2,500,000 Shares
RCM TECHNOLOGIES, INC.
Common Stock
UNDERWRITING AGREEMENT
Philadelphia, Pennsylvania
, 1997
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XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXX XXXXXXXXXX XXXXX INC.
As Representatives of the Several
Underwriters Named in Schedule I
Hereto
c/x Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Dear Ladies and Gentlemen:
RCM Technologies, Inc., a Nevada corporation (the "Company"), proposes
to sell to Xxxx Xxxxx Xxxx Xxxxxx, Incorporated and Xxxxxx Xxxxxxxxxx Xxxxx,
Inc. (the "Representatives") and the several other underwriters named in
Schedule I hereto (collectively with the Representatives, the "Underwriters")
2,323,187 shares of the Company's common stock, par value $.05 per share
("Common Shares") and the selling shareholders of the Company named in Schedule
II hereto (collectively, the "Selling Shareholders") propose to sell severally
to the Underwriters an aggregate of 176,813 Common Shares. Such Common Shares to
be sold to the Underwriters by the Company and the Selling Shareholders are
hereinafter referred to as the "Firm Shares." The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Firm Shares shall be offered to the public
initially at a public offering price of $________ per Firm Share (the "Offering
Price").
In addition, solely to cover over-allotments in the sale of the Firm
Shares, the Underwriters may purchase for the Underwriters' own accounts,
ratably in proportion to the amounts set forth opposite their respective names
in Schedule I hereto, up to 375,000 additional Common Shares from the Company.
Such additional Common Shares are referred to herein as the "Optional Shares."
If any Optional Shares are purchased, the Optional Shares shall be purchased for
offering to the public at the Offering Price and in accordance with the terms
and
conditions set forth herein. The Firm Shares and the Optional Shares are
referred to collectively herein as the "Shares."
The Company and the Selling Shareholders, intending to be legally
bound, hereby confirm their respective agreements with the Underwriters, and
representations and warranties set forth below, as follows:
1. Representations and Warranties
(a) Representations and Warranties of the Company. The
Company, and each of the subsidiaries of the Company listed in Exhibit A hereto
(each a "Subsidiary" and collectively, the "Subsidiaries"), jointly and
severally represent and warrant to, and agree with, the several Underwriters
that:
(i) the Company has prepared, in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations (the "Regulations") of the Securities and Exchange
Commission (the "SEC") under the Act in effect at all applicable times, and has
filed with the SEC a registration statement on Form S-1 (File No. 333- ) for the
purpose of registering the Shares under the Act. Copies of such registration
statement and any amendments thereto, and all forms of the related prospectus
contained therein, have been delivered to the Representatives. Any preliminary
prospectus included in such registration statement or filed with the SEC
pursuant to Rule 424(a) of the Regulations is hereinafter called a "Preliminary
Prospectus." The various parts of such registration statement, including all
exhibits thereto and the information (if any) contained in the form of final
prospectus filed with the SEC pursuant to Rule 424(b) of the Regulations and
deemed by virtue of Rule 430A(b) of the Regulations to be part of the
registration statement at the time it was declared effective, each as amended at
the time the registration statement became effective, are hereinafter
collectively called the "Registration Statement." The final prospectus in the
form included in the Registration Statement or first filed with the SEC pursuant
to Rule 424(b) of the Regulations and any amendments or supplements thereto is
hereinafter called the "Prospectus";
(ii) the Registration Statement has become effective
under the Act and the SEC has not issued any stop order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of the Preliminary Prospectus, nor has the SEC instituted or threatened to
institute proceedings with respect to such an order. No stop order suspending
the sale of the Shares in any jurisdiction designated by the Representatives as
provided for in Section 5(f) hereof has been issued, and no proceedings for that
purpose have been instituted or threatened. The Company has complied in all
material respects with all requests of the SEC, or requests of which the Company
has been advised of any state securities commission in a state designated by the
Representatives as provided for in Section 5(f) hereof, for additional
information to be included in the Registration Statement, any Preliminary
Prospectus or the Prospectus. Each Preliminary Prospectus conformed to all the
requirements of the Act and the Regulations as of its date in all material
respects and did not as of its date contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein except the foregoing shall not apply to
statements in or omissions from any Preliminary Prospectus in reliance upon and
in conformity with information supplied to
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the Company in writing by or on behalf of any Underwriter through the
Representatives expressly for use therein. The Registration Statement, on the
date on which it is declared effective by the SEC (the "Effective Date") and
when any post-effective amendment thereof shall become effective, and the
Prospectus, at the time it is filed with the SEC pursuant to Rule 424(b) and on
the Closing Date (as defined in Section 3 hereof) and any Option Closing Date
(as defined in Section 4(b) hereof), will conform in all material respects to
all the requirements of the Act and the Regulations, and will not, on any of
such dates, include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information furnished to
the Company in writing by or on behalf of any Underwriter through the
Representatives expressly for use therein. The Company hereby acknowledges that
the two paragraphs appearing on the inside front cover of the Prospectus and the
allocation of Shares among the Underwriters, the dollar amounts of the
concessions in the paragraph that follows the tabular list of Underwriters and
the last five paragraphs appearing under the caption "Underwriting" constitute
the only statements in any Preliminary Prospectus, the Registration Statement or
the Prospectus made in reliance upon and in conformity with information
furnished by or on behalf of any Underwriter and that no statement was omitted
from any Preliminary Prospectus, the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished by or on behalf of
any Underwriter;
(iii) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with all necessary corporate power and authority, and all required licenses,
permits, clearances, certifications, registrations, approvals, consents and
franchises, to own or lease and operate its properties and to conduct its
business as described in the Prospectus, and to execute, deliver and perform
this Agreement; each of the Subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with all necessary corporate power and authority, and all
required licenses, permits, clearances, certifications, registrations,
approvals, consents and franchises, to own or lease and operate its properties
and to conduct its business as described in the Prospectus;
(iv) all of the outstanding shares of capital stock or
other evidence of ownership of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are owned by
the Company free and clear of all liens, encumbrances and security interests;
and no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in the Subsidiaries are outstanding;
(v) this Agreement has been duly authorized, executed
and delivered by the Company and each of the Subsidiaries and constitutes, with
respect to each, its legal, valid and binding obligation, enforceable against
the Company and each of the Subsidiaries in accordance with its terms, except as
such enforceability may be limited by equitable principles or by the application
of bankruptcy, insolvency or other similar laws relating to or affecting
creditor's rights generally, and except as rights to indemnity and contribution
hereunder may be limited by applicable securities laws;
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(vi) the execution, delivery and performance of this
Agreement by the Company and the Subsidiaries does not and will not, with or
without the giving of notice or the lapse of time, or both, (a) conflict with
any term or provision of the Company's or the Subsidiaries' Articles of
Incorporation or Bylaws (or any similar governing instruments); (b) result in a
breach of, constitute a default under, result in the termination or modification
of, result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the assets of the Company or any Subsidiary, or
require any payment by the Company or any Subsidiary or impose any liability on
the Company or any Subsidiary pursuant to any contract, indenture, mortgage,
deed of trust, commitment or other agreement or instrument to which the Company
or any Subsidiary is a party or by which any of the Company's or the
Subsidiaries' assets are bound or affected; (c) violate any law, rule,
regulation, judgment, order or decree of any government or governmental agency,
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of the Company's or the Subsidiaries'
properties or business; or (d) result in a breach, termination or lapse of the
Company's or the Subsidiaries' corporate power and authority to own or lease and
operate its assets and properties and conduct its business as described in the
Prospectus;
(vii) at the date or dates indicated in the Prospectus,
the Company had the duly authorized and outstanding capital stock set forth in
the Prospectus. On the Effective Date, the Closing Date and any Option Closing
Date, there will be no options or warrants for the purchase of, other
outstanding rights to purchase, agreements or obligations to issue or agreements
or other rights to convert or exchange any obligation or security into, capital
stock of the Company or securities convertible into or exchangeable for capital
stock of the Company, except as described in the Prospectus;
(viii) the authorized capital stock of the Company
conforms in all respects with the description thereof in the Prospectus;
(ix) the currently outstanding shares of the Company's
capital stock, including the shares to be purchased by the Underwriters from the
Selling Shareholders, have been duly authorized and are validly issued, fully
paid and non-assessable; and none of such outstanding shares of the Company's
capital stock has been issued in violation of any preemptive rights of any
security holder of the Company. The holders of the outstanding shares of the
Company's capital stock are not subject to personal liability solely by reason
of being such holders. The offers and sales of the outstanding shares of the
Company's capital stock, whether described in the Registration Statement or
otherwise, were made in conformity with applicable federal and state securities
laws;
(x) when the Shares have been duly delivered against
payment therefor as contemplated by this Agreement, the Shares will be validly
issued, fully paid and non-assessable. The certificates representing the Shares
are in proper legal form under, and conform in all respects to the requirements
of, the General Corporation Law of Nevada. Neither the filing of the
Registration Statement nor the offering or sale of Shares as contemplated by
this Agreement gives any security holder of the Company any rights for or
relating to the registration of any
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Common Shares or any other capital stock of the Company, except such as have
been satisfied or waived;
(xi) no consent, approval, authorization, order,
registration, license or permit of, or filing or registration with, any court,
government, governmental agency, instrumentality or other regulatory body or
official is required for the valid and legal execution, delivery and performance
by the Company and the Subsidiaries of this Agreement and the consummation of
the transactions contemplated hereby and described in the Prospectus, except
such as may be required for the registration of the Shares under the Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and for
compliance with the applicable state securities or Blue Sky laws;
(xii) the Common Shares (including the Shares) have
been approved for inclusion on the Nasdaq Stock Market's National Market upon
notice of issuance;
(xiii) to the knowledge of the Company and the
Subsidiaries, the statements in the Registration Statement and Prospectus,
insofar as they are descriptions of or references to contracts, agreements or
other documents, are accurate in all material respects and present or summarize
fairly, in all material respects, the information required to be disclosed under
the Act and/or the Regulations, and there are no contracts, agreements or other
documents required to be described or referred to in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement under the
Act or the Regulations that have not been so described, referred to or filed, as
required;
(xiv) the consolidated financial statements of the
Company (including the notes thereto) filed as part of any Preliminary
Prospectus, the Prospectus and the Registration Statement present fairly, in all
material respects, the consolidated financial position of the Company as of the
respective dates thereof, the consolidated results of operations, consolidated
cash flows and consolidated shareholders' equity of the Company for the periods
indicated therein, all in conformity with generally accepted accounting
principles. The supporting notes and schedules included in the Registration
Statement fairly state in all material respects the information required to be
stated therein in relation to the financial statements taken as a whole. The
financial information included in the Prospectus under the caption "Prospectus
Summary" and "Selected Consolidated Financial Data" (including pro forma and pro
forma as adjusted financial information) presents fairly the information shown
therein and has been compiled on a basis consistent with that of the
consolidated financial statements of the Company included in the Registration
Statement; and the unaudited pro forma financial information included in the
Registration Statement complies as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X under the Act
and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of this information;
(xv) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as otherwise
expressly stated therein, there has not been (a) any material adverse change
(including, whether or not insured against, any material loss or damage to any
material assets), or development involving a prospective material adverse
change, in the general affairs, properties, assets, management, condition
(financial or otherwise),
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results of operations, shareholders' equity, business or prospects of the
Company or the Subsidiaries taken as a whole, (b) any material adverse change,
loss, reduction, termination or nonrenewal of any contract to which the Company
or any Subsidiary is a party, (c) any transaction entered into by the Company or
any Subsidiary not in the ordinary course of its business that is material to
the Company and the Subsidiaries taken as a whole, (d) any dividend or
distribution of any kind declared, paid or made on its capital stock by the
Company or any Subsidiary, (e) any liabilities or other obligations, direct or
indirect, incurred by the Company or any Subsidiary that are material to the
Company and the Subsidiaries taken as a whole, (f) any change in the
capitalization or stock ownership of the Company or any Subsidiary or (g) any
change in the indebtedness of the Company or any Subsidiary that is material to
the Company and the Subsidiaries taken as a whole. Neither the Company nor any
Subsidiary has any contingent liabilities or obligations that are material to
the Company and the Subsidiaries taken as a whole and that are not disclosed in
the Prospectus;
(xvi) the Company has not distributed and will not
distribute any offering material in connection with the offering and sale of the
Shares other than the Registration Statement, a Preliminary Prospectus, the
Prospectus and other material, if any, to the extent permitted by the Act and
the Regulations. Neither the Company nor any of its officers, directors or
affiliates has taken nor shall the Company take any action designed to, or that
might be reasonably expected to cause or result in, stabilization or
manipulation of the price of the Common Shares to facilitate the sale of the
Shares;
(xvii) the Company and each Subsidiary has filed with the
appropriate federal, state and local governmental agencies, and all foreign
countries and political subdivisions thereof, all tax returns that are required
to be filed, or has duly obtained extensions of time for the filing thereof and
has paid all taxes shown on such returns or otherwise due and all assessments
received by it to the extent that the same have become due. Neither the Company
nor any Subsidiary has executed or filed with any taxing authority, foreign or
domestic, any agreement extending the period for assessment or collection of any
income or other tax and is not a party to any pending action or proceeding by
any foreign or domestic governmental agencies for the assessment or collection
of taxes, and no claims for assessment or collection of taxes have been asserted
against the Company or any Subsidiary that might materially adversely affect the
general affairs, assets, properties, condition (financial or otherwise), results
of operations, shareholders' equity, business or prospects of the Company or
such Subsidiary;
(xviii) Xxxxx Xxxxxxxx LLP, which has given its reports on
certain financial statements included as part of the Registration Statement, is
a firm of independent certified public accountants as required by the Act and
the Regulations;
(xix) neither the Company nor any Subsidiary is in
violation of or in default under any of the terms or provisions of (a) its
Articles or Certificate of Incorporation or Bylaws or similar governing
instruments, (b) any indenture, mortgage, deed of trust, contract, commitment or
other agreement or instrument to which it is a party or by which it or any of
its properties is bound or affected, (c) any law, rule, regulation, judgment,
order or decree of any government or governmental agency, instrumentality or
court, domestic or foreign, having jurisdiction over it or any of its properties
or business, or (d) any license, permit, certification, registration, approval,
consent or franchise referred to in Section l(a)(iii) hereof the violation of
which would have a material adverse effect on the Company and the Subsidiaries
taken as a whole;
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(xx) except as disclosed in the Prospectus, to the
knowledge of the Company and the Subsidiaries, there are no claims, actions,
suits, protests, proceedings, arbitrations, investigations or inquiries pending
before, or threatened or contemplated by, any governmental agency,
instrumentality, court or tribunal domestic or foreign, or before any private
arbitration tribunal, to which the Company or any Subsidiary is a party, that
could affect the validity of any of the outstanding Common Shares, or that,
except as disclosed in the Prospectus, if determined adversely to the Company or
any Subsidiary, would, in any case or in the aggregate, result in any material
adverse change in the general affairs, properties, condition (financial or
otherwise), results of operations, shareholders' equity, business or prospects
of the Company or the Subsidiaries taken as a whole; nor, to the Company's
knowledge, is there any reasonable basis for any such claim, action, suit,
protest, proceeding, arbitration, investigation or inquiry. Other than as
disclosed in the Prospectus, there are no outstanding orders, judgments or
decrees of any court, governmental agency, instrumentality or other tribunal,
enjoining the Company or any Subsidiary from, or requiring the Company or any
Subsidiary to take or refrain from taking, any action, or to which the Company
or any Subsidiary, their properties, assets or business are bound or subject;
(xxi) the Company and each of the Subsidiaries owns, or
possesses adequate rights to use, all patents, patent applications, trademarks,
trade names, service marks, licenses, inventions, copyrights, know-how, trade
secrets, confidential information, processes, procedures and formulations and
other proprietary information necessary for, used in or proposed to be used in
the conduct of its business as described in the Prospectus (collectively, the
"Intellectual Property"). To their knowledge, the Company and the Subsidiaries
have not infringed upon, are not infringing upon and have not received any
notice of conflict with, the asserted rights of others with respect to the
Intellectual Property, and the Company knows of no reasonable basis for any such
infringement or conflict;
(xxii) the Company and each Subsidiary has good and
marketable title to all property described in the Prospectus as being owned by
it, free and clear of all liens, security interests, charges or encumbrances,
except such as are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere in any
material respect with the use made, or proposed to be made, of such property by
the Company or Subsidiary. The Company and each Subsidiary has adequately
insured its property against loss or damage by fire or other casualty and
maintains, in amounts reasonably believed by it to be adequate, insurance
against such other risks as it deems appropriate. To the knowledge of the
Company and the Subsidiaries, all real and personal property leased by the
Company or any Subsidiary, as described or referred to in the Prospectus, is
held by the Company or such Subsidiary under valid leases. The executive offices
and all other facilities of the Company, owned or operated by the Company since
the inception of its business (the "Premises"), and all operations conducted
thereon, are now and, since the Company or any Subsidiary began to use such
Premises, always have been and prior to when the Company or the Subsidiaries
began to use such Premises, always had been, in compliance with all U.S. laws
concerning or related to industrial hygiene and the protection of health and the
environment, including all federal, state and local statutes, ordinances,
regulations and rules (collectively, the "Governmental Laws"), other than as
disclosed in the Prospectus. Other than as disclosed in the Prospectus, there
are no conditions on, about, beneath or arising from the Premises that might
give rise to liability, the imposition of a statutory lien or require a
"Response," "Removal" or "Remedial Action," as defined herein, under any of the
Governmental Laws. Other than as
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disclosed in the Prospectus, neither the Company nor any Subsidiary has received
notice, and there is no claim, demand, investigation, regulatory action, suit or
other action instituted or threatened against the Company or any Subsidiary or
any portion of the Premises relating to any of the Governmental Laws. Other than
as disclosed in the Prospectus, neither the Company nor any Subsidiary has
received any notice of violation, citation, complaint, order, directive, request
for information or response thereto, notice letter, demand letter or compliance
schedule to or from any governmental or regulatory agency arising out of or in
connection with "hazardous substances" (as defined by applicable environmental
laws) on, about, beneath, arising from or generated at the Premises. As used in
this subsection, the terms "Response," "Removal" and "Remedial Action" shall
have the respective meanings assigned to such terms under Sections
101(23)-101(25) of the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act,
42 U.S.C. 9601(23)-9601(25);
(xxiii) the Company and each Subsidiary maintains a system
of internal accounting controls sufficient to provide reasonable assurances
that: (a) transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary in order to
permit preparation of financial statements in accordance with generally accepted
accounting principles and statutory accounting practices and to maintain
accountability for assets; (c) access to assets is permitted only in accordance
with management's general or specific authorization; and (d) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(xxiv) each contract or other instrument (however
characterized or described) to which the Company or any Subsidiary is a party or
by which any of its properties or business is bound or affected and which is
material to the conduct of the Company's or any Subsidiary's business as
described in the Prospectus has been duly and validly executed by the Company or
such Subsidiary, and, to the knowledge of the Company, by the other parties
thereto. Each such contract or other instrument is in full force and effect and,
to the Company's knowledge, is enforceable against the parties thereto in
accordance with its terms, and the Company or the Subsidiaries are not, and no
other party is, in default thereunder, and no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a default under
any such contract or other instrument. All necessary consents under such
contracts or other instruments to disclosure in the Prospectus with respect
thereto have been obtained;
(xxv) except for such plans as are disclosed in the
Prospectus, the Company and the Subsidiaries do not have any employee benefit
plan, profit sharing plan, employee pension benefit plan or employee welfare
benefit plan or deferred compensation arrangements ("Plans") that are subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder ("ERISA"). All Plans that are
subject to ERISA are in compliance with ERISA, in all material respects, and, to
the extent required by the Internal Revenue Code of 1986, as amended (the
"Code"), in compliance with the Code in all material respects. Neither the
Company nor any Subsidiary has had any employee pension benefit plan that is
subject to Part 3 of Subtitle B of Title I of ERISA or any defined benefit plan
or multi-employer plan. The Company has not maintained retired life and retired
health insurance plans that are employee welfare benefit plans providing for
continuing benefit or
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coverage for any employee or any beneficiary of any employee after such
employee's termination of employment, except as required by Section 4980B of the
Code. No fiduciary or other party in interest with respect to any of the Plans
has caused any of such Plans to engage in a prohibited transaction as defined in
Section 406 of ERISA. As used in this subsection, the terms "defined benefit
plan," "employee benefit plan," "employee pension benefit plan," "employee
welfare benefit plan," "fiduciary" and "multi-employer plan" shall have the
respective meanings assigned to such terms in Section 3 of ERISA;
(xxvi) no labor dispute exists with the employees of the
Company or any Subsidiary, and, to the best of the Company's knowledge, no such
labor dispute is threatened. The Company has no knowledge of any existing or
threatened labor disturbance by the employees of any of the principal customers
of the Company or the Subsidiaries that would materially adversely affect the
general affairs, properties, condition (financial or otherwise), results of
operations, shareholders' equity, business or prospects of the Company or the
Subsidiaries taken as a whole;
(xxvii) neither the Company nor any Subsidiary has
incurred any liability for any finder's fees or similar payments in connection
with the transactions contemplated herein;
(xxviii) the Company and each Subsidiary currently
conducts its affairs in such a manner as to ensure that it will not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), and the rules and regulations thereunder;
(xxix) no statement, representation, warranty or covenant
made by the Company or any Subsidiary in this Agreement or in any certificate or
document required by this Agreement to be delivered to the Representatives is,
was when made, or as of the Closing Date or any Option Closing Date will be,
inaccurate, untrue or incorrect in any material respect. No transaction has
occurred or is proposed between or among the Company and any of its officers,
directors or shareholders or any affiliate of any such officer, director or
shareholder that is required to be described in and is not described in the
Registration Statement and the Prospectus;
(xxx) none of the Company, any Subsidiary or any officer,
director, employee, agent or other person acting on behalf of the Company or
such Subsidiary, has, directly or indirectly, given or agreed to give any money,
property or similar benefit or consideration to any customer (including any
employee or agent of any customer) or official or employee of any agency or
instrumentality of any government (foreign or domestic) or political party or
candidate for office (foreign or domestic) or any other person who was, is or in
the future may be in a position to affect the general affairs, properties,
condition (financial or otherwise), results of operations, shareholders' equity,
business or prospects of the Company and the Subsidiaries or any actual or
proposed business transaction of the Company or the Subsidiaries that (a) could
subject the Company or such Subsidiary to any liability (including, but not
limited to the payment of monetary damages) or penalty in any civil, criminal or
governmental action or proceeding, or (b) violates any law, rule or regulation
to which the Company or the Subsidiaries are subject;
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(xxxi) neither the Company nor any Subsidiary has
declared, paid or accrued any dividends or distributions to shareholders, and
will not hereafter declare, pay or accrue any such dividends or distributions
prior to the Closing Date or the Option Closing Date; and
(xxxii) none of the shareholders of the Company is
affiliated with any member of the National Association of Securities Dealers,
Inc. (the "NASD").
Any certificate signed by any officer of the Company or any
Subsidiary in such capacity and delivered to the Representatives or to counsel
for the Underwriters pursuant to this Agreement shall be deemed a representation
and warranty by the Company or such Subsidiary to the several Underwriters as to
the matters covered thereby.
(b) Representations and Warranties of the Selling
Shareholders. Each of the Selling Shareholders (except as expressly limited
below) represents and warrants to, and agrees with, the several Underwriters
that:
(i) such Selling Shareholder has duly
executed and delivered a power of attorney in the form contained in the Custody
Agreement (as defined below) appointing Xxxx Xxxxx as such Selling Shareholder's
attorney-in-fact (the "Attorney-in-Fact"); the Attorney-in-Fact is authorized
to execute, deliver and perform this Agreement on behalf of such Selling
Shareholder, including, without limitation, the authority to determine the
purchase price to be paid to each such Selling Shareholder by the Underwriters
as set forth in Section 2 of this Agreement, and in connection therewith such
Selling Shareholder has duly executed and delivered a Power of Attorney and
Custody Agreement (the "Custody Agreement"), in the form heretofore delivered to
the Representatives, with American Stock Transfer & Trust Company as custodian
(the "Custodian"). Certificates in negotiable form representing the Shares to be
sold by such Selling Shareholder hereunder have been or will be deposited with
the Custodian pursuant to the Custody Agreement for the purpose of delivery
pursuant to this Agreement. Such Selling Shareholder agrees that the Shares
represented by the certificates which are either on deposit or which will be on
deposit with the Custodian are subject to the interests of the Underwriters
hereunder, that the arrangements made for such custody and the appointment of
the Attorney-in-Fact are to that extent irrevocable, and that the obligations of
such Selling Shareholder hereunder shall not be terminated except as provided in
this Agreement or the Custody Agreement, by any act of such Selling Shareholder,
by operation of law or otherwise, whether, in the case of an individual Selling
Shareholder, by the death or incapacity of such Selling Shareholder, or by the
occurrence of any other event. If any individual Selling Shareholder should die
or become incapacitated, or if any other event should occur, before the delivery
of the Shares to be sold by such Selling Shareholder hereunder, the certificates
for such Shares shall be delivered by the Custodian in accordance with the terms
and conditions of this Agreement and the Custody Agreement as if such death,
incapacity, or other event had not occurred, regardless of whether or not the
Custodian or Attorney-in-Fact shall have received notice thereof;
(ii) such Selling Shareholder has the full
right, power and authority to enter into this Agreement and the Custody
Agreement and to sell, transfer and deliver the Shares to be sold by such
Selling Shareholder hereunder, and this Agreement and the Custody
-10-
Agreement have been duly authorized, executed and delivered by such Selling
Shareholder and constitute the legal, valid and binding obligations of such
Selling Shareholder enforceable in accordance with their respective terms,
subject to equitable principles. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and by the Custody
Agreement will not result in a violation or breach by such Selling Shareholder
of, or constitute a default by such Selling Shareholder under, any indenture,
mortgage, deed of trust, note, bank loan or credit agreement or any other
agreement or instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder is bound, any organizational document relating to such
Selling Shareholder (including, without limitation, any partnership agreement,
articles of incorporation, or bylaws), or any statute, judgment, decree, order,
rule or regulation of any court or governmental agency or body applicable to
such Selling Shareholder;
(iii) all authorizations, approvals and
consents necessary for the execution and delivery by such Selling Shareholder of
the Custody Agreement, the execution and delivery by or on behalf of such
Selling Shareholder of this Agreement, and the sale and delivery of the Shares
to be sold by such Selling Shareholder hereunder (other than such
authorizations, approvals or consents as may be necessary under the state
securities or Blue Sky laws), have been obtained and are in full force and
effect;
(iv) such Selling Shareholder now is, and on
the Closing Date will be, the lawful owner of the Shares to be sold by such
Selling Shareholder pursuant to this Agreement. On the Closing Date, such
Selling Shareholder will have valid and marketable title to such Shares, free
and clear of all liens, encumbrances, security, interests or other restrictions
(other than those created under the Custody Agreement); and upon proper delivery
of and payment for such Shares as provided herein, the Underwriters will acquire
valid and marketable title thereto, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, including any liability for
estate or inheritance taxes, or any liability to or claims of any creditor,
devisee, legatee or beneficiary of such Selling Shareholder;
(v) to the knowledge of such Selling
Shareholder, the representations and warranties of the Company contained in
Section l(a) hereof are true and correct; such Selling Shareholder has examined
the Registration Statement and the Prospectus and has no knowledge of any fact,
condition or information not disclosed therein which has adversely affected or
could adversely affect the general affairs, assets, properties, condition
(financial or otherwise), results of operations, shareholders' equity, business
or prospects of the Company or the Subsidiaries, taken as a whole; to the
knowledge of such Selling Shareholder after review of the Registration Statement
and Prospectus, neither the Registration Statement nor the Prospectus contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; and such Selling Shareholder is not prompted to sell the Shares to
be sold by such Selling Shareholder hereunder by any information concerning the
Company or any Subsidiary which is not set forth in the Prospectus;
(vi) such Selling Shareholder has examined
the Registration Statement and the Prospectus and the information relating to
such Selling Shareholder set forth therein and, as to such information, neither
the Registration Statement nor the Prospectus
-11-
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
such Selling Shareholder hereby acknowledges that the two paragraphs appearing
on the inside front cover of the Prospectus and the allocation of Shares among
the Underwriters, the dollar amounts of the concessions in the paragraph that
follows the tabular list of Underwriters and the last five paragrphs appearing
under the caption "Underwriting" constitute the only statements in any
Preliminary Prospectus, the Registration Statement or the Propsectus made in
reliance upon and in conformity with information furnished by or on behalf of
any Underwriter and that no statement was omitted from any Preliminary
Prospectus, the Registration Statement or the Propsectus in reliance upon and
in conformity with information furnished by or on behalf of any Underwriter;
(vii) such Selling Shareholder will comply in
all respects with the lock-up agreement executed by such Selling Shareholder in
favor of Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, as more fully described in
Paragraph 5(k) below;
(viii) such Selling Shareholder has not
incurred any liability for any finder's fee or similar payments in connection
with the sale of such Selling Shareholder's Shares hereunder; and
(ix) such Selling Shareholder (A) has not
distributed and will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, a
Preliminary Prospectus, the Prospectus and other material, if any, permitted by
the Act and the Regulations, and (B) has not taken and will not take any action
designed to, or that might be reasonably expected to cause or result in,
stabilization or manipulation of the price of the Shares.
2. Purchase and Sale of Firm Shares. On the basis of the
representations, warranties, covenants and agreements contained herein, but
subject to the terms and conditions set forth herein, (a) the Company shall sell
to the several Underwriters at the Offering Price, less the Underwriting
Discounts and Commissions in the amount of $_____ per Share, the respective
amounts of the Firm Shares set forth opposite their names on Schedule I hereto,
and the Underwriters, severally and not jointly, shall purchase from the Company
on a firm commitment basis, at the Offering Price, less the Underwriting
Discounts and Commissions in the amount of $_____ per Share, the respective
amounts of the Firm Shares set forth opposite their names on Schedule I hereto;
and (b) the Selling Shareholders shall sell to the several Underwriters at the
Offering Price, less the Underwriting Discounts and Commissions in the amount of
$______ per Share, the respective amounts of the Firm Shares set forth opposite
their names on Schedule II hereto, and the Underwriters, severally and not
jointly, shall purchase from the Selling Shareholders on a firm commitment
basis, at the Offering Price, less the Underwriting Discounts and Commissions in
the amount of $_____ per Share, the portion of the total Firm Shares listed on
Schedule II hereto that bears the same ratio as the amounts that the Firm Shares
set forth opposite their names on Schedule I hereto bears to the total Firm
Shares listed on such schedule. In making this Agreement, each Underwriter is
contracting severally, and not jointly, and except as provided in Sections 4 and
11 hereof, the agreement of each Underwriter is to purchase only
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that number of shares specified with respect to that Underwriter in Schedule I
hereto. The Underwriters shall offer the Shares to the public as set forth in
the Prospectus.
3. Payment and Delivery. Payment for the Firm Shares shall be
made by certified or official bank check payable to the order of (i) the Company
with respect to the Firm Shares sold by it and (ii) the Custodian with respect
to the Firm Shares sold by the Selling Shareholders, in New York Clearing House
or similar next day funds, at the offices of Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, or such other
place as shall be agreed upon by the Company and the Representatives, or in
immediately available funds wired to such accounts as the Company or the
Custodian may specify (with all costs and expenses incurred by the Underwriters
in connection with such settlement in immediately available funds, including,
but not limited to, interest or cost of funds and expenses, to be borne pro rata
by the Company and the Selling Shareholders), against delivery of the Firm
Shares to the Representatives at the offices of Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx for the respective
accounts of the Underwriters. Such payment and delivery will be made at
_____A.M., Philadelphia, Pennsylvania time, on the third business day after the
date of this Agreement or at such other time and date no later than three
business days thereafter as the Representatives and the Company shall agree
upon. Such time and date are referred to herein as the "Closing Date." The
certificates representing the Firm Shares to be sold and delivered will be in
such denominations and registered in such names as the Representatives request
not less than two full business days prior to the Closing Date, and will be made
available to the Representatives for inspection, checking and packaging at the
office of the Company's transfer agent not less than one full business day prior
to the Closing Date.
4. Option to Purchase Optional Shares.
(a) For the purposes of covering any over-allotments
in connection with the distribution and sale of the Firm Shares as contemplated
by the Prospectus, subject to the terms and conditions herein set forth, the
several Underwriters are hereby granted an option by the Company to purchase all
or any part of the Optional Shares (the "Over-allotment Option"). The purchase
price to be paid for the Optional Shares shall be the Offering Price less the
Underwriting Discounts and Commissions shown on the cover page of the
Prospectus. The Over-allotment Option granted hereby may be exercised by the
Representatives on behalf of the several Underwriters as to all or any part of
the Optional Shares at any time and from time to time within 30 days after the
date of the Prospectus. No Underwriter shall be under any obligation to purchase
any Optional Shares prior to an exercise of the Over-allotment Option.
(b) The Over-allotment Option granted hereby may
be exercised by the Representatives on behalf of the several Underwriters by
giving notice to the Company by a letter sent by registered or certified mail,
postage prepaid, telex, telegraph, telegram or facsimile (such notice to be
effective when received), addressed as provided in Section 13 hereof, setting
forth the number of Optional Shares to be purchased, the date and time for
delivery of and payment for the Optional Shares and stating that the Optional
Shares referred to therein are to be used for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares.
If such notice is given prior to the Closing Date, the date set forth therein
for such delivery and payment shall be the Closing Date. If such notice is given
on or after the Closing
-13-
Date, the date set forth therein for such delivery and payment shall be a date
selected by the Representatives that is within three full business days after
the exercise of the Over-allotment Option. The date and time set forth in such a
notice is referred to herein as an "Option Closing Date," and a closing held
pursuant to such a notice is referred to herein as an "Option Closing." Upon
each exercise of the Over-allotment Option, and on the basis of the
representations, warranties, covenants and agreements herein contained, and
subject to the terms and conditions herein set forth, the several Underwriters
shall become severally, but not jointly, obligated to purchase from the Company
the number of Optional Shares specified in each notice of exercise of the
Over-allotment Option.
(c) The number of Optional Shares to be sold to each
Underwriter pursuant to each exercise of the Over-allotment Option shall be the
number set forth opposite their names on Schedule I hereto. Notwithstanding the
foregoing, the number of Optional Shares purchased and sold pursuant to each
exercise of the Over-allotment Option shall be subject to such adjustment as the
Representatives may approve to eliminate fractional shares and subject to the
provisions for the allocation of Optional Shares purchased for the purpose of
covering over-allotments set forth in the agreement entered into by and among
the Underwriters in connection herewith (the "Agreement Among Underwriters").
(d) Payment for the Optional Shares shall be made to
the Company by certified or official bank check payable to the order of the
Company in New York Clearing House or similar next day funds at the offices of
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx, or such other place as shall be agreed upon by the Company and the
Representatives, or in immediately available funds wired to such account as the
Company may specify (with all costs and expenses incurred by the Underwriters in
connection with such settlement in immediately available funds, including, but
not limited to, interest or cost of funds and expenses, to be borne by the
Company), against delivery of the Optional Shares to the Representatives at the
offices of Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx, for the respective accounts of the Underwriters. The
certificates representing the Optional Shares to be issued and delivered will be
in such denominations and registered in such names as the Representatives
request not less than two full business days prior to the Option Closing Date,
and will be made available to the Representatives for inspection, checking and
packaging at the office of the Company's transfer agent not less than one full
business day prior to the Option Closing Date.
5. Certain Covenants and Agreements of the Company. The Company
covenants and agrees with the several Underwriters as follows:
(a) if Rule 430A of the Regulations is employed,
the Company will timely file the Prospectus pursuant to and in compliance with
Rule 424(b) of the Regulations and will advise the Representatives of the time
and manner of such filing;
(b) the Company will not file or publish any
amendment or supplement to the Registration Statement, any Preliminary
Prospectus or the Prospectus at any time before the completion of the
distribution of the Shares by the Underwriters that is not (i) in compliance
-14-
with the Regulations and (ii) approved by the Representatives (such approval
not to be unreasonably withheld or delayed);
(c) the Company will advise the Representatives
immediately, and confirm such advice in writing, (i) when any post-effective
amendment to the Registration Statement is filed with the SEC, (ii) of the
receipt of any comments from the SEC concerning the Registration Statement,
(iii) when any post-effective amendment to the Registration Statement becomes
effective, or when any supplement to the Prospectus or any amended Prospectus
has been filed, (iv) of any request of the SEC for amendment or supplementation
of the Registration Statement or Prospectus or for additional information, (v)
during the period when the Prospectus is required to be delivered under the Act
and Regulations, of the happening of any event as a result of which the
Registration Statement or the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, (vi) during the period noted in (v) above, of the need
to amend the Registration Statement or supplement the Prospectus to comply with
the Act, (vii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, and (viii)
of the suspension of the qualification of any of the Shares for offering or sale
in any jurisdiction in which the Underwriters intend to make such offers or
sales, or of the initiation or threatening of any proceedings for any of such
purposes known to the Company. The Company will use its best efforts to prevent
the issuance of any such stop order or of any order preventing or suspending
such use and, if any such order is issued, to obtain as soon as possible the
lifting thereof;
(d) the Company has delivered to the Representatives,
without charge, copies of each Preliminary Prospectus. The Company will deliver
to the Representatives, without charge, from time to time during the period when
delivery of the Prospectus is required under the Act, such number of copies of
the Prospectus (as supplemented or amended) as the Representatives may
reasonably request. The Company hereby consents to the use of such copies of the
Preliminary Prospectus and the Prospectus for purposes permitted by the Act, the
Regulations and the securities or Blue Sky laws of the states in which the
Shares are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. The Company has
furnished or will furnish to the Representatives six original signed copies of
the Registration Statement as originally filed and of all amendments and
supplements thereto, whether filed before or after the Effective Date, six
copies of all exhibits filed therewith and six signed copies of all consents and
certificates of experts, and will deliver to the Representatives such number of
conformed copies of the Registration Statement, including financial statements
and exhibits, and all amendments thereto, as the Representatives may reasonably
request;
(e) the Company will comply with the Act, the
Regulations, the Exchange Act and the rules and regulations thereunder so as to
permit the continuance of sales of and dealings in the Shares for as long as may
be necessary to complete the distribution of the Shares as contemplated hereby;
-15-
(f) the Company will furnish such information as may
be required and otherwise cooperate in the registration or qualification of the
Shares, or exemption therefrom, for offering and sale by the several
Underwriters and by dealers under the securities or Blue Sky laws of such
jurisdictions in which the Representatives determine to offer the Shares, after
consultation with the Company, and will file such consents to service of process
or other documents necessary or appropriate in order to effect such registration
or qualification; provided, however, that no such qualification shall be
required in any jurisdiction where, solely as a result thereof, the Company
would be subject to taxation or qualification as a foreign corporation doing
business in such jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject. The Company will, from time to time, prepare and file
such statements and reports as are or may be required to continue such
qualification in effect for so long a period as is required under the laws of
such jurisdictions for such offering and sale;
(g) subject to subsection 5(b) hereof, in case of
any event, at any time within the period during which, in the opinion of counsel
for the Underwriters, a prospectus is required to be delivered under the Act and
Regulations, as a result of which any Preliminary Prospectus or the Prospectus,
as then amended or supplemented, would contain an untrue statement of a material
fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, if it is necessary at any time to amend any Preliminary
Prospectus or the Prospectus to comply with the Act and Regulations or any
applicable securities or Blue Sky laws, the Company promptly will prepare and
file with the SEC, and any applicable state securities commission, an amendment,
supplement or document that will correct such statement or omission or effect
such compliance and will furnish to the several Underwriters such number of
copies of such amendment(s), supplement(s) or document(s) (in form and substance
satisfactory to the Representatives and counsel for the Underwriters) as the
Representatives may reasonably request. For purposes of this subsection (g), the
Company will provide such information to the Representatives, the Underwriters'
counsel and counsel to the Company as shall be necessary to enable such persons
to consult with the Company with respect to the need to amend or supplement the
Registration Statement, Preliminary Prospectus or Prospectus or file any
document, and shall furnish to the Representatives and the Underwriters' counsel
such further information as each may from time to time reasonably request;
(h) the Company will make generally available to its
security holders not later than 18 months after the Effective Date, an earnings
statement of the Company (which need not be audited unless required by the Act
or the Regulations) that shall comply with Section 11(a) of the Act and cover a
period of at least 12 consecutive months beginning not later than the first day
of the Company's fiscal quarter next following the Effective Date;
(i) for a period of five years following the
Effective Date, the Company will upon request furnish to the Representatives
copies of all materials furnished by the Company to its shareholders and all
public reports and all reports and financial statements furnished by the
-16-
Company to the SEC pursuant to the Exchange Act or any rule or regulation of
the SEC thereunder;
(j) during the course of the distribution of the
Shares, the Company will not take, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Shares;
(k) the Company has caused each person listed on
Schedule IV hereto to execute an agreement (a "Lock-up Agreement"), which
Lock-up Agreement shall be in form and substance satisfactory to the
Representatives and the Underwriters' counsel providing that (i) for a period of
180 days after the Effective Date, they will not, without the prior written
consent of the Representatives, directly or indirectly offer to sell, sell,
contract to sell or otherwise transfer or dispose of any Common Shares, any
options or warrants to purchase Common Shares, or any securities convertible
into or exercisable for any Common Shares owned by them or with respect to which
they have the power of disposition and (ii) from the date of such Lock-up
Agreement for a period of 180 days after the Effective Date, they will not
exercise any demand, mandatory, piggyback, optional or any other registration
rights with respect to Common Shares. The Company has delivered such agreements
to the Representatives prior to the date of this Agreement. Appropriate stop
transfer instructions will be issued by the Company to the transfer agent for
the Common Shares;
(l) for a period of three years following the
Effective Date, the Company will not engage in any transaction with affiliates
(as defined in the Regulations) without the prior approval of a majority of the
members of its Board of Directors who do not have an interest in such
transaction other than in their capacity as directors of the Company;
(m) for a period of 180 days after the Effective
Date, the Company will not, without the prior written consent of the
Representatives, offer, sell, contract to sell or otherwise dispose of any
Common Shares or any securities convertible into or exercisable for any Common
Shares or grant options to purchase any Common Shares other than with respect to
issuances in connection with mergers, acquisitions or other similar business
combinations, or the grant of options under the 1986 Incentive Stock Option
Plan, the 1992 Incentive Stock Option Plan, the 1994 Non-Employee Directors
Stock Option Plan and the 1996 Executive Stock Plan which are not exercisable
within such 180-day period;
(n) the Company will cause the Common Shares
(including, without limitation, the Shares) to be included in the Nasdaq Stock
Market's National Market prior to the Closing Date; and
(o) the Company may extend the term of its Class C
Warrants to a date no later than December 31, 1997; provided, that the terms of
such Class C Warrants shall not, at any time, be amended further in any respect.
6. Payment of Fees and Expenses.
(a) Whether or not the transactions contemplated by
this Agreement are consummated and regardless of the reason this Agreement is
terminated, the Company will pay
-17-
or cause to be paid, and bear or cause to be borne, all costs and expenses
incident to the performance of the obligations of the Company and the Selling
Shareholders under this Agreement, including: (i) the fees and expenses of the
accountants and counsel for the Company incurred in the preparation of the
Registration Statement and any post-effective amendments thereto (including
financial statements and exhibits), Preliminary Prospectuses and the Prospectus
and any amendments or supplements thereto; (ii) printing and mailing expenses
associated with the Registration Statement and any post-effective amendments
thereto, any Preliminary Prospectus, the Prospectus, this Agreement, the
Agreement Among Underwriters, the Underwriters' Questionnaire submitted to each
of the Underwriters by Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, in connection
herewith, the power of attorney executed by each of the Underwriters in favor of
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, in connection herewith, the Selected
Dealer Agreement and related documents and the preliminary Blue Sky memorandum
relating to the offering prepared by Wolf, Block, Xxxxxx and Xxxxx-Xxxxx,
counsel to the Underwriters (collectively with any supplement thereto, the
"Preliminary Blue Sky Memorandum"); (iii) the costs (other than fees and
expenses of the Underwriters' counsel except in connection with Blue Sky and
NASD filings or exemptions as provided herein) incident to the authentication,
issuance, sale and delivery of the Shares to the Underwriters; (iv) the fees,
expenses and all other costs of qualifying the Shares for sale under the
securities or Blue Sky laws of those states in which the Shares are to be
offered or sold, including, without limitation, the fees and expenses of
Underwriters' counsel and such local counsel as may have been reasonably
required and retained for such purpose; (v) the fees, expenses and other costs
of, or incident to, securing any review or approvals by or from the NASD,
including the reasonable fees and expenses of the Underwriters' counsel; (vi)
the filing fees of the SEC; (vii) the cost of furnishing to the Underwriters
copies of the Registration Statement, each Preliminary Prospectus and the
Prospectus as herein provided; (viii) the Company's travel expenses in
connection with meetings with the brokerage community and institutional
investors; (ix) the costs and expenses associated with settlement in same day
funds (including, but not limited to, interest or cost of funds expenses), if
desired by the Company; (x) any fees or costs payable to the Nasdaq Stock Market
as a result of the offering; (xi) the cost of printing certificates for the
Shares; (xii) the cost and charges of any transfer agent; (xiii) the costs, up
to $25,000, of advertising the offering, including, without limitation, with
respect to the placement of "tombstone" advertisements in publications selected
by the Representatives; and (xiv) all other costs and expenses reasonably
incident to the performance of the Company's and the Selling Shareholders'
obligations hereunder that are not otherwise specifically provided for in this
Section 6(a); provided, however, that, except as specifically set forth in
Section 6(c) hereof, (A) the Underwriters shall be responsible for their
out-of-pocket expenses, including those associated with meetings with the
brokerage community and institutional investors, other than the Company's travel
expenses, and the fees and expenses of their counsel for other than Blue Sky and
NASD filings or exemptions, and (B) the Selling Shareholders shall be
responsible for any transfer or income taxes assessed with respect to the Shares
sold by the Selling Shareholders and any fees and expenses of the Selling
Shareholders' counsel and such other expenses as are agreed to by the Company
and the Selling Shareholders or as may be required by law or regulation.
(b) The Company shall pay as due any state
registration, qualification, notice and filing fees and any accountable
out-of-pocket disbursements in connection with such registration, qualification
or filing in the states in which the Representatives determine to offer or sell
the Shares.
-18-
7. Conditions of Underwriters' Obligations. The obligation of
each Underwriter to purchase and pay for the Firm Shares that it has agreed to
purchase hereunder on the Closing Date, and to purchase and pay for any Optional
Shares as to which it exercises its right to purchase under Section 4 on an
Option Closing Date, is subject at the date hereof, the Closing Date and any
Option Closing Date to the continuing accuracy and fulfillment of the
representations and warranties of the Company and the Selling Shareholders to
the performance by the Company of its covenants and obligations hereunder, and
to the following additional conditions:
(a) if required by the Regulations, the Prospectus
shall have been filed with the SEC pursuant to Rule 424(b) of the Regulations
within the applicable time period prescribed for such filing by the Regulations;
on or prior to the Closing Date or any Option Closing Date, as the case may be,
no stop order or other order preventing or suspending the effectiveness of the
Registration Statement or the sale of any of the Shares shall have been issued
under the Act or any state securities law and no proceedings for that purpose
shall have been initiated or shall be pending or, to the Representatives'
knowledge or the knowledge of the Company, shall be contemplated by the SEC or
by any authority in any jurisdiction designated by the Representatives pursuant
to Section 5(f) hereof; and any request on the part of the SEC for additional
information shall have been complied with to the reasonable satisfaction of
counsel for the Underwriters;
(b) all corporate proceedings and other matters
incident to the authorization, form and validity of this Agreement, the Shares
and the form of the Registration Statement and the Prospectus, and all other
legal matters relating to this Agreement and the transactions contemplated
hereby, shall be satisfactory in all respects to counsel to the Underwriters;
the Company and the Selling Shareholders shall have furnished to such counsel
all documents and information that they may reasonably request to enable them to
pass upon such matters; and the Representatives shall have received from the
Underwriters' counsel, Wolf, Block, Xxxxxx and Xxxxx-Xxxxx, an opinion, dated as
of the Closing Date and any Option Closing Date, as the case may be, and
addressed to the Representatives individually and as the
-19-
Representatives of the several Underwriters, which opinion shall be satisfactory
in all respects to the Representatives;
(c) the NASD shall have indicated that it has no
objection to the underwriting arrangements pertaining to the sale of any of the
Shares;
(d) the Representatives shall have received a copy
of an executed Lock-up Agreement from each person listed on Schedule IV hereto;
(e) the Representatives shall have received at or
prior to the Closing Date from the Underwriters' counsel a memorandum or
summary, in form and substance satisfactory to the Representatives, with respect
to the qualification for offering and sale by the Underwriters of the Shares
under the securities or Blue Sky laws of such jurisdictions designated by the
Representatives pursuant to Section 5(f) hereof;
(f) on the Closing Date and any Option Closing Date,
there shall have been delivered to the Representatives signed opinions of
Xxxxxxxx Ingersoll Professional Corporation, and _______________ counsel for the
Company and the Selling Shareholders, respectively, dated as of each such date
and addressed to the Representatives individually and as the Representatives of
the several Underwriters to the effect set forth in Exhibit B and Exhibit B-1
hereto, respectively, or as is otherwise reasonably satisfactory to the
Representatives;
(g) at the Closing Date and any Option Closing Date:
(i) the Registration Statement and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto shall contain all
statements that are required to be stated therein in accordance with the Act and
the Regulations and in all material respects shall conform to the requirements
of the Act and the Regulations, and neither the Registration Statement nor any
post-effective amendment thereto nor the Prospectus and any amendments or
supplements thereto shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) since the respective dates as
of which information is given in the Registration Statement and any
post-effective amendment thereto and the Prospectus and any amendments or
supplements thereto, there shall have been no material adverse change in the
properties, condition (financial or otherwise), results of operations,
shareholders' equity, business or management of the Company and the
Subsidiaries, taken as a whole, from that set forth therein, whether or not
arising in the ordinary course of business, other than as expressly referred to
in the Registration Statement or Prospectus; (iii) since the respective dates as
of which information is given in the Registration Statement and the Prospectus
or any amendment or supplement thereto, there shall have been no event or
transaction, contract or agreement entered into by the Company, other than in
the ordinary course of business and as set forth in the Registration Statement
or Prospectus, that has not been, but would be required to be, set forth in the
Registration Statement or Prospectus; (iv) since the respective dates as of
which information is given in the Registration Statement and any post-effective
amendment thereto and the Prospectus and any amendments or supplements thereto,
there shall have been no material adverse change, loss, reduction, termination
or non-renewal of any contract to which the Company or any Subsidiary is a
party; and (v) no action, suit or proceeding at law or in equity shall be
pending or threatened against the Company that
-20-
would be required to be set forth in the Prospectus, other than as set forth
therein, and no proceedings shall be pending or threatened against or directly
affecting the Company or any Subsidiary before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding would materially adversely affect the properties, condition
(financial or otherwise), results of operations, shareholders' equity, or
business of the Company or the Subsidiaries other than as expressly set forth in
the Prospectus;
(h) the Representatives shall have received at the
Closing Date and any Option Closing Date certificates of the Chief Executive
Officer and the Chief Financial Officer of the Company dated as of the date of
the Closing Date or Option Closing Date, as the case may be, and addressed to
the Representatives, individually and as the Representatives of the several
Underwriters, to the effect that (i) the signers of the certificate have read
this Agreement and the representations and warranties of the Company in this
Agreement are true and correct in all material respects, as if made at and as of
the Closing Date or the Option Closing Date, as the case may be, and the Company
has complied in all material respects with all the agreements, fulfilled in all
material respects all the covenants and satisfied all the conditions on its part
to be performed, fulfilled or satisfied at or prior to the Closing Date or the
Option Closing Date, as the case may be, and (ii) the signers of the certificate
have examined the Registration Statement and the Prospectus and any amendments
or supplements thereto and that the conditions set forth in Section 7(g) of this
Agreement have been satisfied;
(i) the Representatives shall have received at the
Closing Date certificates of or on behalf of the Selling Shareholders dated as
of the date of the Closing Date and addressed to the Representatives,
individually and as the Representatives of the several Underwriters, to the
effect that (i) the Selling Shareholders have read this Agreement and the
representations and warranties of the Selling Shareholders in this Agreement are
true and correct in all material respects, as if made at and as of the Closing
Date and (ii) the Selling Shareholders have examined the Registration Statement
and the Prospectus and any amendments or supplements thereto and that the
conditions set forth in Section 7(g) of this Agreement have been satisfied;
(j) at the time this Agreement is executed and at the
Closing Date and any Option Closing Date the Representatives shall have received
a letter addressed to the Representatives individually and as the
Representatives of the several Underwriters, and in form and substance
satisfactory to the Representatives and to Xxxxx Xxxxxxxx LLP in all respects
(including the non-material nature of the changes or decreases, if any, referred
to in clause (iii) below) from Xxxxx Xxxxxxxx LLP dated as of the date of this
Agreement, the Closing Date or the Option Closing Date, as the case may be:
(i) confirming that they are independent certified
public accountants within the meaning of the Act and the Regulations and stating
that the section of the Registration Statement under the caption "Experts" is
correct insofar as it relates to them;
(ii) stating that, in their opinion, the consolidated
financial statements, schedules and notes of the Company and the Subsidiaries
audited by them and included in the
-21-
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the Regulations;
(iii) stating that, on the basis of specified
procedures, which included the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial information, as
described in SAS No. 71, Interim Financial Information (with respect to the
latest unaudited consolidated financial statements of the Company included in
the Registration Statement), a reading of the latest available unaudited interim
consolidated financial statements of the Company (with an indication of the date
of the latest available unaudited interim financial statements), a reading of
the minutes of the meetings of the shareholders and the Boards of Directors of
the Company and the Subsidiaries, and audit and compensation committees of such
Boards, if any, and inquiries to certain officers and other employees of the
Company and the Subsidiaries responsible for financial and accounting matters,
nothing has come to their attention that caused them to believe that (A) the
unaudited consolidated financial statements of the Company included in the
Registration Statement, (1) do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Regulations, or
(2) any material modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted accounting
principles; (B) at the date of the latest available unaudited interim
consolidated financial statements of the Company and a specified date not more
than five business days prior to the date of such letter, there was any change
in the capital stock or debt of the Company or any decrease in net current
assets, total assets or shareholders' equity of the Company as compared with the
amounts shown in the _____________________________ consolidated balance sheet of
the Company included in the Registration Statement, or that for the periods from
________________ to the date of the latest available unaudited consolidated
financial statements of the Company and to a specified date not more than five
days prior to the date of the letter, there were any decreases, as compared to
the corresponding periods in the prior year, in net sales, or in total or per
share amounts of income before minority interest and change in accounting
principle or of net income, except in all instances for changes, decreases or
increases which the Registration Statement discloses have occurred or may occur
and except for such other changes, decreases or increases which the
Representatives shall in their sole discretion accept; or (C) the unaudited pro
forma financial statements included in the Registration Statement does not
comply as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X under the Act and that the pro
forma adjustments have not been properly applied to the historical amounts in
the compilation of those statements; and
(iv) stating that they have compared specific dollar
amounts, numbers of shares and other numerical data and financial information
set forth in the Registration Statement that have been specified by the
Representatives and that Xxxxx Xxxxxxxx LLP is willing to perform and report
upon prior to the date of this Agreement, to the extent that such information is
derived from the accounting records subject to the internal control structure,
policies and procedures of the Company's or the Subsidiaries' accounting
systems, or has been derived directly from such accounting records by analysis
or comparison or has been derived from other records and analysis maintained or
prepared by the Company or the Subsidiaries with the results obtained from the
application of readings, inquiries and other appropriate procedures (which
-22-
procedures do not constitute an audit in accordance with generally accepted
auditing standards) set forth in the letter, and found them to be in agreement;
(k) there shall have been duly tendered to the
Representatives for the respective accounts of the Underwriters certificates
representing all of the Shares to be purchased by the Underwriters on the
Closing Date or any Option Closing Date, as the case may be;
(l) at the Closing Date and any Option Closing Date,
the Representatives shall have been furnished such additional documents,
information and certificates as they shall have reasonably requested;
(m) the Common Shares (including, without limitation,
the Shares) shall be included in the Nasdaq Stock Market's National Market;
(n) the issuance and sale of the Shares shall be
legally permitted under applicable Blue Sky or state securities laws so long as
such sales are made in accordance with the Preliminary Blue Sky Memorandum; and
(o) all corporate and other proceedings and other
matters incident to the authorization, form and validity of this Agreement and
the form of the Registration Statement and Prospectus and all other legal
matters related to this Agreement and the transactions contemplated hereby,
shall be satisfactory in all respects to counsel to the Underwriters. The
Company and the Selling Shareholders shall have furnished to such counsel all
documents and information that they shall have reasonably requested to enable
them to pass upon such matters.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are satisfactory in
form and substance to the Representatives and Underwriters' counsel. The Company
and the Selling Shareholders shall furnish the Representatives with such
conformed copies of such opinions, certificates, letters and other documents as
they shall reasonably request. If any condition to the Underwriters' obligations
hereunder to be fulfilled prior to or at the Closing Date or any Option Closing
Date, as the case may be, is not fulfilled, the Representatives may on behalf of
the several Underwriters, terminate this Agreement with respect to the Closing
Date or such Option Closing Date, as applicable, or, if it so elects, waive any
such conditions which have not been fulfilled or extend the time for their
fulfillment. Any such termination shall be without liability of the Underwriters
to the Company or the Selling Shareholders.
8. Indemnification and Contribution.
(a) The Company and each Selling Shareholder,
severally and jointly, shall indemnify and hold harmless each Underwriter and
each person, if any, who controls each Underwriter within the meaning of the
Act, against any and all loss, liability, claim, damage and expense whatsoever,
including, but not limited to, any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever or in connection with any
investigation or inquiry of, or action or proceeding that may be brought
against, the respective indemnified parties, arising out
-23-
of or based upon any breach of representations and warranties made by the
Company or any such Selling Shareholder in this Agreement and any untrue
statements or alleged untrue statements of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, any
application or other document (in this Section 8 collectively called
"application") executed by the Company and based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify all or any part of the Shares under the securities laws thereof or filed
with the SEC or the NASD, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing indemnity:
(i) shall not, subject to the acknowledgment of the
Company in Section 1(a)(ii) hereof and the acknowledgment of the Selling
Shareholders in Section 1(b)(vi) hereof, apply in respect of any statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter or through the Representatives
expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment or supplement thereto, or in any application or in
any communication to the SEC, as the case may be; and
(ii) with respect to any Preliminary Prospectus,
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages, liabilities or expenses purchased the Shares
if, at or prior to the written confirmation of the sale of such Shares, a copy
of an amended Preliminary Prospectus or the Prospectus (or the Prospectus as
amended or supplemented) was delivered to such Underwriter but was not sent or
delivered to such person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the amended
Preliminary Prospectus or Prospectus (or the Prospectus as amended or
supplemented).
This indemnity agreement will be in addition to any
liability the Company and the Selling Shareholders may otherwise have.
(b) Each Underwriter, severally and not jointly,
shall indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company who shall have signed the
Registration Statement, each Selling Shareholder, and each other person, if any,
who controls the Company or a Selling Shareholder within the meaning of the Act
to the same extent as the foregoing indemnities from the Company and the Selling
Shareholders to the several Underwriters, but only with respect to any loss,
liability, claim, damage or expense resulting from statements or omissions, or
alleged statements or omissions, if any, made in any Preliminary Prospectus,
Registration Statement or Prospectus or any amendment or supplement thereof or
any application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter or through the Representatives with
respect to any Underwriter by or on behalf of such Underwriter expressly for use
in any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereof or any application, as the case may be. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
-24-
(c) If any action, inquiry, investigation or
proceeding is brought against any person in respect of which indemnity may be
sought pursuant to any of the two preceding paragraphs, such person (hereinafter
called the "indemnified party") shall, promptly after notification of, or
receipt of service of process for, such action, inquiry, investigation or
proceeding, notify in writing the party or parties against whom indemnification
is to be sought (hereinafter called the "indemnifying party") of the institution
of such action, inquiry, investigation or proceeding and the indemnifying party,
upon the request of the indemnified party, shall assume the defense of such
action, inquiry, investigation or proceeding, including the employment of
counsel (reasonably satisfactory to such indemnified party) and payment of
expenses. No indemnification provided for in this Section 8 shall be available
to any indemnified party who shall fail to give such notice if the indemnifying
party does not have knowledge of such action, inquiry, investigation or
proceeding, to the extent that such indemnifying party has been materially
prejudiced by the failure to give such notice, but the omission to so notify the
indemnifying party shall not relieve the indemnifying party otherwise than under
this Section 8. Such indemnified party or controlling person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless the employment of such counsel shall have been authorized in writing by
the indemnifying party in connection with the defense of such action. If such
indemnified party or parties shall have been advised by counsel that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties or that there may be legal defenses available
to such indemnified party or parties different from or in addition to those
available to the indemnifying party or parties, the indemnified party or parties
shall be entitled to select counsel (such counsel, "Separate Counsel") to
conduct the defense to the extent determined by such counsel to be necessary to
protect the interests of the indemnified party or parties and the reasonable
fees and expenses of such Separate Counsel shall be borne by the indemnifying
party; provided, however, that if the indemnified parties engage more than one
Separate Counsel, then the indemnifying party's liability with respect to such
Separate Counsel shall be limited, in the aggregate, to an amount equal to the
highest amount of reasonable fees and expenses charged or incurred by a single
Separate Counsel, which amount shall be divided among the indemnified parties on
a pro rata basis in accordance with the relative amounts of reasonable fees and
expenses of their respective Separate Counsel. Expenses covered by the
indemnification in this Section 8 shall be paid by the indemnifying party as
they are incurred by the indemnified party. Anything in this Section 8 to the
contrary notwithstanding, the indemnifying party shall not be liable for any
settlement of any such claim effected without its written consent.
(d) Each Selling Shareholder's aggregate liability
under this Section 8 shall be limited to an amount equal to the net proceeds
(before deducting expenses) received by such Selling Shareholder from the sale
of such Selling Shareholder's Shares pursuant to this Agreement.
(e) If the indemnification provided for in this
Section 8 is unavailable to, or insufficient to hold harmless an indemnified
party under Sections 8(a) or (b) hereof in respect of any losses, liabilities,
claims, damages or expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to therein, except by reason of the
provisos set forth in Section 8(a) hereof or the failure to give notice as
required in Section 8(c) hereof (provided that
-25-
the indemnifying party does not have knowledge of the action, inquiry,
investigation or proceeding and to the extent such party has been materially
prejudiced by the failure to give such notice), then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, liabilities, claims, damages or expenses (or actions,
inquiries, investigations or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company or
the Selling Shareholders on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company or each Selling
Shareholder on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, liabilities, claims
or reasonable expenses (or actions, inquiries, investigations or proceedings in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company or each Selling Shareholder on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company or each Selling Shareholder bears to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or a Selling Shareholder on the one hand or the Underwriters on the other hand
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 contributions pursuant to this
Section 8(e) were determined by pro rata allocation (even if the Selling
Shareholders or the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to above in this Section 8(e). The amount paid or
payable by an indemnified party as a result of the losses, liabilities, claims,
damages or reasonable expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to above in this Section 8(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(e), (i) the
provisions of the Agreement Among Underwriters shall govern contribution among
Underwriters, (ii) no Underwriter (except as provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, and (iii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their individual underwriting
obligations and not joint.
9. Representations and Agreements to Survive Delivery. Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Date
-26-
and any Option Closing Date; and such representations, warranties and agreements
of the Underwriters, the Company and the Selling Shareholders, including,
without limitation, the indemnity and contribution agreements contained in
Section 8 hereof and the agreements contained in Sections 6, 9, 10 and 13
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person,
and shall survive delivery of the Shares and termination of this Agreement,
whether before or after the Closing Date or any Option Closing Date.
10. Effective Date of This Agreement and Termination Hereof.
(a) This Agreement shall become effective at
_______ A.M., Philadelphia, Pennsylvania time, on the first business day
following the Effective Date or at the time of the public offering by the
Underwriters of the Shares, whichever is earlier, except that the provisions of
Sections 6, 8, 9, 10 and 13 hereof shall be effective upon execution hereof. The
time of the public offering, for the purpose of this Section 10, shall mean the
time when any of the Shares are first released by the Underwriters for offering
by dealers. The Representatives may prevent the provisions of this Agreement
(other than those contained in Sections 6, 8, 9, 10 and 13 hereof) from becoming
effective without liability of any party to any other party, except as noted
below, by giving the notice indicated in Section 10(c) hereof before the time
the other provisions of this Agreement become effective.
(b) The Representatives shall have the right to
terminate this Agreement at any time prior to the Closing Date as provided in
Sections 7 and 11 hereof or if any of the following have occurred:
(i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company or its Subsidiaries, or the earnings, business affairs, management or
business prospects of the Company or its Subsidiaries, whether or not arising in
the ordinary course of business, that would, in the Representatives' reasonable
judgment, make the offering or delivery of the Shares impracticable;
(ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic, political or financial
market conditions if the effect on the financial markets of the United States of
such outbreak, calamity, crisis or change is material and adverse and would, in
the Representatives' reasonable judgment, make the offering or delivery of the
Shares impracticable;
(iii) suspension of trading generally in securities
on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Stock
Market or the over-the-counter market or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities or the
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority that in the Representatives' reasonable
opinion materially and adversely affects trading on such exchange or the
over-the-counter market;
-27-
(iv) declaration of a banking moratorium by either
federal or Nevada state authorities;
(v) the taking of any action by any federal, state
or local government or agency in respect of its monetary or fiscal affairs that
in the Representatives' reasonable opinion has a material adverse effect on the
securities markets in the United States; or
(vi) trading in any securities of the Company shall
have been suspended or halted by the Nasdaq Stock Market or the SEC.
(c) If the Representatives elect to prevent this
Agreement from becoming effective or to terminate this Agreement as provided in
this Section 10, the Representatives shall notify the Company and the Selling
Shareholders thereof promptly by telephone, telex, telegraph, telegram or
facsimile, confirmed by letter.
11. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default
in its or their obligation to purchase Firm Shares or Optional Shares hereunder,
and if the Firm Shares or Optional Shares with respect to which such default
relates do not exceed the aggregate of 10% of the number of Firm Shares or
Optional Shares, as the case may be, that all Underwriters have agreed to
purchase hereunder, then such Firm Shares or Optional Shares to which the
default relates shall be purchased severally by the non-defaulting Underwriters
in proportion to their respective commitments hereunder.
(b) If such default relates to more than 10% of the
Firm Shares or Optional Shares, as the case may be, the Representatives may, in
their discretion, arrange for another party or parties (including a
non-defaulting Underwriter) to purchase such Firm Shares or Optional Shares to
which such default relates, on the terms contained herein. In the event that the
Representatives do not arrange for the purchase of the Firm Shares or Optional
Shares to which a default relates as provided in this Section 11, this Agreement
may be terminated by the Representatives or by the Company without liability on
the part of the several Underwriters (except as provided in Section 8 hereof) or
the Company (except as provided in Sections 6 and 8 hereof), but nothing herein
shall relieve a defaulting Underwriter of its liability, if any, to the other
several Underwriters and to the Company for damages occasioned by its default
hereunder.
(c) If the Firm Shares or Optional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, the
Representatives or the Company shall have the right to postpone the Closing Date
or any Option Closing Date, as the case may be, for a reasonable period but not
in any event exceeding seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus or in
any other documents and arrangements, and the Company agrees to file promptly
any amendment to the Registration Statement or supplement to the Prospectus that
in the opinion of counsel for the Underwriters may thereby be made necessary.
The terms "Underwriters" and "Underwriter" as used in this Agreement shall
include any party substituted under this Section 11 with like effect as if it
had
-28-
originally been a party to this Agreement with respect to such Firm Shares
and/or Optional Shares.
12. Notice. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, telexed, telegrammed, telegraphed or
telecopied and confirmed to such Underwriter, c/x Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention:
Xx. Xxxxxxxx Posner, with a copy to Wolf, Block, Xxxxxx and Xxxxx-Xxxxx, Twelfth
Floor Packard Building, S.E. Xxxxxx 00xx xxx Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000-0000, Attention: Xxxx X. Xxxxxxx, Esquire; if sent to the
Company shall be mailed, delivered, telexed, telegrammed, telegraphed or
telecopied and confirmed to RCM Technologies, Inc., 0000 XxXxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxx Xxxxxx, 00000-0000, Attention: Xxxx Xxxxx, with a copy to
Xxxxxxxx Xxxxxxxxx Professional Corporation, Eleven Penn Center, 14th Floor,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, 00000, Attention: Xxxxxxx X.
Xxxxx, Esquire; if sent to the Selling Shareholders shall be mailed, delivered,
telegrammed, telegraphed or telecopied and confirmed to (a) Limeport
Investments, LLC c/o Acquest International, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, (b) J. Xxxxxx Xxxxxxxx, 0000 Xxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, or (c) Xxxxx X. Xxxxxx, 0000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000, as applicable, with a copy to _______________
________________________________________.
13. Parties. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the several Underwriters, the Company, the
Selling Shareholders and the controlling persons, directors and officers
thereof, and their respective successors, assigns, heirs and legal
representatives, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provision herein contained. The terms "successors" and
"assigns" shall not include any purchaser of the Shares merely because of such
purchase.
In all dealings with the Company and the Selling Shareholders
under this Agreement, the Representatives shall act on behalf of each of the
several Underwriters, and the Company and the Selling Shareholders shall be
entitled to act and rely upon any statement, request, notice or agreement made
or given by the Representatives jointly or by Xxxxxx Xxxxxxxxxx Xxxxx Inc. on
behalf of the Representatives.
14. Definition of Business Day. For purposes of this Agreement,
"business day" means any day on which the Nasdaq National Market, or to the
extent that the Common Shares are included in the Nasdaq SmallCap Market, the
Nasdaq SmallCap Market, is opened for trading.
15. Counterparts. This Agreement may be executed in one or more
counterparts and all such counterparts will constitute one and the same
instrument.
16. Construction. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and performed entirely within such Commonwealth.
All references herein to the knowledge of the Company shall be deemed to include
the knowledge of each of the Subsidiaries.
-29-
If the foregoing correctly sets forth your understanding of
our agreement, please sign and return to the Company the enclosed duplicate
hereof, whereupon it will become a binding agreement in accordance with its
terms.
Very truly yours,
RCM TECHNOLOGIES, INC.
By:
------------------------------------
Xxxx Xxxxx
Chairman of the Board, Chief
Executive Officer and President
THE SELLING SHAREHOLDERS
By:
------------------------------------
Xxxx Xxxxx
Attorney-in-fact acting on behalf of
each of the Selling Shareholders
named in Schedule II hereto.
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXX XXXXXXXXXX XXXXX INC.
As Representatives of the Several Underwriters
named in Schedule I hereto
By: XXXX XXXXX XXXX XXXXXX, INCORPORATED
By:
--------------------------------------------
Authorized Representative
By: XXXXXX XXXXXXXXXX XXXXX INC.
By:
--------------------------------------------
Authorized Representative
-30-
JOINDER
Each of the subsidiaries, intending to be legally bound,
hereby joins this Agreement for purposes of Sections 1 and 9 hereof.
INTERTEC DESIGN, INC.
------------------------------------
By:
Title:
CATARACT, INC.
------------------------------------
By:
Title:
THE CONSORTIUM
------------------------------------
By:
Title:
THE CONSORTIUM OF MARYLAND, INC.
------------------------------------
By:
Title:
PROGRAMMING ALTERNATIVES OF
MINNESOTA, INC.
------------------------------------
By:
Title:
-31-
SCHEDULE I
Schedule of Underwriters
Number of Firm Number of
Shares to be Optional Shares
Underwriter Purchased to be Purchased
----------- ---------------- ---------------
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Baltimore, MD
Xxxxxx Xxxxxxxxxx Xxxxx, Inc.,
Philadelphia, PA
--------- -------
TOTAL 2,500,000 375,000
I-1
SCHEDULE II
Schedule of Selling Shareholders
Number of Firm
Selling Shareholder Shares to be Sold
------------------- -----------------
Limeport Investments, LLC 138,313
J. Xxxxxx Xxxxxxxx 1,500
Xxxxx X. Xxxxxx 2,500
Xxxxxx Xxxxxx 36,000
II-1
SCHEDULE III
Shareholder NASD Affiliations
III-1
SCHEDULE IV
List of Persons Who Are to Deliver Lock-Up
Agreements Called for Under Sections 5(k) and 7(d)
RCM Technologies, Inc.
Limeport Investments, LLC
Xxxx Xxxxx
Xxxxx X. Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxx, Xx.
IV-1
EXHIBIT A
Subsidiaries of the Company, Jurisdiction
of Incorporation and Percentage Ownership
Subsidiary Jurisdiction % Ownership
---------- ------------ -----------
Intertec Design, Inc. New York 100%
Cataract, Inc. Pennsylvania 100%
The Consortium New Jersey 100%
The Consortium of New Jersey 100%
Maryland, Inc.
Programming Alternatives Minnesota 100%
of Minnesota, Inc.
A-1
EXHIBIT B
Matters to be Covered in the Opinion of
Xxxxxxxx Xxxxxxxxx Professional Corporation
Counsel for the Company
(1) The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation with full power and authority to conduct all of the activities
conducted by it, own or lease all of the assets owned or leased by it, and
conduct its business all as described in the Registration Statement and the
Prospectus; and is duly licensed or qualified to do business and in good
standing as a United States foreign corporation in all jurisdictions in which
the nature of the activities conducted by it and/or the character of the assets
owned and leased by it makes such qualification or license necessary except
where the failure to be so qualified or licensed would not have a material
adverse effect on the Company and the Subsidiaries taken as a whole; and the
Subsidiaries are all wholly owned subsidiaries of the Company.
(2) No authorization, approval, consent or license of any
governmental or regulatory body, except as may be required under the Act or the
blue sky laws of the various jurisdictions, is required in connection with the
(A) authorization, issuance, transfer, sale or delivery of the Shares to be sold
by the Company; (B) execution, delivery and performance of this Agreement by the
Company or (C) taking of any action contemplated in the Underwriting Agreement
or in the Registration Statement or the Prospectus, or if so required, all such
authorizations, approvals, consents and licenses, specifying the same, have been
obtained and are in full force and effect and have been disclosed to the
Representatives.
(3) The Company has authorized and outstanding capital stock,
stock options and other derivative securities as set forth in the Registration
Statement and the Prospectus. The outstanding shares of the Common Stock have
been, and all of the Shares will be, upon sale or issuance and payment therefor,
duly authorized, validly issued, fully paid and nonassessable, are not subject
to preemptive rights and have not been issued in violation of any statutory
preemptive rights or similar contractual rights. The holders of shares of the
Common Stock are not and will not be subject to personal liability solely by
reason of being such holders. The issue and sale of the Shares by the Company
have been duly and validly authorized. The Common Stock has been duly authorized
for quotation in the Nasdaq National Market. All issuances and repurchases of
securities by the Company were exempt from, or complied in all material respects
with, the provisions of all applicable federal and state securities laws
relating to the registration of securities and all state corporate laws.
(4) No holder of any securities of the Company has the right
to require registration of shares of the Common Stock or other securities of the
Company other than such rights as have been duly waived. The description of the
Common Stock and the Shares contained in the Registration Statement and the
Prospectus conforms to the rights set forth in the instruments defining the same
and is in conformity with the requirements of the Act and the Regulations.
(5) The Company is not an "investment company" as defined in
Section 3(a) of the Investment Company Act and, if the Company conducts its
business as set forth in the
B-1
Registration Statement and the Prospectus, will not become an "investment
company" and will not be required to register under the Investment Company Act.
(6) The Company has full power and authority to enter into
this Agreement, and this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, except insofar as rights to
indemnity or contribution may be limited by applicable law or equitable
principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting
creditors' rights generally or by general equitable principles.
(7) Nothing has come to such counsel's attention to give such
counsel reason to believe that any of the representations and warranties of the
Company or the Selling Shareholders contained in this Agreement or in any
certificate or document contemplated under this Agreement to be delivered is not
true or correct or that any of the covenants and agreements contained in this
Agreement or in any such certificate or document to be performed on the part of
the Company or the Selling Shareholders or any of the respective conditions
contained in this Agreement or in any such certificate or document, or set forth
in the Registration Statement or the Prospectus, to be fulfilled or complied
with by the Company or the Selling Shareholders has not been or will not be duly
and timely performed, fulfilled or complied with in any material respect.
(8) The Registration Statement and the Prospectus, and each
amendment thereof or supplement thereto, comply as to form and substance with,
and are responsive in all material respects to, the requirements of the Act and
the Rules and Regulations (except that no opinion need be expressed as to
matters concerning financial statements and other financial data and related
notes, schedules and financial or statistical data contained in the Registration
Statement or the Prospectus).
(9) Such counsel has participated in the preparation of the
Registration Statement and the Prospectus and nothing has come to the attention
of such counsel to lead them to believe that, as of each of the Effective Date,
the Closing Date and any Option Closing Date, either the Registration Statement
or the Prospectus, or any amendment or supplement thereto, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (except
that no opinion need be expressed as to matters concerning financial statements
and other financial data and related notes, schedules and financial or
statistical data contained in the Registration Statement or the Prospectus).
(10) Such counsel has read all contracts specifically
enumerated in the Registration Statement and the Prospectus, and such contracts
are fairly summarized or described therein, conform in all material respects to
the descriptions thereof contained therein, and are filed as exhibits thereto,
if required, and there are no contracts or documents required to be so
summarized or disclosed or so filed which have not been so summarized or
disclosed or so filed.
B-2
(11) The Registration Statement has become effective under the
Act, and (A) no stop order suspending the effectiveness of the Registration
Statement has been issued and (B) to the best of such counsel's knowledge, no
proceedings for that purpose have been instituted or are threatened, pending or
contemplated. The opinion delivered at the Closing Date shall state that all
filings required by Rule 424 and Rule 430A of the Rules and Regulations have
been made, to the extent that such rules are utilized.
(12) The execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions herein contemplated
and the compliance with the terms of this Agreement do not and will not conflict
with or result in a breach of any of the terms or provisions of or violate or
constitute a default under, the Articles of Incorporation or Bylaws of the
Company, or any indenture, mortgage or other agreement or instrument to which
the Company is a party or by which the Company or any of its properties is
bound, or any existing statute, rule or regulation, or any judgment, order or
decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its properties.
(13) There are no legal proceedings pending or, to the
knowledge of such counsel, threatened against the Company which are required to
be disclosed in the Registration Statement, except as described therein. There
are no pending or, to the knowledge of such counsel, threatened actions, suits
or proceedings before any court or any governmental or regulatory authority
relating to any federal, state or local environmental laws, the ultimate
resolution of which actions, suits or proceedings would have a materially
adverse effect on the overall financial condition of the Company. The analyses,
conclusions and other disclosures in the Registration Statement under "Risk
Factors - Potential Claims Relating to Former Operation of California Facility,"
and in other portions of the Registration Statement which address such matter,
fully and fairly present, in the opinion of such counsel, the analyses,
conclusions and other disclosures described therein with respect to the matters
described therein.
In rendering such opinions, counsel for the Company may set forth that
as to certain matters of fact, such counsel is relying on one or more
certificates of public officials, governmental agencies or officers of the
Company. In addition, as to matters of law, counsel for the Company may rely as
to matters involving the application of laws other than the laws of the United
States, the laws of Pennsylvania, and jurisdictions in which they are admitted,
to the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
satisfactory to the Underwriters' counsel) of other counsel reasonably
acceptable to the Underwriters' counsel, familiar with the applicable laws,
provided that such counsel for the Company also shall state in its opinion that
it believes that both the Underwriters and it are justified in relying upon such
opinions of such local counsel.
Unless the context clearly indicates otherwise, the term "Company" as
used in this Exhibit, shall include the Subsidiaries. The opinion of counsel for
the Company shall include a statement to the effect that it may be relied upon
by counsel for the Underwriters in their opinion delivered to the Underwriters.
B-3
EXHIBIT B-1
Matters to be Covered in the Opinion of
Counsel to the Selling Shareholders
(1) Each Selling Shareholder has full power and authority to
enter into this Agreement and the Power of Attorney and Custody Agreement (the
"Custody Agreement"). All authorizations and consents necessary for the
execution and delivery of this Agreement and the Custody Agreement on behalf of
each Selling Shareholder have been given. The delivery of the Shares on behalf
of each Selling Shareholder pursuant to the terms of the Agreement and payment
therefor by the Underwriters will pass marketable title to the Shares to the
Underwriters and, to the best of such counsel's knowledge, will pass title to
the Shares free and clear of all liens, encumbrances and claims.
(2) Each of the Agreement and the Custody Agreement has been
duly authorized, executed and delivered by each Selling Shareholder, is a valid
and binding agreement of each Selling Shareholder and is enforceable against
each Selling Shareholder in accordance with the terms thereof except insofar as
rights to indemnity or contribution may be limited by applicable law or
equitable principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting
creditors' rights generally or by general equitable principles.
(3) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or regulatory body,
except as may be required under the Act or the blue sky laws of the various
jurisdictions, is required in connection with the authorization, issuance,
transfer, sale or delivery of the Shares by or on behalf of each Selling
Shareholder, in connection with the execution, delivery and performance of the
Agreement and the Custody Agreement by each Selling Shareholder or in connection
with the taking by or on behalf of each Selling Shareholder of any action
contemplated thereby or, if so required, all such
B-1-1
consents, approvals, authorizations and orders specifying the same have been
obtained and are in full force and effect, except such as have been obtained
under the Act or the Regulations.
(4) The execution and delivery of the Agreement and the
Custody Agreement by each Selling Shareholder, the consummation by each Selling
Shareholder of the transactions herein contemplated and the compliance by each
Selling Shareholder with the terms thereof do not and will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the assets
of any Selling Shareholder pursuant to the terms or provisions of, or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under or result in the acceleration of any obligation under, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which any Selling Shareholder is a
party or by which it or any of its properties is bound or affected, or any
statute, judgment, ruling, decree, order, rule or regulation of any court or
other governmental agency or body applicable to each Selling Shareholder.
(5) There are no transfer or similar taxes payable in
connection with the sale and delivery of the Shares by each Selling Shareholder
to the Underwriters, except as specified in such opinion.
B-1-2
