EXHIBIT 1.1
2,000,000 Units
RADYNE COMSTREAM INC.
2,000,000 UNITS
EACH UNIT CONSISTING OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK WARRANT
UNDERWRITING AGREEMENT
_______________, 2000
HD Xxxxx & Co., Inc.
As Representative of the Several
Underwriters referred to herein
00 Xxxxxxxxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Radyne ComStream Inc., a New York corporation (the "Company"), proposes
to sell to the several underwriters (the "Underwriters") named in Schedule I
hereto for whom you are acting as representative (the "Representative") an
aggregate of 2,000,000 units (the "Units"), each Unit consisting of one share of
Common Stock (the "Common Stock") and one redeemable common stock warrant (the
"Warrant") (together, the "Firm Securities"). The respective amounts of the Firm
Securities to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to sell, at the
Underwriters' option, an aggregate of up to 300,000 additional units (the
"Option Securities") as discussed more fully in Section 2 below. The Company
further agrees to issue, upon the Closing Date as hereafter defined in Section
2, the Representative's Purchase Option more fully discussed in Section 4(o)
below (the "Representative's Purchase Option").
The Representative has advised the Company that (a) it is authorized to
enter into this Agreement on behalf of the several Underwriters; and (b) the
several Underwriters are willing, acting severally and not jointly, to purchase
the numbers of Firm Securities set forth opposite their respective names in
Schedule I, plus their pro rata portion of the Option Securities if the
Representative elects to exercise the over-allotment option in whole or in part
for the accounts of the several Underwriters. The Firm Securities, the Option
Securities (to the extent the aforementioned option is exercised), the shares of
Common Stock issuable upon exercise of the Warrants, the Representative's
Purchase Option and the shares of Common Stock issuable upon exercise of the
Representative's Purchase Option are herein collectively called the
"Securities."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants and agrees as follows:
(a) FILING OF REGISTRATION STATEMENT. A registration statement on
Form S-2 (File No. 333-90731) with respect to the Securities has been prepared
by the Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission under the Act. Copies of such
registration statement, including any pre-effective and post-effective
amendments thereto, the preliminary prospectuses (meeting the requirements of
Rule 430A of the Rules and Regulations) contained therein and the exhibits,
financial statements and schedules, as finally amended and revised, have
heretofore been delivered by the Company to the Representative. Such
registration statement, herein referred to as the "Registration Statement,"
after effectiveness and upon filing of the Prospectus referred to below with the
Commission, if required, shall be deemed to include all information incorporated
therein by reference and omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below and also any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations with
respect to the Securities (a "Rule 462(b) Registration Statement"). The
Registration Statement has been declared effective by the Commission under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. The form of prospectus first filed by the
Company with the Commission pursuant to Rule 424(b) (or if no such filing is
required, the form of final prospectus included in the Registration Statement on
the effective date) and Rule 430A is herein referred to as the "Prospectus."
Each preliminary prospectus included in the Registration Statement prior to the
time it becomes effective is herein referred to as a "Preliminary Prospectus."
(b) ORGANIZATION AND QUALIFICATION. The Company and each of its
subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation. The Company and each of its subsidiaries has full corporate
power and authority to conduct all activities that each of them conducts, to own
or lease their respective properties, and to conduct their respective businesses
as described in the Registration Statement and Prospectus. The Company and each
of its subsidiaries is duly qualified to transact business in all jurisdictions
in which the conduct of their respective businesses requires such qualification,
except where the failure to qualify would not have a material adverse effect
upon the business or property of the Company and its subsidiaries, considered as
a whole. Complete and correct copies of the Certificate of Incorporation and
Bylaws of the Company, and all amendments thereto, have been delivered to you,
and no changes therein will be made subsequent to the date hereof and prior to
the Closing Date or the Option Closing Date, as hereinafter defined.
(c) SUBSIDIARIES. The Company's only subsidiaries are those
listed on Schedule II hereto (the "Subsidiaries"). Complete and correct copies
of the Certificate of Incorporation and Bylaws of each of the Subsidiaries, and
all amendments thereto, have been delivered to you, and no changes therein will
be made subsequent to the date hereof and prior to the Closing Date or Option
Closing Date. The issued shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
and are owned of record and beneficially by the Company or one of the
Subsidiaries, free and clear of any security interests, liens, encumbrances,
equities or claims and there are no outstanding options, warrants, or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any
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obligations into any shares of capital stock or ownership interests in any
Subsidiary. Except for the Subsidiaries, neither the Company nor any of the
Subsidiaries controls, directly or indirectly, or has any direct or indirect
interest or investment in any corporation, firm, partnership, association,
limited liability company, business trust or other business organization, or
owns any shares of stock or any other securities of any other corporation, firm,
partnership, association, limited liability company, business trust or other
business organization (other than bank certificates of deposit, shares or units
of interest in "money market" funds, or as set forth in the Prospectus). Except
as otherwise disclosed in the Registration Statement, neither the Company nor
any of the Subsidiaries has made any loans (other than advances to employees in
the ordinary course of business, none of which are material) to or guaranteed
any obligations of, any other corporation, firm, partnership, association,
limited liability company, business trust or other business organization.
(d) CAPITALIZATION AND LEGALITY OF SECURITIES. The Company has
authorized and outstanding capital stock as set forth under the heading
"Capitalization" in the Prospectus; the outstanding shares of Common Stock of
the Company have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with all applicable federal and
state securities laws; all of the Securities to be issued and sold by the
Company pursuant to this Agreement have been duly authorized and, when issued
and paid for as contemplated herein, will be validly issued, fully paid and
nonassessable; no preemptive rights of stockholders exist with respect to any of
the Securities or the issue and sale thereof; no stockholder of the Company has
any right pursuant to any agreement which has not been waived or honored to
require the Company to register the sale of any shares owned by such stockholder
under the Act in the public offering contemplated herein except as disclosed in
the Registration Statement; and all necessary and proper corporate proceedings,
including the reservation of a sufficient number of shares of Common Stock for
issuance upon exercise of the Warrants and the Representative's Purchase Option,
have been taken to validly authorize the issuance and sale of such Securities
and no further approval or authority of the stockholders or the Board of
Directors of the Company is required for the issuance and sale of the Securities
to be sold by the Company as contemplated herein.
(e) DESCRIPTION OF SECURITIES; RIGHTS TO ACQUIRE SHARES. The
Securities conform with the statements concerning them in the Registration
Statement in all material respects. Except as specifically disclosed in the
Registration Statement and the consolidated financial statements of the Company
and the related notes thereto, as of the respective dates therein indicated, the
Company does not have outstanding any options or warrants to purchase, 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, warrants, rights,
convertible securities or obligations. The descriptions of the Company's stock
option and other stock-based plans, and of the options or other rights granted
and exercised thereunder, as set forth in the Prospectus, are accurate summaries
and fairly present the information required to be shown with respect to such
plans and rights in all material respects. The Company and its affiliates are
not currently offering any securities other than the Securities except as
described in the Registration Statement.
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(f) USE AND ACCURACY OF REGISTRATION STATEMENT, PRELIMINARY
PROSPECTUSES, AND PROSPECTUS. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus relating to the proposed
offering of the Securities nor instituted or, to the best knowledge of the
Company, threatened or contemplated instituting proceedings for that purpose.
The Registration Statement contains, and the Prospectus and any amendments or
supplements thereto will contain, all statements that are required to be stated
or incorporated by reference therein by the Act and the Rules and Regulations
and in all respects conform or will conform, as the case may be, to the
requirements of the Act and the Rules and Regulations. Neither the Registration
Statement nor any amendment thereto, and neither the Prospectus nor any
supplement thereto, contains or will contain, as the case may be, any untrue
statement of a material fact or omits 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 Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representative specifically for use in the
preparation thereof. It is agreed that, except for the information on page 57 of
the Prospectus relating to determination of the public offering price of the
Units and lack of assurance that an active trading market will develop for any
of the Securities, the information set forth under the heading "Underwriting" in
the Prospectus shall be deemed to be the only written information furnished to
the Company by the Underwriters specifically for use in the preparation thereof.
(g) FINANCIAL STATEMENTS. The consolidated financial statements
of the Company, together with related notes and schedules, as set forth in or
incorporated by reference into the Registration Statement or the Prospectus
present fairly in all material respects the financial position and the results
of operations and cash flows of the Company and its Subsidiaries at the
indicated dates and for the indicated periods. Such financial statements,
schedules, and related notes have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary and selected financial and statistical
data and schedules included in or incorporated by reference into the
Registration Statement or the Prospectus present fairly the information shown or
incorporated by reference therein and have been compiled on a basis consistent
with the financial statements presented therein. No other financial statements
or schedules are required to be included in or incorporated by reference into
the Registration Statement.
(h) LITIGATION. There is no action, suit, investigation or
proceeding pending or, to the best knowledge of the Company, after due inquiry,
threatened against the Company or its Subsidiaries or any of their respective
officers in their capacity as such, before any arbitrator, court or regulatory,
governmental or administrative agency, authority or body that might result in a
material adverse change in the business, assets or condition of the Company and
its Subsidiaries, considered as a whole, except as set forth in the Registration
Statement. Neither the Company nor any of its Subsidiaries is subject to the
provisions of any injunction, judgment, decree or order of any court, regulatory
body, administrative agency, or other governmental body
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or arbitral forum that might result in a material adverse change in the
business, assets or condition of the Company or its Subsidiaries.
(i) TITLE TO PROPERTY. The Company and each of its Subsidiaries
has good and marketable title to, and valid and enforceable leasehold estates
in, all items of property described in the Registration Statement or Prospectus
as owned or leased, as the case may be, by each of them or that are material to
the conduct of the Company's and its Subsidiaries' respective businesses,
considered as a whole, free and clear of all liens, encumbrances, claims,
security interests, and other restrictions, other than those described in the
Prospectus and those that, individually or in the aggregate, would not have a
material adverse effect on the Company and its Subsidiaries, considered as a
whole. The leases, licenses or other contracts or instruments under which the
Company and each of its Subsidiaries leases, holds or is entitled to use any
property, real or personal, are valid, subsisting, and enforceable with only
such exceptions as are not material and do not interfere with the use of such
property made, or proposed to be made, by the Company or its Subsidiaries, and
all rentals, royalties or other payments accruing thereunder that became due
prior to the date of this Agreement have been duly paid, and neither the Company
nor its Subsidiaries nor, to the best of the Company's knowledge, any other
party is in default thereunder and, to the best of the Company's knowledge, no
event has occurred which, with the passage of time or the giving of notice, or
both, would constitute a default thereunder. Neither the Company nor any of its
Subsidiaries has received notice of any violation of any applicable law,
ordinance, regulation, order or requirement relating to the Company's or its
Subsidiaries' owned or leased properties except any such violation that would
not have a material adverse effect on the Company or its Subsidiaries.
(j) TAXES. The Company and each of its Subsidiaries has filed all
federal, state, local, and foreign income tax returns that have been required to
be filed and have paid all taxes indicated by said returns and each has paid all
tax assessments received by it. There is no income, sales, use, transfer or
other tax deficiency or assessment that has been or might reasonably be expected
to be asserted or threatened against the Company or any of its Subsidiaries
which might result in a material adverse change in the business or condition of
the Company or any of its Subsidiaries. The Company and each of its Subsidiaries
have paid all sales, use, transfer and other taxes applicable to it and its
business and operations.
(k) NO MATERIAL CHANGE. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, as they
may be amended or supplemented, and except as set forth or contemplated in the
Prospectus (i) there has not been and will not have been any material adverse
change or any development involving the likelihood of a future material adverse
change in or affecting the condition, financial or otherwise, of the Company and
its Subsidiaries or the earnings, business affairs, management, or business
prospects of the Company and its Subsidiaries, considered as a whole, whether or
not occurring in the ordinary course of business, (ii) there has not been and,
as of the Closing Date and the Option Closing Date, as the case may be, there
will not have been any material transaction entered into by the Company or any
of its Subsidiaries, other than transactions in the ordinary course of business
or transactions specifically described in the Registration Statement and
Prospectus as it may be amended or supplemented, (iii) neither the Company nor
any of its Subsidiaries has sustained any material loss or interference with its
businesses or properties from
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strike, fire, flood, windstorm, accident or other calamity, (iv) neither the
Company nor any of its Subsidiaries has paid and none of them will have paid or
declared any dividends or other distribution with respect to the Company's
capital stock and neither the Company nor any of its Subsidiaries is in default
in the payment of principal of or interest on any outstanding debt obligations,
and (v) there has not been and, as of the Closing Date and the Option Closing
Date, as the case may be, there will not have been any change in the capital
stock (other than the sale of the Securities or the exercise of outstanding
stock options or warrants as described in the Registration Statement) or
material increase in indebtedness of the Company and its Subsidiaries,
considered as a whole. The Company and its Subsidiaries, considered as a whole,
do not have any material contingent obligation that is not disclosed in the
Registration Statement and Prospectus (or contained or incorporated by reference
in the financial statements or related notes thereto), as such may be amended or
supplemented.
(l) COMPLIANCE WITH CORPORATE DOCUMENTS AND CONTRACTS. Neither
the Company nor any of its Subsidiaries is in violation or default under any
provision of its respective Certificate of Incorporation or Bylaws or except as
disclosed in the Prospectus, any of its material agreements, leases, licenses,
contracts, franchises, mortgages, permits, deeds of trust, indentures or other
instruments or obligations 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 is bound or may be affected (collectively, "Contracts").
(m) AUTHORIZATION OF AGREEMENTS. The Company has the legal right,
corporate power, and authority to enter into this Agreement, the Warrant
Agreement with respect to the Warrants (the "Warrant Agreement"), and the
Representative's Purchase Option and to perform the transactions contemplated
hereby and thereby. This Agreement has been duly authorized, executed, and
delivered by the Company and is legally binding upon and enforceable against the
Company in accordance with its terms. Each of the Warrant Agreement and the
Representative's Purchase Option has been duly authorized and, when executed and
delivered by the Company, will be legally binding upon and enforceable against
the Company in accordance with its terms. The execution, delivery, and
performance of this Agreement, the Warrant Agreement, and the Representative's
Purchase Option and the consummation of the transactions herein and therein
contemplated do not and will not conflict with or result in a breach of, or
violation of, any of the terms or provisions of, or constitute, either by itself
or upon notice or the passage of time or both, a default under, any Contract 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 may be bound or
affected, except where such breach, violation or default would not have a
material adverse effect on the business or financial condition of the Company or
any of its Subsidiaries, or violate any of the provisions of the Certificate of
Incorporation or Bylaws of the Company or any of its Subsidiaries, or violate
any order, judgment, statute, rule or regulation applicable to the Company or
any of its Subsidiaries of any court or of any regulatory, administrative or
governmental body or agency or arbitral forum having jurisdiction over the
Company or its Subsidiaries or any of their respective properties.
(n) APPROVALS AND CONSENTS. Each approval, registration,
qualification, license, permit, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body or agency necessary in connection with the execution
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and delivery by the Company of this Agreement, the Warrant Agreement, and the
Representative's Purchase Option and the consummation of the transactions herein
or therein contemplated (except such additional actions as may be required by
the National Association of Securities Dealers, Inc. (the "NASD") or as may be
necessary to qualify the Securities for public offering under state securities
or Blue Sky laws) has been obtained or made and each is in full force and
effect.
(o) INTELLECTUAL PROPERTIES. The Company and its Subsidiaries own
or possess adequate and sufficient rights by license agreement or otherwise to
use and enjoy the full rights in and to all patents, patent rights, trade
secrets, license or royalty arrangements, trademarks and trademark rights,
service marks, trade names, copyrights, know-how or proprietary techniques or
rights thereto of others, and governmental, regulatory or administrative
authorizations, orders, permits, certificates and consents necessary for the
conduct of the business of the Company as described in the Prospectus,
including, without limitation, for each of the technologies described in the
Prospectus. The Company is not aware of any pending or threatened action, suit,
proceeding or claim by others, either domestically or internationally, that the
Company or any of its Subsidiaries is violating any patents, patent rights,
copyrights, trademarks or trademark rights, inventions, service marks, trade
names, licenses or royalty arrangements, trade secrets, know how or proprietary
techniques or rights thereto of others, or governmental, regulatory or
administrative authorizations, orders, permits, certificates and consents, which
violation could result in a material adverse effect on the business, operations
or financial condition of the Company and the Subsidiaries, considered as a
whole. The Company is not aware, after due diligence, of any rights of third
parties to, or any infringement of, any of the Company's or its Subsidiaries'
patents, patent rights, trademarks or trademark rights, copyrights, licenses or
royalty arrangements, trade secrets, know how or proprietary techniques
(including but not limited to the technologies described in the Prospectus) as
well as processes and substances, or rights thereto of others, which could
materially adversely affect the use thereof by the Company or any of its
Subsidiaries and that would have a material adverse affect on the Company and
its Subsidiaries, considered as a whole. The Company is not aware, after due
diligence, of any pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any of such patents, patent rights,
trademarks or trademark rights, copyrights, licenses or royalty arrangements,
trade secrets, know how, or proprietary techniques or rights thereto of others.
The Company or one of the Subsidiaries possesses those patents that have been
previously disclosed to the Representative in writing, and such patents have not
expired or been declared invalid in a legal or administrative proceeding.
(p) DESCRIPTION OF CONTRACTS. There are no Contracts or other
documents required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been described or filed as required.
(q) COMPLIANCE WITH LAW. The Company and each of the Subsidiaries
is conducting its business in compliance with all applicable laws, rules, and
regulations of the jurisdictions in which it is conducting its business,
including, without limitation, all applicable local, state, federal, and foreign
environmental laws and regulations, except where the failure to so comply would
not have a material adverse effect on the business or financial condition of the
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Company and its Subsidiaries, considered as a whole. The Company and each of the
Subsidiaries possesses adequate certificates or permits issued by the
appropriate federal, state, local, and foreign regulatory authorities necessary
to conduct their respective businesses and to retain possession of their
respective properties, except where the failure to so possess such certificates
or permits would not have a material adverse effect on the business or financial
condition of the Company or any of the Subsidiaries. Neither the Company nor any
of its Subsidiaries has received any notice of any proceeding relating to the
revocation or modification of any of these certificates or permits.
(r) TRANSACTIONS WITH AFFILIATES. All transactions between the
Company or one of the Subsidiaries, on the one hand, and the officers,
directors, and affiliates of the Company and its Subsidiaries, on the other
hand, have been accurately disclosed in the Prospectus, to the extent required
to be disclosed in the Prospectus in accordance with the Act and the Rules and
Regulations. Except as disclosed in the Prospectus, neither the Company nor any
of its Subsidiaries has outstanding any indebtedness to any officer, director,
or beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of 5% or more of the Company's Common
Stock. As used in this Agreement, the term "affiliate" shall mean a person or
entity controlling, controlled by or under common control with any specified
person or entity, or having the ability to direct, directly or indirectly, the
management or policies of the controlled person or entity, whether through the
ownership of voting securities, by contract, positions of employment, family
relationships, service as an officer, director or partner of the person or
entity, or otherwise.
(s) PROHIBITED PAYMENTS. Neither the Company nor any of its
Subsidiaries, nor any of their respective directors or officers acting in any
capacity on behalf of the Company or its Subsidiaries, nor, to the Company's
knowledge after due inquiry, any of its or its Subsidiaries' foreign sales
agents, directly or indirectly, has (i) used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; (iv) made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment or (v) failed to disclose
any such contributions, gifts, or other payments in violation of applicable law.
(t) INDEPENDENT ACCOUNTANTS. Each of KPMG LLP, Deloitte & Touche
LLP, and Ernst & Young, LLP, who have certified the financial statements filed
with the Commission as part of or incorporated by reference into the
Registration Statement, are independent public accountants as required by the
Act and the Rules and Regulations.
(u) INTERNAL ACCOUNTING CONTROLS. The Company and its
Subsidiaries maintain a system of internal accounting controls which, taken as a
whole, is sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with
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the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as specifically disclosed in the Prospectus,
neither the Company nor any of its Subsidiaries, nor any of their respective
employees or agents has made any payment or transfer of any funds or assets of
the Company and its Subsidiaries, conferred any personal benefit by the use of
the assets of the Company and its Subsidiaries or received any funds, assets, or
personal benefit in violation of any law, rule, or regulation, which is required
to be stated in the Prospectus or necessary to make the statements therein not
misleading.
(v) INSURANCE. The Company maintains insurance of the types and
in the amounts that it deems adequate for its business and which is customary
for companies in its industry, including, but not limited to, general liability
insurance and insurance covering all real and personal property owned or leased
by the Company and its Subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(w) LOCK-UP AGREEMENTS. Except for offers and sales of Common
Stock in connection with stock option or other stock-based plans described in
the Registration Statement or upon exercise of the Warrants, the Company has
taken all appropriate steps reasonably necessary or appropriate to assure that
no offering, sale or other disposition of any Common Stock of the Company or
securities exercisable or convertible into Common Stock of the Company will be
made for a period of six (6) months after the date of this Agreement, directly
or indirectly, by the Company, or any of its affiliates, directors or executive
officers set forth in Schedule III hereto, otherwise than hereunder or with the
prior written consent of the Representative.
(x) BOARD OF DIRECTORS. The Company's Board of Directors consists
of those persons listed in the Prospectus. Except as disclosed in the
Prospectus, none of such persons is employed by the Company nor is any of them
affiliated with the Company, except for service on its Board of Directors.
(y) ELIGIBILITY TO USE FORM S-2. The Company is eligible to use
Form S-2 for the registration of the Securities.
(z) DIRECTED OFFERS. Neither the Company, nor to its knowledge,
after due and diligent inquiry, any person other than any Underwriter, has made
any representation, promise or warranty, whether verbal or in writing, to
anyone, whether an existing shareholder or not, that any of the Securities will
be reserved for or directed to them during the proposed public offering.
(aa) STABILIZATION. Neither the Company nor any person that
controls, is controlled by or is under common control with the Company has taken
or will take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in the stabilization or manipulation
of the price of any security in order to facilitate the sale or resale of any of
the Securities.
(bb) UNAUTHORIZED ARRANGEMENTS. Except for Common Stock issued in
connection with the exercise of options and except as otherwise disclosed in the
Registration Statement, the Company has not, since the filing of the
Registration Statement (i) sold, bid for,
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purchased, attempted to induce any person to purchase, or paid anyone any
compensation for soliciting purchases of, its capital stock, or (ii) paid or
agreed to pay to any person any compensation for soliciting another person to
purchase any securities of the Company, except for the sale of Securities under
this Agreement.
(cc) FINDER OR BROKER. The Company has not retained or dealt with
any broker or finder with respect to the transactions contemplated hereby, and
the Company knows of no outstanding claims for services in the nature of a
finder's fee or origination fee with respect to the sale of the Securities. The
Company will indemnify and hold harmless the Underwriters with respect to any
claim for a finder's fee by any party claiming to be owed such fee based on
contacts, conversations or arrangements with the Company.
(dd) EMPLOYMENT AGREEMENTS. The employment agreements between the
Company and its officers named under the caption "Management--Employment
Agreements" in the Prospectus are binding and enforceable obligations upon the
respective parties thereto in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws or arrangements affecting creditors' rights
generally and subject to principles of equity, and public policy considerations.
Except for such employment agreements, the Company does not have any employment,
severance or similar agreement with any officers, directors or employees that
are required to be disclosed in the Prospectus and are not so disclosed.
(ee) CLASSIFICATION AS A "C" CORPORATION. The Company is
classified as a "C" corporation with the Internal Revenue Service.
(ff) NASD AFFILIATIONS. Except as previously disclosed in writing
by the Company to the Representative or in the Registration Statement, no
officer, director or stockholder of the Company has any NASD affiliation and the
Company has no management or financial consulting agreement with any third
party.
(gg) COMPANY NOT AN INVESTMENT COMPANY. The Company is not, and
upon receipt of the proceeds from the sale of the Securities will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(hh) OFFERING MATERIALS. The Company has not distributed and will
not distribute prior to the Closing Date or the Option Closing Date, as the case
may be, any offering material in connection with the offering and sale of the
Securities other than the Registration Statement, any Preliminary Prospectus,
the Prospectus, and the other materials permitted by the Act.
(ii) EXCHANGE ACT REGISTRATION AND NASDAQ LISTING. As of the
Effective Date (as defined in Section 6(a)) each of the Units, the Common Stock,
and the Warrants have been or will be registered under Section 12(g) of the
Exchange Act and have been or will be approved for listing and trading on The
Nasdaq Stock Market Inc. ("Nasdaq") SmallCap Market.
10
2. PURCHASE, SALE, AND DELIVERY OF THE SECURITIES.
(a) PURCHASE AND SALE OF THE FIRM SECURITIES. On the basis of the
representations, warranties, and covenants herein contained, and subject to the
conditions herein set forth, the Company agrees to sell to the Underwriters and
each Underwriter agrees, severally and not jointly, to purchase on the Closing
Date (as defined in Section 2(c)), at the gross price per Unit indicated in the
Prospectus (the "Initial Price") less the Underwriters' discount of nine percent
(9%) of the Initial Price, the number of Firm Securities set forth opposite the
name of each Underwriter in Schedule I hereof, subject to adjustments in
accordance with Section 9 hereof.
(b) PURCHASE AND SALE OF THE OPTION SECURITIES. In addition, on
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, the Company grants an option to the
several Underwriters to purchase the Option Securities at the Initial Price,
less the Underwriters' discount of nine percent (9%) of the Initial Price. The
maximum number of Option Securities to be sold by the Company is equal to
300,000 Units, subject to adjustment as provided in Section 9. The option
granted hereby may be exercised in whole or in part, but only once, and at any
time upon written notice given within 45 days after the Effective Date by the
Representative on behalf of the several Underwriters, to the Company setting
forth the number of Option Securities as to which the several Underwriters are
exercising the option, the names and denominations in which the Option
Securities are to be registered, and the time and date at which certificates
therefor are to be delivered. The closing for the Option Securities shall occur
no earlier than either the Closing Date or the second business day after the
exercise of such option and no later than the tenth business day after the date
of such exercise (such date being herein referred to as the "Option Closing
Date"). Except as otherwise agreed by the Underwriters in writing, the number of
Option Securities to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Securities being purchased as the
number of Firm Securities being purchased by such Underwriter bears to the total
number of the Firm Securities, adjusted by the Representative in such manner as
to avoid fractional shares. The option with respect to the Option Securities
granted hereunder may be exercised solely to cover over-allotments in the sale
of the Firm Securities by the Underwriters or to permit purchases by the
Underwriters to the extent permitted by law. The Representative, on behalf of
the several Underwriters, may cancel such option at any time, in whole or in
part, prior to its expiration, by giving written notice of such cancellation to
the Company.
(c) PAYMENT FOR AND DELIVERY OF THE SECURITIES. Payment for the
Firm Securities to be sold hereunder is to be made by certified or bank
cashier's check(s) drawn to the order of the Company and payable in New York
clearing house funds or similar next day funds, or by wire transfer of next day
funds to an account specified in writing by the Company, against delivery of
certificates for the Firm Securities to the Representative for the several
accounts of the Underwriters. Such payment and delivery are to be made at the
offices of Xxxxxxxxx Xxxxxxx, Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 at
10:00 a.m., Eastern time, on ___________, ____, or at such other time and date
as the Representative shall designate, such time and date being herein referred
to as the "Closing Date." As used herein, the term "business day" means a day on
which the New York Stock Exchange, Inc. is open for trading and on which
11
banks in New York are open for business and not permitted by law or executive
order to be closed. The certificates for the Firm Securities shall be in
definitive form with engraved borders and will be delivered in such
denominations and in such registrations as the Representative requests in
writing not later than the two business days prior to the Closing Date, and will
be made available for inspection by the Representative not later than 2:00 p.m.,
Eastern time, on the business day immediately preceding the Closing Date at the
offices of Xxxxxxxxx Traurig noted above. To the extent, if any, that the option
described in Section 2(b) is exercised, payment for and delivery of the Option
Securities shall be made on the Option Closing Date in the manner and at the
times and places described above for the Closing Date with respect to the Firm
Securities.
3. OFFERING BY THE UNDERWRITERS. It is understood that the several
Underwriters are to make a public offering of the Firm Securities as soon as the
Representative deems it advisable to do so. The Firm Securities are to be
initially offered to the public at the Initial Price set forth in the
Prospectus. The Representative may from time to time thereafter change the
public offering price and other selling terms. To the extent, if at all, that
any Option Securities are purchased pursuant to Section 2 hereof, the
Underwriters will offer them to the public on the foregoing terms.
It is further understood that the Representative will act on behalf of
the Underwriters in the offering and sale of the Securities, in accordance with
an Agreement Among Underwriters entered into by the Representative and the
several other Underwriters on or prior to the date hereof. The Representative
shall have the right to associate with other underwriters and dealers as it may
determine and shall have the right to grant to such persons such concessions out
of the underwriting discount to be received by the Underwriters as it may
determine, under and pursuant to a Selected Dealers' Agreement.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
several Underwriters that:
(a) RULE 424(b) PROSPECTUS AND AMENDMENTS TO REGISTRATION
STATEMENT. The Company shall (i) prepare and timely file with the Commission
under Rule 424(b) of the Rules and Regulations a prospectus containing
information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations and (ii) not
file any amendment to the Registration Statement or supplement to the Prospectus
of which the Representative shall not previously have been advised and furnished
with a copy or to which the Representative shall have reasonably objected in
writing or which is not in compliance with the Rules and Regulations.
(b) NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT AND STOP
ORDERS. The Company shall advise the Representative promptly and shall confirm
such advice in writing (i) when the Registration Statement has become effective,
(ii) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional information,
or (iii) of the issuance by the Commission or any state securities commission of
any stop order suspending the effectiveness of the Registration Statement or the
use of the Prospectus or of the institution of any proceedings for that purpose,
and the Company shall use its best efforts to prevent the issuance of any such
stop order preventing or suspending the use of the Prospectus and to obtain as
soon as possible the lifting thereof, if issued.
12
(c) BLUE SKY QUALIFICATIONS. The Company shall cooperate with the
Representative in endeavoring to qualify the Securities for sale under the
securities laws of such jurisdictions as the Representative may have designated
in writing and shall make such applications, file such documents, furnish such
information and take such other actions as may be required by federal or state
securities laws or regulations (including, but not limited to, complying with
any stock escrow requirements and appointing additional independent directors
that have been disclosed to the Company by counsel for the Underwriters prior to
the Company's execution of this Agreement) whether before, during or after the
offering. The Company shall, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representative may
request for distribution of the Securities.
(d) FILINGS UNDER THE ACT AND EXCHANGE ACT. The Company shall
file such registration statements and take such other action as may be necessary
to register the Units, the Common Stock, and the Warrants pursuant to Section
12(g) of the Exchange Act, such registration statement to become effective
simultaneously with the effectiveness of the Registration Statement, and shall
thereafter keep such registration effective. The Company shall file such
amendments or supplements to the Registration Statement or such subsequent
registration statements as may be necessary to maintain, at all times during the
term of the Warrant Agreement, a current and effective registration statement
covering the issuance of the shares of Common Stock upon exercise of the
Warrants. The Company shall comply with the Act, the Rules and Regulations, the
Exchange Act, the rules and regulations promulgated under the Exchange Act, the
applicable rules and regulations of Nasdaq, and applicable state securities laws
so as to permit the continuance of sales of and dealings in the Securities in
compliance with applicable provisions of such laws, rules, and regulations,
including the filing with the Commission and Nasdaq of all reports required to
be so filed, and the Company will deliver to the holders of the Securities all
reports required to be provided to such holders pursuant to such laws, rules, or
regulations.
(e) NASDAQ LISTING. The Company shall qualify the Securities,
including the Units, the Common Stock, and the Warrants, for trading on the
Nasdaq SmallCap Market and shall use its best efforts to maintain such
qualification for not less than five (5) years, unless the Securities are
subsequently listed on the Nasdaq National Market, the American Stock Exchange,
or the New York Stock Exchange.
(f) COPIES OF PROSPECTUSES AND REGISTRATION STATEMENT. The
Company will deliver to, or upon the order of, the Representative, from time to
time, as many copies of any Preliminary Prospectus as the Representative may
request. The Company will deliver to, or upon the order of, the Representative,
during the period when delivery of a Prospectus is required under the Act, as
many copies of the Prospectus in final form, or as thereafter amended or
supplemented, as the Representative may request. The Company will deliver to the
Representative, at or before the Closing Date, five signed copies of the
Registration Statement and all amendments thereto, including all exhibits filed
therewith, and any information incorporated by reference therein, and will
deliver to the Representative such number of copies of the Registration
Statement, without exhibits, but including any information incorporated by
reference, and of all amendments thereto, as the Representative may request.
13
(g) COMPLIANCE WITH THE ACT AND THE EXCHANGE ACT. Within the time
during which a Prospectus relating to the Securities is required to be delivered
under the Act, the Company shall use its best efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as such acts may
from time to time be hereafter amended, and by the rules and regulations
promulgated under such acts, as from time to time in force to permit the
continuance of sales of or dealings in the distribution of the Securities as
contemplated by the provisions therein, in this Agreement, and in the
Prospectus. If during such period any event as to which the Company has
knowledge occurs as a result of which the Prospectus as then amended or
supplemented includes an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or to supplement the Prospectus to
comply with the Act, the Company shall notify the Representative promptly and
shall amend the Registration Statement or supplement the Prospectus (at the
expense of the Company) so as to comply with the Act or to correct such
statement or omission or otherwise to effect such compliance, and will furnish
without charge to the Representative as many copies of such amended or
supplemented Prospectus as the Representative may from time to time reasonably
request.
(h) LISTING IN SECURITIES MANUAL; INVESTOR RELATIONS FIRM. The
Company shall, as soon as practicable after the Closing Date, use its reasonable
best efforts to obtain listing on an expedited basis in Standard and Poor's
Corporation Records or such other recognized securities manuals for which it may
qualify for listing, and the Company shall use its reasonable best efforts to
maintain such listings for at least five (5) years after the Closing Date. The
Company further agrees at any time during the five (5) year period following the
Closing Date, to engage within sixty (60) days of a written request by the
Representative, the services of an investor relations firm reasonably acceptable
to the Representative, which will act as investor relations liaison during such
five (5) year period, which spokesperson is not required to be the same person
during the duration of the five (5) year period, to consult with and advise the
Company regarding communications and relations with stockholders and the
financial and investment communities.
(i) SECTION 11(a) EARNINGS STATEMENT. The Company will make
generally available to its stockholders, as soon as it is practicable to do so,
but in any event not later than 15 months after the effective date of the
Registration Statement, an earnings statement in reasonable detail covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise the Representative in writing when such statement
has been so made available and will furnish the Representative with a true and
correct copy thereof.
(j) INFORMATION TO THE REPRESENTATIVE. The Company will, for a
period of five years from the Closing Date, deliver to the Representative copies
of annual reports and copies of all other documents, reports and information
furnished by the Company to its stockholders or filed with any securities
exchange or Nasdaq pursuant to the requirements of such exchange or Nasdaq or
with the Commission pursuant to the Act or the Exchange Act. The Company will
deliver to the Representative similar reports with respect to significant
subsidiaries, as that term
14
is defined in the Rules and Regulations, which are not consolidated in the
Company's financial statements. The Company will also use its best efforts to
cause its officers, directors and beneficial owners of 10% or more of any of its
registered securities to deliver to the Representative a copy of any of the
Commission Forms 3, 4, and 5 filed with the Commission and the Company shall
deliver to the Representative copies of all such forms received by it.
(k) USE OF PROCEEDS. The Company shall apply the net proceeds of
the sale of the Securities sold by it in accordance with the statements under
the caption "Use of Proceeds" in the Prospectus. The Company shall not apply any
portion of the proceeds of the offering to pay any amount to any officer,
director, or 5% stockholder of the Company.
(l) RESTRICTIONS ON SALES. Except for offers and sales of Common
Stock in connection with stock option or other stock-based plans described in
the Registration Statement or upon exercise of the Warrants, for a period of six
(6) months from the Effective Date the Company shall not sell or otherwise
dispose of any Common Stock (or securities convertible into or exercisable for
Common Stock) of the Company or any subsidiary of the Company without the
Representative's prior written consent. The Company shall cause each of its
officers, directors, and five percent (5%) stockholders listed on Schedule III
hereto to agree in writing that such person (i) will not, during the six-month
period immediately following the Effective Date, offer, pledge, sell (which term
includes a short sale or sale against the box), contract to sell, grant any
option for the sale of, or otherwise transfer or dispose of, directly or
indirectly, any shares of the Company's Common Stock, without the
Representative's prior written approval. The Company shall furnish the
Representative with an executed copy of each such agreement in the form attached
as Exhibit "A" hereto (the "Lock-up Agreements").
(m) INSPECTION OF DOCUMENTS. Through and including the Option
Closing Date, the Company has made and shall make original documents and other
information relating to the Company's affairs available upon request to the
Underwriters and to their counsel at the Company's office for inspection and
copies of any such documents will be furnished upon request to the Underwriters
and to their counsel. Included within the documents made available have been at
least the Certificate of Incorporation and all amendments thereto, the Bylaws
and all amendments thereto, minutes of all of the meetings of the incorporators,
directors and stockholders, all financial statements and copies of all Contracts
to which the Company or its Subsidiaries is a party or in which the Company or
its Subsidiaries has an interest.
(n) TRANSFER AND WARRANT AGREEMENT. The Company has appointed
Continental Stock Transfer & Trust Company as the Company's transfer and warrant
agent. Unless the Representative otherwise consents in writing, the Company will
continue to retain a transfer and warrant agent reasonably satisfactory to the
Representative for a period of five years following the Closing Date. The
Company will make arrangements to have available at the office of the transfer
and warrant agent sufficient quantities of the Company's Units, Common Stock,
and Warrant certificates as may be needed for the quick and efficient transfer
of the Securities as contemplated hereunder and for the five-year period
following the Closing Date.
(o) REPRESENTATIVE'S PURCHASE OPTION. At the Closing, the Company
shall, for an aggregate of $100, deliver to the Representative the
Representative's Purchase Option in the form attached hereto as Appendix "B" to
purchase an aggregate of 200,000 shares of Common
15
Stock. The Representative's Purchase Option will be exercisable for a four-year
term, commencing one year from the Effective Date of the offering, at an
exercise price equal to 125% of the Initial Price of the Firm Securities. The
Representative's Purchase Option shall not be redeemable by the Company.
(p) INDEPENDENT DIRECTORS. The Company shall, for a period of two
years after the Effective Date, cause at least three persons who are reasonably
acceptable to the Representative and who are not otherwise "affiliated" with the
Company to serve as directors of the Company (the "Outside Directors").
Furthermore, for a period of two years after the Closing Date the Company shall
cause at least one Outside Director to serve as the chair of each committee of
the Company's Board of Directors. For purposes of this Section 4(p), a person
shall be deemed to be "affiliated" with the Company if (i) that person is an
employee or officer (other than Chairman of the Board of the Company) of the
Company or (ii) that person, directly or indirectly, beneficially owns (as
defined in Rule 13d-3 under the Exchange Act) 5% or more of the Company's Common
Stock or (iii) that person is an employee, officer, director, or beneficial
owner of 5% or more of any person that, directly or indirectly, beneficially
owns 5% or more of the Company's Common Stock. The Representative agrees that,
as of the date of this Agreement, Yip Xxx Xxx, Xxxxxx X. Xxxxxx, and Xxxxxx X.
Xxxxxxx meet the definition of Outside Directors for purposes of this Section
4(p).
(q) UNDERTAKINGS. The Company will comply with the provisions of
all undertakings contained in the Registration Statement or made in connection
with any application to register or qualify any of the Securities under state
securities or Blue Sky laws.
(r) KEY PERSON LIFE INSURANCE. The Company shall use its best
efforts to obtain on or before the Closing Date and to maintain thereafter for
the lesser of (i) three years, or (ii) the term of their respective employment
with the Company, key person life insurance policies insuring the lives of
Xxxxxx X. Fitting and Xxxxxx X. Xxxxxx, with the Company named as sole
beneficiary, in a policy amount of not less than $1,000,000 and $500,000,
respectively.
5. COSTS AND EXPENSES. The Company will pay all costs, expenses, and
fees in connection with the offering or incident to the performance of the
obligations of the Company under this Agreement, including, without limiting the
generality of the foregoing, the following: (a) all expenses (including any
transfer taxes) incurred in connection with the delivery to the several
Underwriters of the Securities sold hereunder; (b) all fees and expenses
(including, without limitation, fees, disbursements, and expenses of the
Company's accountants, counsel, and other experts, but excluding fees and
expenses of counsel for the Underwriters) in connection with the preparation,
printing, filing, delivery, and shipping of the Registration Statement
(including the financial statements included or incorporated by reference
therein and all amendments and exhibits thereto), Preliminary Prospectuses, and
the Prospectus as amended or supplemented, this Agreement, the Warrant
Agreement, the Representative's Purchase Option, and other underwriting
documents including Underwriters' Questionnaires, Underwriters' Power of
Attorney, Blue Sky Memoranda, Agreement Among Underwriters, Selected Dealers'
Agreement, Invitation Telecopy, and any letters transmitting the offering
materials to the Underwriters or selling group members (including costs of
mailing and shipment), the stock and warrant certificates, and any supplements
or amendments thereto; (c) all Blue Sky and other
16
regulatory filing fees and fees and disbursements of counsel to the Company and
counsel to the Underwriters incurred in connection with the qualification of the
Securities and their components under the applicable state securities laws; (d)
filing and listing fees of the Commission, NASD, Nasdaq, and any other similar
entity in connection with the offering; (e) the cost of printing certificates
representing the Securities comprising the Units and issuable upon the exercise
of the Warrants; (f) the fees, disbursements, costs, and charges of any transfer
agent, warrant agent, and registrar; (g) the costs of advertising (such as
"tombstone ads"), including but not limited to the cost of placing a tombstone
ad in The Wall Street Journal, as well as any other advertising undertaken at
the Company's request; (h) the costs of preparing, printing, and distributing
two bound volumes to each of the Representative and its counsel; (i) all costs
of holding informational meetings and "road shows;" and (j) all other costs and
expenses incident to the performance of its obligations under this Agreement
that are not otherwise provided for in this Section 5. The Company shall use a
printer and warrant agent acceptable to the Representative. Any transfer taxes
imposed on the sale of the Securities to the several Underwriters will be paid
by the Company. The Company shall pay to the Representative a non-accountable
expense allowance of three percent (3%) of the gross amount raised hereunder,
including upon the sale of any Option Securities, payable at the closing(s). The
Company has advanced, on a nonaccountable basis, Ten Thousand Dollars
($10,000.00) to the Representative on or before the date hereof (the "Deposit"),
which shall be credited to the allowance noted above. This expense allowance is
in addition to the Underwriters' discount. The Underwriters shall be responsible
for the fees and disbursements of their counsel, except for the fees and costs
of such counsel incurred in connection with the qualification of the Securities
and their components under the applicable state securities laws as otherwise
noted in this Section 5. The Company shall not be required to pay for any of the
Underwriters' other expenses, except that if this offering shall not be
consummated because the conditions in Section 7 hereof are not satisfied, or
because this Agreement is terminated by the Representative pursuant to Section 6
hereof, except if such termination is caused by the failure of the condition set
forth in Section 6(e) hereof, or by reason of any failure, refusal or inability
on the part of the Company to perform any undertaking or satisfy any condition
of this Agreement or to comply with any of the terms hereof on its part to be
performed, then the Company shall reimburse the several Underwriters for
out-of-pocket expenses, including fees and disbursements of counsel, incurred in
connection with investigating, marketing, and proposing to market the Securities
or in contemplation of performing their obligations hereunder, up to a maximum
of Thirty Thousand Dollars ($30,000.00). The Deposit shall be credited against
any such payment. In the event that this offering shall not be consummated or
this Agreement is terminated as described in the preceding sentence and the
Deposit exceeds the Underwriters' out-of-pocket expenses, the Representative
shall promptly refund such excess to the Company.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Securities on the Closing
Date and the Option Securities, if any, on the Option Closing Date are subject
to the accuracy, as of the Closing Date or the Option Closing Date, as the case
may be, of the representations and warranties of the Company contained herein,
and to the performance by the Company of its covenants and obligations hereunder
and to the following additional conditions:
17
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:30 p.m., Eastern time, on
the date of this Agreement, or such later date and time as may be consented to
in writing by the Representative (the "Effective Date"). No stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, shall have been issued and no proceedings for that purpose shall have
been taken or, to the best knowledge of the Company, after due inquiry, shall be
contemplated by the Commission or any state securities commission. Any request
of the Commission or any such authorities for additional information to be
included in the Registration Statement or Prospectus or otherwise shall have
been complied with to the reasonable satisfaction of counsel for the
Representative.
(b) REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH AGREEMENT.
The representations and warranties of the Company in this Agreement shall be
true and correct on and as of the Closing Date or the Option Closing Date, as
the case may be, with the same effect as if made on the Closing Date or the
Option Closing Date, as the case may be, and the Company shall have complied
with all the agreements and satisfied all the obligations required to be
performed or satisfied by it at or prior to the Closing Date or the Option
Closing Date, as the case may be.
(c) NO UNTRUE STATEMENTS. The Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all
statements that are required to be stated or incorporated by reference therein
by the Act and the Rules and Regulations and in all respects shall conform to
the requirements of the Act and the Rules and Regulations. The Registration
Statement and the Prospectus and any amendments or supplements thereto shall not
contain 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,
since the Effective Date, there shall not have occurred any event required to be
set forth in an amended or supplemented Prospectus that has not been so set
forth (except any such statement or omission based upon information furnished in
writing by or on behalf of any Underwriter through the Representative for
inclusion in the Registration Statement).
(d) NO MATERIAL CHANGE. Subsequent to the respective dates as of
which information is given in the Registration Statement and Prospectus, as they
have been amended or supplemented, and except as set forth or contemplated in
the Prospectus (i) there has not been any material adverse change or any
development involving the likelihood of a future material adverse change in or
affecting the condition, financial or otherwise, of the Company and its
Subsidiaries, considered as a whole, or the earnings, business affairs,
management, or business prospects of the Company and its Subsidiaries,
considered as a whole, whether or not occurring in the ordinary course of
business, (ii) there has not been any material transaction entered into by the
Company or any of its Subsidiaries, other than transactions in the ordinary
course of business or transactions specifically described in the Registration
Statement and Prospectus as it may be amended or supplemented, (iii) neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with its businesses or properties from strike, fire, flood,
windstorm, accident or other calamity, (iv) neither the Company nor any of its
Subsidiaries has paid or declared any dividends or other distribution with
respect to the Company's capital stock
18
and neither the Company nor any of its Subsidiaries is in default in the payment
of principal of or interest on any outstanding debt obligations, (v) there has
not been any change in the capital stock (other than the sale of the Securities
or the exercise of outstanding stock options or warrants as described in the
Registration Statement) or material increase in indebtedness of the Company and
its Subsidiaries, considered as a whole, and (vi) there have been no actions,
suits, proceedings or investigations pending before any arbitrator, court or
regulatory, governmental or administrative agency, authority or body or, to the
knowledge of the Company, threatened, to which the Company or any of its
Subsidiaries is a party or of which the business or property of the Company or
any of its Subsidiaries is the subject and which, if adversely decided, could
have a material adverse affect on the business, property, condition (financial
or otherwise), results of operations or general affairs of the Company, and
there shall have been no material adverse development in any such suits,
actions, proceedings or investigations. Neither the Company nor any of its
Subsidiaries has any material contingent obligation that is not disclosed in the
Registration Statement and Prospectus (or contained or incorporated by reference
in the financial statements or related notes thereto), as such may be amended or
supplemented.
(e) NASD. The NASD shall have indicated that it has no objection
to the underwriting arrangements pertaining to the sale of the Securities by the
Underwriters. No action shall have been taken by the Commission or the NASD the
effect of which would make it improper, at any time prior to the Closing Date,
or the Option Closing Date, as the case may be, for any member firm of the NASD
to execute transactions (as principal or as agent) in the Securities and no
proceedings for the purpose of taking such action shall have been instituted or
shall be pending, or, to the best of the Underwriters' or the Company's
knowledge, shall be contemplated by the Commission or the NASD. Each of the
Company and the Representative represents at the date of this Agreement, and
shall represent as of the Closing Date or Option Closing Date, as the case may
be, that it has no knowledge that any such action is in fact contemplated by the
Commission or the NASD.
(f) OPINION OF COMPANY COUNSEL. The Representative shall have
received on the Closing Date or the Option Closing Date, as the case may be, the
opinion of Xxxxxx & Xxxxxxx LLP, counsel for the Company, dated the Closing Date
or the Option Closing Date, as the case may be, addressed to the Underwriters to
the effect that:
(i) The Company and each of its Subsidiaries (A) have been
duly incorporated and are validly existing as a corporation in
good standing under the laws of their respective jurisdictions of
incorporation, with full corporate power and corporate authority
to own or lease their respective properties and to conduct their
respective businesses as described in the Registration Statement
and Prospectus, and (B) to such counsel's knowledge are duly
qualified as a foreign corporation to transact business in all
jurisdictions in which the conduct of their respective businesses
requires such qualification, except where the failure to qualify
would not have a material adverse affect upon the business or
financial condition of the Company or its Subsidiaries.
(ii) The issued shares of capital stock of each Subsidiary
have been duly authorized and validly issued, are fully paid and
nonassessable, and, except
19
as described in the Registration Statement and the Prospectus,
are owned of record and beneficially by the Company.
(iii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the
Prospectus; all of the outstanding shares of Common Stock of the
Company issued subsequent to December 16, 1994 (A) have been duly
authorized and validly issued and are fully paid and
nonassessable, (B) conform to the description set forth in the
Prospectus, (C) do not have any, and to such counsel's knowledge
were not issued in violation of any, preemptive rights under the
Company's Certificate of Incorporation or Bylaws or any other
agreement known to such counsel, and (D) to such counsel's
knowledge, have been issued in compliance with all federal and
state securities laws.
(iv) The Company has authorized and reserved for issuance the
shares of Common Stock issuable (A) upon exercise of all
outstanding options or warrants (other than the Warrants) in
accordance with the terms of the applicable options or warrants,
(B) upon exercise of the Warrants, pursuant to the terms of the
Warrants and the Warrant Agreement, and (C) upon exercise of the
Representative's Purchase Option. All of the Securities to be
issued and sold by the Company pursuant to this Agreement, the
Warrant Agreement, and the Representative's Purchase Option have
been duly authorized and, when issued and paid for as
contemplated herein or upon exercise of the Warrants or the
Representative's Purchase Option, will be validly issued, fully
paid and nonassessable. Further, (X) to such counsel's knowledge
no preemptive rights of stockholders exist with respect to any of
the Securities or the issue and sale or exercise thereof; (Y) to
such counsel's knowledge no stockholder of the Company has any
right pursuant to any agreement which has not been waived or
honored to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering
contemplated herein; and (Z) no further approval or authority of
the stockholders or the Board of Directors of the Company is
required for the issuance and sale of the Securities to be sold
by the Company as contemplated herein.
(v) The certificates evidencing the Securities to be
delivered hereunder are in due and proper form under New York law
and the Securities conform in all material respects to the
description thereof contained in the Prospectus.
(vi) The Registration Statement has become effective under
the Act and no stop order proceedings with respect thereto have
been instituted or are pending or threatened under the Act and
nothing has come to such counsel's attention to lead them to
believe that such proceedings are contemplated; any
20
required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules and Regulations has been
made in the manner and within the time period required by such
Rule 424(b).
(vii) The Registration Statement, all Preliminary
Prospectuses, the Prospectus and each amendment or supplement
thereto comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations (except
that such counsel need express no opinion as to the financial
statements, schedules, and other financial and statistical
information included or incorporated by reference therein).
(viii) Such counsel (i) requested that the Company provide it
with copies of all Contracts; (ii) met with officers of the
Company to discuss whether all Contracts were in fact delivered
to such counsel; and (iii) reviewed all Contracts that were so
delivered, and discussed the materiality of such Contracts to the
Company and its business with officers of the Company, to
determine whether such Contracts were required to be filed or
incorporated by reference as exhibits to the Registration
Statement or described in the Registration Statement or the
Prospectus as required under the Act and the Rules and
Regulations. Based upon the foregoing procedures, such counsel
does not know of any Contracts of a character required to be
filed or incorporated by reference as exhibits to the
Registration Statement or described in the Registration Statement
or the Prospectus that are not so filed or incorporated by
reference or described as required, and each description of such
Contracts that is included in the Registration Statement or the
Prospectus fairly presents in all material respects the
information required under the Act and the Rules and Regulations.
(ix) To the best of such counsel's knowledge, there is no
action or suit pending before any court of the United States or
any foreign jurisdiction of a character required to be disclosed
in the Prospectus pursuant to the Act and the Rules and
Regulations; to the best of such counsel's knowledge, there is no
action, suit or proceeding threatened against the Company or any
of its Subsidiaries before any U.S. or foreign court or
regulatory, governmental or administrative agency or body or
arbitral forum of a character required to be disclosed in the
Prospectus pursuant to the Act and the Rules and Regulations; to
the best of such counsel's knowledge, neither the Company nor any
of its Subsidiaries is a party or subject to the provisions of
any injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body
or agency or arbitral forum of a character required to be
disclosed in the Prospectus pursuant to the Act and the Rules and
Regulations, in each case which is not so disclosed in the
Prospectus.
(x) The execution and performance of this Agreement, the
Warrant Agreement, and the Representative's Purchase Option and
the consummation of the transactions herein and therein
contemplated do not and will not conflict with or result in the
breach of, or violation of, any of the terms or provisions of,
21
or constitute, either by itself or upon notice or the passage of
time or both, a default under, any Contract 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
may be bound or affected, except where such breach, violation or
default would not have a material adverse effect on the business
or financial condition of the Company and its Subsidiaries,
considered as a whole, or violate any of the provisions of the
Certificate of Incorporation or Bylaws of the Company or any of
its Subsidiaries or, to the best of such counsel's knowledge,
violate any statute, judgment, decree, order, rule or regulation
known to such counsel or any court or of any governmental,
regulatory or administrative body or agency or arbitral forum
having jurisdiction over the Company or any of its Subsidiaries
or any of their respective properties.
(xi) Neither the Company nor any of its Subsidiaries is in
violation or default under any provision of any of their
respective Certificate of Incorporation or Bylaws.
(xii) The Company has the legal right, power, and authority
to enter into this Agreement, the Warrant Agreement, and the
Representative's Purchase Option on behalf of itself and to
perform the transactions contemplated hereby and thereby. Each of
this Agreement, the Warrant Agreement, and the Representative's
Purchase Option has been duly authorized, executed, and delivered
by the Company. Each of this Agreement, the Warrant Agreement,
and the Representative's Purchase Option is the legal, valid, and
binding obligation of the Company, enforceable in accordance with
its terms, subject to customary exceptions for bankruptcy,
insolvency, and equitable principles, except to the extent that
the enforceability of the indemnification provisions of this
Agreement and the Representative's Purchase Option may be limited
by consideration of public policy under federal and state
securities laws.
(xiii) To the best of such counsel's knowledge, all
approvals, consents, orders, authorizations, designations,
registrations, permits, qualifications, licenses, declarations or
filings by or with any regulatory, administrative or governmental
body necessary in connection with the execution and delivery by
the Company of this Agreement, the Warrant Agreement, and the
Representative's Purchase Option and the consummation of the
transactions herein and therein contemplated (other than as may
be required by the NASD or state securities or "Blue Sky" laws
and regulations, as to which such counsel need express no
opinion) have been obtained or made and are in full force and
effect.
(xiv) No transfer taxes are required to be paid under New
York state law in connection with the sale and delivery of the
Securities to the Underwriters hereunder.
(xv) Upon the Closing, the Company will be classified as a
"C" corporation with the Internal Revenue Service.
22
As to factual matters, such counsel may rely on certificates obtained
from directors and officers of the Company, its stockholders, and from public
officials. Matters stated to counsel's knowledge shall be made after due and
diligent inquiry of the attorneys in such firm who have given substantive
attention to representation of the Company in connection with this public
offering, and the opinion shall so note that requirement. In addition to the
matters set forth above, the Representative shall have received on the Closing
Date or the Option Closing Date, as the case may be, a letter from Xxxxxx &
Whitney LLP, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, substantially in the form as set forth in
Exhibit C attached hereto. Such counsel shall permit Xxxxxxxxx Xxxxxxx, LLP, to
rely upon the opinions and letters required by this Section 6(f) in rendering
its opinion under Section 6(g).
(g) OPINION OF REPRESENTATIVE'S COUNSEL. The Representative shall
have received from Xxxxxxxxx Traurig, LLP, counsel for the Representative, an
opinion dated the Closing Date or the Option Closing Date, as the case may be,
substantially to the effect that: (i) the Company is a validly organized and
existing corporation under the laws of the State of New York; (ii) to the best
of such counsel's knowledge, the Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus; to the
best of such counsel's knowledge, the outstanding shares of the Company's Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable; all of the Securities conform to the description thereof
contained in the Prospectus; the Securities to be sold by the Company pursuant
to this Agreement have been duly authorized and will be validly issued, fully
paid and nonassessable when issued and paid for as contemplated by this
Agreement; and to the best of such counsel's knowledge, no preemptive rights of
stockholders exist with respect to any of the Securities or the issue and sale
thereof; (iii) the Registration Statement has become effective under the Act
and, to the best of the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened under the
Act; (iv) the Registration Statement, all Preliminary Prospectuses, the
Prospectus and each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the applicable Rules and
Regulations thereunder (except that such counsel need express no opinion as to
the financial statements, schedules, and other financial or statistical
information included or incorporated by reference therein); and (v) this
Agreement has been duly authorized, executed and delivered by the Company. In
rendering such opinion, Xxxxxxxxx Xxxxxxx, LLP may rely as to all matters
governed other than by federal laws on the opinion of counsel referred to in
Section 6(f). In addition to the matters set forth above, such opinion shall
also include a statement to the effect that they have participated in the
preparation of the Registration Statement and the Prospectus and nothing has
come to the attention of such counsel which leads them to believe that the
Registration Statement, the Prospectus or any amendment thereto contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or the Prospectus or any amendment or supplement thereto, at the time it was
filed pursuant to Rule 424(b) or at the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except that such counsel need express no view as to financial
statements, schedules, and other financial information included or incorporated
by reference therein). With respect to such statement, Xxxxxxxxx Traurig, LLP
may state that their belief is based upon the procedures set forth therein, but
is without independent check and verification.
23
(h) BLUE SKY MEMORANDUM. The Representative and the Company shall
have received from Xxxxxxxxx Xxxxxxx, LLP, at or prior to the Closing Date, a
memorandum or summary, in form and substance satisfactory to the Representative,
with respect to the qualification for offering and sale by the Underwriters of
the Securities under the state securities or Blue Sky laws of such jurisdictions
as the Representative may have designated to the Company.
(i) ACCOUNTANTS' LETTERS. The Representative shall have received
on the date hereof and on the Closing Date and the Option Closing Date, as the
case may be, a signed letter from each of KPMG LLP, Deloitte & Touche LLP, and
Ernst & Young, LLP, auditors for the Company, dated the date hereof, the Closing
Date, and the Option Closing Date, as the case may be, which shall confirm, on
the basis of a review in accordance with the procedures set forth in the letter
signed by such firm and dated and delivered to the Representative on the dates
noted above the following matters:
(i) They are independent public accountants with respect to
the Company within the meaning of the Act and the applicable
Rules and Regulations.
(ii) The consolidated financial statements and schedules
included in the Registration Statement and Prospectus or
incorporated by reference therein and covered by their reports
therein set forth comply as to form in all material respects with
the applicable accounting requirements of the Act and the
applicable Rules and Regulations.
In addition to the matters set forth under clauses (i) and (ii)
above, the signed letters from KPMG LLP dated the date hereof, the Closing Date,
and the Option Closing Date, as the case may be, also shall confirm, on the
basis of a review in accordance with the procedures set forth in each such
letter signed by such firm the following matters:
(X) On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards)
consisting of a reading of the minutes of meetings and
consents of the stockholders and Board of Directors of the
Company and the committees of such board subsequent to
__________, as set forth in the minute books of the Company,
inquiries of officers and other employees of the Company who
have responsibilities for financial and accounting matters
with respect to transactions and events subsequent to
__________, and such other specified procedures and inquires
to a date not more than five days prior to the date of such
letter, nothing has come to their attention which in their
judgment would indicate that (A) with respect to the period
subsequent to ___________________, there were, as of the
date of the most recent available monthly consolidated
financial statements of the Company and, as of a specified
date not more than five days prior to the date of such
letter, any changes in the capital stock or long-term
indebtedness of the Company or payment or declaration of
24
any dividend or other distribution, or decrease in net
current assets, total assets or net stockholder's equity, in
each case as compared with the amounts shown in the most
recent audited consolidated financial statements included in
or incorporated by reference into the Registration Statement
and the Prospectus, except for changes or decreases which
the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter
or (B) during the period from __________, to the date of the
most recent available monthly unaudited consolidated
financial statements of the Company and to a specified date
not more than five days prior to the date of such letter,
there was any decrease, as compared with the corresponding
period in the prior fiscal year, in total revenues or total
or per share net income, except for decreases which the
Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter.
(Y) Stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings and
other financial information pertaining to the Company set
forth in or incorporated by reference into the Registration
Statement and the Prospectus, which have been specified by
the Representative, to the extent that such amounts,
numbers, and percentages and information may be derived from
the general accounting and financial records of the Company
and its subsidiaries or from schedules furnished by the
Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained
from the application of specified reasonings, inquiries, and
other appropriate procedures specified by the Representative
(which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set
forth in such letter heretofore delivered, and found them to
be in agreement.
(Z) Such other matters as may be reasonably requested by the
Underwriters. All such letters shall be in form and
substance satisfactory to the Representative and its
counsel.
(j) OFFICERS' CERTIFICATES. The Representative shall have
received on the Closing Date or the Option Closing Date, as the case may be, a
certificate or certificates of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be, each of them jointly and severally
represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for
such purpose have been taken or are, to the best of their
knowledge, after due inquiry, contemplated or threatened by the
Commission or any state securities commissions.
25
(ii) They do not know of any investigation, litigation, or
proceeding instituted or threatened against the Company of a
character required to be disclosed in the Registration Statement
which is not so disclosed; they do not know of any Contract or
other document required to be filed as an exhibit to the
Registration Statement which is not so filed; and the
representations and warranties of the Company contained in
Section 1 hereof are true and correct in all material respects as
of the Closing Date or the Option Closing Date, as the case may
be, as if such representations and warranties were made as of
such date.
(iii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, as of the effective
date of the Registration Statement, the statements contained in
the Registration Statement were and are correct, in all material
respects, and such Registration Statement and Prospectus do not
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading
and, in their opinion, since the effective date of the
Registration Statement, no event has occurred which should be set
forth in a supplement to or an amendment of the Prospectus which
has not been so set forth in such supplement or amendment.
(k) EXCHANGE ACT REGISTRATION AND NASDAQ LISTING. On each of the
Effective Date, the Closing Date, and the Option Closing Date, each of the
Units, the Common Stock, and the Warrants shall be (i) registered under Section
12(g) of the Exchange Act, and (ii) listed for trading on the Nasdaq SmallCap
Market.
(l) LOCK-UP AGREEMENTS. The Representative shall have received
the Lock-up Agreements, in form and substance satisfactory to the
Representative, as required by Section 4(l) of this Agreement.
(m) OTHER AGREEMENTS. The Company shall have executed and
delivered to the Representative the Warrant Agreement and the Representative's
Purchase Option.
(n) FURTHER ASSURANCES. The Company shall have furnished to the
Representative such further certificates and documents confirming the
representations, warranties and covenants contained herein and related matters
as the Representative may reasonably have requested.
The opinions, certificates, and other documents described in this
Agreement shall be deemed to be in compliance with the provisions hereof only if
they are in all respects satisfactory to the Representative and to Xxxxxxxxx
Xxxxxxx, LLP, counsel for the Representative.
If any of the conditions herein provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representative by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be. In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the Securities required to be delivered as and when
specified in this Agreement
26
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Underwriter and its respective affiliates,
directors, officers, partners, employees, agents, counsel, and representatives,
(collectively, "Underwriter Parties") against any losses, claims, damages or
liabilities to which such Underwriter Parties or any one or more of them may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any failure by the Company or any of its affiliates,
directors, officers, employees, agents, counsel, and representatives
(collectively, the "Company Parties") to perform any obligation hereunder or any
other agreement among any of the Company Parties and any of the Underwriter
Parties, (ii) any untrue statement or alleged untrue statement of any material
fact contained in or incorporated by reference in the Registration Statement,
any Preliminary Prospectus, the Prospectus, any Rule 462(b) Registration
Statement, or any amendment or supplement thereto, or (iii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and will reimburse each Underwriter
Party for any legal or other expenses incurred by such Underwriter Party in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that (X) the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement, or alleged
untrue statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, any Rule 462(b)
Registration Statement, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Underwriters specifically for use in the preparation thereof (which the parties
hereto agree is limited solely to that information contained on the cover page
of the Prospectus or Preliminary Prospectus and in the section thereof entitled
"Underwriting"), and (Y) such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter Party from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person did not receive a copy
of the Prospectus (or the Prospectus as amended or supplemented) at or prior to
the confirmation of the sale of such Securities to such person in any case where
such delivery is required by the Act and the untrue statement or omission of a
material fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented). This indemnity
agreement will be in addition to any liability that the Company may otherwise
have.
(b) INDEMNIFICATION BY THE UNDERWRITERS. Each Underwriter will
severally indemnify and hold harmless the Company Parties against any losses,
claims, damages or liabilities to which the Company Parties or any one or more
of them may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any failure by the Underwriter Parties to
perform any obligations hereunder or any other agreement among any of the
27
Underwriter Parties and any of the Company Parties, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, any Rule 462(b)
Registration Statement, or any amendment or supplement thereto, or (iii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and will reimburse any
legal or other expense reasonably incurred by the Company Parties in connection
with investigating or defending any such loss, claim, damage, liability, action
or proceeding; provided, however, that each Underwriter will be liable in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, any Rule
462(b) Registration Statement, or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through such Underwriter specifically for use in the preparation thereof (which
the parties hereto agree is limited solely to that information set forth under
the heading "Underwriting" in the Prospectus, except for the information on page
57 of the Prospectus relating to determination of the public offering price of
the Units and lack of assurance that an active trading market will develop for
any of the Securities. This indemnity agreement will be in addition to any
liability that such Underwriter may otherwise have.
(c) CLAIMS. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or 8(b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was prejudiced by the failure to give such notice,
but the failure to give such notice shall not relieve the indemnifying party or
parties from any liability that it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of Section 8(a) or
8(b). In case any such proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and shall pay as incurred the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by the
Representative in the case of parties indemnified pursuant to Sections 8(a) and
by the
28
Company in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) above in respect of any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Securities.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8(c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company 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 fees, 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 untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) 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 that does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Subsection 8(d), (i) no Underwriter shall be required to contribute any amount
in excess of the underwriting discounts and commissions applicable to the
Securities purchased by such Underwriter, and (ii) no person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 8(d)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) CONSENT TO VENUE AND SERVICE OF PROCESS. In any proceeding
relating to the Registration Statement, any Preliminary Prospectus, the
Prospectus or any supplement or amendment thereto, each party against whom
contribution may be sought under this Section 8 hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing
29
party, agrees that process issuing from such court may be served upon him, her,
or it by any other contributing party, and consents to the service of such
process and agrees that any other contributing party may join him, her, or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Securities that such Underwriter has agreed to purchase
and pay for on such date (otherwise than by reason of any default on the part of
the Company or the failure to occur of a condition precedent to the closing),
the Representative on behalf of the Underwriters, shall use its best efforts to
procure as soon as possible but not later than five business days thereafter one
or more of the other Underwriters, or any others, to purchase from the Company
such amounts as may be agreed upon and upon the terms set forth herein, the Firm
Securities or Option Securities, as the case may be, that the defaulting
Underwriter or Underwriters failed to purchase. If during such period the
Representative shall not have procured such other Underwriters, or any others,
to purchase the Firm Securities or Option Securities, as the case may be, agreed
to be purchased by the defaulting Underwriter or Underwriters then (a) if the
aggregate number of Securities with respect to which such default shall occur
does not exceed 10% of the Firm Securities or Option Securities, as the case may
be, covered hereby, the other Underwriters shall be obligated, severally, to
take up and pay for (in the respective proportions that the aggregate amount of
Securities set forth opposite their respective names in Schedule I hereto bears
to the aggregate amount of Securities set forth opposite the names of all such
other Underwriters) the Firm Securities or Option Securities, as the case may
be, that such defaulting Underwriter or Underwriters failed to purchase, or (b)
if the aggregate number of Securities with respect to which such default shall
occur exceeds 10% of the Firm Securities or Option Securities, as the case may
be, covered hereby, the Company or the Representative on behalf of the
Underwriters will have the right, by written notice given within the next
24-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the nondefaulting Underwriters or the Company,
except to the extent provided in Section 8 and Section 5 hereof. In the event of
a default by any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as the Representative may determine
in order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered, telecopied, or
telegraphed and confirmed as follows: if to the Underwriters, to HD Xxxxx & Co.,
Inc., 00 Xxxxxxxxxx Xxxx, Xxxxx Xxxx, Xxx Xxxx 00000; Telephone: (000) 000-0000;
Fax: (000) 000-0000; Attention: Xx. Xxxxxx X. Xxxxx, with a copy to Xxxxxxxxx
Traurig, LLP, Xxx Xxxx Xxxxxxxxx Xx., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000;
Telephone: (000) 000-0000; Fax: (000) 000-0000; Attention: Xxxxxx X. Xxxx, Esq.;
if to the Company, to Radyne ComStream Inc., 0000 X. Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000; Telephone: (000) 000-0000; Fax: (000) 000-0000; Attention: Xxxxxx
X. Fitting, Chief Executive
30
Officer, with a copy to Xxxxxx & Whitney, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000; Telephone: (000) 000-0000; Fax: (000) 000-0000; Attention: Xxxx X. Xxxx,
III, Esq.
11. TERMINATION. This Agreement may be terminated by the Representative
by notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the
Securities are released by the Representative for sale by notice to the
Underwriters, or (ii) 11:30 a.m., New York time, on the first business day
following the date of this Agreement; or
(b) at any time prior to the Closing itself if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company, or the
earnings, business affairs, management or business prospects of the Company,
whether or not arising in the ordinary course of business, including a material
decline in the price of Company's Common Stock on or prior to the Closing Date;
(ii) any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, calamity, crisis or change on the financial markets or economic
conditions would, in reasonable judgment of the Representative, make the
offering or delivery of the Securities impracticable; (iii) suspension of
trading in securities on the New York Stock Exchange, Inc. or the Nasdaq Stock
Market, Inc. or limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on such exchange or trading market; (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
that in the reasonable opinion of the Representative materially and adversely
affects or will materially or adversely affect the business or operations of the
Company; (v) declaration of a banking moratorium by either federal or New York
authorities; or (vi) the taking of any action by any federal, state, local, or
foreign government or agency in respect of its monetary or fiscal affairs that
in the reasonable opinion of the Representative has a material adverse effect on
the securities markets in the United States or the prospects of the Company; or
(c) as provided in Sections 6 and 9 of this Agreement.
This Agreement also may be terminated by the Representative, by notice
to the Company, as to any obligation of the Underwriters to purchase the Option
Securities, upon the occurrence at any time at or prior to the Option Closing
Date of any of the events described in Section 11(b) above or as provided in
Sections 6 and 9 of this Agreement.
12. SUCCESSORS. This Agreement has been and is made solely for the
benefit of the Underwriters and the Company and their respective successors,
executors, administrators, heirs and assigns, and the Underwriter Parties and
Company Parties referred to herein, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Securities merely because of such purchase.
13. MISCELLANEOUS. The reimbursement, indemnification, and contribution
agreements contained in Sections 5 and 8 of this Agreement and the
representations and warranties contained in Section 1 of this Agreement shall
remain in full force and effect regardless of (a) any
31
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter Party, or by or on behalf of any Company Party, and (c) delivery of
and payment for the Securities under this Agreement.
This Agreement and any notices delivered hereunder may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement and
any and all notices may be delivered by telecopy and shall be effective upon
receipt, with the original of such document to be deposited promptly in the U.S.
Mail.
This Agreement and all disputes and controversies relating hereto or in
connection with the transactions contemplated hereby shall be governed by, and
construed in accordance with, the laws of the State of New York.
If the foregoing agreement is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
RADYNE COMSTREAM INC.
By: _____________________________________
Xxxxxx X. Fitting,
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of ____________, 2000.
HD Xxxxx & Co., Inc.
As Representative of the
several Underwriters listed
on Schedule I
HD Xxxxx & Co., Inc.
By: _________________________________
Xxxxxx X. Xxxxx,
Chairman
32
SCHEDULE I
SCHEDULE OF UNDERWRITERS
UNDERWRITER NUMBER OF FIRM SECURITIES TO BE PURCHASED
----------- _________________________________________
HD Xxxxx & Co., Inc.
__________
Total 2,000,000
SCHEDULE II
SUBSIDIARIES
ComStream Corp.
ComStream UK Limited*
[ComStream Israel*]
---------------
* Wholly owned subsidiary of ComStream Corp.
SCHEDULE III
OFFICERS, DIRECTORS, AND STOCKHOLDERS WHO
SHALL SIGN LOCK-UP AGREEMENTS
Xxxxxx X. Fitting
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxx
Ming Xxxxx Xxx
Xxx Xxx Xxx
Xxx Xxxxx Xxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Stetsys Pte Ltd
Stetsys US, Inc.
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
_______________, 2000
HD Xxxxx & Co., Inc.
As Representative of the Several Underwriters
c/o HD Xxxxx & Co., Inc.
00 Xxxxxxxxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
RE: RADYNE COMSTREAM INC. (THE "COMPANY")
Ladies & Gentlemen:
The undersigned is or may become an owner of record or beneficially of
certain shares of Common Stock of the Company ("Common Stock") or securities
convertible into or exchangeable or exercisable for Common Stock. The Company
proposes to carry out a public offering of Units consisting of Common Stock and
Warrants (the "Offering") for which you will act as the representative of the
underwriters. The undersigned recognizes that the Offering will be of benefit to
the undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you and
the other underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of HD Xxxxx & Co.,
Inc. (which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract, or grant any option to sell (including
without limitation any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for, or convertible into, shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date six (6) months after the date of the Prospectus.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock, or securities convertible into, or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
By:
___________________________________
(Print name of stockholder)
Signature:
___________________________________
Indicate how shares held: ______________
________________________________________
________________________________________
________________________________________
(indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
EXHIBIT B
FORM OF
REPRESENTATIVE'S PURCHASE OPTION
Void after 5:00 p.m. New York Time, on ______________, 2005.
Option to Purchase 200,000 Shares of Common Stock.
REPRESENTATIVE'S PURCHASE OPTION
OF
RADYNE COMSTREAM INC.
This is to certify that, FOR VALUE RECEIVED, HD XXXXX & CO.,
INC., or assigns (the "Holder"), is entitled to purchase, subject to the
provisions of this Option, from RADYNE COMSTREAM INC., a New York corporation
(the "Company"), 200,000 fully paid, validly issued, and nonassessable shares of
the Company's Common Stock, par value $.002 per share ("Common Stock") at a
price of $__________ per share at any time or from time to time during the
period from ____________, 2001 to ____________, 2005, but not later than 5:00
p.m. New York City Time, on ____________, 2005. The number of shares of Common
Stock to be received upon the exercise of this Option and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Option
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price." This Option, together with options of like tenor, constituting
in the aggregate options (the "Options") to purchase 200,000 shares of Common
Stock, was originally issued pursuant to an underwriting agreement between the
Company and HD Xxxxx & Co., Inc. ("Xxxxx"), in connection with a public offering
through Xxxxx of 2,000,000 shares of Common Stock and warrants to purchase
2,000,000 shares of Common Stock, in consideration of $100 for the Options.
1. EXERCISE OF OPTION.
(a) This Option may be exercised in whole or in part at any time or
from time to time on or after ____________, 2001 and until ____________, 2005
(the "Exercise Period"), subject to the provisions of Section 10(b) hereof;
provided, however, that (i) if either such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day, and (ii) in the event
of any merger, consolidation or sale of substantially all the assets of the
Company as an entirety, resulting in any distribution to the Company's
stockholders, prior to ____________, 2005, the Holder shall have the right
to exercise this Option commencing at such time through ____________, 2005
into the kind and amount of shares of stock and other securities and property
(including cash) receivable by a holder of the number of shares of Common
Stock into which this Option might have been exercisable immediately prior
thereto. This Option may be exercised by presentation and surrender hereof
to the Company at its principal office, or at the office of its stock
transfer agent, if any, with the Purchase Form attached as Exhibit A hereto
duly executed and accompanied by payment of the Exercise Price for the
number _________ of Option Shares specified in such form. As soon as
practicable after each such exercise, but not later than seven (7) days from
the date of such
exercise, the Company shall issue and deliver to the Holder a certificate or
certificate for the Option Shares issuable upon such exercise, registered in
the name of the Holder or its designee. If this Option should be exercised in
part only, the Company shall, upon surrender of this Option for cancellation,
execute and deliver a new Option evidencing the rights of the Holder thereof
to purchase the balance of the Option Shares purchasable thereunder. Upon
receipt by the Company at its office, or by the stock transfer agent of the
Company at its office, of this Option in proper form for exercise, together
with the payment of the Exercise Price or the "Notice of Exchange" specified
in Section 1(b), the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically
delivered to the Holder.
(b) At any time during the Exercise Period, the Holder may, at its
option, exchange this Option, in whole or in part (an "Option Exchange"),
into the number of Option Shares determined in accordance with this Section
1(b), by surrendering this Option at the principal office of the Company or
at the office of its stock transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Option Shares to
be exchanged, and the date on which the Holder requests that such Option
Exchange occur (the "Notice of Exchange"). The Option Exchange shall take
place on the date specified in the Notice of Exchange or, if later, the date
the Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the shares issuable upon such Option Exchange and, if
applicable, a new Option of like tenor evidencing the balance of the shares
remaining subject to this Option, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) days following the Exchange Date. In
connection with any Option Exchange, this Option shall represent the right to
subscribe for and acquire the number of Option Shares (rounded to the next
highest integer) equal to (i) the number of Option Shares specified by the
Holder in its Notice of Exchange (the "Total Number") less (ii) the number of
Option Shares equal to the quotient obtained by dividing (A) the product of
the Total Number and the existing Exercise Price by (B) the current market
value of a share of Common Stock. Current market value shall have the meaning
set forth Section 3 below, except that for purposes hereof, the date of
exercise, as used in such Section 3, shall mean the Exchange Date.
2. RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Option such number of shares
of its Common Stock as shall be required for issuance and delivery upon
exercise of the Options.
3. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Option. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:
(a) If the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq
National Market, the current market value shall be the last reported sale
price of the Common Stock on such exchange or market on the last business day
prior to the date of exercise of this Option or if no such sale is made on
such day, the average closing bid and asked prices for such day on such
exchange or market; or
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges, but is traded on the Nasdaq SmallCap Market, the current
market value shall be the average of the closing bid and asked prices for
such day on such market and if the Common Stock is not so traded, the current
market value shall be the mean of the last reported bid and asked prices
reported by the OTC Bulletin Board or the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise of this Option; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
market value shall be an amount, not less than book value thereof as at the
end of the most recent fiscal year of the Company ending prior to the date of
the exercise of the Option, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF OPTION. This Option is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. This Option is not transferable (other
than by will, pursuant to the laws of descent and distribution, or by the
operation of law) and may not be assigned, transferred, or hypothecated
except to officers and employees of Xxxxx who are also shareholders of Xxxxx.
Upon surrender of this Option to the Company at its principal office or at
the office of its stock transfer agent, if any, with the Assignment Form
attached as Exhibit B hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Option in the name of the assignee named in such instrument of assignment and
this Option shall promptly be cancelled. This Option may be divided or
combined with other Options that carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names
and denominations in which new Options are to be issued and signed by the
Holder hereof. The term "Option" as used herein includes any Options into
which this Option may be divided or exchanged. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Option, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Option, if mutilated, the Company will execute and deliver a new Option of
like tenor and date.
5. RIGHTS OF THE HOLDER. Until the Holder exercises this Option pursuant
to Section 1, the Holder shall not, by virtue hereof, be entitled to any
rights of a shareholder in the Company, either at law or equity, and the
rights of the Holder are limited to those expressed in this Option and are
not enforceable against the Company except to the extent set forth herein.
6. ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and
the number and kind of securities purchasable upon the exercise of the
Options shall be subject to adjustment from time to time upon the happening
of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price by a fraction, the denominator
of which shall be the number of shares of Common Stock outstanding after
giving effect to such action, and the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Whenever the Exercise Price payable upon exercise of each Option
is adjusted pursuant to Section 6(a) above, the number of Option Shares
purchasable upon exercise of this Option shall simultaneously be adjusted by
multiplying the number of Option Shares initially issuable upon exercise of
this Option by the Exercise Price in effect on the date hereof and dividing
the product so obtained by the Exercise Price, as adjusted.
(c) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($0.01)
in such price; provided, however, that any adjustments which by reason of
this Section 6(c) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section 6 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be. Anything
in this Section 6 to the contrary notwithstanding, the Company shall be
entitled, but shall not be required, to make such changes in the Exercise
Price, in addition to those required by this Section 6, as it shall
determine, in its sole discretion, to be advisable in order that any dividend
or distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter made by the
Company shall not result in any federal income tax liability to the holders
of Common Stock or securities convertible into Common Stock (including
Options).
(d) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly but no later than 10 days after any request for such
an adjustment by the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Option Shares issuable upon exercise of
each Option, and, if requested, information describing the transactions
giving rise to such adjustments, to be mailed to the Holders at their last
addresses appearing in the Company's records, and shall cause a certified
copy thereof to be mailed to its transfer agent, if any. The Company may
retain a firm of independent certified public accountants selected by the
Board of Directors (who may be the regular accountants employed by the
Company) to make any computation required by this
Section 6, and a certificate signed by such firm shall be conclusive evidence
of the correctness of such adjustment.
(e) In the event that at any time, as a result of an adjustment made
pursuant to Section 6(a) above, the Holder of this Option thereafter shall
become entitled to receive any shares of capital stock of the Company other
than Common Stock, thereafter the number of such other shares so receivable
upon exercise of this Option shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 6(a) to
6(d), inclusive above.
(f) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of this Option, Options
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Options initially
issuable pursuant to this Agreement.
7. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted
as required by the provisions of the foregoing Section 6, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at
its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein
provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection by
the holder or any holder of an Option executed and delivered pursuant to
Section 1 and the Company shall, forthwith after each such adjustment, mail a
copy by certified mail of such certificate to the Holder or any such holder.
8. NOTICES TO OPTION HOLDERS. So long as this Option shall be
outstanding, (a) if the Company shall pay any dividend or make any
distribution upon the Common Stock or (b) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any share of any
class or any other rights or (c) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation
or merger of the Company with or into another corporation, sale, lease or
transfer of all or substantially all of the property and assets of the
Company to another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then in any such
case, the Company shall cause to be mailed by certified mail to the Holder,
at least 15 days prior to the date specified in (x) or (y) below, as the case
may be, a notice containing a brief description of the proposed action and
stating the date on which (x) a record is to be taken for the purpose of such
dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be
fixed, as of which the holders of Common Stock or other securities shall
receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation
or winding up.
9. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company, or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger
with a subsidiary in which merger the Company is the continuing corporation
and which does not result in any reclassification, capital reorganization or
other change of outstanding shares of Common Stock of the class issuable upon
exercise of this Option) or in case of any sale, lease or conveyance to
another corporation of the property of the Company as an entirety, the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter by
exercising this Option at any time prior to the expiration of the Option, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization and
other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock which might have been purchased upon
exercise of this Option immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Option. The foregoing
provisions of this Section 9 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances. In the
event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares of Common Stock shall be issued in exchange, conversion, substitution
or payment, in whole or in part, for a security of the Company other than
Common Stock, any such issue shall be treated as an issue of Common Stock
covered by the provisions of Section 6 hereof.
10. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(a) The Company shall advise the Holder of this Option or of the Option
Shares or any then holder of Options or Option Shares (such persons being
collectively referred to herein as "Holders") by written notice at least
thirty (30) days prior to the filing of any post-effective amendment to the
Company's Registration Statement No. 333-90731 on Form S-2 ("Registration
Statement"), declared effective by the Securities and Exchange Commission on
____________, 2000 or of any new registration statement (other than a Form
S-8 or Form S-4 or a successor form) or post-effective amendment thereto
under the Securities Act of 1933 (the "Act") covering securities of the
Company and will for a period of six years, commencing one year from the
effective date of the Registration Statement, upon the request of any such
Holder, include in any such post-effective amendment or registration
statement such information as may be required to permit a public offering of
the Option Shares. The Company shall supply prospectuses and other documents
as the Holder may reasonably request in order to facilitate the public sale
or other disposition of the Option Shares, use its reasonable best efforts to
qualify the Option Shares for sale in such states as any such Holder shall
reasonably designate and do any and all other acts and things which may be
reasonably necessary or desirable to enable such Holders to consummate the
public sale or other disposition of the Option Shares, and furnish
indemnification in the manner as set forth Section 10(c)(iii). Such Holders
shall furnish information and indemnification as set forth in Section
10(c)(iv), except that the maximum amount which may be recovered from
the Holder shall be limited to the amount of net proceeds received by the
Holder from the sale of the Option Shares. The Company's obligations to
include the Option Shares in a public offering under this Section 10(a) shall
be subject to the provisions of Section 10(f), below.
(b) If any majority holder (as defined in Section 10(d) below)
shall give notice to the Company at any time during the four-year period
commencing one year from the effective date of the Registration Statement to
the effect that such holder contemplates (i) the transfer of all or any part
of his, her, or its Option Shares, or (ii) the exercise and/or conversion of
all or any part of his, her, or its Options and the transfer of all or any
part of the Option Shares under such circumstances that a public offering
(within the meaning of the Act) of Option Shares will be involved, and
desires to register under the Act the Option Shares, then the Company shall,
within sixty (60) days after receipt of such notice, prepare and file a
post-effective amendment to the Registration Statement or a new registration
statement on Form X-0, X-0 or such other form as the holder requests and for
which the Company and the proposed transaction qualify, pursuant to the Act,
to the end that the Option Shares may be sold under the Act as promptly as
practicable thereafter and the Company will use its best efforts to cause
such registration to become effective and continue to be effective (including
the taking of such steps as are necessary to obtain the removal of any stop
order) for the lesser of (A) 180 days or (B) the date on which the holder has
advised the Company that all of the Option Shares have been sold; provided
that such Holders shall furnish the Company with appropriate information
(relating to the intentions of such Holders) in connection therewith as the
Company shall reasonably request in writing. Subject to applicable state law,
in the event the registration statement is not declared effective under the
Act within 180 days after the majority holder first gives notice to the
Company of his, her, or its desire to register Option Shares under the Act,
then at the Holders' request, the Company shall purchase the Options from the
Holders for a per share price equal to the fair market value of the Common
Stock less the per share Exercise Price. Notwithstanding the foregoing, if
the Company shall furnish to Holders requesting registration of Option Shares
pursuant to this Section 10(b) a certificate signed by the President of the
Company stating that a Blackout Period (as defined in Section 10(e)) is in
effect, the Company shall have the right to defer such filing during the term
of such Blackout Period. The Holder may, at its option, request the
registration of the Option Shares in a registration statement made by the
Company as contemplated by Section 10(a) or in connection with a request made
pursuant to this Section 10(b) prior to the acquisition of the Option Shares
upon exercise of the Option and even though the Holder has not given notice
of exercise of the Option. If the Company determines to include securities to
be sold by it in any registration statement originally requested pursuant to
this Section 10(b), such registration shall instead be deemed to have been a
registration under Section 10(a) and not under this Section 10(b). The Holder
may thereafter at its option, exercise the Options at any time or from time
to time subsequent to the effectiveness under the Act of the registration
statement in which the Option Shares were included.
(c) The following provisions of this Section 10 shall also be
applicable:
(i) Within ten days after receiving any such notice pursuant
to Section 10(b), the Company shall give notice to the other Holders of
Options and Option Shares, advising that the Company is proceeding with such
post-effective amendment or registration statement and offering to include
therein Option Shares of such other Holders, provided that they shall furnish
the Company with such appropriate information in connection therewith as the
Company shall reasonably request in writing to enable the Company to effect
such registration. Following the effective date of such post-effective
amendment or registration, the Company shall upon the request of any owner of
Options and/or Option Shares forthwith supply such a number of prospectuses
meeting the requirements of the Act, as shall be reasonably requested by such
owner to permit such Holder to make a public offering of all Option Shares
from time to time offered or sold to such Holder, provided that such Holder
shall from time to time furnish the Company with such appropriate information
in connection therewith as the Company shall request in writing to enable the
Company to effect such registration. The Company shall also use its
reasonable best efforts to qualify the Option Shares for sale in such states
as such majority Holder shall reasonably designate.
(ii) The Company shall bear the entire cost and expense of any
registration of securities initiated by it under Section 10(a)
notwithstanding that Option Shares subject to this Option may be included in
any such registration. The Company shall also comply with one request for
registration made by the majority holder pursuant to Section 10(b) at its own
expense and without charge to any Holder of any Options and/or Option Shares;
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 10(b) if
the registration request is subsequently withdrawn at the request of the
majority holder, in which case the Holders participating in such offering and
favoring such withdrawal shall bear such expenses; provided further, however,
that if such registration request has been withdrawn by virtue of a material
adverse change in the condition, business, or prospects of the Company from
that known to the majority holder at the time of its request, then the
Holders shall not be required to pay any of such expenses and shall retain
their rights pursuant to Section 10(b). The Company shall comply with one
additional request made by the majority holder pursuant to Section 10(b) (and
not deemed to be pursuant to Section 10(a)) at the sole expense of such
majority holder. Any Holder whose Option Shares are included in any such
registration statement pursuant to this Section 10 shall, however, bear the
fees of his, her, or its own counsel and any registration fees, transfer
taxes or underwriting discounts or commissions applicable to the Option
Shares sold by him, her, or it pursuant thereto.
(iii) The Company shall indemnify and hold harmless each such
Holder and each underwriter, within the meaning of the Act, who may purchase
from or sell for any such Holder any Option Shares from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereto or any registration
statement under the Act or any prospectus included therein required to be
filed or furnished by reason of this Section 10 or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused
by any such untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished or required to be furnished
in writing to the Company by such Holder or underwriter expressly for use
therein, which indemnification shall include each person, if any, who
controls any such Holder or underwriter within the meaning of such Act
provided, however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Holder or
any other Holder, specifically for use in the preparation thereof.
(iv) Each Holder severally, but not jointly, shall indemnify and
hold harmless the Company and each person who controls the Company, within
the meaning of the Act, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any post-effective
amendment thereto or any registration statement under the Act or any
prospectus included therein required to be filed or furnished by reason of
this Section 10 or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided, however, that each Holder
will be liable in any such case to the extent, but only to the extent, that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished by such Holder specifically for use in the
preparation thereof. In no event, however, shall the liability of any Holder
for indemnification under this Section 10 exceed the net proceeds received by
such Holder from the sale of such Holder's Option Shares.
(v) Neither the giving of any notice by any such majority holder
nor the making of any request for prospectuses shall impose upon such
majority holder making such request any obligation to sell any Option Shares,
or exercise any Options.
(d) The term "majority holder" as used in this Section 10 shall
include any owner or combination of owners of Options or Option Shares in any
combination if the holdings of the aggregate amount of (i) the Options held
by him, her, or among them, plus (ii) the Options which he, she, or they
would be holding if the Options for the Option Shares (provided such person
can demonstrate to the Company's reasonable satisfaction that he, she, or it
owns such Option Shares) owned by him, her, or among them had not been
exercised, would constitute a majority of the Options originally issued.
(e) The term "Blackout Period" as used in this Section 10 means any
period
(i) beginning on the date on which the Company notifies the
Holders that the Board of Directors of the Company, in its good faith
judgment, has determined that (A) disclosures in the registration statement
could have an adverse effect on
the Company's ability to engage in a merger, acquisition, or similar
transaction, or (B) financial statements with respect to the Company that may
be required to utilize a registration statement pursuant to Section 10(b) are
unavailable; and
(ii) ending on the date (1) with respect to Section 10(e)(i)(A)
above, upon the earliest to occur of (x) the consummation of such merger,
acquisition, or similar transaction, (y) the date on which the Company
terminates discussions or any definitive agreement with respect to such
merger, acquisition, or similar transaction, or (z) 180 days after the date
on which the Company notifies the Holders of the Board of Directors'
determination pursuant to Section 10(e)(i)(A); and (2) with respect to
Section 10(e)(i)(B) above, as soon as financial statements sufficient to
permit Company to file or permit the utilization of a registration statement
under the Act have become available.
(f) In the event the offering in which Option Shares are to be
included pursuant to Section 10(a) is to be underwritten, the Company shall
furnish the Holders with a written statement of the managing or principal
underwriter as to the Maximum Includable Securities (as defined in Section
10(f)(iii), below) as soon as practicable after the Holder's request to have
Option Shares included in such offering, as provided for in Section 10(a). If
the total number of securities proposed to be included in such registration
statement is in excess of the Maximum Includable Securities, the number of
securities to be included within the coverage of such registration statement
shall be reduced to the Maximum Includable Securities as follows:
(i) no reduction shall be made in the number of shares of
capital stock or other securities to be registered for the account of the
Company or for the account of any of the Company's securityholders that have
the right to require the Company to initiate the registration of such
securities; and
(ii) the number of Option Shares and other securities that may be
included in the registration, if any, shall be allocated among the Holders of
this Option and/or the Option Shares and holders of other securities (the
"Other Holders") requesting inclusion on a pro rata basis, with the number of
each type or class of securities of each Holder and Other Holder thereof
included in the registration to be that number determined by multiplying (A)
the total number of such type or class of security included in the Maximum
Includable Securities less (B) the number of such type or class of security
to be registered for the account of the Company or other securityholders that
have the right to require the Company to initiate the registration, by a
fraction, the numerator of which will be the total number of such type or
class of security that such Holder or Other Holder owns, and the denominator
of which will be the total number of such type or class of security owned by
all Holders and Other Holders that have requested inclusion of such type or
class of security in the registration.
(iii) "Maximum Includable Securities" shall mean the maximum
number of shares of each type or class of the Company's securities that a
managing or principal underwriter, in its good faith judgment, deems
practicable to offer and sell at that time in a firm commitment underwritten
offering without materially and adversely affecting the marketability or
price of the securities of the Company to be offered. When more than
one type or class of the Company's securities are to be included in a
registration, the managing or principal underwriter of the offering shall
designate the maximum number of each such type or class of securities that is
included in the Maximum Includable Securities.
(g) The Company's agreements with respect to Option Shares under this
Section 10 shall continue in effect regardless of the exercise and surrender
of this Option.
11. OPTIONS NOT REDEEMABLE. Except as otherwise set forth herein, the
Company shall not have the right to redeem this Option without the consent of
the Holder.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by a duly authorized officer as of this _____ day of ____________,
2000.
RADYNE COMSTREAM INC.
By: _____________________________________
Its: ____________________________________
EXHIBIT A
PURCHASE FORM
Dated ____________, ____
The undersigned hereby irrevocably elects to exercise the
within Option to the extent of purchasing _______ shares of Common Stock and
hereby makes payment of _______ in payment of the actual exercise price thereof.
----------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name ________________________________
(Please typewrite or print in block letters)
Address ______________________________
______________________________
______________________________
Signature _____________________________
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________
hereby sells, assigns and transfers unto
Name _______________________________
(Please typewrite or print in block letters)
Address ______________________________
______________________________
______________________________
the right to purchase Common Stock represented by this Option to the extent of
______ shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint _______________________________ as attorney, to transfer
the same on the books of the Company with full power of substitution in the
premises.
Date ____________, ____
Signature _____________________________
Signature(s) guaranteed by:*
____________________________
*THE SIGNATURE(S) MUST BE GUARANTEED BY A BANK, SAVINGS AND LOAN ASSOCIATION,
STOCKBROKER, OR CREDIT UNION WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTY
MEDALLION PROGRAM PURSUANT TO SECURITIES EXCHANGE ACT RULE 17AD-15. NOTARIZATION
BY A NOTARY PUBLIC IS NOT ACCEPTABLE.
REPRESENTATIVE'S PURCHASE OPTION
TO PURCHASE COMMON STOCK OF
RADYNE COMSTREAM INC.
EXHIBIT C
FORM OF
LETTER FROM XXXXXX & XXXXXXX, LLP
[_____________], 2000
H.D. Xxxxx & Co., Inc.
00 Xxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Re: RADYNE COMSTREAM INC.
Ladies and Gentlemen:
We have acted as counsel to Radyne Comstream, Inc. (the "Company") in
connection with the public offering by the Company of units, each unit
consisting of one share of the Company's common stock and one warrant to
purchase one share of common stock pursuant to the underwriting agreement dated
as of _______________ ___, 2000, by and between the Company and H.D. Xxxxx &
Co., Inc., as representative of the several underwriters listed in such
underwriting agreement (the "Underwriting Agreement"). This letter is being
delivered pursuant to Section 6(f) of the Underwriting Agreement. All
capitalized terms used herein and not defined herein have the meanings assigned
to such terms in the Underwriting Agreement.
In connection with the preparation of the Registration Statement and
the Prospectus we have participated in various discussions and meetings with
representatives of the Company, representatives of the Company's independent
public accountants and your representatives. We have also examined copies of the
documents incorporated by reference into the Registration Statement, and filed
as exhibits thereto, certain minutes of meetings of the Board of Directors and
shareholders of the Company, as set forth in the Company's minute books, and
other documents furnished to us by the Company. Although we assume no
responsibility for, and cannot guarantee, the accuracy, completeness or fairness
of any of the statements contained in the Registration Statement and the
Prospectus, during the course of the above-described procedures, nothing has
come to our attention which would cause us to believe that the Registration
Statement, or any amendment thereto, at the time the Registration Statement or
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or the Prospectus or any amendment or
supplement thereto, at the time it was filed pursuant to Rule 424(b) or at the
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; it being understood that we make no statement herein as to
financial statements and schedules, or other financial information or
statistical data and information included or incorporated by reference in the
Registration Statement.
This letter is being furnished to you solely for your benefit in
connection with the transactions described in the Underwriting Agreement. This
letter may not be relied upon by you for any other purpose, and may not be
relied upon by, nor may copies be delivered to, any other person without our
prior written consent.
Very truly yours,
