.
(xv) Prior to each Closing Date, the Company will issue no press release or
other communication, directly or indirectly, and hold no press conference, with
respect to the Company, the financial condition, results of operation, business,
prospects, assets or liabilities of the Company, or the offering of the Stock,
without the prior consent of Cowen. For a period of twelve (12) months following
the later of the Closing Dates, the Company will provide to the Representatives
copies of each press release or other public communication with respect to the
financial condition, results of operations, business, prospects, assets or
liabilities of the Company.
6 Payment of Expenses.
-------------------
The Company will pay (directly or by reimbursement) all costs, fees
and expenses incurred in connection with or incident to the performance of the
obligations of the Company and the Parent under this Agreement and in connection
with the transactions contemplated hereby, including but not limited to (i) all
expenses and taxes incident to the issuance and delivery of the Stock to the
Representatives; (ii) all expenses incident to the registration of the Stock
under the
22
Securities Act; (iii) the costs of preparing stock certificates (including
printing and engraving costs); (iv) all fees and expenses of the registrar and
transfer agent of the Stock; (v) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Stock to the Underwriters;
(vi) all fees and expenses of the Company's and the Parent's counsel and
independent accountants; (vii) all costs and expenses incurred in connection
with the preparation, printing, filing, shipping and distribution of the
Registration Statement, each Preeffective Prospectus and the Prospectus
(including all exhibits and financial statements therein) and all amendments and
supplements provided for herein, the Master Agreement Among Underwriters, the
Selected Dealers' Agreement, the Underwriters' Questionnaire, the Blue Sky
memoranda and this Agreement; (viii) all filing fees, attorneys' fees and
expenses incurred by the Company, the Parent or the Underwriters in connection
with exemptions from the qualifying or registering (or obtaining qualification
or registration) of all or any part of the Stock for offer and sale and
determination of its eligibility for investment under the Blue Sky or other
securities laws of such jurisdictions as the Representatives may designate; (ix)
all fees and expenses paid or incurred in connection with filings made with the
NASD; and (x) all other costs and expenses incident to the performance of the
Company's and the Parent's obligations hereunder which are not otherwise
specifically provided for in this Section 6.
---------
7 Indemnification and Contribution.
--------------------------------
(i) The Company and the Parent, jointly and severally, agree to indemnify
and hold harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of the Securities Act and the respective
officers, directors, partners, employees, representatives and agents of such
Underwriter (collectively, the "Underwriter Indemnified Parties" and, each, an
-------------------------------
"Underwriter Indemnified Party"), against any losses, claims, damages,
------------------------------
liabilities or expenses (including the cost of investigating and defending
against any claims therefor and counsel fees incurred in connection therewith),
joint or several, which may be based upon the Securities Act, or any other
statute or at common law, on the ground or alleged ground that any Preeffective
Prospectus, the Registration Statement or the Prospectus (or any Preeffective
Prospectus, the Registration Statement or the Prospectus as from time to time
amended or supplemented) includes or allegedly includes an untrue statement of a
material fact or omits to state a material fact
23
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon, and in
------
conformity with, written information furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof. The Company and the Parent will be entitled to
participate at their own expense in the defense or, if they so elect, to assume
the defense of any suit brought to enforce any such liability, and if the
Company and the Parent elect to assume the defense, such defense shall be
conducted by counsel chosen by them. In the event the Company and the Parent
elect to assume the defense of any such suit and retain such counsel, any
Underwriter Indemnified Parties, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) the Company and the Parent shall have specifically authorized the retaining
of such counsel or (ii) the parties to such suit include any such Underwriter
Indemnified Parties and the Company or the Parent and such Underwriter
Indemnified Parties have been advised by counsel to the Underwriters that one or
more legal defenses may be available to it or them which may not be available to
the Company or the Parent, in which case the Company and the Parent shall not be
entitled to assume the defense of such suit on behalf of such Underwriter
Indemnified Party or Underwriter Indemnified Parties notwithstanding the
Company's and the Parent's obligations to bear the fees and expenses of such
counsel. In no event shall the Company and the Parent be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all Underwriter Indemnified Parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances unless
------
the Company and the Parent, on the one hand, and such Underwriter Indemnified
Parties, on the other hand, have been advised by counsel to the Underwriter
Indemnified Parties that one or more factual or legal defenses may be available
to one or more of the Underwriter Indemnified Parties which may not be available
to all of the Underwriter Indemnified Parties. The Company and the Parent shall
not be liable to indemnify any person for any settlement of any such claim
effected without the consent of the Company and the Parent, respectively, which
consent shall not be unreasonably withheld. This indemnity agreement is not
exclusive and will be in addition to any liability which the Company or the
Parent might otherwise have and shall not limit any rights or remedies which may
24
otherwise be available at law or in equity to each Underwriter Indemnified
Party.
(ii) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act (collectively, the "Company Indemnified
-------------------
Parties") and the Parent and each person, if any, who controls the Parent
-------
within the meaning of the Securities Act (collectively, the "Parent Indemnified
Parties"), against any losses, claims, damages, liabilities or expenses
(including, unless the Underwriter or Underwriters elect to assume the defense,
the reasonable cost of investigating and defending against any claims therefor
and reasonable counsel fees incurred in connection therewith), joint or several,
which arise out of or are based in whole or in part upon the Securities Act, the
Exchange Act or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any
Preeffective Prospectus, the Registration Statement or the Prospectus (or any
Preeffective Prospectus, the Registration Statement or the Prospectus, as from
time to time amended and supplemented) includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading, but only insofar as any such statement
or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by such Underwriter, directly or through
the Representatives, specifically for use in the preparation thereof. Such
Underwriter shall be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, and, if such Underwriter elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event that any
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Company Indemnified Parties, the Parent Indemnified Parties and any
other Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, respectively. In no event shall the Underwriters be
liable for fees and expenses of more than one counsel (in addition to any local
counsel), separate from its own counsel, for all Company Indemnified Parties and
Parent Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction
25
arising out of the same general allegations or circumstances unless the
------
Underwriters and such Company Indemnified Parties and Parent Indemnified Parties
have been advised by counsel to the Company Indemnified Parties and Parent
Indemnified Parties that one or more factual or legal defenses may be available
to one or more of the Company Indemnified Parties or Parent Indemnified Parties
which may not be available to all of the Company Indemnified Parties and Parent
Indemnified Parties. The Underwriter against whom indemnity may be sought shall
not be liable to indemnify any person for any settlement of any such claim
effected without such Underwriter's consent, which consent shall not be
unreasonably withheld. This indemnity agreement is not exclusive and will be in
addition to any liability which such Underwriter might otherwise have and shall
not limit any rights or remedies which may otherwise be available at law or in
equity to any Company Indemnified Party or Parent Indemnified Parties.
(iii) If the indemnification provided for in this Section 7 is unavailable or
---------
insufficient to hold harmless an indemnified party under Section 7(a) or Section
------------ -------
7(b) above in respect of any losses, claims, damages, liabilities or expenses
----
(or actions in respect thereof) referred to herein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Parent on the one hand and the
Underwriters on the other from the offering of the Stock. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company and the Parent on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Parent on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company 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. The
relative fault shall be determined by reference to, among other things, whether
the
26
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by either of
the Company, the Parent or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Parent and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, defending, settling or compromising any
such claim. Notwithstanding the provisions of this Section 7(c), no Underwriter
------------
shall be required to contribute any amount in excess of the amount by which the
total price at which the shares of the Stock underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Underwriters'
obligations to contribute are several in proportion to their respective
underwriting obligations and not joint. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(iv) Each party indemnified under the provisions of Section 7(a) or Section
------------ -------
7(b) agrees that, upon the service of a summons or other initial legal process
---
upon it in any action or suit instituted against it or upon its receipt of
written notification of the commencement of any investigation or inquiry of, or
proceedings against, it in respect of which indemnity may be sought on account
of any indemnity agreement contained in such sections, it will promptly give
written notice (herein called the "Notice") of such service or notification to
------
the party or parties from whom indemnification may be sought hereunder. No
indemnification provided for in such sections shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceedings to
which the Notice would have related to the extent such indemnifying party was
materially prejudiced by the failure to give the Notice, but the omission to
27
notify such indemnifying party or parties of any such service or notification
shall not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party for contribution or otherwise than on
account of its indemnity agreement contained in Section 7(a) or Section 7(b).
------------ ------------
(v) In addition to their other obligations under Section 7(a), the Company
------------
and the Parent, jointly and severally, agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon (i) any statement or omission or any alleged
statement or omission or (ii) any breach or inaccuracy in their representations
and warranties, they will reimburse each Underwriter on a quarterly basis for
all legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's and the Parent's obligation to reimburse each
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Company or the
Parent, as the case may be, together with interest, compounded daily, determined
on the basis of the prime rate (or other commercial lending rate for borrowers
of the highest credit standing) announced from time to time by Citibank, N.A.,
New York, New York (the "Prime Rate"). Any such interim reimbursement payments
----------
which are not made to an Underwriter within 30 days of a written request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This expense reimbursement agreement will be in addition to any other
liability which the Company and the Parent may otherwise have.
(vi) In addition to its other obligations under Section 7(b), each
------------
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in Section 7(b) which relates to information furnished by such
------------
Underwriter to the Company and the Parent hereunder, it will reimburse the
Company (and, to the extent applicable, each officer, director or controlling
person) on a quarterly basis for all legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding,
28
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company and the
Parent (and, to the extent applicable, each officer, director or controlling
person) for such expenses and the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been improper,
the Company and the Parent (and, to the extent applicable, each officer,
director or controlling person) shall promptly return it to the Underwriter
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to the Company
and the Parent within thirty (30) days of a written request for reimbursement
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
8 Survival of Indemnities, Representations, Warranties, etc. The respective
----------------------------------------------------------
indemnities, covenants, agreements, representations, warranties and other
statements of the Company, the Parent and the several Underwriters, as set forth
in this Agreement or made by them respectively pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company, the Parent, any of their respective
officers or directors or any controlling person, and shall survive delivery of
and payment for the Stock.
9 Conditions of Underwriters' Obligations. The respective obligations of
---------------------------------------
the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof and at and as of each
Closing Date, of the representations and warranties made herein by the Company
and the Parent, to compliance at and as of each Closing Date by the Company and
the Parent with their respective covenants and agreements herein contained and
the other provisions herein to be satisfied at or prior to each Closing Date,
and to the following additional conditions:
(a) The Registration Statement shall have become effective and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge
of the Company, the Parent or the
29
Representatives, shall be threatened by the Commission, and any request for
additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives. Any
filings of the Prospectus, or any supplement thereto, required pursuant to
Rule 424(b) or Rule 434 of the Rules and Regulations, shall have been made in
the manner and within the time period required by Rule 424(b) and Rule 434 of
the Rules and Regulations, as the case may be.
(b) The Representatives shall have been satisfied that there shall not
have occurred any change, on a consolidated basis, prior to the applicable
Closing Date in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the Company and
its subsidiaries considered as a whole, or any change in the capital stock,
short-term or long-term debt of the Company and its subsidiaries considered
as a whole, such that (i) the Registration Statement or the Prospectus, or
any amendment or supplement thereto, contains an untrue statement of fact
which, in the opinion of the Representatives, is material, or omits to state
a fact which, in the opinion of the Representatives, is required to be stated
therein or is necessary to make the statements therein not misleading, or
(ii) it is impracticable in the reasonable judgment of the Representatives to
proceed with the public offering or purchase the Stock as contemplated
hereby.
(c) The Representatives shall be satisfied that no legal or governmental
action, suit or proceeding affecting the Company or any of its subsidiaries
which is material and adverse to the Company and its subsidiaries considered
as a whole, or which affects or may affect the Company's ability to perform
its obligations hereunder, shall have been instituted or threatened and there
shall have occurred no material adverse development in any existing such
action, suit or proceeding.
(d) At the time of execution of this Agreement, the Representatives shall
have received from KPMG Peat
00
Xxxxxxx XXX, xxxxxxxxxxx certified public accountants, a letter, dated the
date hereof, in form and substance satisfactory to the Underwriters.
(e) The Representatives shall have received, prior to the applicable
Closing Date, from KPMG Peat Marwick LLP, independent certified public
accountants, a letter, dated as of the applicable Closing Date, to the effect
that such accountants reaffirm, as of such Closing Date, and as though made
on such Closing Date, the statements made in the letter furnished by such
accountants pursuant to Section 9(d).
------------
(f) Prior to each Closing Date, the Representatives shall have received
from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel for the
Company, an opinion, dated as of such Closing Date, in form and substance
reasonably satisfactory to the Representatives to the effect set forth in
Exhibit I hereto, together with the opinion of ______, Japanese counsel for
---------
the Parent, contemplated thereby and attached thereto.
(g) Prior to the First Closing Date, the Representatives shall have
received from X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Underwriters,
an opinion dated as of the First Closing Date in form and substance
reasonably satisfactory to the Representatives.
(h) Prior to each Closing Date, the Representatives shall have received
certificates, dated as of such Closing Date, of the chairman or chief
executive officer and the chief financial or accounting officer of each of
the Company and the Parent, to the effect that:
(i) no stop order suspending the effectiveness of the Registration
Statement has been issued, and, to the certifying party's knowledge, no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act;
(ii) neither any Preeffective Prospectus, as of its date, nor the
Registration Statement nor the
31
Prospectus, nor any amendment or supplement thereto, as of the time when
the Registration Statement became effective and at all times subsequent
thereto up to the delivery of such certificate, included any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(iii) the representations and warranties of the Company and the
Parent herein are true and correct at and as of the Closing Date in
connection with which said certificate is being delivered, and the Company
and the Parent has complied with all of its covenants herein and performed
or satisfied all of the conditions on their part to be performed or
satisfied at or prior to such Closing Date; and
(iv) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as disclosed
in or contemplated by the Prospectus, (i) there has not been any material
adverse change or a development involving a material adverse change in the
condition (financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company or any of its
subsidiaries; (ii) the business and operations conducted by the Company
and each of its subsidiaries have not sustained a loss by strike, fire,
flood, accident or other calamity (whether or not insured) of such a
character as to interfere materially with the conduct of the business and
operations of the Company or such subsidiary, as the case may be; (iii) no
legal or governmental action, suit or proceeding is pending or, to the
knowledge of the Company or the Parent, threatened against the Company or
any of its subsidiaries which is material to the Company or any of its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, or which may materially and adversely affect the
transactions contemplated by this Agreement; (iv) neither the Company nor
any of its subsidiaries has incurred any liability or obligation, direct,
contingent or indirect, or
32
entered into any transaction, not in the ordinary course of business; (v)
the Company has not made any change in its capital stock (except pursuant
to its stock option plans or outstanding stock options and warrants), made
any material change in its short-term or funded debt or repurchased or
otherwise acquired any of the Company's capital stock; and (vi) the
Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock on or prior to the
applicable Closing Date.
(i) The Representatives shall have received the written agreements of
the employees, officers and directors of the Company and the persons and
entities set forth in Schedule B hereto, in each case in the form of Exhibit
---------- -------
II hereto, and such agreements shall be in full force and effect.
--
All opinions, certificates, letters and other documents will be in compliance
with the provisions hereunder only if they are in form and substance reasonably
satisfactory to the Representatives. The Company and the Parent will furnish to
the Representatives conformed copies of such opinions, certificates, letters and
other documents as the Representatives shall reasonably request. If any of the
conditions hereinabove provided for in this Section 9 shall not have been
---------
satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company and the Parent of
such termination in writing or by telegram at or prior to the Closing Dates, but
the Representatives shall be entitled to waive any of such conditions.
10 Effective Date. This Agreement shall become effective immediately as to
--------------
Section 6, Section 7, Section 8, Section 10, Section 12, Section 14, Section 15,
--------- --------- --------- ---------- ---------- ---------- ----------
Section 16, Section 17, Section 18 and Section 19 and, as to all other
---------- ---------- ---------- ----------
provisions, at 11:00 a.m. New York Time on the first full business day following
the effectiveness of the Registration Statement or at such earlier time after
the Registration Statement becomes effective as the Representatives may
determine on and by notice to the Company or by release of any of the Stock for
sale to the public. For the purposes of this Section 10, the Stock shall be
----------
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by the
Representatives of telegrams (i)
33
advising Underwriters that the shares of Stock are released for public offering
or (ii) offering the Stock for sale to securities dealers, whichever may occur
first.
11 Termination. This Agreement (except for the provisions of Section 6) may
----------- ---------
be terminated by the Company at any time before it becomes effective in
accordance with Section 10 by notice to the Representatives and may be
----------
terminated by the Representatives at any time before it becomes effective in
accordance with Section 10 by notice to the Company. In the event of any
termination of this Agreement under this or any other provision of this
Agreement, there shall be no liability of any party to this Agreement to any
other party, other than as provided in Section 6, Section 7 and Section 12 and
--------- --------- ----------
other than as provided in Section 13 as to the liability of defaulting
----------
Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the First Closing
Date or the Option Closing Date trading in securities on the New York Stock
Exchange or the American Stock Exchange or the Nasdaq National Market shall have
been suspended or minimum or maximum prices shall have been established on any
such exchange or market, or a banking moratorium shall have been declared by New
York or United States authorities; (ii) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter market;
(iii) if at or prior to the First Closing Date or the Option Closing Date there
shall have been (A) an outbreak or escalation of hostilities between the United
States and any foreign power or of any other insurrection or armed conflict
involving the United States or (B) any change in financial markets or any
calamity or crisis which, in the judgment of the Representatives, makes it
impractical or inadvisable to offer or sell the Firm Stock or Optional Stock, as
applicable, on the terms contemplated by the Prospectus; (iv) if there shall
have been any development or prospective development involving particularly the
business or properties or securities of the Company or the transactions
contemplated by this Agreement, which, in the judgment of the Representatives,
makes it impracticable or inadvisable to offer or deliver the Firm Stock or the
Optional Stock, as applicable, on the terms contemplated by the Prospectus; (v)
if there shall be any litigation or proceeding, pending or threatened, which, in
the judgment of the Representatives, makes it impracticable or inadvisable to
offer or deliver the Firm Stock or Optional Stock, as applicable, on
34
the terms contemplated by the Prospectus; or (vi) if there shall have occurred
any of the events specified in the immediately preceding clauses (i) through (v)
together with any other such event that makes it, in the judgment of the
Representatives, impractical or inadvisable to offer or deliver the Firm Stock
or Optional Stock, as applicable on the terms contemplated by the Prospectus.
12 Reimbursement of Underwriters. Notwithstanding any other provisions
-----------------------------
hereof, if this Agreement shall not become effective by reason of any election
of the Company pursuant to the first paragraph of Section 11 or shall be
----------
terminated by the Representatives under Section 9 or Section 11, the Company
--------- ----------
will bear and pay the expenses specified in Section 6 and, in addition to its
---------
obligations pursuant to Section 7, the Company will reimburse the reasonable
---------
out-of-pocket expenses of the several Underwriters (including reasonable fees
and disbursements of counsel for the Underwriters) incurred in connection with
this Agreement and the proposed purchase of the Stock, and promptly upon demand
the Company will pay such amounts to the Representatives.
13 Substitution of Underwriters. If any Underwriter or Underwriters shall
----------------------------
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company for the purchase or
sale of any Stock under this Agreement.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or
35
Underwriters as provided in this Section 13, (i) the Company and the Parent
----------
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full business days in order that the Company and the Parent may effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary, and (ii) the
respective numbers of shares to be purchased by the remaining Underwriters or
substituted Underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company, the Parent
or the other Underwriters for damages occasioned by its default hereunder. Any
termination of this Agreement pursuant to this Section 13 shall be without
----------
liability on the part of any non-defaulting Underwriter, the Parent or the
Company, except for expenses to be paid or reimbursed pursuant to Section 6 and
---------
except for the provisions of Section 7.
---------
14 Notices. All communications hereunder shall be in writing and, if sent to
-------
the Underwriters shall be mailed, delivered or telegraphed and confirmed to the
Representatives c/o Cowen & Company at Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 except that notices given to an Underwriter pursuant to Section 7 shall be
---------
sent to such Underwriter at the address furnished by the Representatives or, if
sent to the Company or the Parent, shall be mailed, delivered or telegraphed and
confirmed to EPITAXX, Inc. at 0 Xxxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxx Xxxxxx 00000,
Attention: Xxxxxx Xxxxxxxx.
15 Successors. This Agreement shall inure to the benefit of and be binding
----------
upon the several Underwriters, the Company, the Parent and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company and the Parent contained in
this
36
Agreement shall also be for the benefit of the person or persons, if any, who
control any Underwriter or Underwriters within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the indemnities of the
several Underwriters shall also be for the benefit of each director of the
Company, each of its officers who has signed the Registration Statement and the
person or persons, if any, who control the Company or the Parent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
16 Jurisdiction, Venue. Any suit, action or proceeding, whether at law or in
-------------------
equity, including any declaratory judgment or similar suit or action, instituted
by or against the Company or the Parent arising out of or relating in any way to
this Agreement may be brought and enforced in the courts of the State of New
York or of the United States for the Southern District of New York, and each of
the Company and the Parent irrevocably consents and submits to the jurisdiction
of each such court in respect of any suit, action or proceeding. Each of the
Company and the Parent further irrevocably consents to the service of process in
any such suit, action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, return receipt requested, to the
Company and the Parent or to its agent at its address as set forth in Section
-------
14. The Parent hereby irrevocably appoints the Company as its agent for
accepting any service of process within the State of New York. Furthermore,
each of the Company and the Parent hereby waives any objection that it may now
or hereafter have to the laying of venue of any such action or proceeding
arising under or relating to this Agreement in any court located in the county
of New York, State of New York, and hereby further waives any claim that a court
located in the County of New York, State of New York is not a convenient forum
for any such action or proceeding.
17 Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York with regard to conflict of
laws principles.
18 Authority of the Representatives. In connection with this Agreement, the
--------------------------------
Representatives will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by any Representative in such capacity will be
binding on all of the Underwriters.
37
19 Partial Unenforceability. The invalidity or unenforceability of any
------------------------
Section, subsection or provision of this Agreement shall not affect the validity
or enforceability of any other Section, subsection or provision hereof. If any
Section, subsection or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
20 General. This Agreement constitutes the entire agreement of the parties
-------
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The Section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Parent and the Representatives.
21 Counterparts. This Agreement may be signed in two (2) or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
* * * * *
38
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
among us.
Very truly yours,
EPITAXX, INC.
By:____________________________
Xxxxxx Xxxxxxxx
Chief Executive Officer and
Vice Chairman
NIPPON SHEET GLASS CO., LTD.
By:____________________________
Name:
Title:
Accepted and delivered in New
York, New York as of the date
first above written:
XXXXX & COMPANY
CIBC XXXXXXXXXXX CORP.
DAIWA SECURITIES AMERICA INC.,
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: Xxxxx & Company
By:______________________________
Title: Managing Director
39
SCHEDULE A
Number
of Shares
of Firm Stock
to be
Name Purchased
---- ---------
Xxxxx & Company
CIBC Xxxxxxxxxxx
Daiwa Securities America Inc.
____ _____
-------------
Total 2,150,000
40
SCHEDULE B
----------
41
EXHIBIT I
42
EXHIBIT II
43
