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EXHIBIT 1.1
1,900,000 SHARES*
APPLIED FILMS CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
November __, 1997
XXXXXXX & COMPANY, INC.
X.X. XXXXXXXX & CO.
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Applied Films Corporation, a Colorado corporation (the "Company"),
proposes to issue and sell 500,000 shares (the "Company Firm Shares") of the
Company's Common Stock, no par value per share (the "Common Stock"), and the
stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") propose to sell the number of shares set forth opposite their
name in Schedule II hereto for an aggregate of 1,400,000 shares (the "Selling
Stockholder Firm Shares") of Common Stock, in each case to you and to the
several other Underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company and certain of the Selling Stockholders have
also agreed to grant to you and the other Underwriters an option (the "Option")
to purchase up to an additional 285,000 shares of Common Stock, on the terms
and for the purposes set forth in Section 1(b) (the "Option Shares"). The
Company Firm Shares and the Selling Stockholder Firm Shares are referred to
collectively herein as the "Firm Shares," and the Firm Shares and the Option
Shares are referred to collectively herein as the "Shares."
The Company and each of the Selling Stockholders confirm as follows
their respective agreements with the Representatives and the several other
Underwriters.
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* Plus an option to purchase up to an additional 285,000 shares to cover
over-allotments.
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1. AGREEMENT TO SELL AND PURCHASE.
(A) On the basis of the representations, warranties and
agreements of the Company and the Selling Stockholders herein contained
and subject to all the terms and conditions of this Agreement, (i) the Company
agrees to issue and sell the Company Firm Shares to the several Underwriters,
(ii) each Selling Stockholder, severally and not jointly, agrees to sell to the
several Underwriters the respective number of Selling Stockholder Firm Shares
set forth opposite that Selling Stockholders' name on Schedule II hereto and
(iii) each of the Underwriters, severally and not jointly, agrees to purchase
from the Company and the Selling Stockholders the respective number of Firm
Shares set forth opposite that Underwriter's name in Schedule I hereto, at the
purchase price of $____ for each Firm Share. The number of Firm Shares to be
purchased by each Underwriter from the Company and each Selling Stockholder
shall be as nearly as practicable in the same proportion to the total number of
Firm Shares being sold by the Company and each Selling Stockholder as the
number of Firm Shares being purchased by each Underwriter bears to the total
number of Firm Shares to be sold hereunder.
(B) Subject to all the terms and conditions of this
Agreement, the Selling Stockholders grant the Option to the several
Underwriters to purchase, severally and not jointly, up to the maximum number
of Option Shares set forth in Schedule II hereto at the same price per share as
the Underwriters shall pay for the Firm Shares. The Option may be exercised
only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this Agreement upon
written or telegraphic notice (the "Option Shares Notice") by the
Representatives to the Company and the Selling Stockholders no later than 12:00
noon, New York City time, at least two and no more than five business days
before the date specified for closing in the Option Shares Notice (the "Option
Closing Date"), setting forth the aggregate number of Option Shares to be
purchased and the time and date for such purchase. On the Option Closing Date,
the Company and certain of the Selling Stockholders will sell to the
Underwriters the number of Option Shares set forth in the Option Shares Notice,
and each Underwriter will purchase such percentage of the Option Shares as is
equal to the percentage of Firm Shares that such Underwriter is purchasing, as
adjusted by the Representatives in such manner as they deem advisable to avoid
fractional shares.
2. DELIVERY AND PAYMENT. Delivery of the Firm Shares shall be
made to the Representatives for the accounts of the Underwriters against
payment of the purchase price by certified or official bank checks or by wire
transfers payable in same-day funds to the order of the Company for the Company
Firm Shares to be sold by it and to __________, as custodian for the Selling
Stockholders (the "Custodian") for the Firm Shares to be sold by the Selling
Stockholders at the office of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the third (or, if
the purchase price set forth in Section 1(b) hereof is determined after 4:30
p.m., Washington D.C. time, the fourth) business day following the commencement
of the offering contemplated by this Agreement, or at such time on such other
date, not later than seven business days after the date of this Agreement, as
may be agreed upon by the Company and the Representatives (such date is
hereinafter referred to as the "Closing Date").
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To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to
the respective Underwriters shall be borne by the Company. The Company will
pay and save each Underwriter and any subsequent holder of the Shares harmless
from any and all liabilities with respect to or resulting from any failure or
delay in paying Federal and state stamp and other transfer taxes, if any, which
may be payable or determined to be payable in connection with the original
issuance or sale to such Underwriter of the Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants and covenants to each Underwriter that:
(A) A registration statement (Registration No. 333-35331)
on Form S-1 relating to the Shares, including a preliminary prospectus and
such amendments to such registration statement as may have been required to the
date of this Agreement, has been prepared by the Company under the provisions
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (collectively referred to as the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has been
filed with the Commission. The term "preliminary prospectus" as used herein
means a preliminary prospectus as contemplated by Rule 430 or Rule 430A of the
Rules and Regulations included at any time as part of the registration
statement. Copies of such registration statement and amendments and of each
related preliminary prospectus have been delivered to the Representatives. If
such registration statement has not become effective, a further amendment to
such registration statement, including a form of final prospectus, necessary to
permit such registration statement to become effective will be filed promptly
by the Company with the Commission. If such registration statement has become
effective, a final prospectus containing information permitted to be omitted at
the time of effectiveness by Rule 430A of the Rules and Regulations will be
filed promptly by the Company with the Commission in accordance with Rule
424(b) of the Rules and Regulations. The term "Registration Statement" means
the registration statement as amended at the time it becomes or became
effective (the "Effective Date"), including financial statements and all
exhibits and any information deemed to be included by Rule 430A and includes
any registration statement relating to the offering contemplated by this
Agreement and filed pursuant to Rule 462(b) of the Rules and Regulations. The
term "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule
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424(b) of the Rules and Regulations or, if no such filing is required, the form
of final prospectus included in the Registration Statement at the Effective
Date.
(B) No order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission. On the Effective
Date, the date the Prospectus is first filed with the Commission pursuant to
Rule 424(b) (if required), at all times subsequent to and including the Closing
Date and, if later, the Option Closing Date and when any post-effective
amendment to the Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, the Registration
Statement and the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment or supplement thereto),
including the financial statements included in the Prospectus, did and will
comply with all applicable provisions of the Act and the Rules and Regulations
and will contain all statements required to be stated therein in accordance
with the Act and the Rules and Regulations. On the Effective Date and when any
post-effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement, the Prospectus or any such amendment or
supplement did or will contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. At the Effective Date, the date
the Prospectus or any amendment or supplement to the Prospectus is filed with
the Commission and at the Closing Date and, if later, the Option Closing Date,
the Prospectus did not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The foregoing representations and warranties in this Section 3(b) do not apply
to any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company acknowledges
that the statements set forth under the heading "Underwriting" in the
Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement.
(C) The Company does not own, and at the Closing Date and,
if later, the Option Closing Date, will not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any corporation, firm, partnership,
joint venture, association or other entity, other than the subsidiaries listed
in Exhibit 21 to the Registration Statement (the "Subsidiaries"). The Company
and each of its Subsidiaries is, and at the Closing Date and, if later, the
Option Closing Date, will be, a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation. The
Company and each of its Subsidiaries has, and at the Closing Date and, if
later, the Option Closing Date, will have, full power and authority to conduct
all the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is, and
at the Closing Date and, if later, the Option Closing Date, will be, duly
licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
license or qualification necessary, except to the extent that the
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failure to be so qualified or be in good standing would not materially and
adversely affect the Company or its business, properties, business prospects,
condition (financial or other) or results of operations. All of the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable, and owned
by the Company free and clear of all claims, liens, charges and encumbrances;
there are no securities outstanding that are convertible into or exercisable or
exchangeable for capital stock of any Subsidiary. The Company is not, and at
the Closing Date and, if later, the Option Closing Date, will not be, engaged
in any discussions or a party to any agreement or understanding, written or
oral, regarding the acquisition of an interest in any corporation, firm,
partnership, joint venture, association or other entity where such discussions,
agreements or understandings would require amendment to the Registration
Statement pursuant to applicable securities laws. Complete and correct copies
of the certificate of incorporation and of the by-laws of the Company and each
of its Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(D) All of the outstanding shares of capital stock of the
Company (including the Selling Stockholder Firm Shares to be sold by the Selling
Stockholders under this Agreement) have been duly authorized, validly issued
and are fully paid and nonassessable and were issued in compliance with all
applicable state and federal securities laws; the Company Firm Shares have been
duly authorized and when issued and paid for as contemplated herein will be
validly issued, fully paid and nonassessable; no preemptive or similar rights
exist with respect to any of the Shares or the issue and sale thereof. The
description of the capital stock of the Company in the Registration Statement
and the Prospectus is, and at the Closing Date and, if later, the Option
Closing Date, will be, complete and accurate in all respects. Except as set
forth in the Prospectus, the Company does not have outstanding, and at the
Closing Date and, if later, the Option Closing Date, will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of capital stock, or any such warrants, convertible
securities or obligations. No further approval or authority of stockholders or
the Board of Directors of the Company will be required for the transfer and
sale of the Selling Stockholder Firm Shares or the issuance and sale of the
Company Firm Shares as contemplated herein.
(E) The financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the financial condition
of the Company and its consolidated Subsidiaries as of the respective dates
thereof and the results of operations and cash flows of the Company and its
consolidated Subsidiaries for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. No other financial statements or schedules of the
Company are required by the Act or the Rules and Regulations to be included in
the Registration Statement or the Prospectus. Xxxxxx Xxxxxxxx LLP (the
"Accountants"), who have reported on such financial statements and schedules,
are independent accountants with respect to the Company as required by the Act
and the Rules and Regulations. The summary consolidated financial and
statistical data included in the
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Registration Statement present fairly the information shown therein and have
been compiled on a basis consistent with the financial statements presented
therein.
(F) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date and, if later, the Option Closing Date, except as set forth
in or contemplated by the Registration Statement and the Prospectus, (i) there
has not been and will not have been any change in the capitalization of the
Company (other than in connection with the exercise of options to purchase the
Company's Common Stock granted pursuant to the Company's stock option plans
from the shares reserved therefor as described in the Registration Statement),
or any material adverse change in the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company or
any of its Subsidiaries, arising for any reason whatsoever, (ii) neither the
Company nor any of its Subsidiaries has incurred nor will any of them incur,
except in the ordinary course of business as described in the Prospectus, any
material liabilities or obligations, direct or contingent, nor has the Company
or any of its Subsidiaries entered into nor will it enter into, except in the
ordinary course of business as described in the Prospectus, any material
transactions other than pursuant to this Agreement and the transactions
referred to herein and (iii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class of its
capital stock.
(G) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its business
in a manner that would cause it to become, an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(H) Except as set forth in the Registration Statement and
the Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company, and of
its Subsidiaries or any of its or their officers in their capacity as such, nor
any basis therefor, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might materially
and adversely affect the Company, any of its Subsidiaries or the business,
properties, business prospects, condition (financial or otherwise) or results
of operations of the Company or any of its Subsidiaries.
(I) The Company and each Subsidiary has, and at the Closing
Date and, if later, the Option Closing Date, will have, performed all the
obligations required to be performed by it, and is not, and at the Closing
Date, and, if later, the Option Closing Date, will not be, in default, under
any contract or other instrument to which it is a party or by which its
property is bound or affected, which default might materially and adversely
affect the Company or the business, properties, business prospects, condition
(financial or other) or results of operations of the Company or any of its
Subsidiaries. To the best knowledge of the Company, no other party under any
contract or other instrument to which it or any of its Subsidiaries is a party
is in default in any respect thereunder, which default might materially and
adversely affect the Company, any of its Subsidiaries or the business,
properties, business prospects, condition (financial or other) or
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results of operations of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is, and at the Closing Date and, if later,
the Option Closing Date, will be, in violation of any provision of its
certificate or articles of organization or by-laws or other organizational
documents.
(J) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required for the consummation by the Company of the transactions on its part
contemplated herein, except such as have been obtained under the Act or the
Rules and Regulations and such as may be required under state securities or
Blue Sky laws or the by-laws and rules of the National Association of
Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution by the Underwriters of the Shares.
(K) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with the terms
hereof. The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate or articles of
incorporation or by-laws of the Company or any of its Subsidiaries, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of its or their properties is bound or affected, or violate or conflict with
any judgment, ruling, decree, order, statute, rule or regulation of any court
or other governmental agency or body applicable to the business or properties
of the Company or any of its Subsidiaries.
(L) The Company or one of its Subsidiaries has good and
marketable title to all properties and assets described in the Prospectus as
owned by them, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company or its Subsidiaries. The Company or
its Subsidiaries has valid, existing and enforceable leases for the properties
described in the Prospectus as leased by them. The Company or one of its
Subsidiaries owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted, except where the
failure to so own or lease would not materially and adversely affect the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company or its Subsidiaries.
(M) There is no document or contract of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required. All such contracts to which the Company or any of its
Subsidiaries is a party have been duly authorized, executed and delivered by the
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Company or such Subsidiary, constitute valid and binding agreements of the
Company or such Subsidiary and are enforceable against and by the Company or
such Subsidiary in accordance with the terms thereof.
(N) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document
required by Section 6 of this Agreement to be delivered to the Representatives
was or will be, when made, inaccurate, untrue or incorrect.
(O) Neither the Company nor any of its directors, officers
or controlling persons has taken, directly or indirectly, any action designed,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(P) No holder of securities of the Company has rights to
the registration of any securities of the Company because of the filing of the
Registration Statement, which rights have not been waived by the holder thereof
as of the date hereof.
(Q) The Company has filed a registration statement pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to register the Common Stock, has filed an application to list
the Shares to be sold by the Company hereunder on the Nasdaq National Market
("NNM"), and has received notification that the listing has been approved,
subject to notice of issuance of such Shares.
(R) Except as disclosed in or specifically contemplated by
the Prospectus (i) the Company and its Subsidiaries have, or can acquire on
reasonable terms, sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct
their businesses as now conducted, (ii) the Company has no knowledge of any
infringement by it or any of its Subsidiaries of trademarks, trade name rights,
patent rights, copyrights, licenses, trade secrets or other similar rights of
others, where such infringement could have a material and adverse effect on the
Company, any of its Subsidiaries or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company or any of its Subsidiaries, and (iii) to the best of the Company's
knowledge, there is no claim being made against the Company or any of its
Subsidiaries or any employee of the Company or any of its Subsidiaries,
regarding trademark, trade name, patent, copyright, license, trade secret or
other infringement which could have a material and adverse effect on the
Company, any of its Subsidiaries or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company or any of its Subsidiaries.
(S) The Company and each of its Subsidiaries has filed all
federal, state, local and foreign income tax returns which have been required
to be filed and has paid all taxes and assessments received by it to the extent
that such taxes or assessments have become due. Neither the Company nor any of
its Subsidiaries has any tax deficiency which has been or, to the best
knowledge of the Company, might be asserted or threatened against it which
could have a
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material and adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company or
its Subsidiaries.
(T) The pro forma financial information set forth in the
Registration Statement reflects, subject to the limitations set forth in the
Registration Statement as to such pro forma financial information, the results
of operations of the Company and its consolidated Subsidiaries purported to be
shown thereby for the periods indicated and conforms to the requirements of
Regulation S-X of the Rules and Regulations.
(U) The Company or its Subsidiaries owns or possesses all
authorizations, approvals, orders, licenses, registrations, other certificates
and permits of and from all governmental regulatory officials and bodies,
necessary to conduct their respective businesses as contemplated in the
Prospectus, except where the failure to own or possess all such authorizations,
approvals, orders, licenses, registrations, other certificates and permits
would not materially and adversely affect the Company and its Subsidiaries
taken as a whole or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole. There is no proceeding pending or threatened (or
any basis therefor known to the Company) which may cause any such
authorization, approval, order, license, registration, certificate or permit to
be revoked, withdrawn, canceled, suspended or not renewed; and the Company and
each of its Subsidiaries is conducting its business in compliance with all
laws, rules and regulations applicable thereto (including, without limitation,
all applicable federal, state and local environmental laws and regulations)
except where such noncompliance would not materially and adversely affect the
Company, any of its Subsidiaries or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company or any of its Subsidiaries.
(V) The Company and each of its Subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for
its business, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and its Subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
(W) Neither the Company nor any of its Subsidiaries has
nor, to the best of the Company's knowledge, any of its or their respective
employees or agents at any time during the last five years (i) made any
unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(X) The Company and each of its Subsidiaries is in
compliance in all respects with all applicable Environmental Laws except
to the extent that any noncompliance would not have a material adverse effect
on the Company as the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole. Except as set forth in the Registration
Statement and Prospectus, neither the
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Company nor any of its Subsidiaries has received any notice or other
communication (in writing or otherwise) that alleges that the Company or any of
its Subsidiaries is not in compliance with any Environmental Law where such
noncompliance is required to be disclosed in the Registration Statement and the
Prospectus, and there are no circumstances that may prevent or interfere with
the Company's or any of its Subsidiaries' compliance with any Environmental Law
in the future. For purposes of this Section 3(x), "Environmental Law" means
any federal, state, local or foreign legal requirement relating to pollution or
protection of human health or the environment.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING
STOCKHOLDERS. Each Selling Stockholder, severally and not jointly, represents,
warrants and covenants to each Underwriter that:
(A) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of
this Agreement and the Power-of-Attorney and Custody Agreement (hereinafter
referred to as a "Custody Agreement") hereinafter referred to, and for the sale
and delivery of the Selling Stockholder Firm Shares to be sold by such Selling
Stockholder hereunder, have been obtained; and such Selling Stockholder has
full right, power and authority to enter into this Agreement and the Custody
Agreement, to make the representations, warranties and agreements hereunder and
thereunder, and to sell, assign, transfer and deliver the Shares to be sold by
such Selling Stockholder hereunder.
(B) Certificates in negotiable form representing all of the
Selling Stockholder Firm Shares to be sold by such Selling Stockholder have
been placed in custody under the Custody Agreement, in the form heretofore
furnished to you, duly executed and delivered by such Selling Stockholder to
the Custodian, and such Selling Stockholder has duly executed and delivered a
power-of-attorney, in the form heretofore furnished to you and included in the
Custody Agreement (the "Power-of-Attorney"), appointing [XXXXX XXX XXXXXXX] and
[XXXXXX XXXXXXX], and each of them, as such Selling Stockholder's
attorney-in-fact (the "Attorneys-in-Fact") with authority to execute and
deliver this Agreement on behalf of such Selling Stockholder, to determine
(subject to the provisions of the Custody Agreement) the purchase price to be
paid by the Underwriters to the Selling Stockholders as provided in Section 2
hereof, to authorize the delivery of the Selling Stockholder Firm Shares to be
sold by such Selling Stockholder hereunder and otherwise to act on behalf of
such Selling Stockholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement.
(C) Such Selling Stockholder specifically agrees that the
Selling Stockholder Firm Shares represented by the certificates held in custody
for such Selling Stockholder under the Custody Agreement are for the benefit of
and coupled with and subject to the interests of the Underwriters, the
Custodian, the Attorneys-in-Fact, each other Selling Stockholder and the
Company, that the arrangements made by such Selling Stockholder for such
custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power-of-Attorney, are to that extent irrevocable, and
that the obligations of such Selling Stockholder hereunder shall not be
terminated by operation of law, whether by the death, disability, incapacity,
liquidation or dissolution of any Selling Stockholder or by the occurrence of
any other event. If any individual
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Selling Stockholder or any executor or trustee for a Selling Stockholder should
die or become incapacitated, or if any Selling Stockholder that is an estate or
trust should be terminated, or if any Selling Stockholder that is a partnership
or corporation should be dissolved, or if any other such event should occur,
before the delivery of the Selling Stockholder Firm Shares hereunder,
certificates representing the Selling Stockholder Firm Shares shall be
delivered by or on behalf of the Selling Stockholders in accordance with the
terms and conditions of this Agreement and of the Custody Agreement, and
actions taken by the Attorneys-in-Fact pursuant to the Powers-of-Attorney shall
be as valid as if such death, incapacity, termination, dissolution or other
event had not occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such death,
incapacity, termination, dissolution or other event.
(D) This Agreement and the Custody Agreement have each been
duly authorized, executed and delivered by such Selling Stockholder and each
such document constitutes a valid and binding obligation of such Selling
Stockholder, enforceable in accordance with its terms.
(E) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required in connection with the sale of the Selling Stockholder Firm Shares by
such Selling Stockholder or the consummation by such Selling Stockholder of the
transactions on its part contemplated by this Agreement and the Custody
Agreement, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by such Selling
Stockholder.
(F) The sale of the Selling Stockholder Firm Shares and the
Option Shares to be sold by such Selling Stockholder hereunder and the
performance by such Selling Stockholder of this Agreement and the Custody
Agreement and the consummation of the transactions contemplated hereby
and thereby will not result in the creation or imposition of any lien, charge
or encumbrance upon any of the Shares 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, any voting trust agreement, contract or other
agreement or instrument, relating directly or indirectly to any of the Shares,
to which such Selling Stockholder is a party, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to such Selling Stockholder or, if
such Selling Stockholder is a corporation, partnership or other entity, the
organizational documents of such Selling Stockholder.
(G) Such Selling Stockholder has, and at the Closing Date
and, if later, the Option Closing Date, will have, good and marketable title
to the Selling Stockholder Firm Shares to be sold by such Selling Stockholder
hereunder, free and clear of all liens, encumbrances, equities or claims
whatsoever; and, upon delivery of such Selling Stockholder Firm Shares and
payment therefor pursuant hereto, good and valid title to such Selling
Stockholder Firm Shares, free and clear of all liens, encumbrances, equities or
claims whatsoever, will be delivered to the Underwriters.
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(H) On the Closing Date or, if later, the Option Closing
Date, all stock transfer or other taxes (other than income taxes) that are
required to be paid in connection with the sale and transfer of the Shares to
be sold by such Selling Stockholder to the several Underwriters hereunder will
have been fully paid or provided for by such Selling Stockholder and all laws
imposing such taxes will have been fully complied with.
(I) Other than as permitted by the Act and the Rules and
Regulations, such Selling Stockholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Stockholder has not taken and will not at any time take, directly or
indirectly, any action designed, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(J) All information with respect to such Selling
Stockholder contained in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement thereto complied or
will comply in all material respects with all applicable requirements of the
Act and the Rules and Regulations and does not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(K) Such Selling Stockholder has no knowledge of any
material fact or condition not set forth in the Registration Statement
or the Prospectus that has adversely affected, or may adversely affect, the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, and the sale of the
Shares proposed to be sold by such Selling Stockholder is not prompted by any
such knowledge, provided, however, that if such Selling Stockholder is named in
Schedule III hereto, such Selling Stockholder's representations in this section
4(k) shall be limited to the actual knowledge of such Selling Stockholder.
(L) Such Selling Stockholder has no reason to believe that
the representations and warranties of the Company contained in Section 3 hereof
are not true and correct.
(M) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder agrees to deliver to you prior to or at
the Closing Date a properly completed and executed United States Treasury
Department Form W 9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
5. AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. Each
of the Company and the Selling Stockholders respectively covenants and agrees
with the several Underwriters as follows:
(A) The Company will not, either prior to the Effective
Date or thereafter during such period as the Prospectus is required by law to
be delivered in connection with sales
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of the Shares by an Underwriter or dealer, file any amendment or supplement to
the Registration Statement or the Prospectus, unless a copy thereof shall first
have been submitted to the Representatives within a reasonable period of time
prior to the filing thereof and the Representatives shall not have objected
thereto in good faith.
(B) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify the Representatives
promptly, and will confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (iv) of the happening
of any event during the period mentioned in the second sentence of Section 5(e)
that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making
of any changes in the Registration Statement or the Prospectus in order to make
the statements therein, in the light of the circumstances in which they are
made, not misleading and (v) of receipt by the Company or any representative or
attorney of the Company of any other communication from the Commission relating
to the Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations, the
Company will comply with the provisions of and make all requisite filings with
the Commission pursuant to said Rule 430A and notify the Representatives
promptly of all such filings.
(C) The Company will furnish to each Representative,
without charge, one signed copy of each of the Registration Statement and
of any post-effective amendment thereto, including financial statements and
schedules, and all exhibits thereto and will furnish to the Representatives,
without charge, for transmittal to each of the other Underwriters, a copy of
the Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(D) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(E) On the Effective Date, and thereafter from time to
time, the Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus or any amendment or supplement thereto
as the Representatives may reasonably request. The Company consents to the use
of the Prospectus or any amendment or supplement thereto by the several
Underwriters and by all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur
which in the judgment of the Company or counsel to the Underwriters should be
set
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forth in the Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, the Company
will forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and will deliver to each of the Underwriters,
without charge, such number of copies of such supplement or amendment to the
Prospectus as the Representatives may reasonably request.
(F) Prior to any public offering of the Shares, the Company
will cooperate with the Representatives and counsel to the Underwriters in
connection with the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(G) The Company will, so long as required under the Rules
and Regulations, furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flow of the Company and
its consolidated Subsidiaries, if any, certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), consolidated summary
financial information of the Company and its Subsidiaries, if any, for such
quarter in reasonable detail.
(H) During the period of five years commencing on the
Effective Date, the Company will furnish to the Representatives and each
other Underwriter who may so request copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Representatives and each other Underwriter who may so request a
copy of each annual or other report it shall be required to file with the
Commission.
(I) The Company will make generally available to holders of
its securities as soon as may be practicable but in no event later than the
last day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).
(J) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, Xxxxxxxx
Corporation and, unless otherwise paid by Xxxxxxxx Corporation, the Company
will pay or reimburse if paid by the Representatives, in such proportions as
they may agree upon themselves, all costs and expenses incident to the
performance of the obligations of the Company and the Selling Stockholders
under this Agreement and in connection with the transactions contemplated
hereby, including but not limited to costs and expenses of or relating to (i)
the preparation, printing and filing of the
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Registration Statement and exhibits to it, each preliminary prospectus,
Prospectus and any amendment or supplement to the Registration Statement or
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement Among Underwriters,
any Selected Dealer Agreements, any Underwriters' Questionnaires, the Custody
Agreements, any Underwriters' Powers of Attorney, and any invitation letters to
prospective Underwriters, (iv) furnishing (including costs of shipping and
mailing) such copies of the Registration Statement, the Prospectus and any
preliminary prospectus, and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold, (v) the listing of the
Shares on the NNM, (vi) any filings required to be made by the Underwriters
with the NASD, and the fees, disbursements and other charges of counsel for the
Underwriters in connection therewith, (vii) the registration or qualification
of the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 5(f), including the fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (viii) fees, disbursements and other charges of
counsel to the Company (but not those of counsel for the Underwriters, except
as otherwise provided herein) and (ix) the transfer agent for the Shares. The
Underwriters may deem the Company to be the primary obligor with respect to all
costs, fees and expenses to be paid by the Company and by the Selling
Stockholders. The Selling Stockholders will pay (directly or by reimbursement)
all fees and expenses incident to the performance of their obligations under
this Agreement that are not otherwise specifically provided for herein,
including but not limited to any fees and expenses of counsel for such Selling
Stockholders, any fees and expenses of the Attorneys-in-Fact and the Custodian,
and all expenses and taxes incident to the sale and delivery of the Shares to
be sold by such Selling Stockholders to the Underwriters hereunder.
(K) The Company will not at any time, directly or
indirectly, take any action designed or which might reasonably be expected to
cause or result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(L) The Company will apply the net proceeds from the
offering and sale of the Shares to be sold by the Company in the manner set
forth in the Prospectus under "Use of Proceeds" and shall file such reports
with the Commission with respect to the sale of the Shares and the application
of the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(M) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, without the prior written consent of Xxxxxxx & Company, Inc., the
Company will not offer, sell, contract to sell, grant options to purchase or
otherwise dispose of any of the Company's equity securities of the Company or
any other securities convertible into or exchangeable with its Common Stock or
other equity security (other than pursuant to employee stock option plans or
the conversion of convertible securities or the exercise of warrants
outstanding on the date of this Agreement).
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(N) During the period of 180 days after the date of the
Prospectus, the Company will not, without the prior written consent of Xxxxxxx
& Company, Inc., grant options to purchase shares of Common Stock at a price
less than the initial public offering price.
(O) The Selling Stockholders will, and the Company will
cause each of its officers, directors and certain stockholders designated by
the Representatives to, enter into lock up agreements with the Representatives
to the effect that they will not, without the prior written consent of Xxxxxxx
& Company, Inc., sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to acquire such shares according to the form of Lock-up
Agreement set forth in Schedule IV hereto.
(P) The Company will not file with the Commission any
registration statement on Form S-8 relating to shares of its Common Stock prior
to 90 days after the effective date of the Registration Statement.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of each Underwriter hereunder are subject to the following
conditions:
(A) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m.,
New York City time, on the date of this Agreement or at such later date and
time as shall be consented to in writing by the Representatives and all filings
required by Rule 424 and Rule 430A of the Rules and Regulations shall have been
made.
(B) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Representatives and the
Representatives do not object thereto in good faith, and the Representatives
shall have received certificates, dated the Closing Date and, if later, the
Option Closing Date and signed by the Chief Executive Officer and the Chief
Financial Officer of the Company (who may, as to proceedings threatened, rely
upon the best of their information and belief), to the effect of clauses (i),
(ii) and (iii) of this paragraph.
(C) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not
have been a material adverse change in the general affairs, business, business
prospects, properties, management, condition (financial or otherwise) or
results of operations of the Company or any of its Subsidiaries, whether or not
arising from transactions in the ordinary course of business, in each case
other than as described in or contemplated by the Registration Statement and the
Prospectus, and (ii)
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the Company shall not have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not
described in the Registration Statement and the Prospectus, if in the judgment
of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(D) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have
been no litigation or other proceeding instituted against the Company, any of
its Subsidiaries, or any of its or their officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would, in the judgment of the Representatives, materially and adversely
affect the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company or any of its Subsidiaries.
(E) Each of the representations and warranties of the
Company and the Selling Stockholders contained herein shall be true and correct
in all material respects at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, and all covenants and agreements contained
herein to be performed on the part of the Company or the Selling Stockholders
and all conditions contained herein to be fulfilled or complied with by the
Company or the Selling Stockholders at or prior to the Closing Date and, with
respect to the Option Shares, at or prior to the Option Closing Date, shall
have been duly performed, fulfilled or complied with.
(F) The Representatives shall have received an opinion,
dated the Closing Date and, with respect to the Option Shares, the Option
Closing Date, satisfactory in form and substance to the Representatives and
counsel for the Underwriters from Varnum, Riddering, Xxxxxxx & Xxxxxxx LLP,
counsel to the Company and the Selling Stockholders, with respect to the
following matters:
(I) Each of The Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; has full corporate power and
authority to conduct all the activities conducted by it, to own or lease all
the assets owed or leased by it and to conduct its business as described in the
Registration Statement and Prospectus; and is duly licensed or qualified to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such license or qualification necessary
except to the extent that the failure to be so licensed or qualified would not
have a material and adverse effect on the business or financial condition of
the Company.
(II) All of the outstanding shares of capital stock
of the Company (including the Selling Stockholder Shares) have been duly
authorized, validly issued and are fully paid and nonassessable, to such
counsel's knowledge, were issued pursuant to exemptions
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from the registration and qualification requirements of federal and applicable
state securities laws, and were not issued in violation of or subject to any
preemptive or similar rights under the Articles of Incorporation or By-Laws of
the Company or any statute or under any agreement known to such counsel;
(III) The specimen certificate evidencing the Common
Stock filed as an exhibit to the Registration Statement is in due and proper
form under Colorado law, the Shares to be sold by the Company hereunder have
been duly authorized and, when issued and paid for as contemplated by this
Agreement, will be validly issued, fully paid and nonassessable; and no
preemptive or similar rights exist with respect to any of the Shares or the
issue and sale thereof under the Articles of Incorporation or By-Laws of the
Company or any statute or under any agreement known to such counsel.
(IV) All of the outstanding shares of capital stock
of each Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable, and owned by the Company free and clear of all
claims, liens, charges and encumbrances; to such counsel's knowledge, there are
no securities outstanding that are convertible into or exercisable or
exchangeable for capital stock of any Subsidiary.
(V) The authorized and outstanding capital stock of
the Company is as set forth in the Registration Statement and the Prospectus
in the column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements, employee benefit plans or the exercise of convertible
securities, options or warrants referred to in the Prospectus). To such
counsel's knowledge, except as disclosed in or specifically contemplated by the
Prospectus, there are no outstanding options, warrants of other rights calling
for the issuance of, and no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any security convertible into or
exchangeable or exercisable for capital stock of the Company. The description
of the capital stock of the Company in the Registration Statement and the
Prospectus conforms in all material respects to the terms thereof.
(VI) To such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened to which the Company or any
of its Subsidiaries is a party or to which any of their respective properties is
subject that are required to be described in the Registration Statement or the
Prospectus but are not so described.
(VII) No consent, approval, authorization or order
of, or any filing or declaration with, any court or governmental agency or
body is required for the consummation by the Company of the transactions on its
part contemplated under this Agreement, except such as have been obtained or
made under the Act or the Rules and Regulations and such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the
Shares.
(VIII) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
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(IX) The execution and delivery of this Agreement,
the compliance by the Company with all of the terms hereof and the
consummation of the transactions contemplated hereby does not contravene any
provision of applicable law or the Articles of Incorporation or By-Laws of the
Company or any of its Subsidiaries, and to the best of such counsel's knowledge
will not result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company pursuant to the terms and
provisions of, result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to such
counsel to which the Company or any of its Subsidiaries is a party or by which
the Company, any of its Subsidiaries, or any of their respective properties is
bound or affected, or violate or conflict with (i) any judgment, ruling, decree
or order known to such counsel or (ii) any statute, rule or regulation of any
court or other governmental agency or body, applicable to the business or
properties of the Company or any of its Subsidiaries.
(X) To such counsel's knowledge, there is no
document or contract of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required, and each
description of such contracts and documents that is contained in the
Registration Statement and Prospectus fairly presents in all material respects
the information required under the Act and the Rules and Regulations.
(XI) The statements under the captions "Risk
Factors -- Shares Eligible for Future Sale," "Risk Factors -- Anti-Takeover
Provisions, Possible Issuance of Preferred Stock," "Management -- Stock Option
and Purchase Plans," "Certain Transactions," "Description of Capital Stock,"
and "Shares Eligible for Future Sale" in the Prospectus, insofar as the
statements constitute a summary of documents referred to therein or matters of
law, are accurate summaries and fairly and correctly present, in all material
respects, the information called for with respect to such documents and matters
(provided, however, that such counsel may rely on representations of the
Company with respect to the factual matters contained in such statements, and
provided further that such counsel shall state that nothing has come to the
attention of such counsel which leads them to believe that such representations
are not true and correct in all material respects).
(XII) The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(XIII) The Selling Stockholder Shares are duly listed
on the NNM and the Company Shares have been duly authorized for listing on the
NNM, subject to notice of issuance.
(XIV) To such counsel's knowledge, no holder of
securities of the Company has rights, which have not been waived or satisfied,
to require the register with the
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Commission shares of Common Stock or other securities, as part of the offering
contemplated hereby.
(XV) The Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is pending, threatened
or contemplated.
(XVI) The Registration Statement and the Prospectus
comply as to form in all material respects with the requirement of the Act
and the Rules and Regulations (other than the financial statements, schedules
and other financial data contained in the Registration Statement or the
Prospectus, as to which such counsel need express no opinion).
(XVII) This Agreement and the Custody Agreement have
each been duly executed and delivered by or on behalf of each Selling
Stockholder; the Custody Agreement constitutes a valid and binding agreement of
such Selling Stockholder in accordance with its terms, except as enforceability
may be limited by the application of bankruptcy, insolvency or other laws
affecting creditors' rights generally or by general principles of equity; the
Attorneys-in-Fact and the Custodian have been duly authorized by such Selling
Stockholder to deliver the Shares on behalf of such Selling Stockholder in
accordance with the terms of this Agreement; and the sale of the Shares to be
sold by such Selling Stockholder hereunder, the performance by such Selling
Stockholder of this Agreement and the Custody Agreement and the consummation of
the transactions contemplated hereby and thereby will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or give any party a right to terminate any of its obligations under, or result
in the acceleration of any obligation under any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, note agreement
or other evidence of indebtedness, lease, contract or other agreement or
instrument known to such counsel to which such Selling Stockholder is a party
or by which such Selling Stockholder or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to such Selling Stockholder or, if such Selling Stockholder is a
corporation, partnership or other entity, the organizational documents of such
Selling Stockholder.
(XVIII) No consent, approval, authorization or order
of, or any filing or declaration with, any court or governmental agency or
body is required for the consummation by the Selling Stockholders of the
transactions on their part contemplated by this Agreement, except such as have
been obtained or made under the Act or the Rules and Regulations and such as
may be required under state securities or Blue Sky laws or the by-laws and
rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares.
(XIX) Each Selling Stockholder has full legal right,
power and authority to enter into this Agreement and the Custody Agreement and
to sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder and, upon payment for such Shares and assuming that the
Underwriters are purchasing such Shares in good faith and without notice of any
other adverse claim within the meaning of the Uniform Commercial Code, the
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Underwriters will have acquired all rights of such Selling Stockholder in such
Shares free of any adverse claim, any lien in favor of the Company and any
restrictions on transfer imposed by the Company.
In rendering the opinions in subparagraphs (xiii) - (xix), such counsel
may rely upon opinions of other counsel retained by the Selling Stockholders
reasonably acceptable to the Representatives and as to matters of fact on
certificates of the Selling Stockholders, officers of the Company and
governmental officials and the representations and warranties of the Company
and the Selling Stockholders contained in this Agreement and the Custody
Agreement, provided that the opinion of counsel to the Company and Selling
Stockholders shall state that they are doing so, that they have no reason to
believe that they and the Underwriters are not entitled to rely on such
opinions or certificates and that copies of such opinions or certificates are
to be attached to the opinion.
In rendering such opinion, such counsel may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Representatives and counsel for the Underwriters, provided that the opinion of
counsel to the Company and the Selling Stockholders shall state that they are
doing so, that they have no reason to believe that they and the Underwriters
are not entitled to rely on such opinions and that copies of such opinions are
to be attached to the opinion.
Such counsel shall also state that such counsel has participated in the
preparation of the Registration Statement and Prospectus and has no reason to
believe that, as of the Effective Date the Registration Statement, or any
amendment or supplement thereto, (other than the financial statements,
schedules and other financial data contained therein, as to which such counsel
need express no opinion) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, or any
amendment or supplement thereto, as of its date and the Closing Date and, if
later, the Option Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (other than the financial statements, schedules and other
financial data contained therein, as to which such counsel need express no
opinion).
(G) The representatives shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Xxxxxx Godward
LLP, counsel to the Underwriters, with respect to the Registration Statement,
the Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to the Representatives.
(H) Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Representatives a
letter, dated the date of its delivery, addressed to the Representatives and in
form and substance satisfactory to the Representatives, confirming that they
are independent accountants with respect to the Company and its Subsidiaries as
required by the Act and the Rules and Regulations and with respect to certain
financial and other statistical and numerical information contained in the
Registration Statement.
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At the Closing Date and, as to the Option Shares, the Option Closing Date, the
Accountants shall have furnished to the Representatives a letter, dated the
date of its delivery, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the letter from the Accountants,
that nothing has come to their attention during the period from the date of the
letter referred to in the prior sentence to a date (specified in the letter)
not more than five days prior to the Closing Date and the Option Closing Date,
as the case may be, which would require any change in their letter dated the
date hereof if it were required to be dated and delivered at the Closing Date
and the Option Closing Date.
(I) Concurrently with the execution and delivery of this
Agreement and at the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representatives a
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representatives, to the effect that:
(I) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of the
date of such certificate, such documents are true and correct in all material
respects and do not omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not untrue or misleading
and (B) in the case of the certificate delivered at the Closing Date and the
Option Closing Date, since the Effective Date no event has occurred as a result
of which it is necessary to amend or supplement the Prospectus in order to make
the statements therein not untrue or misleading.
(II) Each of the representations and warranties of
the Company contained in this Agreement were, when originally made, and are, at
the time such certificate is delivered, true and correct.
(III) Each of the covenants required to be performed
by the Company herein on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein required to be
satisfied or fulfilled on or prior to the date of such certificate has been
duly, timely and fully satisfied or fulfilled.
(J) Concurrently with the execution and delivery of this
Agreement and at the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representatives a
certificate, dated the date of its delivery, signed by the Selling Stockholders
(or the Attorneys-in-Fact on their behalf), in form and substance satisfactory
to the Representatives, to the effect that the representations and warranties
of the Selling Stockholders contained herein are true and correct in all
material respects on and as of the date of such certificate as if made on and
as of the date of such certificate, and each of the covenants and conditions
required herein to be performed or complied with by the Selling Stockholders on
or prior to the date of such certificate has been duly, timely and fully
performed or complied with.
(K) On or prior to the Closing Date, the Representatives
shall have received the executed agreements referred to in Section 5(n).
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(L) The Shares shall be qualified for sale in such
jurisdictions as the Representatives may reasonably request and each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date or the Option Closing Date.
(M) Prior to the Closing Date, the Shares shall have been
duly authorized for listing on the NNM upon official notice of issuance.
(N) The Company and the Selling Stockholders shall have
furnished to the Representatives such certificates, in addition to those
specifically mentioned herein, as the Representatives may have reasonably
requested as to the accuracy and completeness at the Closing Date and the
Option Closing Date of any statement in the Registration Statement or the
Prospectus, as to the accuracy at the Closing Date and the Option Closing Date
of the representations and warranties of the Company and the Selling
Stockholders herein, as to the performance by the Company and the Selling
Stockholders of its and their respective obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Representatives.
7. INDEMNIFICATION.
(A) The Company will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, liabilities, expenses and damages
(including any and all investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based in
whole or in part on (i) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus, (ii) the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading in the light of the circumstances in which
they were made, or (iii) any inaccuracy in the representations and warranties
of the Company contained herein or any failure of the Company to perform its
obligations hereunder or under law in connection with the transactions
contemplated hereby; provided, however, that (x) the Company will not be liable
to the extent that such loss, claim, liability, expense or damage arises from
the sale of the Shares in the public offering to any person by an Underwriter
and is based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives, on
behalf of any Underwriter, expressly for inclusion in the Registration
Statement, the preliminary prospectus or the Prospectus and (y) the Company
will not be liable to any Underwriter, the directors, officers, employees or
agents of such Underwriter or any person controlling such Underwriter with
respect to any loss, claim, liability, expense, or damage arising out of or
based on any untrue statement or omission or alleged untrue statement or
omission or alleged omission
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to state a material fact in the preliminary prospectus which is corrected in
the Prospectus if the person asserting any such loss, claim, liability, charge
or damage purchased Shares from such Underwriter but was not sent or given a
copy of the Prospectus at or prior to the written confirmation of the sale of
such Shares to such person. The Company acknowledges that the statements set
forth under the heading "Underwriting" in the preliminary prospectus and the
Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf of the
Underwriters expressly for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the Company might otherwise have.
(B) Each of the Selling Stockholders, severally and not
jointly will indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
liabilities, expenses and damages (including any and all investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based in whole or in part on (i) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus, (ii) the omission
or alleged omission to state in such document a material fact required to be
stated in it or necessary to make the statements in it not misleading in the
light of the circumstances in which they were made, or (iii) any inaccuracy in
the representations and warranties of the Selling Stockholders contained herein
or any failure of the Selling Stockholders to perform their obligations
hereunder or under law in connection with the transactions contemplated hereby;
provided, however, that (x) the Selling Stockholders will not be liable to the
extent that such loss, claim, liability, expense or damage arises from the sale
of the Shares in the public offering to any person by an Underwriter and is
based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives, on
behalf of any Underwriter, expressly for inclusion in the Registration
Statement, the preliminary prospectus or the Prospectus; (y) the Selling
Stockholders will not be liable to any Underwriter, the directors, officers,
employees or agents of such Underwriter or any person controlling such
Underwriter with respect to any loss, claim, liability, expense, or damage
arising out of or based on any untrue statement or omission or alleged untrue
statement or omission or alleged omission to state a material fact in the
preliminary prospectus which is corrected in the Prospectus if the person
asserting any such loss, claim, liability, charge or damage purchased Shares
from such Underwriter but was not sent or given a copy of the Prospectus at or
prior to the written confirmation of the sale of such Shares to such person;
and (z) the liability of each Selling Stockholder under this Section 7(a) shall
not exceed the product of the purchase price for each share set forth in
Section 1(a) hereof multiplied by the number of Shares sold by such Selling
Stockholder hereunder (less (1) the amount of the underwriting commissions paid
thereon to the Underwriters by such Selling Stockholder and (2) any costs or
expenses paid by such Selling
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Stockholder incident to the performance of the obligations of the Company or
the Selling Stockholders under this Agreement and in connection with the
transactions contemplated hereby including, but not limited to, those costs and
expenses of the type described in Section 5(j)); and further provided, that in
the case of a Selling Stockholder named in Schedule III hereto, the indemnity
agreement provided in sub paragraphs (i) and (ii) of this Section 7(b) shall
apply only to the extent that any untrue statement or alleged untrue statement
or omission or alleged omission described in such subparagraphs was made in
reliance upon and in conformity with written information furnished to the
Company or such Underwriter by such Selling Stockholder, directly or through
such Selling Stockholder's representatives, specifically for use in the
preparation thereof. The Selling Stockholders acknowledge that the statements
set forth under the heading "Underwriting" in the preliminary prospectus and
the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf of the
Underwriters expressly for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the Selling Stockholders might otherwise have.
(C) Each Underwriter will indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who signs
the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and each Selling Stockholder to the same extent as the foregoing indemnity from
the Company and each Selling Stockholder to each Underwriter, as set forth in
Section 7(a), but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives, on behalf of such Underwriter, expressly for use in the
Registration Statement, the preliminary prospectus or the Prospectus. The
Company and the Selling Stockholders acknowledge that the statements set forth
under the heading "Underwriting" in the preliminary prospectus and the
Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf of the
Underwriters expressly for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity will be in addition
to any liability that each Underwriter might otherwise have.
(D) Any party that proposes to assert the right to be
indemnified under this Section 7 shall, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim is
to be made against an indemnifying party or parties under this Section 7,
notify each such indemnifying party in writing of the commencement of such
action, enclosing with such notice a copy of all papers served, but the
omission so to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 7 unless, and only to the extent that, such omission
results in the loss of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party
will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying
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party similarly notified, to assume the defense of the action, with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable out of pocket costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. Any indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
(E) If the indemnification provided for in this Section 7
is applicable in accordance with its terms but for any reason is held to
be unavailable to or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) and (c) of this Section 7 in respect of any losses, claims,
liabilities, expenses and damages referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company or the Selling
Stockholders from persons other than the Underwriters, such as persons who
control the Company within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who also may be
liable for contribution) by such indemnified party as a result of such losses,
claims, liabilities, expenses and damages in such proportion as shall be
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders, on the one hand, and the Underwriters, on the other hand.
The relative benefits received by the Company and the Selling Stockholders, on
the one hand, and the Underwriters, on the other hand, shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. If, but
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only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other hand, with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any
other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, the
Selling Stockholders or the Representatives on behalf of the Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 7(d) shall be deemed to include, for purposes of this Section 7(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts
received by it and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(F) The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Company and the
Selling Stockholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any investigation made by or on behalf
of the Underwriters, (ii) acceptance of any of the Shares and payment therefor
or (iii) any termination of this Agreement.
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8. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7(a) of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other reasonable expenses incurred in connection with investigating or
defending any claim, action, investigation, inquiry or other proceeding arising
out of or based upon, in whole or in part, any statement or omission or alleged
statement or omission, or any inaccuracy in the representations and warranties
of the Company or the Selling Stockholder contained herein or failure of the
Company or the Selling Stockholders to perform its or their respective
obligations hereunder or under law, all as described in Section 7(a),
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligations under this Section 8 and the possibility that
such payment might later be held to be improper; provided, however, that, to
the extent any such payment is ultimately held to be improper, the persons
receiving such payments shall promptly refund them.
9. TERMINATION. The obligations of the several Underwriters under
this Agreement may be terminated at any time on or prior to the Closing Date
(or, with respect to the Option Shares, on or prior to the Option Closing
Date), by notice to the Company and the Selling Stockholders from the
Representatives, without liability on the part of any Underwriter to the
Company if, prior to delivery and payment for the Firm Shares or Option Shares,
as the case may be, in the sole judgment of the Representatives, (i) trading in
any of the equity securities of the Company shall have been suspended by the
Commission or by The Nasdaq Stock Market, (ii) trading in securities generally
on The Nasdaq Stock Market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange, by order of the Commission or any court or other governmental
authority, or by The Nasdaq Stock Market, (iii) a general banking moratorium
shall have been declared by Federal or New York State authorities or (iv) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States
or any outbreak or material escalation of hostilities or other calamity or
crisis shall have occurred, the effect of which is such as to make it, in the
sole judgment of the Representatives, impracticable or inadvisable to proceed
with completion of the public offering or the delivery of and payment for the
Shares.
If this Agreement is terminated pursuant to Section 9 hereof, neither
the Company nor any Selling Stockholder shall be under any liability to any
Underwriter except as provided in Sections 5(j), 7 and 8 hereof; but, if the
purchase of the Shares by the Underwriters is not consummated because of a
failure by the Company or the Selling Stockholders to comply with any of the
terms or to fulfill any of the obligations of this Agreement or if for any
reason the Company shall be unable to perform its obligations hereunder, the
Company and the Selling Stockholders will reimburse the several Underwriters
for all out-of-pocket expenses not to exceed $100,000 (including the fees,
disbursements and other charges of counsel to the Underwriters) incurred by
them in connection with the offering of the Shares.
10. SUBSTITUTION OF UNDERWRITERS. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it
or they have agreed to purchase hereunder, and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters
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agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Firm Shares, the other Underwriters shall be obligated,
severally, to purchase the Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase, in the proportions which
the number of Firm Shares which they have respectively agreed to purchase
pursuant to Section 1 bears to the aggregate number of Firm Shares which all
such non-defaulting Underwriters have so agreed to purchase, or in such other
proportions as the Representatives may specify; provided that in no event shall
the maximum number of Firm Shares which any Underwriter has become obligated to
purchase pursuant to Section 1 be increased pursuant to this Section 10 by more
than one-ninth of such number of Firm Shares without the prior written consent
of such Underwriter. If any Underwriter or Underwriters shall fail or refuse
to purchase any Firm Shares and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
exceeds one-tenth of the aggregate number of the Firm Shares and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Firm Shares are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Stockholders for the purchase or sale of any Shares
under this Agreement. In any such case either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 10
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
11. MISCELLANEOUS. Notice given pursuant to any of the provisions
of this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company or the Selling Stockholders, at the
office of the Company, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx Xxx Xxxxxxx, with a copy to Xxxxxxx X. Xxxxxxxx III, Esq.,
Varnum, Riddering, Xxxxxxx & Xxxxxxx LLP, 000 Xxxxxx Xxxxxx, X.X., Xxxxx
Xxxxxx, Xxxxxxxx 00000, or (b) if to the Underwriters, to the Representatives
at the offices of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Finance Department, with a copy to Xxxxx C. T.
Linfield, Esq., Xxxxxx Godward LLP, 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000. Any such notice shall be effective only upon receipt. Any
notice under such Section 9 or 10 may be made by telex or telephone, but if so
made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, the Selling Stockholders and the controlling
persons, directors and officers referred to in Section 7, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as
used in this Agreement shall not include a purchaser, as such purchaser, of
Shares from any of the several Underwriters.
Any action required or permitted to be made by the Representatives
under this Agreement may be taken by them jointly or by Xxxxxxx & Company, Inc.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby waive any right they may
have to a trial by jury in respect of any claim based upon or arising out of
this Agreement or the transactions contemplated hereby.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
APPLIED FILMS CORPORATION
By: ___________________________________
Title:
SELLING STOCKHOLDERS
(named in Schedule II hereto)
By: ___________________________________
Attorney-in-Fact
Confirmed as of the date first
above mentioned:
XXXXXXX & COMPANY, INC.
X.X. XXXXXXXX & CO.
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereto.
By: XXXXXXX & COMPANY, INC.
By: _____________________________________
Title:
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SCHEDULE I
UNDERWRITERS
Number of
Firm
Shares
Underwriters to be Purchased
----------------------- ---------------
Xxxxxxx & Company, Inc. .....................
X. X. Xxxxxxxx & Co. ........................
Total .......................................
---------
1,900,000
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SCHEDULE II
Total Number Total Number of
of Firm Shares Option Shares
to be Sold to be Sold
-------------- ---------------
Applied Films Corporation .............. 500,000 236,439
Selling Stockholders
--------------------
Xxxxxxxx Corporation.................... 1,400,000 __
Xxxxxx Xxxxxx Trust..................... __ 21,000
Xxxx Xxxxx.............................. __ 27,561
TOTALS.............................
--------- -------
1,900,000 285,000
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SCHEDULE III
Xxxxxx Xxxxxx Trust
Xxxx Xxxxx
35
SCHEDULE IV
APPLIED FILMS CORPORATION
180-DAY LOCK-UP AGREEMENT
XXXXXXX & COMPANY, INC.
X.X. XXXXXXXX & CO.
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned is a holder of securities of Applied Films Corporation,
a Colorado corporation (the "Company"), and wishes to facilitate the public
offering of shares of the Common Stock (the "Common Stock") of the Company (the
"Offering"). The undersigned recognizes that such Offering and the public
market for shares of the Company's Common Stock created thereby will be of
benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby
irrevocably agrees that he, she or it will not, without the prior written
approval of Xxxxxxx & Company, Inc., acting on its own behalf and/or on behalf
of other representatives of the underwriters, directly or indirectly, offer,
sell, contract to sell, make any short sale (including, but not limited to, a
"short against the box"), pledge, or otherwise dispose of, any shares of Common
Stock (exclusive of any shares of Common Stock purchased in connection with the
Offering), options to acquire shares of Common Stock or securities exchangeable
or exercisable for or convertible into shares of, or any other rights to
purchase or acquire, Common Stock of the Company (the "Securities") which he,
she or it may own directly or indirectly or beneficially (as defined by the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder), for a period commencing on the date on which the Form S-1
Registration Statement filed on behalf of the Company in connection with the
Offering (the "Registration Statement") shall become effective by order of the
Securities and Exchange Commission (the "Effective Date") and ending on the
date which is one hundred eighty (180) days (the "Lock-Up Period") following
the Effective Date. The foregoing restriction is expressly agreed to preclude
the holder of Securities from engaging in any hedging or other transaction that
is designed to or reasonably expected to lead to, or result in, a disposition
of Securities during the Lock-Up Period even if such Securities would be
disposed of by the undersigned subsequent to the Lock-Up Period or by someone
other than the undersigned.
Notwithstanding the foregoing, any transfer of Securities which either
(i) will not result in any change in beneficial ownership, including, but not
limited to, pro rata partnership distributions and transfers into trusts for
the benefit of the original holder, or (ii) constitute bona fide gifts of such
shares will not require your consent; provided that the transferee enters into
a
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lock-up agreement in substantially the form hereof covering the remainder of
the Lock-Up Period under this Agreement.
The undersigned confirms that he, she or it understands that the
underwriters and the Company will rely upon the representations set forth in
this Agreement in proceeding with the Offering. The undersigned further
confirms that this Agreement is irrevocable and shall be binding upon the
undersigned and his, her or its respective heirs, personal representatives,
successors and assigns. The undersigned agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of Securities held by the undersigned except in compliance with this
Agreement.
_______________________________________
(Securities Holder's Name)
_______________________________________
(Signature)
_______________________________________
(Name of Person Signing)
_______________________________________
(Title)
