3,300,000 Shares
AEHR TEST SYSTEMS
Common Stock
UNDERWRITING AGREEMENT
August ___, 1997
Xxxxxxxxxxx & Co., Inc.
Xxxxxxx & Company, Inc.
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
000 Xxxxxxx Xxxxxx
World Financial Center
New York, New York 10281
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Aehr Test Systems, a California corporation (the "Company"), proposes,
subject to the terms and conditions contained herein, to sell to you and the
other underwriters named on Schedule I to this Agreement (the "Underwriters"),
for whom you are acting as Representatives (the "Representatives"), an aggregate
of 2,200,000 shares of the Common Stock, $0.01 par value (the "Common Stock") of
the Company. Certain shareholders of the Company named on Schedule II hereto
(the "Selling Shareholders") propose, subject to the terms and conditions
contained herein, to sell to the Underwriters an aggregate of 1,100,000 shares
of Common Stock, in the amounts set forth opposite the names of the respective
Selling Shareholders on Schedule II. The aggregate of 3,300,000 shares to be
sold by the Company and the Selling Shareholders is herein called the "Firm
Shares." The respective amounts of the Firm Shares to be purchased by each of
the several Underwriters are set forth opposite their names on Schedule I
hereto, and the respective amounts of Firm Shares to be sold by the Selling
Shareholders are set forth opposite their names on Schedule II. The Company and
the Selling Shareholders are sometimes referred to herein collectively as the
"Sellers." In addition, certain of the Selling Shareholders propose to grant to
the Underwriters an option to purchase up to an additional 495,000 shares (the
"Option Shares") of Common Stock from them for the purpose of covering
over-allotments in connection
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with the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties and covenants contained in, and subject to the terms
and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at a price of $______ per share (the "Initial Price"),
the number of Firm Shares set forth opposite the name of such Underwriter
under the column "Number of Firm Shares to be Purchased from the Company"
on Schedule I to this Agreement, subject to adjustment in accordance with
Section 11 hereof. The Selling Shareholders agree to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Selling Shareholders, at the Initial Price,
the number of Firm Shares set forth opposite the name of such Underwriter
under the column "Number of Firm Shares to be Purchased from Selling
Shareholders" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 11 hereof.
(b) Certificates in negotiable form for the total number of
the Firm Shares to be sold hereunder by each of the Selling Shareholders
have been placed in custody with U.S. Stock Transfer Corporation as
custodian (the "Custodian"), pursuant to the Custody Agreement and
Irrevocable Power of Attorney (the "Custody Agreement") executed by each
Selling Shareholder for delivery of all Firm Shares to be sold hereunder by
such Selling Shareholder. Each of the Selling Shareholders specifically
agrees that the Firm Shares represented by the certificates held in custody
for such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder, that the arrangements made by such
Selling Shareholder for such custody are to that extent irrevocable, and
that the obligations of such Selling Shareholder hereunder shall, subject
to applicable law, not be terminable by any act or deed of the Selling
Shareholder (or by any other person, firm or corporation including the
Company, the Custodian or the Underwriters) or by operation of law
(including the death of such Selling Shareholder) or by the occurrence of
any other event or events, except as set forth in the Custody Agreement.
If any such event should occur prior to the delivery to the Underwriters of
the Firm Shares to be sold by the Selling Shareholders hereunder,
certificates for the Firm Shares shall, except as set forth herein or in
the Custody Agreement, be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such event had not occurred.
The Custodian is authorized to receive and acknowledge receipt of the
proceeds of the sale of the Shares to be sold by the Selling Shareholders
held by it against delivery of such Shares.
(c) The Selling Shareholders identified on Schedule II
hereto grant to the several Underwriters an option to purchase, severally
and not jointly, all or any part of the Option Shares at the Initial Price.
The number of Option Shares to be purchased by each Underwriter shall be
the same percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be
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purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. The number of Option Shares to be sold by each of the Selling
Shareholders identified on Schedule II hereto shall be the same percentage
(adjusted by the Representatives to eliminate fractions) of the number of
Option Shares set forth opposite such Selling Shareholder's name on
Schedule II hereof as the percentage of the total number of Option Shares
being purchased by the Underwriters. Such option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters
and may be exercised in whole or in part at any time on or before 12:00
noon, New York City time, on the business day before the Firm Shares
Closing Date (as defined below), and from time to time thereafter within 30
days after the date of this Agreement, in each case upon written or
telegraphic notice, or oral or telephonic notice confirmed by written or
telegraphic notice, by the Representatives to the Company and the Custodian
no later than 12:00 noon, New York City time, on the business day before
the Firm Shares Closing Date or at least two business days before the
Option Shares Closing Date (as defined below), as the case may be, setting
forth the number of Option Shares to be purchased and the time and date (if
other than the Firm Shares Closing Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company and the Custodian
of the Firm Shares to the Representatives for the respective accounts of the
Underwriters, and payment of the purchase price by certified or official bank
check or checks payable in New York Clearing House (next day) funds drawn to the
order of the Company for the Shares purchased from the Company and to the
Custodian for the Shares purchased from the Selling Shareholders, against
delivery of the respective certificates therefor to the Representatives, shall
take place at the offices of Xxxxxxxxxxx & Co., Inc. at Xxxxxxxxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time,
(a) on the third full business day following the first day that the shares are
traded, (b) if this Agreement is executed and delivered after 4:30 p.m., New
York City time, on the fourth business day following the date of this Agreement,
or (c) at such time on such other date, not later than the fourth full business
day following the Effective Date (as hereinafter defined), as shall be agreed
upon by the Company, the Selling Shareholders and the Representatives (such time
and date of delivery and payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Custodian of the Option Shares to the Representatives
for the respective accounts of the Underwriters, and payment of the purchase
price by certified or official bank check or checks payable in New York Clearing
House (next day) funds to the Custodian shall take place at the offices of
Xxxxxxxxxxx & Co., Inc. specified above at the time and on the date (which may
be the same date as, but in no event shall be earlier than, the Firm Shares
Closing Date) specified in the notice referred to in Section 1(c) (such time and
date of delivery and payment are called the "Option Shares Closing Date"). The
Firm Shares Closing Date and the Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section 1(c) and shall be made available to the Representatives for
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checking and packaging, at such place as is designated by the Representatives,
one full business day before the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-28987), including a preliminary prospectus relating to the Shares, and has
filed with the Commission such registration statement and such amendments
thereto as may have been required to the date of this Agreement. Copies of such
registration statement (including all amendments thereof) and of the related
preliminary prospectus have heretofore been delivered by the Company to you.
The term "preliminary prospectus" means any preliminary prospectus (as described
in Rule 430 of the Rules) included at any time as part of the registration
statement or filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules. The registration
statement, as amended at the time and on the date it became effective (the
"Effective Date"), including all exhibits and information, if any, deemed to be
part of the registration statement pursuant to Rule 424(b), Rule 430A and
Rule 434 of the Rules, is called the "Registration Statement." The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement or (A) if Rule 430(A) of the Rules is relied on,
the term "Prospectus" means the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and (B) if Rule 434 of the Rules is relied
on, then (i) the term "Prospectus" means the "prospectus subject to completion"
(as such term is defined in Rule 434(g) of the Rules) together with the term
sheet (the "Term Sheet") required under Rule 434(b) of the Rules and (ii) the
date of such Prospectus shall be deemed to be the date of the Term Sheet. If
the Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) of the Rules for such registration statement to become
effective upon filing with the Commission (the "Rule 462(b) Registration
Statement"), then any reference to the "Registration Statement" herein shall be
deemed to include both the registration statement referred to above (No. 333-
28987) and the Rule 462(b) Registration Statement, as each such registration
statement may be amended pursuant to the Securities Act.
The Company and each of the Selling Shareholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Prospectus, as soon after the Effective Date and the date of
this Agreement as the Representatives deem advisable. The Company and each of
the Selling Shareholders hereby confirm that the Underwriters and dealers have
been authorized to distribute or cause to be distributed each preliminary
prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, on the date any post-effective
amendment to the
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Registration Statement becomes effective, on the date any supplement or
amendment to the Prospectus is filed with the Commission and on each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the
Rules; the Registration Statement did not, as of the Effective Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and on the other dates referred to
above neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue statement
of a material fact or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. When any related preliminary prospectus was first filed with
the Commission (whether filed as part of the Registration Statement or any
amendment thereto or pursuant to Rule 424(a) of the Rules) and when any
amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus as amended or supplemented complied
in all material respects with the applicable provisions of the Securities
Act and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; provided,
however, that none of the representations and warranties in this
paragraph 4(a) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon, and in
conformity with, information herein or otherwise furnished in writing to
the Company by the Representatives on behalf of the several Underwriters
for use in the Registration Statement or the Prospectus. With respect to
the preceding sentence, the Company acknowledges that the only information
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus is the
paragraph with respect to stabilization on the inside front cover page of
the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are threatened under the Securities Act; any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules has been or will be made in the manner and within the time period
required by such Rule 424(b).
(c) The consolidated financial statements of the Company
(including all notes and schedules thereto) included in the Registration
Statement and Prospectus present fairly the financial position, the results
of the operations, the statements of cash flows and the statements of
shareholders' equity and the other information purported to be shown
therein of the Company and its consolidated subsidiaries at the respective
dates and for the respective periods to which they apply; and such
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout
the periods involved, are correct and complete and are in accordance with
the books and records of the Company
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and its consolidated subsidiaries. The summary and selected financial data
included in the Prospectus present fairly the information shown therein as
at the respective dates and for the respective periods specified, and the
summary and selected financial data have been presented on a basis
consistent with the consolidated financial statements so set forth in the
Prospectus and such books and records.
(d) Coopers & Xxxxxxx L.L.P., whose report is filed with
the Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act and the Rules.
(e) The Company and each of it Subsidiaries (as hereinafter
defined) is a corporation duly organized, validly existing and in good
standing under their respective jurisdictions of organization. The Company
has no subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or
other business organization, except for those set forth on SCHEDULE 4(e)
hereto. The Company and each such subsidiary or other entity
(collectively, "Subsidiaries") is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased or
licensed) or the nature of its business makes such qualification necessary
except for such jurisdictions where the failure to so qualify would not
have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of
the Company and its Subsidiaries considered as a whole (a "Material Adverse
Effect"). Except as disclosed in the Prospectus, neither the Company nor
any Subsidiary owns, leases or licenses any asset or property or conducts
any business outside the United States. The Company and each of its
Subsidiaries has all requisite corporate power and authority, and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory bodies
or any other person or entity, to own, lease and license its assets and
properties and conduct its businesses as now being conducted and as
described in the Prospectus except for such authorizations, approvals,
consents, orders, licenses, certificates and permits the failure to so
obtain would not have a Material Adverse Effect; no such authorization,
approval, consent, order, license, certificate or permit contains a
materially burdensome restriction other than as disclosed in the
Prospectus; and the Company has all such corporate power and authority and
such authorizations, approvals, consents, orders, licenses, certificates
and permits to enter into, deliver and perform this Agreement and to issue
and sell the Shares.
(f) The Company and each of its Subsidiaries owns, or
possesses adequate and enforceable rights, either as owner or licensee, to
use all patents, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other
similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as described in the Prospectus.
Neither the Company nor any of its Subsidiaries has received any notice of,
or is aware of, any infringement of or conflict with asserted rights of
others with respect to any Intangibles. No Intangibles of the Company or
any Subsidiary are in dispute or are in
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any conflict with the right of any other person or entity and the Company
and each of its Subsidiaries (i) has or will have the right to use, free
and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects, restrictions or equities of any kind whatsoever all
licenses and rights to the Intangibles used in the conduct of their
business as now conducted or proposed to be conducted without infringing
upon or otherwise acting adversely to the right or claimed right of any
other person and (ii) is not or will not become, as the case may be,
obligated or in any way liable for any payment by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any
Intangibles with respect to the use thereof or in connection with the
conduct of their business or otherwise, except in each case as disclosed in
the Prospectus and except for any such payments, claims, uses, liens,
charges, encumbrances, pledges, security interests, defects, restrictions
and equities which would not have a Material Adverse Effect.
(g) The Company and each of its Subsidiaries has good and
marketable title in fee simple to each of the items of property which are
reflected in the consolidated financial statements referred to in
Section 4(c) or are referred to in the Registration Statement or the
Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property which are
referred to in the Registration Statement or the Prospectus as being leased
by it, in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the
Prospectus and those which do not and will not have a Material Adverse
Effect.
(h) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, pending or, to
the Company's knowledge, threatened (and the Company does not know of any
basis therefor) against or involving the assets, properties or business of,
the Company or any of its Subsidiaries or their respective directors or
officers which is required to be disclosed in the Prospectus that is not so
disclosed or which, if adversely determined, could be reasonably expected
to have a Material Adverse Effect.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as described therein, (i) there has not been any material adverse
change in the assets or properties, business, results of operations,
prospects or condition (financial or otherwise), of the Company or any of
its Subsidiaries, whether or not arising from transactions in the ordinary
course of business; (ii) neither the Company nor any of its Subsidiaries
has sustained any loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other governmental action,
order or decree which would have a Material Adverse Effect; and (iii) since
the date of the latest balance sheet included in the Registration Statement
and the Prospectus, except as reflected therein, neither the Company nor
any of its Subsidiaries has (A) issued any securities, (other than shares
issued pursuant to the exercise of options granted under stock option plans
or agreements described in the Registration Statement and Prospectus), or
incurred any liability or obligation, direct or contingent, for borrowed
money, except
7
for borrowings under its existing credit facilities in the ordinary course
of business, (B) entered into any transaction not in the ordinary course of
business or (C) declared or paid any dividend or made any distribution on
any shares of its capital stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of
its stock.
(j) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required by the Securities Act or the Rules.
Each agreement described in the Registration Statement and the Prospectus
or listed in the Exhibits to the Registration Statement is in full force
and effect and is valid and enforceable by and against the Company or the
Subsidiaries, as the case may be, in accordance with its terms. Neither
the Company, the Subsidiaries, nor to the Company's knowledge, any other
party is in default in the observance or performance of any term or
obligation to be performed by it under any such agreement, and no event has
occurred which with notice or lapse of time or both would constitute such a
default, in any such case which default or event would have a Material
Adverse Effect. No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the
Company or any of its Subsidiaries of any other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of
them or their respective properties or businesses may be bound or affected
which default or event would have a Material Adverse Effect.
(k) Neither the Company nor any of its Subsidiaries is in
violation of (i) any term or provision of its charter or by-laws, in each
case amended to the date hereof or (ii) any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will (i) give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any of its Subsidiaries pursuant to
the terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries or any of their properties or
businesses is bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation applicable to the Company or its
Subsidiaries or (ii) violate any provision of the charter, by-laws or other
organizational documents of the Company or any of its Subsidiaries, in each
case as amended to the date hereof. No consent, approval, authorization,
order, registration or qualification of or with any court or governmental
8
agency or body is required for the issue and sale of the Shares or the
consummation of the other transactions contemplated by this Agreement,
except the registration under the Securities Act of the Shares, and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters.
(m) The Company's authorized, issued and outstanding
capital stock is on the date hereof, and will be on the Closing Date, as
set forth under the caption "Capitalization" in the Prospectus (except for
subsequent issuances pursuant to outstanding options described in the
Registration Statement and Prospectus). The certificates evidencing the
Shares are in due and proper legal form and have been duly authorized for
issuance by the Company. All of the issued and outstanding shares of
Common Stock have been duly and validly issued and are fully paid and
nonassessable and none of them was issued in violation of any preemptive or
other similar right or any state or Federal securities laws. The Shares
have been duly authorized and the Shares to be sold by the Company, when
issued and sold pursuant to the Agreement, will be duly and validly issued,
fully paid and nonassessable and the Underwriters will receive good title
to such Shares, free and clear of all liens, security interests, pledges,
changes, claims and encumbrances. There are no statutory, preemptive or
other similar rights to subscribe for or to purchase or acquire any shares
of Common Stock of the Company or any of its Subsidiaries or any such
rights pursuant to their respective charter or by-laws, in each case as
amended to the date hereof, or any agreement or instrument to or by which
the Company or any of its Subsidiaries is party or bound. Except as
disclosed in the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment, plan
or arrangement to issue, any share of stock of the Company or any of its
Subsidiaries or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in
all material respects to all statements in relation thereto contained in
the Registration Statement and the Prospectus. As of the date hereof and
as of the Closing Date, all outstanding shares of capital stock of each
Subsidiary have been and will be duly authorized and validly issued, and
are and will be fully paid and nonassessable and owned directly by the
Company or by another wholly-owned subsidiary of the Company free and clear
of any security interests, liens, encumbrances, equities or claims, other
than those described in the Prospectus. The Company has a sufficient
number of authorized but unissued shares of Common Stock to enable the
Company to issue, without further shareholder action, all the Shares to be
sold by the Company.
(n) No holder of securities of the Company has rights,
which have not been waived, to the registration of shares of Common Stock
or other securities, as a result of the filing of the Registration
Statement by the Company or the offering contemplated thereby. Each
shareholder or optionholder, holding shares, or options to purchase shares,
representing 1.0% or more of the Company's Common Stock and each director
and executive officer of the Company has delivered to the Representatives
its, his or her enforceable written agreement (each, a "Lock-Up Agreement")
in the form attached to this Agreement. To the knowledge of the Company,
from June 11, 1997 through the date hereof, no such shareholder, director
or executive officer has sold any of its Common
9
Stock or reduced its, his or her risk through the use of any option, put,
call or other derivative security relative to its Common Stock.
(o) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares by
the Company and the sale of the Shares by the Selling Shareholders. This
Agreement has been duly and validly executed and delivered by the Company
and constitutes and will constitute a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its
terms, except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles and (ii) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
(p) No labor dispute with the employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company is
threatened; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers or
contractors which could have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has violated any applicable safety or
similar law applicable to its business nor any Federal or state law
relating to discrimination in the hiring, promotion or pay of employees,
nor any applicable Federal or state wages and hours law, nor any provisions
of the Employee Retirement Income Security Act or the rules and regulations
promulgated thereunder, the violation of any of which could have a Material
Adverse Effect. The Company is not aware of any threatened or pending
litigation between the Company or any of its Subsidiaries and any of its
executive officers which, if adversely determined, could have a Material
Adverse Effect and has no reason to believe that such officers will not
remain in the employment of the Company.
(q) No transaction has occurred between or among the
Company or any of its Subsidiaries and any of their officers or directors
or any affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the Prospectus.
(r) Neither the Company nor any of its Subsidiaries has
taken, nor will any of them take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock.
(s) Neither the Company nor any of its Subsidiaries has
ever been denied a license, permit or authorization and the operating
practices and procedures of the Company and each of its Subsidiaries are in
material compliance with all applicable Federal, state and local laws,
rules and regulations and, with respect to the Subsidiaries, the applicable
laws of Japan and Germany.
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(t) The Company and each of its Subsidiaries has timely
filed all Federal, state, local and foreign tax returns which are required
to be filed through the date hereof, or has received extensions thereof
(and such returns are each true, correct and complete in all material
respects) and has paid all taxes shown on such returns and all assessments
received by it to the extent that the same are material and have become
due. There are no tax audits or investigations pending which if adversely
determined would have a Material Adverse Effect, and there is no further
liability (whether or not disclosed in such returns) or assessment for any
such tax, and no interest or penalties accrued or accruing with respect
thereto, except as may be set forth or adequately reserved for in the
financial statements included in the Registration Statement and the
Prospectus; and the amounts currently set up as provisions for taxes or
otherwise by the Company and each of its Subsidiaries on their books and
records are sufficient for the payment of all their unpaid Federal,
foreign, state, county and local taxes accrued through the dates as of
which they speak, and for which the Company and each of its Subsidiaries
may be liable in their own right, or as a transferee of the assets of, or
as successor to any other corporation, association, partnership, joint
venture or other entity.
(u) The books, records and accounts of the Company and each
of its Subsidiaries accurately and fairly reflect, in reasonable detail,
the transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its Subsidiaries, respectively. The Company
and each of its Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(v) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the business in which they
are engaged or propose to engage after giving effect to the transactions
described in the Prospectus; and neither the Company nor any Subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue their
business at a cost that would not have a Material Adverse Effect.
(w) Each approval, consent, order, authorization,
designation, declaration or filing of, by or with any regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated required to be
obtained or performed by the Company (except such additional steps as may
be required by the National Association of Securities Dealers, Inc. (the
"NASD") or may be necessary
11
to qualify the Shares under the state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
(x) The Shares have been duly authorized for quotation on
the National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System, and a registration statement has been
filed on Form 8-A pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which registration statement
complies in all material respects with the Exchange Act.
(y) The Company and each of its Subsidiaries have such
licenses, permits and other approvals or authorizations of and from
governmental or regulatory authorities ("Permits") as are necessary under
applicable law to own their respective properties and to conduct their
respective businesses in the manner now being conducted and as described in
the Registration Statement and the Prospectus except where the failure to
have such Permits, individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect; and the Company and
each of its Subsidiaries has fulfilled and performed all of its respective
obligations with respect to such Permits, and no event has occurred which
allows, or after notice or lapse of time or both would allow, revocation or
termination thereof or result in any other impairment of the rights of the
holder of any such Permits except such Permits which individually or in the
aggregate do not have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries has ever been denied a Permit of the type referred
to in this subsection (y).
(z) There are no affiliations with the NASD among the
Company's officers, directors or, to the best knowledge of the Company, any
five percent or greater shareholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives of the Underwriters.
(aa) (i) The Company and each of its Subsidiaries is in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances
and protection of health or the environment ("Environmental Laws") which
are applicable to its business; (ii) neither the Company nor any of its
Subsidiaries has received any notice (written or oral) from any
governmental authority or third party of an asserted claim under
Environmental Laws; (iii) the Company and each of its Subsidiaries has
received all permits, licenses or other approvals or authorizations
required of it under applicable Environmental Laws to conduct its business
and is in compliance with all terms and conditions of any such permit,
license, approval or authorization; (iv) to the Company's knowledge, no
facts currently exist that will require the Company or any of its
Subsidiaries to make future material capital expenditures to comply with
Environmental Laws; and (v) no property which is or has been owned, leased
or occupied by the Company or any of its Subsidiaries has been designated
as a Superfund site pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601,
et seq.), or otherwise designated as a contaminated site under applicable
state or local law.
12
(bb) The Company is not an "Investment Company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act').
(cc) Neither the Company, any of its Subsidiaries or any
other person associated with or acting on behalf of the Company or any of
its Subsidiaries including, without limitation, any director, officer,
agent or employee of the Company or any of its Subsidiaries has, directly
or indirectly, while acting on behalf of the Company or its Subsidiaries
(i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
(ii) made any unlawful payment to foreign or domestic government officials
or employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful payment.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder, severally, hereby represents and warrants to each
Underwriter as follows:
(a) Such Selling Shareholder has caused certificates for
the number of Shares to be sold by such Selling Shareholder hereunder to be
delivered to the Custodian, endorsed in blank or with blank stock powers
duly executed, with a signature appropriately guaranteed, such certificates
to be held in custody by the Custodian for delivery, pursuant to the
provisions of this Agreement and the Custody Agreement.
(b) Such Selling Shareholder has granted an irrevocable
power of attorney (the "Power of Attorney") to the persons named therein,
on behalf of the Selling Shareholder, to execute and deliver this Agreement
and any other document necessary or desirable in connection with the
transactions contemplated hereby and to deliver the Shares to be sold by
the Selling Shareholder pursuant thereto, and all authorizations and
consents necessary for the execution and delivery by such Selling
Shareholder of this Agreement and the Custody Agreement on behalf of such
Selling Shareholder have been duly given and received.
(c) This Agreement, the Custody Agreement, the Power of
Attorney and a Lock-Up Agreement have each been duly authorized, executed
and delivered by or on behalf of such Selling Shareholder and constitute
the legal, valid and binding agreement of such Selling Shareholder,
enforceable in accordance with its terms, except (i) as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles and (ii) to the extent
that rights to indemnity or contribution under this Agreement may be
limited by Federal or state securities laws or the public policy underlying
such laws.
(d) The execution and delivery by such Selling Shareholder
of, and the performance by such Selling Shareholder of its obligations
under, this Agreement will not (i) contravene any provision of applicable
law, or any agreement or other
13
instrument binding upon such Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
such Selling Shareholder, or (ii) give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in the
imposition of any lien, charge or encumbrance upon any properties or assets
of such Selling Shareholder pursuant to the terms of any indenture,
mortgage, deed of trust or other agreement or instrument by which such
Selling Shareholder is a party or by which such Selling Shareholder is
bound. No consent, approval, authorization or order of or qualification
with any governmental body or agency is required for the performance by
such Selling Shareholder of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(e) Such Selling Shareholder has, and on each Closing Date
will have the sole right to dispose of the Shares to be sold by such
Selling Shareholder hereunder and valid and marketable title to the Shares
to be sold by such Selling Shareholder on such Closing Date and the legal
right and power, and all authorization and approval required by law, to
enter into this Agreement and to sell, transfer and deliver the Shares to
be sold by such Selling Shareholder. Such Selling Shareholder will have
paid all stock transfer and stamp taxes which are required to be paid in
connection with the Shares.
(f) Upon delivery of and payment for the Shares to be sold
by such Selling Shareholder pursuant to this Agreement, the several
Underwriters will receive valid and marketable title to such Shares, free
and clear of any security interests, liens, encumbrances, equities or
claims.
(g) All information relating to such Selling Shareholder
furnished in writing by such Selling Shareholder expressly for use in the
Registration Statement and Prospectus is, and on each Closing Date will be,
true, correct, and complete, and does not, and on each Closing Date will
not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading.
(h) Such Selling Shareholder has reviewed the Registration
Statement and Prospectus and, although such Selling Shareholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of such Selling
Shareholder that would lead such Selling Shareholder to believe that (i) on
the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein in order to make the statements made therein not
misleading or (ii) on the Effective Date, the Prospectus contained or, on
any Closing Date contains, any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
14
(i) The sale of Shares by such Selling Shareholder pursuant
to this Agreement is not prompted by such Selling Shareholder's knowledge
of any material information concerning the Company or any of its
Subsidiaries which is not set forth in the Prospectus.
(j) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(k) Such Selling Shareholder has no actual knowledge that
any representation or warranty of the Company set forth in Section 4 above
is untrue or inaccurate in any material respect.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 7(a)(i) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Representatives.
(c) The representations and warranties of the Company and
the Selling Shareholders contained in this Agreement and in the
certificates delivered pursuant to Sections 6(d) and 6(e) shall be true and
correct when made and on and as of each Closing Date as if made on such
date, and the Company and the Selling Shareholders shall have performed all
the covenants and agreements and satisfied all the conditions contained in
this Agreement required to be performed or satisfied by them at or before
such Closing Date.
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such Closing
Date, of the president and chief executive officer and the chief financial
officer of the Company to the effect that (i) the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties
of the Company in this Agreement are true and correct on and as of such
Closing Date with the same effect as if made on such Closing Date and the
Company has performed all
15
covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to such
Closing Date, and (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of their knowledge,
no proceedings for that purpose have been instituted or are pending under
the Securities Act.
(e) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such Closing
Date, of each Selling Shareholder, to the effect that such Selling
Shareholder has carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties
of such Selling Shareholders contained in this Agreement are true and
correct on and as of such Closing Date with the same effect as if made on
such Closing Date and such Selling Shareholders has performed all covenants
and agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by such Selling Shareholder at or
prior to such Closing Date.
(f) The Representatives shall have received Lock-Up
Agreements from each of the Company's shareholders and optionholders
holding outstanding shares, or options to purchase shares, representing
1.0% or more of the Company's Common Stock and from each director and
executive officer of the Company.
(g) The Representatives shall have received on the
Effective Date, at the time this Agreement is executed and on each Closing
Date a signed letter from Coopers & Xxxxxxx L.L.P. addressed to the
Representatives and dated, respectively, the Effective Date, the date of
this Agreement and each such Closing Date, in form and substance reasonably
satisfactory to the Representatives, confirming that they are independent
accountants to the Company within the meaning of the Securities Act and the
Rules, that the response to Item 10 of the Registration Statement is
correct insofar as it relates to them and stating in effect that:
(i) in their opinion the audited consolidated
financial statements and consolidated financial statement schedules
included in the Registration Statement and the Prospectus audited and
reported on by them comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the
Rules;
(ii) they have performed the procedures set forth in
Statement of Accounting Standards No. 71 ("SAS 71") for a review of
interim financial information with respect to the quarters ended
August 31 and November 30, 1995, February 19, August 31, and
November 30, 1996 and February 28, 1997 and that, in the course of
such review, nothing came to the attention of such firm that leads
them to believe that any changes need to be made in the financial
statements for such quarters for them to be in accordance with
generally accepted accounting principles.
16
(iii) on the basis of a reading of the amounts included
in Registration Statement and the Prospectus under the headings
"Summary Consolidated Financial Information" and "Selected
Consolidated Financial Data," carrying out certain procedures,
including a reading of the latest available interim financial
statements of the Company and each Subsidiary (but not an examination
in accordance with generally accepted auditing standards) which would
not necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of the
meetings of the shareholders and directors of the Company, and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest audited
financial statements, except as disclosed in the Registration
Statement and the Prospectus, nothing came to their attention which
caused them to believe that: (A) the amounts in "Summary Consolidated
Financial Information," and "Selected Consolidated Financial Data"
included in the Registration Statement and the Prospectus do not agree
with the corresponding amounts in the audited or unaudited
consolidated financial statements from which such amounts were
derived; or (B) during the period from May 31, 1997 to a specified
date not more than five days prior to the date of such letter there
was any change in the consolidated capital stock or consolidated debt
of the Company and its Subsidiaries, or any decrease in the
consolidated current assets or consolidated total assets or
consolidated shareholders' equity of the Company and its Subsidiaries,
each as compared with the amounts shown on the consolidation balance
sheet as of May 31, 1997 included in the Registration Statement, or
any decrease from June 1, 1997 to the specified date, on a
proportional basis with the fiscal quarter ended May 31, 1997, in net
sales, income from operations, income before income taxes, net income
or net income per share, except in all instances for changes,
decreases or increases which the Registration Statement and the
Prospectus disclose have occurred or may occur and except for such
other changes, decreases or increases which you shall in your sole
discretion accept.
(iv) they have performed certain other procedures as
may be permitted under generally acceptable auditing standards as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and specified by the
Representatives agrees with the accounting records of the Company and
the Subsidiaries; and
(v) based upon the procedures set forth in
clauses (ii) and (iii) above and a reading of the amounts included in
the Registration Statement under the headings "Summary Consolidated
Financial Information" and "Selected Consolidated Financial Data"
included in the Registration Statement and Prospectus and a reading of
the financial statements, from which certain of such data were
derived, nothing has come to their attention that gives them reason to
believe (A) that the "Summary Consolidated Financial Information" and
"Selected
17
Consolidated Financial Data" included in the Registration Statement
and Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the
Rules or (B) that the information set forth therein is not fairly
stated in relation to the financial statements included in the
Registration Statement or Prospectus from which certain of such data
were derived or is not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration
Statement and Prospectus.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the date
of the letter.
(h) The Representatives shall have received on each Closing
Date from Wilson, Sonsini, Xxxxxxxx & Xxxxxx, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date, and
stating in effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of California. The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which it
owns or leases properties, except for such jurisdictions where the
failure to so qualify would not have a Material Adverse Effect.
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and
conduct its business as now being conducted and as described in the
Registration Statement and the Prospectus and to enter into, deliver
and perform this Agreement and to issue and sell the Shares to be sold
by the Company hereunder.
(iii) The Company has authorized, issued and
outstanding capital stock as set forth in the Registration Statement
and the Prospectus under the caption "Capitalization;" the
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company; all of the
issued and outstanding shares of Common Stock of the Company have been
duly and validly authorized and issued and are fully paid and
nonassessable. There are no statutory preemptive or other similar
rights to subscribe for or to purchase or acquire any shares of Common
Stock of the Company or any such rights pursuant to the Company's
Articles of Incorporation or by-laws, each as amended to date, or any
agreement filed as an exhibit to the Registration Statement or, to
such counsel's knowledge, any other agreement. The Shares to be sold
by the Company hereunder when issued and sold pursuant to this
Agreement will be duly and validly authorized and issued, fully paid
and nonassessable and, to such counsel's knowledge, free and clear of
all security interests, liens, encumbrances, equities or claims. To
such counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus and for subsequent employee option grants
made in the ordinary course of business, there is no outstanding
option, warrant or other right calling for the issuance of, and no
18
commitment, plan or arrangement to issue, any share of stock of the
Company or any of its Subsidiaries, or any security convertible into,
exercisable for, or exchangeable for stock of the Company or any of
its Subsidiaries. The Common Stock and the Shares conform in all
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. The Company has a
sufficient number of authorized but unissued shares of Common Stock to
enable the Company to issue, without further shareholder action, all
the Shares to be sold by the Company.
(iv) Each of the Lock-Up Agreements executed by the
Company's shareholders, optionholders, directors and executive
officers has been duly and validly delivered by such persons and
constitutes the legal, valid and binding obligation of each such
person enforceable against each such person in accordance with its
terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
(v) To such counsel's knowledge, no holder of
securities of the Company has rights, which have not been waived, to
the registration of shares of Common Stock or other securities, as a
result of the filing of the Registration Statement by the Company or
the offering contemplated thereby.
(vi) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
by the Company and the sale of the Shares by the Selling Shareholders.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and this Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms except (A) as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles and
(B) to the extent that rights to indemnity or contribution under this
Agreement may be limited by Federal or state securities laws or the
public policy underlying the laws.
(vii) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will (A) give rise to
a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under (except those which have been
obtained), or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of
19
the Company pursuant to (i) the terms of any indenture, mortgage, deed
of trust, note or other agreement or instrument of which such counsel
is aware and to which the Company is a party or by which it or any of
its properties or businesses is bound or (ii) any franchise, license,
permit, judgment, decree, order, statute, rule or regulation of which
such counsel is aware or (B) violate any provision of the Articles of
Incorporation or by-laws of the Company, each as amended to date.
(viii) To such counsel's knowledge, no default exists,
and no event has occurred which with notice or lapse of time, or both,
would constitute a default, in the due performance and observance of
any term, covenant or condition by the Company of any indenture,
mortgage, deed of trust, note or any other agreement or instrument to
which the Company is a party or by which it or any of its assets or
properties or businesses may be bound or affected, where the
consequences of such default could have a Material and Adverse Effect.
(ix) To such counsel's knowledge, the Company is not
in violation of any term or provision of its Articles of Incorporation
or by-laws or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such violation
could have a Material Adverse Effect.
(x) No consent, approval, authorization or order of
any court or governmental or regulatory agency or body is required for
the execution, delivery or performance of this Agreement by the
Company or the consummation of the transactions contemplated hereby or
thereby, except such as have been obtained under the Securities Act
and such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
several Underwriters.
(xi) To such counsel's knowledge, there is no action,
suit or other proceeding or investigation before any court or
governmental agency or body, domestic or foreign, pending or
threatened against, or involving the assets, properties or businesses
of, the Company or its directors or officers which could have a
Material Adverse Effect or which is required to be described in the
Registration Statement which is not so described.
(xii) The statements in the Prospectus under the
caption "Description of Capital Stock," insofar as such statements
constitute a summary of documents referred to therein or matters of
law, are fair summaries in all material respects and accurately
present the information called for with respect to such documents and
matters. All documents, contracts and other agreements required to be
filed as exhibits to, or described in, the Registration Statement have
been so filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
(xiii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or supplement
thereto
20
(except for the financial statements and schedules and other financial
and statistical data derived therefrom or included therein or omitted
therefrom, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the
Securities Act and the Rules.
(xiv) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement of suspending or preventing the use of the
Prospectus has been issued and to such counsel's knowledge, no
proceedings for that purpose have been instituted or are threatened
under the Securities Act; any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules has been
made in the manner and within the time period required by such
Rule 424(b).
(xv) The registration of the Common Stock under
Section 12(g) of the Exchange Act has become effective.
(xvi) The Common Stock, including the Shares, has been
authorized for quotation on the Nasdaq National Market.
(xvii) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xviii) The Company is not an "investment company" or
an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the Company
and public officials and on the opinions of other counsel satisfactory to
the Representatives as to matters which are governed by laws other than the
laws of the State of California or the Federal laws of the United States;
provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions.
Copies of such certificates and other opinions shall be furnished to the
Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent public accountants of the Company, at which conferences the
contents of the Registration Statement and Prospectus and related matters
were discussed and that, although such counsel has not undertaken to
independently verify and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as specified in the
foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect
to the
21
financial statements and notes and schedules thereto and other financial
data, as to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements and notes and schedules thereto and
other financial data, as to which such counsel need make no statement) on
the date thereof contained or at any Closing Date contains any untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(i) The Representatives shall have received on each
Closing Date from Wilson, Sonsini, Xxxxxxxx & Xxxxxx, counsel for the
Selling Shareholders, an opinion addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) This Agreement has been duly and validly executed
and delivered by or on behalf of each of the Selling Shareholders.
(ii) This Agreement, the Custody Agreement, the Power
of Attorney and the Lock-Up Agreement each constitute the legal, valid
and binding obligation of each of the Selling Shareholders enforceable
in accordance with their respective terms except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal or state
securities laws or the public policy underlying such laws; and each
Selling Shareholder has full legal right, power and authority to enter
into this Agreement and to sell, transfer and deliver in the manner
provided in this Agreement, the Shares to be sold by such Selling
Shareholder hereunder.
(iii) To such counsel's knowledge, the transfer and
sale by each Selling Shareholder of the Shares to be sold by such
Selling Shareholders as contemplated by this Agreement do not give
rise to a right to terminate or accelerate the due date of any payment
due under, or conflict with or result in the breach of any term or
provision of, and will not conflict with, result in a breach of, or
constitute a default under any agreement or instrument to which the
Selling Shareholders are parties by which the Selling Shareholders or
any of their properties may be bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation.
(iv) All of the Selling Shareholders' rights in the
Shares to be sold by the Selling Shareholders pursuant to this
Agreement, have been transferred to the Underwriters who have
severally purchased such Shares pursuant to this Agreement, free and
clear of adverse claims, assuming for purposes of this opinion that
the Underwriters purchased the same in good faith
22
without notice of any adverse claims. All stock transfer and stamp
taxes which are required to be paid in connection with the sale of the
Shares by the Selling Shareholders have been paid.
(v) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or regulatory
agency, authority or body or financial institution is required in
connection with the performance of this Agreement by any of the
Selling Shareholders or the consummation of the transactions
contemplated hereby, including the delivery and sale of the Shares to
be delivered and sold by the Selling Shareholders, except such as may
be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the several
Underwriters.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of the Selling Shareholders and on the
opinions of other counsel satisfactory to the Representatives as to matters
which are governed by laws other than the laws of the State of California
or the Federal laws of the United States; provided that such counsel shall
state that in their opinion the Underwriters and they are justified in
relying on such other opinions. Copies of such certificates and other
opinions shall be furnished to the Representatives and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent public accountants of the Company, at which conferences the
contents of the Registration Statement and the Prospectus and related
matters were discussed and that, although such counsel has not undertaken
to independently verify and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as specified in the
foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect
to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as amended or supplemented (except
with respect to the financial statements and notes and schedules thereto
and other financial data, as to which such counsel need make no statement)
on the date thereof contained or at any Closing Date contains any untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(j) The Representatives shall have received on each Closing
Date from Xxxxxxxx Law Office, counsel to Aehr Test Systems Japan (the
"Japanese Subsidiary"), an opinion, addressed to the Representatives and
dated such Closing Date, and stating in effect that:
23
(i) The Japanese Subsidiary has been duly organized
and is validly existing as a corporation in good standing under the
laws of Japan and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of
its assets or properties (owned, leased or licensed) or the nature of
its business makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets, properties, business, results
of operations, prospects or condition (financial or otherwise) of the
Japanese Subsidiary.
(ii) The Japanese Subsidiary has all requisite
corporate power and authority to own, lease and license its assets and
properties and to conduct its business as now being conducted and as
described in the Registration Statement and Prospectus.
(iii) All of the outstanding shares of capital stock of
the Japanese Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable and, except as otherwise
described in the Registration Statement and Prospectus are owned by
the Company (except for ____________________ shares which are held of
record by _________________________) and, to the knowledge of such
counsel, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue any shares of capital stock of the Japanese
Subsidiary or any security, convertible or exchangeable or exercisable
for capital stock of the Japanese Subsidiary.
(iv) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will (A) give rise to
a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under (except those which have been
obtained), or result in the execution or imposition of any lien,
charge or encumbrance upon any property or assets of the Japanese
Subsidiary pursuant to (i) the terms of any indenture, mortgage, deed
of trust, note or other agreement or instrument of which such counsel
is aware and to which the Japanese Subsidiary is a party by which it
or any of its properties or business is bound or (ii) any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
of which such counsel is aware or (B) violate any provision of the
charter or bylaws of the Japanese Subsidiary, each as amended to date.
(v) To such counsel's knowledge, no default exists,
and no event has occurred which with notice or lapse of time, or both,
would constitute a default, in the due performance and observance of
any term, covenant or condition by the Japanese Subsidiary of any
indenture, mortgage, deed of trust,
24
note or any other agreement or instrument to which the Japanese
Subsidiary is a party or by which it or any of its assets or
properties or businesses may be bound or effected, where the
consequences of such default could have a material and adverse effect
on the assets, properties, business, results of operations, prospects
or condition (financial or otherwise) of the Japanese Subsidiary.
(vi) To such counsel's knowledge, the Japanese
Subsidiary is not in violation of any term or provision of its charter
or bylaws or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation where the consequences of such violation
could have a material and adverse effect on the assets, properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Japanese Subsidiary.
(vii) To such counsel's knowledge, there is no action,
suit or other proceeding or investigation before any court or
governmental agency or body, domestic or foreign, pending or
threatened against, or involving the assets, properties or businesses
of the Japanese Subsidiary or its directors or officers which could
have a material adverse effect on the assets, properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Japanese Subsidiary.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the Japanese
Subsidiary and public officials and on the opinions of other counsel
satisfactory to the Representatives as to matters which are governed by
laws other than the laws of Japan; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on
such opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters.
(k) The Representatives shall have received on each Closing
Date from Xx. Xxxxxxx Xxxx and Xxxx Xxxx, counsel to Aehr Test Systems GmbH
(the "German Subsidiary"), an opinion, addressed to the Representatives and
dated such Closing Date, and stating in effect that:
(i) The German Subsidiary has been duly organized and
is validly existing as a corporation in good standing under the laws
of Germany and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of
its assets or properties (owned, leased or licensed) or the nature of
its business makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets, properties, business, results
of operations, prospects or condition (financial or otherwise) of the
German Subsidiary.
(ii) The German Subsidiary has all requisite corporate
power and authority to own, lease and license its assets and
properties and to
25
conduct its business as now being conducted and as described in the
Registration Statement and Prospectus.
(iii) All of the outstanding shares of capital stock of
the German Subsidiary have been duly and validly authorized and issued
and are fully paid and nonassessable and, except as otherwise
described in the Registration Statement and Prospectus are owned by
the Company (except for ____________________ shares which are held of
record by _________________________) and, to the knowledge of such
counsel, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue any shares of capital stock of the German
Subsidiary or any security, convertible or exchangeable or exercisable
for capital stock of the German Subsidiary.
(iv) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will (A) give rise to
a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under (except those which have been
obtained), or result in the execution or imposition of any lien,
charge or encumbrance upon any property or assets of the German
Subsidiary pursuant to (i) the terms of any indenture, mortgage, deed
of trust, note or other agreement or instrument of which such counsel
is aware and to which the German Subsidiary is a party by which it or
any of its properties or business is bound or (ii) any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
of which such counsel is aware or (B) violate any provision of the
charter or bylaws of the German Subsidiary, each as amended to date.
(v) To such counsel's knowledge, no default exists,
and no event has occurred which with notice or lapse of time, or both,
would constitute a default, in the due performance and observance of
any term, covenant or condition by the German Subsidiary of any
indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the German Subsidiary is a party or by which it or
any of its assets or properties or businesses may be bound or
effected, where the consequences of such default could have a material
and adverse effect on the assets, properties, business, results of
operations, prospects or condition (financial or otherwise) of the
German Subsidiary.
(vi) To such counsel's knowledge, the German
Subsidiary is not in violation of any term or provision of its charter
or bylaws or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation where the consequences of such violation
could have a material and adverse effect
26
on the assets, properties, business, results of operations, prospects
or condition (financial or otherwise) of the German Subsidiary.
(vii) To such counsel's knowledge, there is no action,
suit or other proceeding or investigation before any court or
governmental agency or body, domestic or foreign, pending or
threatened against, or involving the assets, properties or businesses
of the German Subsidiary or its directors or officers which could
have a material adverse effect on the assets, properties, business,
results of operations, prospects or condition (financial or otherwise)
of the German Subsidiary.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the German
Subsidiary and public officials and on the opinions of other counsel
satisfactory to the Representatives as to matters which are governed by
laws other than the laws of Japan; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on
such opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters.
(l) All proceedings taken in connection with the sale of
the Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives and
their counsel and the Underwriters shall have received from Xxxx Xxxx
Xxxx & Freidenrich, counsel for the Underwriters, an opinion, addressed to
the Representatives and dated such Closing Date, with respect to the
Shares, the Registration Statement and Prospectus, and such other related
matters, as the Representatives may reasonably request, and the Company
shall have furnished to Xxxx Xxxx Xxxx & Freidenrich such documents as they
may reasonably request for the purposes of enabling them to pass upon such
matters.
(m) The Representatives shall have received copies of the
Lock-Up Agreements executed by each entity or person described in
Section 4(n).
(n) The Company and the Selling Shareholders shall have
furnished or caused to be furnished to the Representatives such further
certificates and documents as the Representatives shall have reasonably
requested.
7. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
(a) The Company covenants and agrees with the several
Underwriters as follows:
(i) The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if
27
applicable, such earlier time as may be required by Rule 430(a)(3) or
Rule 434 under Securities Act.
(ii) The Company shall promptly advise the
Representatives (A) when any amendment to the Registration Statement
shall have become effective, (B) of any request by the Commission for
any amendment of the Registration Statement or the Prospectus or for
any additional information, (C) of the prevention or suspension of the
use of any preliminary prospectus or the Prospectus or of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening of any
proceeding for that purpose and (D) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a copy
for its review prior to filing and shall not file any such proposed
amendment or supplement to which the Representatives reasonably
object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Securities Act and the
Rules, any event occurs as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the
Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of this
Section 7(a) an amendment or supplements which shall correct such
statement or omission or an amendment which shall effect such
compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable,
but not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during which
the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement (which
need not be audited) of the Company, covering such 12-month period,
which shall satisfy the provisions of Section 11(a) of the Securities
Act or Rule 158 of the Rules.
(v) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable,
but not later than 45 days after the end of each fiscal quarter in
each fiscal year of the Company, a balance sheet of the Company as of
the end of such fiscal quarter and statements of operations and cash
flows of the Company for the portion of such fiscal year
28
ended the last day of such fiscal quarter, all in reasonable detail
and stating in comparative form the figures as of the corresponding
date and for the corresponding period in the previous fiscal year, all
such material to be prepared and certified by an authorized financial
officer of the Company.
(vi) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and,
so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and amendments thereof and
supplements thereto as the Representatives may reasonably request.
(vii) In the event it becomes necessary to qualify the
Shares for sale in various states, the Company shall cooperate with
the Representatives and their counsel in endeavoring to qualify the
Shares for offer and sale in connection with this offering under the
state Blue Sky laws of such jurisdictions as the Representatives may
designate and shall maintain such qualifications in effect so long as
required for the distribution of the Shares; provided, however, that
the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(viii) For a period of five years after the date of
this Agreement, the Company shall supply to the Representatives, and
to each other Underwriter who may so request in writing, copies of
such financial statements and other periodic and special reports as
the Company may from time to time distribute generally to the holders
of any class of its capital stock and to furnish to the
Representatives a copy of each annual or other report it shall be
required to file with the Commission (including the Report on Form SR
required by Rule 463 of the Rules).
(ix) Without the prior written consent of
Xxxxxxxxxxx & Co., Inc., for a period of 180 days after the date of
this Agreement, the Company shall not issue, sell or register (other
than on Form S-8 or on a successor form), or otherwise dispose of,
directly or indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable for
equity securities of the Company), except for the issuance of the
Shares pursuant to the Registration Statement and the issuance of
options pursuant to the Company's 1986 Incentive Stock Plan, 1996
Stock Option Plan, 1997 Employee Stock Purchase Plan and Employee
Stock Bonus Plan (collectively, the "Stock Option Plans") as described
in the Registration Statement and the Prospectus. In the event that
during this period, (A) any options are issued pursuant to the
Company's Stock Option Plans that are exercisable during such 180-day
period or
29
(B) any registration is effected on Form S-8 or on any successor form
relating to options that are exercisable during such 180-day period,
the Company shall obtain the written agreement of such grantee or
holder of such registered securities that, for a period of 180 days
after the date of this Agreement, such person will not, without the
prior written consent of Xxxxxxxxxxx & Co., Inc., offer for sale,
sell, distribute, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or exercise any registration
rights with respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by such person.
(x) On or before completion of this offering, the
Company shall make all filings required under applicable securities
laws and by the Nasdaq National Market (including any required
registration under the Exchange Act).
(xi) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of Proceeds"
in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Representatives and the Underwriters;
(iii) the registration or qualification of the Shares for offer and sale
under the securities or Blue Sky laws of the various jurisdictions referred
to in Section 7(a)(vii), including the reasonable fees and disbursements of
counsel for the Underwriters in connection with such registration and
qualification and the preparation, printing, distribution and shipment of
preliminary and supplementary Blue Sky memoranda; (iv) the furnishing
(including costs and shipping and mailing) to the Representatives and to
the Underwriters of copies of each preliminary prospectus, the Prospectus
and all amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be reasonably
requested for use in connection with the offering and the sale of the
Shares by the Underwriters or by dealers to whom Shares may be sold;
(v) the filing fees of the NASD in connection with its review of the terms
of the public offering and reasonably fees and disbursements of counsel for
the Underwriters in connection with such review; (vi) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of all reports and information required by
Section 7(a)(iv), (v) and (viii); (vii) the inclusion of the Shares for
quotation on the Nasdaq National Market; and (viii) all transfer taxes, if
any, with respect to the sale and delivery of the Shares by the Company to
the Underwriters. Subject to the provisions of Section 10, the
Underwriters agree to pay, whether or not the transactions contemplated
30
hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of
counsel for the Underwriters.
(c) Each Selling Shareholder covenants and agrees with the
Company that:
(i) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Internal Revenue
Code of 1986, as amended, such Selling Shareholder shall deliver to
you on or prior to each Closing Date a properly completed and executed
United States Treasury Department Form W-8 or Form W-9, as applicable
(or other applicable statement specified by Treasury Department
regulations in lieu thereof).
(ii) Such Selling Shareholder will not take, directly
or indirectly, any action designed to cause or result in the
stabilization or manipulation of the price of the Common Stock of the
Company.
(iii) Such Selling Shareholder will not, for a period
of 180 days from the date of this Agreement, without the prior written
consent of Xxxxxxxxxxx & Co., Inc. on behalf of the Underwriters,
sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by such Selling Shareholder.
8. INDEMNIFICATION.
(a) The Company and the Selling Shareholders agree, jointly
and severally, to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal or other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereof, or arise out of
or are based upon any omission to state therein 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; or (ii) any
breach of the representations and warranties set forth in Section 4 hereof,
provided, however, that such indemnity shall not inure to the benefit of
any Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages, or liabilities arising from the sale of the
Shares to any person by such
31
Underwriter if such untrue statement or omission or alleged untrue
statement or omission was made in such preliminary prospectus, the
Registration Statement or the Prospectus, or such amendment or supplement,
in reliance upon and in conformity with information furnished in writing to
the Company by the Representatives on behalf of any Underwriter
specifically for use therein. Notwithstanding the foregoing, the liability
of a Selling Shareholder pursuant to the provisions of this Section 8(a)
shall be limited to an amount equal to the aggregate net proceeds received
by such Selling Shareholder from the sale of the Shares sold by the Selling
Shareholder hereunder. This indemnity agreement will be in addition to any
liability which the Company and the Selling Shareholders may otherwise
have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Shareholders, each
person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each director of
the Company, and each officer of the Company who signs the Registration
Statement, to the same extent as the foregoing indemnity from the Company
or the Selling Shareholders to each Underwriter, but only insofar as such
losses, claims, damages or liabilities arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which
was made in any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, contained in
the last paragraph of the cover page, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus and the
statement contained under the caption "Underwriting" in the Prospectus;
provided, however, that the obligation of each Underwriter to indemnify the
Company or the Selling Shareholders (including any controlling person,
director or officer thereof), as the case may be, shall be limited to an
amount equal to the net proceeds received by the Company from such
Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all
papers served. No indemnification provided for in Section 8(a) or 8(b)
shall be available to any party who shall fail to give notice as provided
in this Section 8(c) if the party to whom notice was not given was unaware
of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified party,
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party, to such indemnified party of its election so to assume
the defense thereof and the approval by the indemnified party of such
counsel, the
32
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have reasonably concluded that there may be a conflict of
interest between the indemnifying parties and the indemnified party in the
conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party) or (iii) the indemnifying parties shall
not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its
written consent.
9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8(a) or 8(b) is due in accordance with its terms but for any reason is
held to be unavailable to or is insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b), then each indemnifying party shall contribute
to the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by any person
entitled hereunder to contribution from any persons who may be liable for
contribution) to which the indemnified party may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Shareholders on the one hand and the Underwriters on the other from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provide in Section 8 hereof, in such proportion as
is appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Shareholders and the Underwriters
shall be deemed to be in the same proportion as (1) the total proceeds from the
offering (net of underwriting discounts but before deducting expenses) received
by the Company or the Selling Shareholders, as set forth in the table on the
cover page of the Prospectus, bear to (2) the underwriting discounts received by
the Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company, the Selling Shareholders or the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact related to information supplied by
the Company, the Selling Shareholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the
33
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 9, (i) in no
case shall any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder; (ii) the Company shall be liable and responsible for any amount in
excess of such underwriting discount; and (iii) in no case shall a Selling
Shareholder be liable and responsible for any amount in excess of the aggregate
net proceeds of the sale of Shares received by the Selling Shareholder
hereunder; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company and the Selling Shareholders,
subject in each case to clauses (i) and (ii) in the immediately preceding
sentences of this Section 9. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
10. TERMINATION. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company and the Selling Shareholder at any time:
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares; (iv) if trading in the Shares has been suspended by the
Commission or trading generally on the New York Stock Exchange, Inc. or
Nasdaq has been suspended or limited, or minimum or maximum ranges for
prices for securities shall have been fixed, or maximum ranges for prices
for securities have been required, by said exchanges or by
34
order of the Commission, the NASD or any other governmental or regulatory
authority; or (v) if a banking moratorium has been declared by any state or
Federal authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 6 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
neither the Company nor the Selling Shareholders shall be under any liability to
any Underwriter, and no Underwriter shall be under any liability to the Company
or the Selling Shareholders, except that (A) if this Agreement is terminated by
the Representatives or the Underwriters because of any failure, refusal or
inability on the part of the Company or a Selling Shareholder to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in contemplation
of performing their obligations hereunder and (B) no Underwriter who shall have
failed or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Company, the Selling Shareholders or to the other Underwriters
for damages occasioned by its failure or refusal.
11. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 10) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10% of the
Shares that all the Underwriters are obligated to purchase on such Closing
Date, then each of the nondefaulting Underwriters shall be obligated to
purchase such Shares on the terms herein set forth in proportion to their
respective obligations hereunder; provided, that in no event shall the
maximum number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 11 by more than
one-ninth of such number of Shares without the written consent of such
Underwriter, or
(b) if the number of Shares to be purchase by the
defaulting Underwriters on such Closing Date shall exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing Date,
then the Company shall be entitled to an additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase
such Shares upon the terms set forth in this Agreement.
35
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company or the Selling
Shareholders, and without liability on the part of the Company or the Selling
Shareholders, except in both cases as provided in Sections 7(b), 8, 9 and 10.
The provisions of this Section shall not in any way affect the liability of any
defaulting Underwriter to the Company, the Selling Shareholders or the
nondefaulting Underwriters arising out of such default. A substitute
underwriter hereunder shall become an Underwriter for all purposes of this
Agreement.
12. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company of its officers, of
the Selling Shareholders and of the Underwriters set forth in or made pursuant
to this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or the
Selling Shareholders or any of the officers, directors or controlling persons
referred to in Sections 8 and 9 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 7(b), 8, 9 and 10 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o Oppenheimer & Co., Inc., Xxxxxxxxxxx
Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate
Department, with a copy to Xxxx Xxxx Xxxx & Freidenrich, 000 Xxxxxxxx Xxxxxx,
Xxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Esq. facsimile
000-000-0000; (b) if to the Company, to its agent for service as such agent's
address appears on the cover page of the Registration Statement, with a copy to
Wilson, Sonsini, Xxxxxxxx & Xxxxxx, Attention: Xxxxxxx X. Xxxxxxx, Esq.; and
(c) if to the Selling Shareholders, to Xxxx Xxxxxx, Aehr Test Systems, 0000
Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
36
This Agreement (including the Schedules and Exhibits hereto)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and supersedes all other agreements relating
to the subject matter hereof.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
37
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
AEHR TEST SYSTEMS
By
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chairman of the
Board of Directors
SELLING SHAREHOLDERS
By
-------------------------------------
Attorney-in-Fact
By
-------------------------------------
Attorney-in-Fact
Confirmed:
XXXXXXXXXXX & CO., INC.
XXXXXXX & COMPANY, INC.
Acting severally on behalf of
themselves and as representatives
of the several Underwriters named
in Schedule I annexed hereto.
By XXXXXXXXXXX & CO., INC.
By
---------------------------------
Name:
Title:
38
SCHEDULE I
Number of Firm
Number of Firm Shares to be
Shares to be Purchased from Total Number of
Purchased from the Selling Firm Shares to be
Name the Company Shareholders Purchased
----------------------- -------------- -------------- -----------------
Xxxxxxxxxxx & Co., Inc.
Xxxxxxx & Company, Inc.
-------------
Total 3,300,000
-------------
-------------
SCHEDULE II
SELLING SHAREHOLDERS
Number of Firm
Name Shares to be Sold
---------------------------------------- ---------------------------
-------------
Total 1,100,000
Number of Option
Name Shares to be Sold
---------------------------------------- ---------------------------
-------------
Total 495,000
SCHEDULE 4(e)
Aehr Test Systems Japan K.K.
Aehr Test Systems GmbH
Aehr Test Foreign Sales Corporation
