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EXHIBIT 1.01
2,990,000 Shares
CREE, INC.
Common Stock
UNDERWRITING AGREEMENT
January __, 2000
CIBC World Markets Corp.
Prudential Securities Incorporated
Banc of America Securities LLC
SoundView Technology Group, Inc.
Xxxxxx Xxxxxx & Company, Inc.
c/o CIBC World Markets Corp.
World Financial Center
New York, New York 10281
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Cree, Inc., a North Carolina corporation (the "Company"), proposes to
sell to you and the other underwriters named on Schedule I to this Agreement
(the "Underwriters"), for whom you are acting as Representatives, an aggregate
of 2,600,000 shares (the "Firm Shares") of the Company's Common Stock, $0.0025
par value (the "Common Stock"). In addition, the Company proposes to grant to
the Underwriters an option to purchase up to an additional 390,000 shares (the
"Option Shares") of Common Stock from it for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The Firm Shares
and the Option Shares are together called the "Shares."
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
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(a) The Company agrees to sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Company, at $_________ per share (the "Initial Price"), the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule I to this
Agreement.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares at the
Initial Price. The number of Option Shares to be purchased by each Underwriter
shall be the same percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares. Such option
may be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below), and only once thereafter within 30 days
after the date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined below), as
the case may be, setting forth the number of Option Shares to be purchased and
the time and date (if other than the Firm Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm Shares to
the Representatives for the respective accounts of the Underwriters, and payment
of the purchase price by wire transfer or certified or official bank check or
checks payable in New York Clearing House (same day) funds to the Company, shall
take place at the offices of CIBC World Markets Corp., World Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the third
business day following the date of this Agreement, or at such time on such other
date, not later than 10 business days after the date of this Agreement, as shall
be agreed upon by the Company and the Representatives (such time and date of
delivery and payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is exercised,
delivery by the Company of the Option Shares to the Representatives for the
respective accounts of the Underwriters and payment of the purchase price by
wire transfer or certified or official bank check or checks payable in New York
Clearing House (same day) funds to the Company shall take place at the offices
of CIBC World Markets Corp. specified above at the time and on the date (which
may be the same date as, but in no event shall be earlier than, the Firm Shares
Closing Date) specified in the notice referred to in Section 1(b) (such time and
date of delivery and payment are called the "Option Shares Closing Date"). The
Firm Shares Closing Date and the Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of
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exercise of the option as described in Section l(b) and shall be made available
to the Representatives for checking and packaging, at such place as is
designated by the Representatives, on the full business day before the Firm
Shares Closing Date (or the Option Shares Closing Date in the case of the Option
Shares).
3. Registration Statement and Prospectus; Public Offering.
(a) A registration statement (No.333-94013) relating to the Shares,
including a form of prospectus, has been filed with the Securities and Exchange
Commission ("Commission") and either (A) has been declared effective under the
Securities Act of 1933 (the "Securities Act") and is not proposed to be amended
or (B) is proposed to be amended by amendment or post-effective amendment. If
such registration statement (the "initial registration statement") has been
declared effective, either (A) an additional registration statement (the
"additional registration statement") relating to the Shares may have been filed
with the Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Securities
Act and, if so filed, has become effective upon filing pursuant to such Rule and
the Shares all have been duly registered under the Securities Act pursuant to
the initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to such Rule and upon such filing the Shares will
all have been duly registered under the Securities Act pursuant to the initial
registration statement and such additional registration statement. If the
Company does not propose to amend the initial registration statement or if an
additional registration statement has been filed and the Company does not
propose to amend it, and if any post-effective amendment to either such
registration statement has been filed with the Commission prior to the execution
and delivery of this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the
Securities Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with respect to the
initial registration statement or, if filed prior to the execution and delivery
of this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared effective by
the Commission or has become effective upon filing pursuant to Rule 462(c), or
(B) if the Company has advised the Representatives that it proposes to file an
amendment or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such amendment
or post-effective amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed prior to
the execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect to
such additional registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule 462(b).
"Effective Date" with respect to the initial registration statement or the
additional registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective Time,
including all material incorporated by reference therein, including all
information contained in the additional registration statement (if any) and
deemed to be a part of
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the initial registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on which
it is filed and including all information (if any) deemed to be a part of the
initial registration statement as of its Effective Time pursuant to Rule 430A(b)
("Rule 430A(b)") under the Securities Act, is hereinafter referred to as the
"Initial Registration Statement". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional registration
statement as of its Effective Time pursuant to Rule 430A(b), is hereinafter
referred to as the "Additional Registration Statement". The Initial Registration
Statement and the Additional Registration Statement, if any, are hereinafter
referred to collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Shares, as
first filed with the Commission pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") under the Securities Act or (if no such filing is required) as
included in a Registration Statement, including all material incorporated by
reference in such prospectus, is hereinafter referred to as the "Prospectus". No
document has been or will be prepared or distributed in reliance on Rule 434
under the Securities Act.
(b) The Company understands that the Underwriters propose to make a
public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Time and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Underwriter as follows:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective Date
of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Securities Act and the
rules and regulations of the Commission (the "Rules") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) on the Effective Date of the Additional Registration Statement (if any),
each Registration Statement conformed or will conform, in all respects to the
requirements of the Securities Act and the Rules and did not include, or will
not include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and (iii) on the date of this
Agreement, the Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at the time
of filing of the Prospectus pursuant to Rule 424(b) or (if no such filing is
required) at the Effective Date of the Additional Registration Statement in
which the Prospectus is included, each Registration Statement and the Prospectus
will conform, in all respects to the requirements of the Securities Act and the
Rules, and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any material fact
required to be stated
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therein or necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the Prospectus
will conform in all material respects to the requirements of the Act and the
Rules, neither of such documents will include any untrue statement of a material
fact or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no Additional
Registration Statement has been or will be filed. Notwithstanding the foregoing,
the Company makes no representation or warranty as to the statements contained
under the caption "Underwriting" (except for the seventh, eighth and ninth
paragraphs therein) in the Prospectus. The Company acknowledges that the
statements referred to in the previous sentence constitute the only information
furnished in writing by the Representatives on behalf of the several
Underwriters specifically for inclusion in the Registration Statements, any
preliminary prospectus or the Prospectus. The Company and the transactions
contemplated by this Agreement meet the requirements for using Form S-3 under
the Securities Act.
(b) All contracts and other documents required to be filed as exhibits
to the Registration Statements have been filed with the Commission as exhibits
to the Registration Statements.
(c) The consolidated financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference in the
Registration Statements and Prospectus present fairly the financial position,
the results of operations and cash flows and the shareholders' equity and the
other information purported to be shown therein of the Company at the respective
dates and for the respective periods to which they apply; and such financial
statements have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for such periods
have been made.
(d) PricewaterhouseCoopers LLP, whose reports are filed with the
Commission as a part of the Registration Statements, are, to the Company's
knowledge, and, during the periods covered by their reports, were, to the
Company's knowledge, independent public accountants as required by the
Securities Act and the Rules. Ernst & Young LLP, whose reports are filed with
the Commission as a part of the Registration Statements, are, to the Company's
knowledge, and, during the periods covered by their reports, were, to the
Company's knowledge, independent public accountants as required by the
Securities Act and the Rules.
(e) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its subsidiaries is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties (owned, leased or
licensed) or the nature of its business makes such qualification necessary
except for such jurisdictions where the failure to so qualify would not have a
material adverse effect on the business, results of operations or financial
condition of the Company and its subsidiaries taken as a whole. Each of the
Company and its subsidiaries has all requisite corporate power and authority,
and all necessary authorizations, approvals, consents, orders,
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licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity, to own, lease and license its assets and
properties and conduct its businesses as now being conducted and as described in
the Registration Statements and the Prospectus except for such authorizations,
approvals, consents, orders, material licenses, certificates and permits the
failure to so obtain would not have a material adverse effect upon the business,
results of operations or financial condition of the Company and its subsidiaries
taken as a whole; no such authorization, approval, consent, order, license,
certificate or permit contains a materially burdensome restriction other than as
disclosed in the Registration Statements and the Prospectus; and the Company has
all such corporate power and authority, and such authorizations, approvals,
consents, orders, licenses, certificates and permits to enter into, deliver and
perform this Agreement and to issue and sell the Shares.
(f) Except as described in the Registration Statements and the
Prospectus, (i) each of the Company and its subsidiaries owns or possesses
adequate and enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") necessary for the conduct of its business as described in the
Registration Statements and the Prospectus; and (ii) neither the Company nor any
of its subsidiaries has received any notice of, or to its best knowledge is
aware of, any infringement of or conflict with asserted rights of others with
respect to any Intangibles which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a material adverse effect
upon the assets or properties, business, results of operations or financial
condition of the Company and its subsidiaries taken as a whole.
(g) Each of the Company and its subsidiaries has good title to each of
the items of personal property which are reflected in the financial statements
referred to in Section 4(c) or are referred to in the Registration Statements
and the Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property which are referred
to in the Registration Statements and the Prospectus as being leased by it, in
each case free and clear of all liens, encumbrances, claims, security interests
and defects, other than those described in the Registration Statements and the
Prospectus and those which do not and will not have a material adverse effect
upon the business, results of operations or financial condition of the Company
and its subsidiaries taken as a whole.
(h) Except as set forth in the Registration Statements and the
Prospectus, there is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the Company's best knowledge, threatened against, or involving the
assets, properties or business of, the Company or any of its subsidiaries which
would materially adversely affect the business, results of operations, prospects
or financial condition of the Company and its subsidiaries taken as a whole.
(i) Subsequent to the respective dates as of which information is given
in the Registration Statements and the Prospectus, except as described therein,
(i) there has not been any material adverse change in the business, results of
operations, or financial condition of the Company and its subsidiaries taken as
a whole, whether or not arising from transactions in the ordinary course of
business; (ii) neither the Company nor any of its subsidiaries has sustained
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any material loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree; and (iii)
and since the date of the latest balance sheet included in the Registration
Statements and the Prospectus, except as reflected therein, neither the Company
nor any of its subsidiaries has (A) issued any securities (except pursuant to
the Company's existing stock option plan, employee stock purchase plan or bonus
plan or outstanding warrants) or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations incurred
in the ordinary course of business, (B) entered into any material transaction
not in the ordinary course of business or (C) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares
of its stock.
(j) There is no document or contract of a character required to be
described in the Registration Statements or Prospectus or to be filed as an
exhibit to the Registration Statements which is not described or filed as
required. Each agreement listed in the Exhibits to the Registration Statements
or incorporated by reference therein is in full force and effect and is valid
and enforceable against the Company in accordance with its terms in all material
respects, assuming the due authorization, execution and delivery thereof by each
of the other parties thereto. Neither the Company, nor to the best of the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event would
have a material adverse effect on the business, results of operations, financial
or condition of the Company and its subsidiaries taken as a whole. No default
exists, and, to the Company's knowledge, no event has occurred which with notice
or lapse of time or both would constitute a default, in the due performance and
observance of any term or obligation, by the Company or any of its subsidiaries
of any other agreement or instrument to which the Company or any such
subsidiaries is a party or by which it or its properties or business may be
bound or affected which default or event would have a material adverse effect on
the business, results of operations or financial condition of the Company and
its subsidiaries taken as a whole.
(k) Neither the Company nor any of its subsidiaries is in violation of
any term or provision of its charter or by-laws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a material adverse effect on the
business, results of operations or financial condition of the Company and its
subsidiaries taken as a whole.
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(l) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company of
the Shares) will give rise to a right to terminate or accelerate the due date of
any payment due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or any of its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of its subsidiaries or violate any provision of
the articles of incorporation or by-laws of the Company or any of its
subsidiaries, except (i) in any such case, where such right to terminate or
accelerate, or such conflict, breach, default, execution, imposition or
violation would not have a material adverse effect on the business, results of
operations or financial condition of the Company and its subsidiaries taken as a
whole, or (ii) in the case of such consents or waivers, for such consents or
waivers as may be required under state or foreign securities or Blue Sky laws or
which have already been obtained and are in full force and effect.
(m) The Company has an authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable and none of them was issued in violation of any
preemptive or other similar right. The Shares, when issued and sold pursuant to
this Agreement, will be duly and validly issued, fully paid and nonassessable
and none of them will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statements and the Prospectus,
there is no outstanding option, warrant or other right calling for the issuance
of any share of stock of the Company or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the Shares
conform in all material respects to the description thereof contained or
incorporated by reference in the Registration Statements and the Prospectus.
(n) No holder of any security of the Company has the right to have any
security owned by such holder included in the Registration Statements or to
demand registration of any security owned by such holder during the period
ending 90 days after the date of this Agreement, except such rights as may have
been duly waived. Each director and executive officer of the Company has
delivered to the Representatives his or her enforceable written agreement that
he or she will not, for a period of 90 days after the date of this Agreement,
without the prior written consent of CIBC World Markets Corp., offer for sale,
sell, distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by him or her, other than
Common Stock transferred as a gift or gifts (provided that any donee thereof
agrees in writing to be bound by the terms of such agreement).
(o) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the
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issuance and sale of the Shares by the Company. This Agreement has been duly and
validly authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except (A) as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles and (B) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state securities
laws or the public policy underlying such laws.
(p) Neither the Company nor any of its subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a material adverse effect on the business,
results of operations or financial condition of the Company and its subsidiaries
taken as whole.
(q) No transaction has occurred between or among the Company or any of
its subsidiaries and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described in
and is not described in the Registration Statements and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
(s) The Company has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof, or has received
extensions thereof, and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same have become due, except
where the failure to do so would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(t) The Shares have been duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") National
Market, subject to notice of issuance.
(u) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds therefrom as
described in the Prospectus, will not be, an "investment company" as defined in
the Investment Company Act of 1940.
5. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares on each Closing Date are
subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(A)(a) of this Agreement.
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(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statements shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statements or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.
(c) The representations and warranties of the Company contained in this
Agreement and in the certificates delivered pursuant to Section 5(d) shall be
true and correct when made and on and as of each Closing Date as if made on such
date and the Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
the chief executive or chief operating officer and the chief financial officer
or chief accounting officer of the Company to the effect that the signers of
such certificate have carefully examined the Registration Statements, the
Prospectus and this Agreement and that the representations and warranties of the
Company in this Agreement are true and correct on and as of such Closing Date
with the same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(e) (i) The Representatives shall have received on the Effective Time,
at the time this Agreement is executed and on each Closing Date a signed letter
from Ernst & Young LLP addressed to the Representatives and dated, respectively,
the Effective Time, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives, confirming
that they are independent accountants within the meaning of the Securities Act
and the Rules and stating in effect that:
(A) in their opinion the audited financial statements and
financial statement schedules examined by them and included in the
Registration Statements and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules;
(B) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements as of December 26, 1999 and for the six months
ended December 27, 1998 and December 26, 1999 included in the
Registration Statements;
(C) on the basis of the review referred to in clause (B)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and
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accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that:
(1) the amounts set forth for the six-month periods
ended December 27, 1998 and December 26, 1999 in "Summary
Consolidated Financial Information," and "Selected
Consolidated Financial Data" included in the Registration
Statements and the Prospectus do not agree with the
corresponding amounts in the unaudited financial statements
from which such amounts were derived; or
(2) with respect to the Company, there were, at a
specified date not more than five business days prior to the
date of the letter, any increases in the current liabilities
and long term liabilities of the Company or any decreases in
net income or in working capital or the shareholders' equity
in the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended June
27, 1999 and the six month period ended December 26, 1999
included in the Registration Statements; and
(D) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statements and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company.
(ii) The Representatives shall have received on the
Effective Time, at the time this Agreement is executed and on each
Closing Date a signed letter from PricewaterhouseCoopers LLP addressed
to the Representatives and dated, respectively, the Effective Time, the
date of this Agreement and each such Closing Date, in form and
substance reasonably satisfactory to the Representatives, confirming
that they are independent accountants within the meaning of the
Securities Act and the Rules and stating in effect that:
(A) in their opinion the audited financial statements and
financial statement schedules examined by them and included in the
Registration Statements and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules; and
(B) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set
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forth in the Registration Statements and the Prospectus and reasonably
specified by the Representatives agrees with the accounting records of
the Company.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery of
this Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "Registration Statements" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective Time, and
(iii) "Prospectus" shall mean the prospectus included in the Registration
Statements. All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in the
Registration Statements for purposes of this subsection.
(f) The Representatives shall have received on each Closing Date from
Smith, Anderson, Blount, Dorsett, Xxxxxxxx & Xxxxxxxx, L.L.P, counsel for the
Company, an opinion, addressed to the Representatives and dated such Closing
Date, and stating in effect that:
(i) Each of the Company and its U.S. subsidiaries has been
duly incorporated and is validly existing as a corporation under the laws of the
State of North Carolina. Each of the Company and its U.S. subsidiaries is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties (owned, leased or
licensed) or the nature of its businesses makes such qualification necessary,
except for such jurisdictions where the failure to so qualify would not have a
material adverse effect on the business, results of operations, or financial
condition of the Company and its subsidiaries taken as a whole.
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and conduct its
business as described in the Registration Statements and the Prospectus; and the
Company has all requisite corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses, certificates and permits
to enter into, deliver and perform this Agreement and to issue and sell the
Shares, except as may be required under state or foreign securities or Blue Sky
laws.
(iii) The Company has authorized capital stock as set forth in
the Registration Statements and the Prospectus; the certificates evidencing the
Shares are in due and proper legal form and have been duly authorized for
issuance by the Company; all of the outstanding shares of Common Stock of the
Company issued since the Company's initial public offering on February 8, 1993,
have been duly and validly authorized and have been duly and validly issued and
are fully paid and nonassessable. The Shares when issued and sold pursuant to
this Agreement, will be duly and validly issued, outstanding, fully paid and
nonassessable and none of them will have been issued in violation of any
preemptive or other similar right under any North Carolina statutes or the
Company's articles of incorporation or by-laws. To the best of such counsel's
knowledge, except as disclosed in the Registration Statements and the Prospectus
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or as provided in the Company's employee stock purchase plan, there is no
outstanding option, warrant or other right calling for the issuance of any share
of stock of the Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock and the Shares conform
in all material respects to the descriptions thereof contained in the
Registration Statements and the Prospectus.
(iv) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles and (B) to the
extent that rights to indemnity or contribution under this Agreement may be
limited by Federal or state securities laws or the public policy underlying such
laws.
(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets of the Company or any
of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, note or other agreement or instrument filed as an Exhibit to the
Registration Statements or incorporated by reference therein, or violate any
provision of the articles of incorporation or by-laws of the Company or any of
its U.S. subsidiaries or, to such counsel's knowledge, violate any applicable
law or any judgment or order of any governmental authority or court that is
binding on the Company or any of its subsidiaries or any of their respective
properties, except (i) in any such case, where such right to terminate or
accelerate, or such conflict, breach, default, execution, imposition or
violation would not have a material adverse effect on the business, results of
operations or financial condition of the Company and its subsidiaries taken as a
whole, or (ii) in the case of such consents or waivers, for such consents or
waivers as may be required under state or foreign securities or Blue Sky laws or
which have already been obtained and are in full force and effect.
(vi) To such counsel's knowledge, neither the Company nor any
of its U.S. subsidiaries is in violation of any term or provision of its
articles of incorporation or by-laws where the consequences of such violation
would have a material adverse effect on the business, results of operations or
financial condition of the Company and its subsidiaries taken as a whole.
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the performance of this
Agreement by the Company or the consummation of the transactions contemplated
hereby or thereby, except such as have
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been obtained under the Securities Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the several Underwriters.
(viii) To such counsel's knowledge, and other than as set
forth in the Prospectus, there is no litigation or other proceeding before any
court or before or by any state or federal public body pending or threatened
against, or involving the assets, properties or businesses of, the Company or
any of its subsidiaries which would have a material adverse effect upon the
business, results of operations or financial condition of the Company and its
subsidiaries taken as a whole.
(ix) The statements in the Prospectus under the captions
"Capitalization" (as to authorized shares of Capital Stock), "Certain
Transactions" and in Item 15 of the Registration Statement, insofar as such
statements constitute a summary of documents referred to therein or matters of
law, are fair summaries in all material respects and accurately present the
information called for with respect to such documents and matters. To such
counsel's knowledge, all contracts and other documents required to be filed as
exhibits to, or described in, each Registration Statement have been so filed
with the Commission or are fairly described in such Registration Statement, as
the case may be.
(x) Each Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except for the
financial statements and schedules and other financial and statistical data
included therein, as to which such counsel expresses no opinion) comply as to
form in all material respects with the requirements of the Securities Act and
the Rules.
(xi) Each Registration Statement has become effective under
the Securities Act, and, to such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened, pending or
contemplated.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to special matters or matters which are governed by laws
other than the laws of the State of North Carolina and the Federal laws of the
United States; provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions. Copies of
such certificates and other opinions shall be furnished to the Representatives
and counsel for the Underwriters. In rendering their opinion in subparagraph
(iv), such counsel may assume that the laws of the State of North Carolina and
the laws of the State of New York are the same. In rendering their opinion in
subparagraph (viii), such counsel may rely on a review of its litigation files
and certificates of officers of the Company.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the
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Company, at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that any Registration Statement at the time
it became effective (except with respect to the financial statements and notes
and schedules thereto and other financial data, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements and notes
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their counsel and
the Underwriters shall have received from Xxxx and Xxxx LLP a favorable opinion,
addressed to the Representatives and dated such Closing Date, with respect to
the Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representatives may reasonably request, and the Company
shall have furnished to Xxxx and Xxxx LLP such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
6. Covenants of the Company.
(A) The Company covenants and agrees as follows:
(a) The Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act, and shall promptly advise the Representatives, after the Company
receives notice thereof (i) when any amendment to the Registration Statement
shall have become effective, (ii) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any additional
information, (iii) of the prevention or suspension of the use of any preliminary
prospectus or the Prospectus or of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the Prospectus unless
the Company has furnished the Representatives a copy for its review prior to
filing and shall not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best efforts to
prevent the
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issuance of any such stop order and, if issued, to obtain as soon as possible
the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 6(A), an amendment or
supplement which shall correct such statement or omission or an amendment which
shall effect such compliance.
(c) The Company shall make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 45 days
after the end of the 12-month period beginning at the end of the fiscal quarter
of the Company during which the Effective Time occurs (or 90 days if such
12-month period coincides with the Company's fiscal year), an earnings statement
(which need not be audited) of the Company, covering such 12-month period, which
shall satisfy the provisions of Section 11(a) of the Securities Act.
(d) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration Statements
(including all exhibits thereto and amendments thereof) and to each other
Underwriter a copy of the Registration Statements (without exhibits thereto) and
all amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Rules, as
many copies of any preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may reasonably request.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale under the laws
of such jurisdictions as the Representatives may designate and shall maintain
such qualifications in effect so long as required for the distribution of the
Shares; provided, however, that the Company shall not be required in connection
therewith, as a condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(f) For a period of five years after the date of this Agreement, the
Company shall supply to the Representatives, and to each other Underwriter who
may so request in writing, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock and to furnish to the
Representatives a copy of each annual or other report it shall be required to
file with the Commission.
(g) Without the prior written consent of CIBC World Markets Corp., on
behalf of the Representatives, for a period of 90 days after the date of this
Agreement, the Company shall not issue, sell or register with the Commission
(other than on Form S-8 or on any
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successor form), or otherwise dispose of, directly or indirectly, any equity
securities of the Company (or any securities convertible into or exercisable or
exchangeable for equity securities of the Company), except for the issuance of
the Shares pursuant to the Registration Statement and the issuance of shares
pursuant to the Company's existing stock option plan, employee stock purchase
plan or bonus plan or pursuant to outstanding warrants.
(h) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by the Nasdaq National
Market (including any required registration under the Exchange Act).
(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statements including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statements and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the various jurisdictions referred to in Section 6(A)(e), including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and the preparation, printing, distribution and shipment
of preliminary and supplementary Blue Sky memoranda; (iv) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus and all
amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6(A)(f); (vii) inclusion of the
Shares for quotation on the Nasdaq National Market; and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. Subject to the provisions of Section 9, the
Underwriters agree to pay, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses incident
to the performance of the obligations of the Underwriters under this Agreement
not payable by the Company pursuant to the preceding sentence, including,
without limitation, the fees and disbursements of counsel for the Underwriters.
7. Indemnification.
(a) The Company agrees, to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding
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or any claim asserted), to which they, or any of them, may become subject under
the Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, any
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that such indemnity
shall not inure to the benefit of any Underwriter (or any person controlling
such Underwriter) on account of any losses, claims, damages or liabilities
arising from the sale of the Shares to any person by such Underwriter if such
untrue statement or omission or alleged untrue statement or omission was made in
such preliminary prospectus, such Registration Statement or the Prospectus, or
such amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives on behalf
of any Underwriter specifically for use therein; and provided, further, that
with respect to any untrue statement or alleged untrue statement in or omission
or alleged omission from any preliminary prospectus, the foregoing indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any losses, claims, damages or
liabilities purchased the Shares concerned, to the extent that a prospectus
relating to such Shares was required to be delivered by such Underwriter under
the Securities Act in connection with such purchase and any such loss, claim,
damage or liability of such Underwriter results from the fact that there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such Shares to such person, a copy of the Prospectus (exclusive of
material incorporated by reference) if the Company had previously furnished or
caused to be furnished copies thereof to such Underwriter. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs any Registration Statement, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, such Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, and was contained under the caption
"Underwriting" in the Prospectus (except for the seventh, eighth and ninth
paragraphs therein); provided, however, that the obligation of each Underwriter
to indemnify the Company (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by the Company from such
Underwriter.
(c) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a) or 7(b) shall be available to any party who shall fail to give
notice as provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to
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which such notice would have related and was prejudiced by the failure to give
such notice but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7 is due in accordance with its terms but for any reason is held to be
unavailable to an indemnified party, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed any Registration Statement and directors of the Company, who may also
be liable for contribution) to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in
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the table on the cover page of the Prospectus, bear to (y) the underwriting
discounts received by the Underwriters, as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company or the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or alleged omission to state a
material fact related to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, and (ii) the Company shall be liable and responsible for any amount
in excess of such underwriting discount; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed any Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
Section, notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company at any time
(a) in the absolute discretion of the Representatives at or before any
Closing Date: (i) if there shall have occurred any change, or any development or
event involving a prospective change, in the business, results of operation or
financial condition of the Company and its subsidiaries taken as a whole which,
in the judgment of the Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public offering or
the sale of and payment for the Shares; (ii) if on or prior to such date, any
domestic or international event or act or occurrence has materially disrupted,
or in the opinion of the Representatives will in the future materially disrupt,
the securities markets; (iii) if there has
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occurred any new outbreak or material escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representatives,
inadvisable to proceed with the offering; (iv) if there shall be such a material
adverse change in general financial, political or economic conditions or the
effect of international conditions on the financial markets in the United States
is such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (v) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock Exchange,
Inc. or on the Nasdaq Stock Market has been suspended or limited, or minimum or
maximum ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by said exchanges or by
order of the Commission, the National Association of Securities Dealers, Inc.,
or any other governmental or regulatory authority; or (vi) if a banking
moratorium has been declared by any New York state or Federal authority, or
(b) at or before any Closing Date, that any of the conditions specified
in Section 5 shall not have been fulfilled when and as required by this
Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then each of
the nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to this
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Section 10 by more than one-ninth of such number of Shares without the written
consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
shall be entitled to an additional business day within which it may, but is not
obligated to, find one or more substitute underwriters reasonably satisfactory
to the Representatives to purchase such Shares upon the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statements or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters
and the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed
or delivered or by telephone or telegraph if subsequently confirmed in writing,
(a) if to the Representatives, c/o CIBC World Markets Corp., World Financial
Center, New York, New York
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10281 Attention: Xxxxxxx X. Xxxxx, and (b) if to the Company, to its agent for
service as such agent's address appears on the cover page of the Initial
Registration Statement.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
CREE, INC.
By
Name: F. Xxxx Xxxxxx
Title: Chief Executive Officer
Confirmed:
CIBC WORLD MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
BANC OF AMERICA SECURITIES LLC
SOUNDVIEW TECHNOLOGY GROUP, INC.
XXXXXX XXXXXX & COMPANY, INC.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I
annexed hereto.
By CIBC WORLD MARKETS CORP.
By
Title:
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- --------------
CIBC World Markets Corp.
Prudential Securities Incorporated
Banc of America Securities LLC
SoundView Technology Group, Inc.
Xxxxxx Xxxxxx & Company, Inc.
TOTAL: 2,600,000
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