<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1997
REGISTRATION NO. 333-25015
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
ORBIT/FR, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3825 23-2874370
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
506 PRUDENTIAL ROAD
HORSHAM, PENNSYLVANIA 19044
(215) 674-5100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ARYEH TRABELSI, PRESIDENT
ORBIT/FR, INC.
506 PRUDENTIAL ROAD
HORSHAM, PENNSYLVANIA 19044
(215) 674-5100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
ARTHUR H. MILLER, ESQUIRE FREDERICK W. DREHER, ESQUIRE
BLANK ROME COMISKY & MCCAULEY DUANE, MORRIS & HECKSCHER LLP
1200 FOUR PENN CENTER PLAZA 4200 ONE LIBERTY PLACE
PHILADELPHIA, PENNSYLVANIA 19103 PHILADELPHIA, PENNSYLVANIA 19103
(215) 569-5500 (215) 979-1000
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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- -------------------------------------------------------------------------------
<PAGE>
PART II
Information Not Required In Prospectus
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
1.1 Form of Underwriting Agreement (Dated June 16, 1997).
2.1* Stock Purchase Agreement dated March 31, 1997 by and among
Advanced Electromagnetics, Inc., Anechoic Systems, Inc., Gabriel
A. Sanchez, Barbara Sanchez and the Company.
2.2* Share Exchange Agreement dated December 31, 1996 by and among
Orbit-Alchut Technologies, Ltd., Orbit Advanced Systems, Ltd. and
the Company.
2.3* Asset Acquisition Agreement dated December 31, 1996 by and between
Orbit-Alchut Technologies, Ltd. and Orbit F.R. Engineering, Ltd.
2.4* Inventory Acquisition Agreement dated January 1, 1997 by and
between Orbit-Alchut Technologies, Ltd. and Orbit F.R.
Engineering, Ltd.
2.5* Stock Purchase Agreement dated June 28, 1996 by and among Orbit
Advanced Technologies, Inc., The Samuel T. Russell Trust, Richard
P. Flam, Rickey E. Hartman, Lois A. R. Charles, Dorothy Russell,
John Aubin, Norman D. Kegg and Flam & Russell, Inc.
3.1* Amended and Restated Certificate of Incorporation of the Company.
3.2* Bylaws of the Company.
4.1* Specimen Common Stock Certificate of the Company.
5.1* Opinion of Blank Rome Comisky & McCauley.
10.1* Employment Agreement dated February 15, 1997 by and between the
Company and Aryeh Trabelsi.
10.2* Employment Agreement dated January 1, 1997 by and between the
Company and Moshe Pinkasy.
10.3* 1997 Equity Incentive Plan.
10.4* Services Agreement dated January 1, 1997 by and among Orbit-Alchut
Technologies, Ltd., Orbit F.R. Engineering, Ltd. and the Company.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Ernst & Young LLP.
23.2* Consent of Messina, Ceci, Archer & Company, P.C.
23.3* Consent of Blank Rome Comisky & McCauley (included in the opinion
filed as Exhibit 5.1 hereto).
23.4* Consent of Eric Haskell.
24.1* Power of Attorney (included on page II-4).
27.1* Financial Data Schedule (electronic filing only).
</TABLE>
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*Previously filed.
(b) Financial Statement Schedules.
Schedules have been omitted because they are not applicable or because
required information is included in the Financial Statements and Notes
thereto.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Horsham,
Pennsylvania, on the date indicated.
ORBIT/FR, INC.
Date: June 17, 1997
By: /s/ Aryeh Trabelsi
---------------------------------
Aryeh Trabelsi
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
/s/ Aryeh Trabelsi President, Chief June 17, 1997
- ----------------------------- Executive Officer and
ARYEH TRABELSI Director (Principal
Executive Officer)
* Chairman of the Board of June 17, 1997
- ----------------------------- Directors
JOSEPH AVIV
* Director June 17, 1997
- -----------------------------
ZEEV STEIN
* Director June 17, 1997
- -----------------------------
DAVID BEN-BASSAT
/s/ Joseph E. Sullivan Director of Finance and June 17, 1997
- ----------------------------- Treasurer (Principal
JOSEPH E. SULLIVAN Financial and Accounting
Officer)
*By: /s/ Aryeh Trabelsi
------------------------
ATTORNEY-IN-FACT
II-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
1.1 Form of Underwriting Agreement (Dated June 16, 1997).
2.1* Stock Purchase Agreement dated March 31, 1997 by and among
Advanced Electromagnetics, Inc., Anechoic Systems, Inc., Gabriel
A. Sanchez, Barbara Sanchez and the Company.
2.2* Share Exchange Agreement dated December 31, 1996 by and among
Orbit-Alchut Technologies, Ltd., Orbit Advanced Systems, Ltd. and
the Company.
2.3* Asset Acquisition Agreement dated December 31, 1996 by and between
Orbit-Alchut Technologies, Ltd. and Orbit F.R. Engineering, Ltd.
2.4* Inventory Acquisition Agreement dated January 1, 1997 by and
between Orbit-Alchut Technologies, Ltd. and Orbit F.R.
Engineering, Ltd.
2.5* Stock Purchase Agreement dated June 28, 1996 by and among Orbit
Advanced Technologies, Inc., The Samuel T. Russell Trust, Richard
P. Flam, Rickey E. Hartman, Lois A. R. Charles, Dorothy Russell,
John Aubin, Norman D. Kegg and Flam & Russell, Inc.
3.1* Amended and Restated Certificate of Incorporation of the Company.
3.2* Bylaws of the Company.
4.1* Specimen Common Stock Certificate of the Company.
5.1* Opinion of Blank Rome Comisky & McCauley.
10.1* Employment Agreement dated February 15, 1997 by and between the
Company and Aryeh Trabelsi.
10.2* Employment Agreement dated January 1, 1997 by and between the
Company and Moshe Pinkasy.
10.3* 1997 Equity Incentive Plan.
10.4* Services Agreement dated January 1, 1997 by and among Orbit-Alchut
Technologies, Ltd., Orbit F.R. Engineering, Ltd. and the Company.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Ernst & Young LLP.
23.2* Consent of Messina, Ceci, Archer & Company, P.C.
23.3* Consent of Blank Rome Comisky & McCauley (included in the opinion
filed as Exhibit 5.1 hereto).
23.4* Consent of Eric Haskell.
24.1* Power of Attorney (included on page II-4).
27.1* Financial Data Schedule (electronic filing only).
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 1.1
-----------
ORBIT/FR, INC.
2,000,000 Common Shares
_______________________
UNDERWRITING AGREEMENT
_______________________
West Conshohocken, Pennsylvania
June 16, 1997
Pennsylvania Merchant Group Ltd
Unterberg Harris
As Representatives of the Several
Underwriters Named in Schedule I
Attached Hereto
Four Falls Corporate Center
West Conshohocken, Pennsylvania 19428
Dear Sirs:
Orbit/FR, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell an aggregate of 2,000,000 shares of its common stock to Pennsylvania
Merchant Group Ltd and Unterberg Harris (the "Representatives") and the several
underwriters named in Schedule I hereto (collectively with the Representatives,
the "Underwriters" and individually, an "Underwriter," which terms shall also
include any Underwriter substituted as hereinafter provided in Section 11). The
shares of the Company's common stock, par value $.01 per share, are hereinafter
referred to as the "Common Shares," and the 2,000,000 Common Shares to be issued
and sold to the Underwriters by the Company are hereinafter referred to as the
"Offered Shares." The initial public offering price per Offered Share (the
"Offering Price") and the purchase price per Offered Share for the Offered
Shares to be paid by the several Underwriters shall be agreed upon by the
Company, the Selling Stockholder and the Representatives, acting on behalf of
the several Underwriters, and such agreement shall be set forth in a separate
written instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication among the
Company, the Selling Stockholder and the Representatives and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
Shares will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of execution and delivery of
the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and, unless the context otherwise indicates, all references
contained herein to "this Agree-
<PAGE>
ment" and to the phrases "herein" and "hereof" shall be deemed to include the
Price Determination Agreement.
In addition, the Underwriters, in order to cover over-allotments in the
sale of the Offered Shares, may purchase from Orbit-Alchut Technologies, Ltd.,
an Israeli corporation (the "Selling Stockholder") within 30 business days
after the Effective Date (as hereinafter defined), for their own account for
offering to the public at the Offering Price, up to 300,000 additional Common
Shares (the "Optional Shares"), upon the terms and conditions set forth in
Section 4 hereof. The Selling Stockholder has executed and delivered a Power of
Attorney and a Custody Agreement in the form attached hereto as Exhibit B
(collectively, the "Agreement and Power of Attorney") pursuant to which the
Selling Stockholder has placed the Optional Shares in custody and appointed the
person or persons designated therein with authority to execute and deliver this
Agreement on behalf of the Selling Stockholder and to take certain other
actions with respect thereto and hereto. The Offered Shares and the Optional
Shares are hereinafter collectively referred to as the "Shares." The Company and
the Selling Stockholder, intending to be legally bound hereby, confirm their
respective agreements with each of the Underwriters as follows:
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) The Company has prepared in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the rules,
regulations, releases and instructions (the "Regulations") of the
Securities and Exchange Commission (the "SEC") under the Act in effect
at all applicable times and has filed with the SEC a registration
statement on Form S-1 (File No. 333-25015) and one or more amendments
thereto registering the Shares under the Act. If the Company elects to
rely on Rule 462(b) of the Regulations to register a portion of the
Shares, a registration statement on Form S-1 relating to the Shares
(the "Rule 462 registration statement") has been or will be prepared
by the Company under the Act and the Regulations and has been or will
be filed with the SEC. Any preliminary prospectus included in such
registration statement or filed with the SEC pursuant to Rule 424(a)
of the Regulations is hereinafter called a "Preliminary Prospectus."
The various parts of such initial registration statement, including
all exhibits thereto and the information contained in the form of
final prospectus filed with the SEC pursuant to Rule 424(b) of the
Regulations in accordance with Section 5(a) of this Agreement and
deemed by virtue of Rule 430A of the Regulations to be part of the
registration statement at the time it was declared effective, each as
amended at the time the registration statement became effective, and
any Rule 462 registration statement at the time it becomes or became
effective, are hereinafter collectively called the "Regis-
-2-
<PAGE>
tration Statement." The final prospectus in the form included in the
Registration Statement and any Rule 462 registration statement or
first filed with the SEC pursuant to Rule 424(b) of the Regulations
and any amendments or supplements thereto is hereinafter collectively
called the "Prospectus."
(ii) The Registration Statement and any Rule 462 registration
statement have become effective under the Act as of their respective
Effective Date (as defined below), and the SEC has not issued any stop
order suspending the effectiveness of such Registration Statement or
Rule 462 registration statement or preventing or suspending the use of
the Preliminary Prospectus nor, to the knowledge of the Company, has
the SEC instituted, contemplated or threatened to institute
proceedings with respect to such an order. No stop order suspending
the sale of the Shares in any jurisdiction designated by the
Representatives pursuant to Section 5(f) hereof has been issued, and
no proceedings for that purpose, to the knowledge of the Company, have
been instituted or are contemplated or threatened. The Company has
complied in all material respects with any request of the SEC, or any
state securities commission in a state designated by the
Representatives pursuant to Section 5(f) hereof, for additional
information to be included in the Registration Statement or Prospectus
or otherwise. Each Preliminary Prospectus conformed to the Act and the
Regulations as of its date in all material respects and did not as of
its date contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, except the foregoing shall not apply
to statements in or omissions from any Preliminary Prospectus in
reliance upon and in conformity with information furnished to the
Company in writing by or on behalf of any Underwriter through the
Representatives expressly for use therein. The Registration Statement
and any Rule 462 registration statement on the date on which it is
declared effective by the SEC (the "Effective Date") conformed, and
any post-effective amendment thereof on the date it shall become
effective, and the Prospectus at the time it is filed with the SEC
pursuant to Rule 424(b) and on the Closing Date (as defined in Section
3 hereof) and any Option Closing Date (as defined in Section 4(b)
hereof), will conform in all material respects to the requirements of
the Act and the Regulations, and neither the Registration Statement,
any Rule 462 registration statement, any post-effective amendment
thereof nor the Prospectus will, on any of such respective dates,
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, except that this representation
and warranty does not apply to statements in or omissions from the
Registration Statement, any Rule 462
-3-
<PAGE>
registration statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by or
on behalf of any Underwriter through the Representatives expressly for
use therein.
(iii) Each of the Company and the Subsidiaries (as defined herein)
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation with all
necessary power and authority, corporate and other, and all required
licenses, permits, certifications, registrations, approvals, consents
and franchises, to own or lease and operate its properties and to
conduct its business as described in the Prospectus. The Company has
full power and authority, corporate and other, to execute, deliver and
perform this Agreement. Each of the Company and the Subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which such qualification is required,
except where the failure so to qualify would not have a material
adverse effect on the general affairs, material properties, condition
(financial or otherwise), results of operations, stockholders' equity,
business or prospects of the Company and the Subsidiaries taken as a
whole. The Company does not own any stock or other equity interest in
any corporation, partnership, joint venture or other entity other than
Orbit Advanced Technologies, Inc., a Delaware corporation and its
wholly owned subsidiary, Flam & Russell, Inc., a Delaware corporation
("Flam & Russell"), Orbit F. R. Engineering, Ltd., an Israeli corpo-
ration ("Engineering"), Wireless Products Holding Company, Inc., a
Delaware corporation, Wireless Software Holding Company, Inc., a
Delaware corporation and Wireless Investments Holding Company, Inc.,
a Delaware corporation (collectively, the "Subsidiaries"). For the
purposes of this Agreement, unless specifically excluded, the term
"Subsidiary" shall also include Advanced Electromagnetics, Inc.
("AEMI"), a California corporation. No Subsidiary is currently
prohibited, directly or indirectly, from paying any dividends to the
Company, from making other distributions on such Subsidiary's capital
stock, from repaying to the Company any loans or advances to such
Subsidiary or from transferring any of such Subsidiary's property or
assets to the Company or any other Subsidiary, except as disclosed in
the Prospectus. All material transactions between the Company and the
Subsidiaries and the officers, directors and stockholder of the
Company have been accurately disclosed in the Registration Statement
and the terms of each such transaction are fair to the Company and no
less favorable to the Company than the terms that could have been
obtained from unrelated parties.
(iv) All of the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially, or will be owned
beneficially in the case of
-4-
<PAGE>
AEMI upon the Closing Date, by the Company free and clear of all
liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, voting trusts, equities or claims of any
nature whatsoever.
(v) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due execution by the
Representatives, constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to
general equitable principles and except as the enforceability of
rights to indemnity and contribution hereunder may be limited by
federal or state securities laws or principles of public policy
underlying such laws.
(vi) The issue and sale of the Shares to be issued and sold by
the Company and the execution, delivery and performance of this
Agreement by the Company does not and will not, with or without the
giving of notice or the lapse of time, or both, (A) conflict with any
terms or provisions of the Certificate of Incorporation or By-laws, as
amended to the date hereof of the Company or any of the Subsidiaries;
(B) result in a breach of, constitute a default under, result in the
termination or modification of or result in the creation or imposition
of any lien, security interest, charge or encumbrance upon any of the
material properties of the Company or any of the Subsidiaries pursuant
to, any indenture, mortgage, deed of trust, contract, commitment or
other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of the properties of the
Company or any of the Subsidiaries are bound or affected; (C) violate
any law, rule, regulation, judgment, order or decree of any government
or governmental agency, instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of the Subsidiaries or
any of the material properties or business of the Company or any of
the Subsidiaries or (D) result in a breach, termination or lapse of
the power and authority of the Company or any of the Subsidiaries to
own or lease and operate its material properties and conduct its
business as described in the Prospectus.
(vii) At the date or dates indicated in the Prospectus, the
Company had, based on the assumptions stated and footnotes included
in the Prospectus, the capitalization set forth under the caption
"Capitalization" in the Prospectus and will have the pro forma
capitalization and the pro forma as adjusted capitalization set forth
under the caption "Capitalization" in the Prospectus. On the
Effective Date (except with respect to AEMI), the Closing Date and any
Option Closing Date, there will be no options or warrants for the
purchase of, other outstanding rights to
-5-
<PAGE>
purchase, agreements or obligations to issue or agreements or other
rights to convert or exchange any obligation or security into, capital
stock of the Company or any of the Subsidiaries or securities
convertible into or exchangeable for capital stock of the Company or
any such Subsidiary, except as described in the Registration Statement
or the Prospectus with respect to the (A) options and awards that have
been granted or are available for grant to employees, directors and
certain others to purchase Common Shares (the "Employee Options") and
(B) the Over-allotment Option granted hereunder.
(viii) The authorized capital stock of the Company, including,
without limitation, the outstanding Common Shares and the Shares being
issued on the Closing Date and any Option Closing Date, conforms in
all material respects with the descriptions thereof in the Prospectus,
and such descriptions conform in all material respects with the
descriptions thereof set forth in the instruments defining the same.
The information in the Prospectus insofar as it relates to the
Employee Options as of the Effective Date and immediately prior to the
Closing Date is true and correct in all material respects.
(ix) The outstanding Common Shares have been duly authorized and
are validly issued, fully paid and non-assessable and the Employee
Options have been duly authorized and validly issued and are legal,
valid and binding obligations enforceable against the Company in
accordance with the terms thereof, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of creditors' rights or
contractual obligations generally. The Common Shares issuable pursuant
to the Employee Options, when issued in accordance with the terms
thereof, will be duly authorized, validly issued, fully-paid and
nonassessable. None of such outstanding Common Shares, Employee
Options or shares of capital stock of each Subsidiary were, and none
of such issuable Common Shares will be, issued in violation of any
preemptive rights of any security holder of the Company or any
Subsidiary that have not been waived. The Company has reserved a
sufficient number of Common Shares for issuance pursuant to the
Employee Options. The holders of the outstanding Common Shares are not
subject to personal liability solely by reason of being such holders,
and the holders of the Common Shares issuable pursuant to the Employee
Options will not be subject to personal liability solely by reason of
being such holders. The offers and sales of the outstanding Common
Shares, the Employee Options and the shares of capital stock of each
Subsidiary were, and the issuance of the Common Shares pursuant to the
Employee Options will be, made in conformity with applicable
registration requirements or exemptions therefrom under federal and
applicable state securities laws.
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<PAGE>
(x) The issuance and sale of the Shares by the Company have been
duly authorized and, when the Shares have been duly delivered against
payment therefor as contemplated by this Agreement, the Shares will
be validly issued, fully paid and nonassessable, and the holders
thereof will not be subject to personal liability solely by reason of
being such holders. None of the Shares will be issued in violation of
any preemptive rights of any stockholder of the Company. The
certificates representing the Shares are in proper legal form under,
and conform in all respects to the requirements of, the Delaware
General Corporation law, as amended (the "DGCL"). Neither the filing
of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives any security holder of the
Company any rights, other than those which have been waived, for or
relating to the registration of any Common Shares or other security of
the Company.
(xi) No consent, approval, authorization, order, registration,
license or permit of any court, government, governmental agency,
instrumentality or other regulatory body or official is required for
the valid authorization, issuance, sale and delivery by the Company of
any of the Shares, or for the execution, delivery or performance by
the Company of this Agreement, except such as may be required for the
registration of the Shares under the Act, the Regulations and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which consent, approval and authorization have been obtained, and for
compliance with the applicable state securities or Blue Sky laws, or
the By-laws, rules and other pronouncements of the National
Association of Securities Dealers, Inc. ("NASD"). Upon the
effectiveness of the Registration Statement, the Common Shares will be
registered pursuant to Section 12(g) of the Exchange Act, and will be
listed on the National Market System ("NMS") of the NASD Automated
Quotation System ("Nasdaq"). The Company has taken no action designed
to, or likely to, have the effect of terminating the registration of
the Common Shares from the Nasdaq NMS, nor has the Company received
any notification that the SEC or the NASD is contemplating terminating
such registration or listing.
(xii) The statements in the Registration Statement and the
Prospectus, insofar as they are descriptions of or references to
statutes, legal and governmental proceedings or contracts, agreements
or other documents, are accurate in all material respects and present
or summarize fairly, in all material respects, the information
required to be disclosed under the Act or the Regulations, and there
are no contracts, agreements or other documents required to be
described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
under the Act or the Regulations that have not been so described,
referred to or filed, as required.
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<PAGE>
(xiii) The consolidated financial statements of the Company and its
consolidated subsidiaries, excluding AEMI, and the financial
statements of Flam & Russell (including the notes thereto) filed as
part of the Preliminary Prospectus, the Prospectus and the
Registration Statement present fairly, in all material respects, the
financial position of the Company and its consolidated subsidiaries,
on a consolidated basis, and of Flam & Russell, respectively, as of
the respective dates thereof, and the results of operations and cash
flows of the Company and its consolidated subsidiaries, excluding
AEMI, on a consolidated basis, and of Flam & Russell, respectively,
for the periods indicated therein, all in conformity with generally
accepted accounting principles consistently applied. The supporting
schedules included in the Registration Statement fairly state in all
material respects the information required to be stated therein in
relation to the basic financial statements taken as a whole. The
financial information included in the Prospectus under the captions
"Prospectus Summary" and "Selected Consolidated Financial Data"
presents fairly the information shown therein and has been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement. No other financial statements
or schedules of any Subsidiary are required by the Act or the
Regulations to be included in the Registration Statement or the Pro-
spectus.
(xiv) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein, there has not been (A) any material adverse change,
including, whether or not insured against, any material loss or damage
to any material assets, or development involving a prospective
material adverse change, in the general affairs, properties, assets,
management, condition (financial or other wise), results of
operations, stockholders' equity, business or prospects of the
Company or any of the Subsidiaries taken as a whole, (B) any
transaction entered into other than in the ordinary course of business
consistent with past practice by the Company or any of the
Subsidiaries that is material to the Company and the Subsidiaries
taken as a whole, (C) any dividend or distribution of any kind
declared, paid or made by the Company or any of the Subsidiaries on
their respective capital stock, (D) any liabilties or obligations,
direct or indirect, incurred by the Company or any of the Subsidiaries
that are material to the Company and the Subsidiaries other than
liabilities incurred in the ordinary course of the Company's business
consistent with past practice or (E) any material change in the short-
term debt or long-term debt of the Company or any of the Subsidiaries.
Neither the Company nor any of the Subsidiaries has any contingent
liabilities or obligations that are material and that are not
disclosed in the Prospectus.
-8-
<PAGE>
(xv) The Company has not distributed and, prior to the later to
occur of the Closing Date, the Option Closing Date or the completion
of the distribution of the Shares, will not distribute any offering
material in connection with the offering and sale of the Shares other
than the Registration Statement, the Preliminary Prospectus, the
Prospectus and other materials, if any, permitted by the Act and the
Regulations.
(xvi) The Company and each of the Subsidiaries has filed with the
appropriate federal state and local governmental agencies, and all
foreign countries and political subdivisions thereof, all material tax
returns that are required to be filed or has duly obtained extensions
of time for the filing thereof and has paid all taxes shown on such
returns and all material assessments received by it to the extent that
the same have become due. The Company and each of the Subsidiaries has
not executed or filed with any taxing authority, foreign or domestic,
any agreement extending the period for assessment or collection of
any income or other taxes, is not a party to any pending action or
proceeding by any foreign or domestic governmental agencies for the
assessment or collection of taxes, and no claims for assessment or
collection of taxes have been asserted against the Company or any of
the Subsidiaries that would materially adversely affect the general
affairs, assets, material properties, condition (financial or other
wise), results of operations, stockholders' equity, business or
prospects of the Company and the Subsidiaries taken as a whole.
(xvii) To the best of the Company's knowledge, Ernst & Young LLP,
which has certified certain financial statements of the Company and
its consolidated subsidiaries, not including AEMI, and of Flam &
Russell included in the Registration Statement and the Prospectus, are
independent public accountants as required by the Act, the Exchange
Act and the Regulations. The statements included in the Registration
Statement with respect to Ernst & Young LLP pursuant to Rule 509 of
Regulation S-K are true and correct in all material respects.
(xviii) Neither the Company nor any of the Subsidiaries is, or with
the giving of notice or the passage of time or both would be, in
violation of, or in default under, any of the terms or provisions of
(A) its Certificate of Incorporation or By-laws, as amended to the
date hereof, or (B) except to the extent such action would not have a
material adverse effect on the general affairs, material properties,
assets, condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company and the
Subsidiaries taken as a whole, (1) any indenture, mortgage, deed of
trust, contract, loan agree ment, commitment or other agreement or
instrument to which it is a party or by which it or any of its
material proper-
-9-
<PAGE>
ties is bound or affected; (2) any law, rule, regulation, judgment,
order or decree of any government or governmental agency,
instrumentality or court, domestic or foreign, having jurisdiction
over it or any of its material properties or business or (3) any
license, permit, certification, registration, approval, consent or
franchise referred to in subsection (iii) of this Section 1(a).
(xix) Other than as disclosed in the Prospectus, there are no
claims, actions, suits, proceedings, arbitrations, investigations or
inquiries pending before or, to the knowledge of the Company,
threatened or contemplated by, any governmental agency,
instrumentality, court or tribunal, domestic or foreign, or before
any private arbitration tribunal, relating to or affecting the Company
or any of the Subsidiaries or any of their respective material prop-
erties or business that might affect the issuance or validity of any
of the Shares or the validity of any of the outstanding Common Shares,
or that, if determined adversely to the Company, would, in any case or
in the aggregate, result in any material adverse change in the general
affairs, material properties, assets, condition (financial or
otherwise), results of operations, stockholders' equity, business or
prospects of the Company and the Subsidiaries taken as a whole; nor,
to the knowledge of the Company, is there any reasonable basis for any
such claim, action, suit, proceeding, arbitration, investigation or
inquiry. There are no outstanding orders, judgments or decrees of any
court, governmental agency, instrumentality or other tribunal
enjoining the Company or any Subsidiary from, or requiring the Company
to take or refrain from taking, any action, or to which the Company or
any Subsidiary, or their respective material properties, assets or
business is bound or subject.
(xx) Except as disclosed in the Prospectus, the Company and each
of the Subsidiaries owns, or possesses adequate rights to use, all
patents, patent applications, trademarks, trademark registrations,
applications for trademark registration, trade names, service marks,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
technology, information, systems, design methodologies and devices or
procedures developed or derived from the Company's or a Subsidiary's
business), trade secrets, confidential information, processes and
formulations necessary for or used in the conduct of its business as
described in the Prospectus (collectively, the "Intellectual
Property") that, if not so owned, or if rights to use were not so
possessed, would materially adversely affect the general affairs,
material properties, condition (financial or otherwise), results of
operations, stockholders' equity, business or prospects of the Company
and the Subsidiaries; neither the Company nor any of the Subsidiaries
has knowingly infringed, is infringing or has
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<PAGE>
received any notice of conflict with the asserted rights of others
with respect to the Intellectual Property that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the general affairs,
material properties, condition (financial or otherwise), results of
operations, stockholders' equity, business or prospects of the Company
and the Subsidiaries taken as a whole; and, to the knowledge of the
Company, no others have infringed upon or are in conflict with its
Intellectual Property.
(xxi) The Company and each of the Subsidiaries has good and
marketable title to all personal property (tangible and intangible)
described in the Prospectus as being owned by it, free and clear of
all liens, security interests, charges or encumbrances, except (A)
those as are described in the Prospectus, (B) liens arising in the
ordinary course of the Company's business consistent with past
practice since the date of the latest balance sheet in the Prospec-
tus, (C) purchase money security interests, conditional sale
contracts, capitalized leases and other title retention or deferred
purchase devices arising in the ordinary course of the Company's
business consistent with past practice, (D) deposits or pledges made
in connection with workers' compensation or unemployment insurance,
(E) liens arising by operation of law to secure landlords and lessors
under lease agreements, (F) liens to secure claims for labor, material
or supplies to the extent payment therefor shall not at the time be
required to be made, (G) liens for current taxes not yet due or for
taxes being contested in good faith and (H) those as do not materially
affect the value or the transferability of such property and do not
interfere in any material respect with the use made, or proposed to be
made, of such property by the Company or such Subsidiary. The Company
and each of the Subsidiaries has adequately insured with insurers of
recognized financial responsibility its personal property against
loss or damage by fire or other casualty and maintains, in adequate
amounts, insurance against such other risks as are prudent and
customary in the businesses in which they are engaged. The Company
does not own any real property, and all real property used or leased
by the Company or any of the Subsidiaries, as described in the
Prospectus (collectively, the "Premises"), is held by the Company or
such Subsidiary under a valid, subsisting and enforceable lease,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of
creditors' rights or contractual obligations generally. The Premises,
and all operations conducted thereon, are now and, since the Company
or such Subsidiary began to use such Premises, always have been in
compliance in all material respects with all federal, state and local
statutes, ordinances, regulations, rules, standards and requirements
of common law concerning or relating to industrial hygiene and the
protection of health and the environ-
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<PAGE>
ment (collectively, "the Environmental Laws"), except to the extent
that any failure to be in such compliance would not materially
adversely affect the general affairs, material properties, assets,
condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company and the
Subsidiaries taken as a whole. To the actual knowledge of the Company,
there have been no releases of hazardous substances on, beneath or
arising from the Premises since the Company or such Subsidiary began
to use such Premises that would give rise to liability, the imposition
of a statutory lien or require a "Response," "Removal" or "Remedial
Action," as defined herein, under any of the Environmental Laws, and
that would materially adversely affect the general affairs, material
properties, assets, condition (financial or otherwise), results of
operations, stockholders' equity, business or prospects of the Company
and the Subsidiaries taken as a whole. Neither the Company nor any of
the Subsidiaries has received written notice, and does not have actual
knowledge, of any claim, investigation, regulatory action, suit or
other action instituted or threatened against it or the Premises
relating to any of the Environmental Laws. Neither the Company nor
any of the Subsidiaries has received any notice of material violation,
citation, complaint, order, directive, request for information or
response thereto, notice letter, demand letter or compliance schedule
to or from any governmental or regulatory agency arising out of or in
connection with Hazardous Substances (as defined by applicable
Environmental Laws) on, beneath, arising from or generated at the
Premises. As used in this subsection, the terms "Response," "Removal"
and "Remedial Action" shall have the respective meanings assigned to
such terms under Sections 101 (23)-101 (25) of the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by
the Superfund Amendments and Reauthorization Act.
(xxii) Each of the Company and the Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable
assurances that: (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary in order to permit preparation of the Company's
consolidated financial statements in accordance with generally
accepted accounting principles and to maintain accountability for
assets; (C) access to assets is permitted only in accordance with
management's general or specific authorization and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxiii) All offers and sales of the Company's capital stock prior to
the date hereof were at all relevant times duly registered under the
Act or exempt from the registration
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<PAGE>
requirements of the Act and were duly registered or the subject
of an available exemption from the registration requirements of
applicable state securities or blue sky laws.
(xxiv) Each material contract or other material instrument (however
characterized or described) to which the Company or any of the
Subsidiaries is a party or by which any of its properties or business
is bound or affected and to which reference has been made in the
Prospectus or which has been filed as an exhibit to the Registration
Statement has been duly and validly executed by the Company or such
Subsidiary and, to the knowledge of the Company, by the other parties
thereto. Except as described in the Prospectus, each such contract or
other instrument is in full force and effect in all material respects
and, to the knowledge of the Company, is enforceable against the par-
ties thereto in all material respects in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of
creditors' rights or contractual obligations generally, and neither
the Company nor such Subsidiary is and, to the knowledge of the
Company, no other party is in material default thereunder and no event
has occurred that, with the lapse of time or the giving of notice, or
both, would constitute a material default thereunder.
(xxv) Except for the Company's 401(k), disability, health and life
insurance plans, neither the Company nor any Subsidiary has had any
employee benefit plan, profit sharing plan, employee pension benefit
plan or employee welfare benefit plan or deferred compensation
arrangements (collectively, "Plans") that are subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder ("ERISA"). All Plans
that are subject to ERISA are, and have been at all times since their
establishment, in compliance with ERISA in all material respects and,
to the extent required by the Internal Revenue Code of 1986, as
amended (the "Code"), in compliance with the Code in all material re-
spects. Neither the Company nor any Subsidiary has sponsored any
employee pension benefit plan that is subject to Part 3 of Subtitle B
of Title I of ERISA or any defined benefit plan or multiemployer plan.
Neither the Company nor any Subsidiary has maintained retired life and
retired health insurance plans that are employee welfare benefit plans
providing for continuing benefit or coverage for any employee or any
beneficiary of any employee after such employee's termination of
employment, except as required by Section 4980B of the Code. To the
knowledge of the Company, no fiduciary or other party in interest
with respect to any of the Plans has caused any of such Plans to
engage in a prohibited transaction as defined in Section 406 of ERISA.
As used in this subsection, the terms "defined
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<PAGE>
benefit plan," "employee benefit plan," "employee pension benefit
plan," "employee welfare benefit plan," "fiduciary" and "multiemployer
plan" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
(xxvi) No labor dispute exists with the employees of the Company or
any of the Subsidiaries and, to the knowledge of the Company, no such
labor dispute is imminent.
(xxvii) Except as disclosed in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in
connection with the transactions contemplated herein.
(xxviii) Except as described in the Prospectus or as entered into in
the ordinary course of the Company's business consistent with past
practice, neither the Company nor any Subsidiary is a party to, nor is
it bound by, any agreement pursuant to which royalties, honoraria or
fees are payable by the Company or such Subsidiary to any person by
reason of the ownership or use of any Intellectual Property that is
material to the business of the Company or such Subsidiary.
(xxix) The Company is familiar with the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future
to continue to con duct, its affairs in such a manner to ensure that
it will not become an "investment company" within the meaning of the
1940 Act and such rules and regulations.
(xxx) Neither the Company nor any of its officers, directors or
affiliates has (A) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Shares or (B) since the filing of the Registration Statement
(1) sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares or (2) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
other securities of the Company.
(xxxi) The Company has obtained for the benefit of the Company and
the Underwriters from the Selling Stockholder and each of the
Company's directors and executive officers listed on Schedule II
hereto a written agreement ("lock-up agreement"), in the form of
Exhibit C hereto, that for a period of 180 days from the Effective
Date such Selling Stockholder, director or executive officer will not,
without the prior written consent of the Representatives, offer,
sell, contract to sell, grant any option for the
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<PAGE>
sale of, or otherwise dispose of, directly or indirectly, any shares
of Common Stock.
(xxxii) Neither the Company, any of the Subsidiaries, nor any
director, officer, employee or other person associated with or acting
on behalf of the Company or any Subsidiary has, directly or
indirectly: used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
Any certificate signed by any officer of the Company in such capacity
and delivered to the Representatives or to counsel for the Underwriters
pursuant to this Agreement shall be deemed a representation and warranty by
the Company to the several Underwriters as to the matters covered thereby.
(b) Representations and Warranties of the Selling Stockholder. The
Selling Stockholder represents and warrants to, and agrees with, each of
the several Underwriters and the Company that:
(i) The Selling Stockholder is a corporation in good standing
under the laws of the State of Israel. The Selling Stockholder has
full power and authority to own its assets and to conduct its
business.
(ii) The Selling Stockholder has full right, power (corporate and
other) and authority to enter into this Agreement and the Agreement
and Power of Attorney and to sell, assign, transfer and deliver to the
Underwriters the Shares to be sold by the Selling Stockholder
hereunder; and the execution and delivery of this Agreement and the
Agreement and Power of Attorney have been duly authorized by all
necessary action of the Selling Stockholder.
(iii) The Selling Stockholder has duly executed and delivered this
Agreement and the Agreement and Power of Attorney and, assuming due
execution of this Agreement by the Representatives of the
Underwriters, this Agreement and the Agreement and Power of Attorney
constitute the valid and binding agreements of the Selling Stockholder
enforceable against the Selling Stockholder in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating
to or affecting the enforcement of creditors' rights generally and to
general equitable principles and, with respect to this Agreement and
the Agreement and Power of Attorney, except as the enforceability of
rights to indemnity and contribution under this Agreement
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<PAGE>
may be limited under applicable securities laws or the public policy
underlying such laws.
(iv) No consent, approval, authorization, order or declaration of or
form, or registration, qualification or filing with, any court or governmental
agency or body is required for the sale of the Shares to be sold by the
Selling Stockholder or the consummation of the transactions contemplated by
this Agreement and the Agreement and Power of Attorney, except the
registration of such Shares under the Act (which, if the Registration
Statement is not effective as of the time of execution hereof, shall be
obtained as provided in this Agreement) and such as may be required under
state securities or blue sky laws in connection with the offer, sale and
distribution of such Shares by the Underwriters.
(v) The sale of the Shares to be sold by the Selling Stockholder and the
performance of this Agreement and the Agreement and the Power of Attorney and
the consummation of the transactions therein and herein contemplated will not
conflict with, or, with or without the giving of notice or the passage of time
or both, result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any material indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the
Selling Stockholder or any of its subsidiaries is a party or to which any of
their respective material properties or assets is subject, nor will such
action conflict with or violate any provision of the charter documents or by-
laws of the Selling Stockholder or governing instruments of any of its
subsidiaries or any statute, rule or regulation or any order, judgement or
decree of any court or governmental agency or body having jurisdiction over
the Selling Stockholder or any of the Selling Stockholder's material
properties or assets.
(vi) The Selling Stockholder has, and immediately prior to the Option
Closing Date (as defined in Section 4 hereof), the Selling Stockholder will
have, good and valid title to the Shares to be sold by the Selling Stockholder
hereunder, free and clear of all liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting trusts, equities or
claims of any nature whatsoever (other than pursuant to this Agreement and the
Agreement and Power of Attorney); and, upon delivery of such Shares against
payment therefor as provided herein, good and valid title to such Shares, free
and clear of all liens, security interests, pledges, charges, encumbrances,
defects, stockholders' agreements, voting trusts, equities or claims of any
nature whatsoever, will pass to the several Underwriters.
(vii) Neither the Selling Stockholder nor any of its officers, directors
or affiliates has (A) taken, directly
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<PAGE>
or indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares or (2) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of
the Company.
(viii) To the best knowledge of the Selling Stockholder, the
representations and warranties of the Company contained in Section 1(a) hereof
are true and correct.
(ix) Certificates in negotiable form for the Optional shares to be sold
hereunder by the Selling Stockholder have been placed in custody, for the
purpose of making delivery of such Optional Shares under this Agreement, under
the Agreement and Power of Attorney which appoints Aryeh Trabelsi as custodian
(the "Custodian") for the Selling Stockholder. The Selling Stockholder agrees
that the Optional Shares represented by the certificates held in custody for
it under the Agreement and Power of Attorney are for the benefit of and
coupled with and subject to the interest hereunder of the Custodian, the
Underwriters and the Company, that the arrangements made by the Selling
Stockholder for such custody and the appointment of the Custodian by the
Selling Stockholder are irrevocable, and that the obligations of the Selling
Stockholder hereunder shall not be terminated by operation of law, the
liquidation of the Selling Stockholder or any other event, and after any such
liquidation or event, certificates for the Optional Shares shall be delivered
by the Custodian in accordance with the terms and conditions of this Agreement
and any actions taken by the Custodian pursuant to the Agreement and Power of
Attorney shall be as valid as if such liquidation or other event had not
occurred, regardless of whether or not the Custodian shall have received
notice thereof.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Code, with respect to the transactions herein
contemplated, the Selling Stockholder agrees to deliver to the Representatives
prior to or at the Option Closing Date, a properly completed and executed United
States Treasury Department Form W-8 or other applicable form or statement
specified by Treasury Department regulations in lieu thereof.
2. Purchase and Sale of Offered Shares. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company shall sell the
Offered Shares to the several Underwriters at the Offering Price less the
underwriting discount shown on the
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<PAGE>
cover page of the Prospectus (the "Underwriting Discount"), and the
Underwriters, severally and not jointly, shall purchase from the Company on a
firm commitment basis, at the Offering Price less the Underwriting Discount, the
respective Offered Shares set forth opposite their names on Schedule I hereto.
In making this Agreement, each Underwriter is contracting severally, and not
jointly, and except as provided in Sections 4 and 11 hereof, the agreement of
each Underwriter is to purchase only that number of Offered Shares specified
with respect to that Underwriter in Schedule I. The Underwriters shall offer
the Offered Shares to the public as set forth in the Prospectus.
3. Payment and Delivery. Payment for the Offered Shares shall be made to
the Company by certified or official bank check payable to its order in
Philadelphia Clearing House funds, at the offices of Duane, Morris & Heckscher
LLP, 4200 One Liberty Place, Philadelphia, Pennsylvania 19103, or at such other
location as shall be agreed upon by the Company and the Representatives, or in
immediately available funds wired to such account as the Company may specify
(with all costs and expenses incurred by the Underwriters in connection with
such settlement in immediately available funds (including, but not limited to,
interest or cost of funds expenses) to be borne by the Company), against
delivery of the Offered Shares to the Representatives at the offices of The
Depository Trust Company, 55 Water Street, New York, New York 10041, for the
respective accounts of the Underwriters. Such payment and delivery will be made
at 10:00 A.M., Philadelphia time, on the third (or, if the Offered Shares are
priced, as contemplated by Rule 15c6-1(c) under the Exchange Act after 4:30 P.M.
Philadelphia time, the fourth) business day after the date of this Agreement or
at such other time and date not later than five business days thereafter as the
Representatives and the Company shall agree upon. Such time and date are
referred to herein as the "Closing Date." The certificates representing the
Offered Shares to be sold and delivered will be in such denominations and
registered in such names as the Representatives request not less than two full
business days prior to the Closing Date, and will be made available to the
Representatives for inspection, checking and packaging at the office of The
Depository Trust Company in New York, New York or at such other location in New
York, New York as is specified by the Representatives, not less than one full
business day prior to the Closing Date.
4. Option to Purchase Optional Shares.
(a) For the purposes of covering any over-allotments in connection with the
distribution and sale of the Offered Shares as contemplated by the Prospectus,
subject to the terms and conditions herein set forth, the several Underwriters
are hereby granted an option by the Selling Stockholder to purchase all or any
part of the Optional Shares from the Selling Stockholder (the "Over-allotment
Option"). The purchase price to be paid for the Optional Shares shall be the
Offering Price less the Underwriting Discount. The Over-allotment Option
granted hereby may be exercised by the Representatives on behalf of the
several Underwriters as to all or any part of the Optional Shares at any
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<PAGE>
time and from time to time within 30 business days after the Effective Date. No
Underwriter shall be under any obligation to purchase any Optional Shares prior
to an exercise of the Over-allotment Option.
(b) The Over-allotment Option granted hereby may be exercised by the
Representatives on behalf of the several Underwriters by giving notice to the
Selling Stockholder by a letter sent by registered or certified mail, postage
prepaid, telex, telegraph, telegram or facsimile (such notice to be effective
when sent), addressed as provided in Section 13 hereof, setting forth the number
of Optional Shares to be purchased, the date and time for delivery of and
payment for the Optional Shares and stating that the Optional Shares referred to
therein are to be used for the purpose of covering over-allotments in connection
with the distribution and sale of the Offered Shares. If such notice is given
prior to the Closing Date, the date set forth therein for such delivery and
payment shall not be earlier than either five full business days thereafter or
the Closing Date, whichever occurs later. If such notice is given on or after
the Closing Date, the date set forth therein for such delivery and payment shall
be a date selected by the Representatives that is not later than five full
business days after the exercise of the Over-allotment Option. The date and
time set forth in such a notice is referred to herein as an "Option Closing
Date," and a closing held pursuant to such a notice is referred to herein as an
"Option Closing." The number of Optional Shares to be sold to each Underwriter
pursuant to each exercise of the Over-allotment Option shall be the number that
bears the same ratio to the aggregate number of Optional Shares being purchased
through such Over-allotment Option exercise as the number of Offered Shares
opposite the name of such Underwriter in Schedule I hereto bears to the total
number of all Offered Shares; subject, however, to such adjustment as the
Representatives may approve to eliminate fractional shares and subject to the
provisions for the allocation of Optional Shares purchased for the purpose of
covering over-allotments set forth in Sections 9 and 12 of the Agreement Among
Underwriters. Upon each exercise of the Over-allotment Option, the Selling
Stockholder shall become obligated to issue and sell to the Representatives for
the respective accounts of the Underwriters, and on the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the several Underwriters
shall become severally but not jointly obligated to purchase from the Selling
Stockholder, the number of Optional Shares specified in each notice of exercise
of the Over-allotment Option.
(c) Payment for the Optional Shares shall be made to the Selling Stockholder
by certified or official bank check payable to its order in Philadelphia
Clearing House funds, at the offices of Duane, Morris & Heckscher LLP, 4200 One
Liberty Place, Philadelphia, PA 19103, or such other location as shall be agreed
upon by the Selling Stockholder and the Representatives, or in immediately
available funds wired to such
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account as the Selling Stockholder may specify (with all costs and expenses
incurred by the Underwriters in connection with such settlement in immediately
available funds (including, but not limited to, interest or cost of funds
expenses) to be borne by the Selling Stockholder), against delivery of the
Optional Shares to the Representatives at the offices of The Depository Trust
Company, 55 Water Street, New York, New York 10041, for the respective
accounts of the Underwriters. The certificates representing the Optional
Shares to be issued and delivered will be in such denominations and registered
in such names as the Representatives request not less than two full business
days prior to the Option Closing Date, and will be made available to the
Representatives for inspection, checking and packaging at the office of The
Depository Trust Company in New York, New York or at such other location in
New York, New York as is specified by the Representatives not less than one
full business day prior to the Option Closing Date.
5. Certain Covenants and Agreements of the Company and the Selling
Stockholder.
(a) Covenants of the Company. The Company covenants and agrees with the
several Underwriters as follows:
(i) If Rule 430A of the Regulations is employed, the Company will
timely file the Prospectus pursuant to and in compliance with Rule 424(b)
of the Regulations and will advise the Representatives of the time and
manner of such filing.
(ii) The Company will not at any time, whether before or after the
Registration Statement shall have become effective, during such period as,
in the opinion of counsel for the Underwriters, the Prospectus is required
by law to be delivered in connection with sales by the Underwriters or a
dealer, file or publish any amendment or supplement to the Registration
Statement or the Prospectus of which the Representatives have not been
previously advised and furnished a copy, or which is not in compliance with
the Regulations, or, during the period before the distribution of the
Offered Shares and the Optional Shares is completed, file or publish any
amendment or supplement to the Registration Statement or the Prospectus to
which the Representatives reasonably object in writing.
(iii) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time and date that this Agreement is
executed and delivered by the parties hereto, to become effective and will
advise the Representatives immediately, and confirm such advice in writing,
(A) when the Registration Statement, or any post-effective amendment to the
Registration Statement, is filed with the SEC, (B) of the receipt of any
comments from the SEC, (C) when the Registration Statement has become
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effective and when any post-effective amendment thereto becomes effective,
or when any supplement to the Prospectus or any amended Prospectus has been
filed, (D) of any request of the SEC for amendment or supplementation of
the Registration Statement or Prospectus or for additional information, (E)
during the period when the Prospectus is required to be delivered under the
Act and Regulations, of the happening of any event which in the Company's
judgment makes any material statement in the Registration Statement or the
Prospectus untrue or which requires any changes to be made in the
Registration Statement or the Prospectus in order to make any material
statements therein not misleading and (F) of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, the suspension of the qualification of any of the Shares
for offering or sale in any jurisdiction in which the Underwriters intend
to make such offers or sales, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will use its best efforts
to prevent the issuance of any such stop order or of any order preventing
or suspending such use and, if any such order is issued, to obtain as soon
as possible the lifting thereof.
(iv) The Company has delivered to the Representatives, without charge,
and will continue to deliver from time to time until the Effective Date, as
many copies of each Preliminary Prospectus as the Representatives may
reasonably request. The Company will deliver to the Representatives,
without charge, as soon as possible after the Effective Date, and
thereafter from time to time during the period when delivery of the
Prospectus is required under the Act, such number of copies of the
Prospectus (as supplemented or amended, if the Company makes any
supplements or amendments to the Prospectus) as the Representatives may
reasonably request. The Company hereby consents to the use of such copies
of the Preliminary Prospectus and the Prospectus for the purposes permitted
by the Act, the Regulations and the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters
and by all dealers to whom Shares may be sold, both in connection with the
offering and sale of the Shares and for such period of time thereafter as
the Prospectus is required by the Act to be delivered in connection with
sales by any Underwriter or dealer. The Company has furnished or will
furnish to the Representatives two signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Effective Date, two copies of all exhibits filed
therewith and two signed copies of all consents and certificates of
experts, and will deliver to the Representatives such number of conformed
copies of the Registration Statement, including
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financial statements and exhibits, and all amendments thereto, as the
Representatives may reasonably request.
(v) The Company will comply with the Act, the Regulations, the
Exchange Act and the rules and regulations thereunder so as to permit the
continuance of sales of and dealings in the Shares for as long as may be
necessary to complete the distribution of the Shares as contemplated
hereby. The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement.
(vi) The Company will furnish such information as may be required and
otherwise cooperate in the registration or qualification of the Shares, or
exemption therefrom, for offering and sale by the several Underwriters and
by dealers under the securities or Blue Sky laws of such jurisdictions in
which the Representatives determine to offer the Shares, after consultation
with the Company, and will file such consents to service of process or
other documents necessary or appropriate in order to effect such
registration or qualification; provided, however, that no such
qualification shall be required in any jurisdiction where, solely as a
result thereof, the Company would be subject to taxation or qualification
as a foreign corporation doing business in such jurisdiction where it is
not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering
or sale of the Shares, in any jurisdiction where it is not now so subject.
The Company will, from time to time, prepare and file such statements and
reports as are or may be required to continue such qualification in effect
for so long a period as is required under the laws of such jurisdictions
for such offering and sale.
(vii) Subject to subsection (ii) of this Section 5(a), in case of any
event, at any time within the period during which, in the opinion of
counsel for the Underwriters, a prospectus is required to be delivered
under the Act and the Regulations, as a result of which event any
Preliminary Prospectus or the Prospectus, as then amended or supplemented,
would contain in the judgment of the Company or in the opinion of counsel
for the Underwriters an untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading,
or, if it is necessary at any time to amend any Preliminary Prospectus or
the Prospectus to comply with the Act and the Regulations or any applicable
securities or Blue Sky laws, the Company promptly will prepare and file
with the SEC, and any applicable state securities commission, an amendment
or supplement that will correct such statement or omission or an amendment
that will effect such compliance and will furnish to the Representatives
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such number of copies of such amendment or amendments or supplement or
supplements to the Prospectus, in form and substance satisfactory to the
Representatives and counsel for the Underwriters, as the Representatives
may reasonably request. For purposes of this subsection, the Company will
furnish such information to the Representatives, the Underwriters' counsel
and counsel to the Company as shall be necessary to enable such persons to
consult with the Company with respect to the need to amend or supplement
the Prospectus, and shall furnish to the Representatives and the
Underwriters' counsel such further information as each may from time to
time reasonably request. If the Company and the Representatives agree that
the Prospectus should be amended or supplemented, the Company, if requested
by the Representatives, will, if and to the extent required by law,
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(viii) The Company will make generally available to its security
holders as soon as practicable and in any event not later than 45 days
after the end of the period covered thereby, an earnings statement of the
Company, which need not be audited unless required by the Act or the
Regulations, that shall comply with Section 11(a) of the Act and Rule 158
under the Regulations and cover a period of at least 12 consecutive months
beginning not later than the first day of the Company's fiscal quarter next
following the Effective Date.
(ix) For a period of five years from the Effective Date, the Company
will deliver to the Representatives: (i) a copy of each report or document,
including, without limitation, reports on Forms 8-K, 10-Q and 10-K (or such
similar forms as may be designated by the SEC), registration statements and
any exhibits thereto, filed or furnished to the SEC or any securities
exchange or the NASD, on the date each such report or document is so filed
or furnished; (ii) as soon as practicable, copies of any reports or
communications (financial or other) of the Company mailed to its security
holders and (iii) every material press release in respect of the Company or
its affairs that was released or prepared by the Company.
(x) For a period of three years from the Effective Date, the Company
will deliver to the Representatives, subject to execution of an appropriate
confidentiality agreement, such additional information concerning the
business and financial condition of the Company as the Representatives may
from time to time reasonably request in writing, and which can be prepared
or obtained by the Company without unreasonable effort or expense.
(xi) Neither the Company nor any of its officers, directors or
affiliates will (A) take, directly or
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indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to cause or to result
in, or that might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares, (B) sell, bid for, purchase or pay anyone
any compensation for soliciting purchases of, the Shares or (C) pay or
agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(xii) In connection with the lock-up agreements, appropriate stop
transfer instructions with respect to any Common Shares held by such person
will be issued by the Company to the transfer agent for such Common Shares.
(xiii) The Company will not sell, issue, contract to sell offer to sell
or otherwise dispose of any Common Shares, options to purchase Common
Shares or any other security convertible into or exchangeable for Common
Shares, from the date of the Effective Date through the period ending 180
days after the Effective Date, without the prior written consent of the
Representatives, which consent shall not be unreasonably withheld, except
for (i) the sale of the Shares as contemplated by this Agreement and the
granting of options, (ii) the grant of options or awards under, or the
issuance of Common Shares upon the exercise of options or awards granted
under, the Company's 1997 Equity Incentive Plan described in the
Prospectus, (iii) in connection with the acquisition of AEMI and (iv) the
issuance of shares as consideration for future acquisitions if the terms of
such issuance provide that such Common Shares shall not be sold prior to
the expiration of the 180-day period referenced under the lock-up
agreements.
(xiv) The Company will use all reasonable efforts to maintain the
listing of the Common Shares on the Nasdaq NMS.
(xv) The Company shall, at its sole cost and expense, supply and
deliver to the Representatives and the Underwriters' counsel (in the form
they require), within a reasonable period from the Closing Date, six
transaction binders, each of which shall include the Registration
Statement, as amended or supplemented, the Prospectus, the Preliminary Blue
Sky Memorandum and any supplement thereto and all other underwriting and
closing documents.
(xvi) The Company will use the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectus and shall file such reports with
the SEC with respect to the sale of such Shares and the application of
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the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(xvii) Following the Closing Date, the Company shall nominate as
directors for election by the Company's stockholders and, to the extent
permitted by applicable law, shall use its best efforts to effectuate such
election so that for the three years following the Effective Date, the
Company's Board of Directors shall include three individuals who are not
affiliates of the Company or its affiliates.
(xviii) If at any time during the period beginning on the Effective
Date and ending on the later of (A) the date 30 days after such Effective
Date and (B) the date that is the earlier of (1) the date on which the
Company first files with the SEC a Quarterly Report on Form 10-Q after the
Effective Date and (2) the date on which the Company first issues a
quarterly financial report to stockholders after the Effective Date, (x)
any publication or event relating to or affecting the Company shall occur
as a result of which in the reasonable opinion of the Representatives the
market price of the Shares has been or is likely to be materially affected,
regardless of whether such publication or event necessitates an amendment
of or supplement to the Prospectus, the Company will, after written notice
from the Representatives advising the Company to the effect set forth
above, consult with the Representatives concerning the necessity of a press
release or other public statement, and, if the Company reasonably
determines after such consultation that a press release or other public
statement is necessary, the Company will forthwith prepare and consult with
the Representatives concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to the
Representatives, responding to or commenting on such publication or event
and (y) any rumor relating to or affecting the Company shall occur as a
result of which in the reasonable opinion of the Representatives the
market price of the Shares has been or is likely to be materially affected,
regardless of whether such rumor necessitates an amendment of or supplement
to the Prospectus, the Company will consult with the Represen tatives
concerning the necessity of a press release or other public statement, and,
if the Company determines that a press release or other public statement is
necessary, the Company will forthwith prepare, consult with the Represen-
tatives concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to the Representatives,
responding to or commenting on such rumor.
(xix) For a period of three years following the Closing Date, the
Company grants Pennsylvania Merchant Group Ltd the right of first refusal
to act as the managing under writer for any and all future public offerings
(excluding
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offerings to Company employees or to others as consideration for the
purchase of assets for use in the Company's business or in one or more
business combinations) of any equity securities of the Company, or any
successor to or any subsidiary of the Company. Pennsylvania Merchant Group
Ltd shall notify the Company of the decision whether or not to exercise
this right of first refusal within 30 days of receipt of written notice of
the intention of the Company or its successor or subsidiary to offer equity
securities for sale.
(b) Covenants of the Selling Stockholder. The Selling Stockholder
covenants and agrees with each of the Underwriters:
(i) The Selling Stockholder will execute a lock-up agreement, which
lock-up agreement shall be in form of Exhibit C hereto, and shall deliver
such agreement to the Representatives prior to the Effective Date.
Appropriate stop transfer instructions with respect to the Common Shares
held by the Selling Stockholder, other than the Optional Shares, will be
issued by the Company to the transfer agent for the Common Shares.
(ii) Neither the Selling Stockholder nor any of its officers,
directors or affiliates will (A) take, directly or indirectly, prior to the
termination of the underwriting syndicate contemplated by this Agreement,
any action designed to cause or to result in, or that might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of any of the
Shares, (B) sell, bid for, purchase or pay anyone any compensation for
soliciting purchases of, the Shares or (C) pay to or agree to pay any
person any compensation for soliciting another to purchase any other
securities of the Company.
(iii) The Selling Stockholder will not, without the prior written
consent of the Representatives, make any bid for or purchase any Common
Shares during the 180-day period following the date hereof.
6. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are
consummated and regardless of the reason this Agreement is terminated, the
Company will pay or cause to be paid, and bear or cause to be borne, all costs
and expenses incident to the performance of the obligations of the Company and
the Selling Stockholder under this Agreement, including: (i) the fees and
expenses of the accountants and counsel for the Company incurred in the
preparation of the Registration Statement and any post-effective amendments
thereto (including financial statements and exhibits), the Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto;
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(ii) printing and delivery expenses associated with the Registration Statement
and any post-effective amendments thereto, the Preliminary Prospectus, the
Prospectus, this Agreement, the Agreement Among Underwriters, the Underwriters'
Questionnaire, the Power of Attorney, the Selected Dealer Agreement and related
documents and the Preliminary Blue Sky Memorandum and any supplement thereto;
(iii) the costs (other than fees and expenses of the Underwriters' counsel
except in connection with Blue Sky filings or exemptions as provided herein)
incident to the authentication, issuance, sale and delivery of the Shares to the
Underwriters; (iv) all taxes, if any, on the issuance, delivery and transfer of
the Shares to be sold by the Company and the Selling Stockholders; (v) the fees,
expenses and all other costs of qualifying the Shares for sale under the securi-
ties or Blue Sky laws of those states in which the Shares are to be offered or
sold, including the reasonable fees and disbursements of Underwriters' counsel
and such local counsel as may have been reasonably required and retained for
such purpose; (vi) the fees, expenses and other costs of, or incident to,
securing any review or approvals by or from the NASD exclusive of fees of the
Underwriters' counsel; (vii) the filing fees of the SEC; (viii) the cost of
furnishing to the Underwriters copies of the Registration Statement, the
Preliminary Prospectuses and the Prospectuses as herein provided; (ix) the
Company's travel expenses in connection with meetings with the brokerage
community and institutional investors; (x) the costs and expenses associated
with settlement in same day funds (including, but not limited to, interest or
cost of funds expenses), if desired by the Company or the Selling Stockholder;
(xi) the fees for listing the Shares on the Nasdaq NMS; (xii) the cost of
printing certificates for the Shares; (xiii) the cost and charges of any
transfer agent and (xiv) all other costs and expenses reasonably incident to the
performance of their respective obligations hereunder that are not otherwise
specifically provided for in this Section 6, provided that except as
specifically set forth in subsection (c) of this Section 6 the Underwriters
shall be responsible for their out-of-pocket expenses, including those
associated with meetings with the brokerage community and institutional
investors, other than the Company's travel expenses, and the fees and expenses
of their counsel for other than Blue Sky work.
(b) The Company shall pay as due any state registration, qualification and
filing fees and any accountable out-of-pocket disbursements in connection with
such registration, qualification or filing in the states in which the
Representatives determine, after consultation with the Company, to offer or sell
the Shares.
(c) In order to reimburse the Representatives for those costs and expenses
customarily incurred during the registration process: (i) if the issuance and
sale of the Offered Shares to the Underwriters is consummated as contemplated by
this Agreement, then the Company will pay the Representatives on the Closing
Date a non-accountable expense allowance in the amount
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of $100,000 and (ii) in the event that the Underwriters are willing to proceed
with the offering of the Offered Shares at an initial public offering price
per share equal to or above the low end of the offering price range stated on
the cover of the Preliminary Prospectus circulated to the public and the
Company elects not to proceed with the offering of the Offered Shares for any
reason, the Company will reimburse the Representatives for their out-of-pocket
expenses relating to the offering of the Offered Shares (including but not
limited to the fees and disbursements of its counsel) in an amount not to
exceed $150,000.
7. Conditions of the Underwriters' Obligations. The obligation of each
Underwriter to purchase and pay for the Offered Shares that it has agreed to
purchase hereunder on the Closing Date, and to purchase and pay for any Optional
Shares as to which it exercises its right to purchase under Section 4 on any
Option Closing Date, is subject at the date hereof, the Closing Date and any
Option Closing Date to the continuing accuracy of the respective representations
and warranties of the Company and of the Selling Stockholder set forth herein,
to the performance by the Company and by the Selling Stockholder of their
respective covenants and obligations hereunder and to the following additional
conditions precedent:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m., Philadelphia time, on the date of this Agreement, or at such
later time or on such later date as the Representatives may agree to in
writing; if required by the Regulations, the Prospectus shall have been filed
with the SEC pursuant to Rule 424(b) of the Regulations within the applicable
time period prescribed for such filing by the Regulations and in accordance
with subsection (a) of Section 5 hereof; on or prior to the Closing Date or
any Option Closing Date, as the case may be, no stop order or other order
preventing or suspending the effectiveness of the Registration Statement or
the sale of any of the Shares shall have been issued under the Act or any
state securities law and no proceedings for that purpose shall have been
initiated or shall be pending or, to the Representatives' knowledge or the
knowledge of the Company, shall be contemplated by the SEC or by any authority
in any jurisdiction designated by the Representatives pursuant to subsection
(f) of Section 5 hereof and any request on the part of the SEC for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters.
(b) All corporate proceedings and other matters incident to the
authorization, form and validity of this Agreement, the Shares and the form of
the Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby, shall be
satisfactory in all respects to counsel to the Underwriters; the Company shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters; and the
Representatives shall have
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received from the Underwriters' counsel, Duane, Morris & Heckscher LLP, a
favorable opinion, dated as of the Closing Date and any Option Closing Date,
as the case may be, and addressed to the Representatives individually and as
the Representatives of the several Underwriters with respect to the due
authorization, execution and delivery of this Agreement, that the issuance and
sale of the Shares have been duly authorized by the Company and the Selling
Stockholder, that when the Offered Shares have been duly delivered against
payment therefor as contemplated by this Agreement, they will be validly
issued, fully paid and nonassessable and that the Registration Statement has
become effective under the Act.
(c) The NASD shall have indicated that it has no objection to the
underwriting arrangements pertaining to the sale of any of the Shares.
(d) The Representatives shall have received copies of the lock-up
agreements described in subsection (xii) of Section 5(a) and subsection (i) of
Section 5(b) signed by those persons set forth on Schedule II annexed hereto.
(e) The Representatives shall have received at or prior to the Closing Date
from the Underwriters' counsel a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the securities or
Blue Sky laws of such jurisdictions designated by the Representatives pursuant
to subsection (vii) of Section 5(a) hereof.
(f) On the Closing Date and any Option Closing Date, there shall have been
delivered to the Representatives a signed opinion of Blank Rome Comisky &
McCauley, counsel for the Company ("Company Counsel"), dated as of each such
date and addressed to the Representatives individually and as the
Representatives of the several Underwriters to the effect that:
(i) The Company has been incorporated and is validly existing and in
good standing under the laws of Delaware, with corporate power and authority
to own or lease and operate its properties and to conduct its business as
described in the Prospectus and to execute, deliver and perform this
Agreement. To the knowledge of Company Counsel, the Company does not own any
stock or other equity interest in any corporation, partnership or other entity
other than the Subsidiaries.
(ii) Each Subsidiary (not including AEMI and Engineering) has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to own or lease its properties and conduct its business as described
in the Prospectus.
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(iii) This Agreement has been duly authorized, executed and delivered
by the Company.
(iv) The execution, delivery and performance of this Agreement by the
Company does not and will not, with or without the giving of notice or the
lapse of time, or both, (A) conflict with any terms or provisions of the
Certificate of Incorporation or By-laws, as amended to the date hereof of each
of the Company or the Subsidiaries (other than AEMI or Engineering); (B)
result in a breach of, or constitute a default under, result in the
termination or modification of or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any of the material
properties of the Company or any Subsidiary (other than AEMI or Engineering)
pursuant to, any material indenture, mortgage, deed of trust, contract,
commitment or other agreement or instrument, known to Company Counsel, to
which the Company or any Subsidiary (other than AEMI or Engineering) is a
party or by which any of the material properties or assets of the Company or
any Subsidiary (other than AEMI or Engineering) is bound or subject or (C)
violate any law, rule or regulation applicable to the Company or any
Subsidiary known to Company Counsel, or violate any judgment, order or decree,
known to Company Counsel, of any government or governmental agency,
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary (other than AEMI or Engineering) or any of the
material properties of the Company or any Subsidiary (other than AEMI or
Engineering).
(v) The Company has the authorized and outstanding capitalization as
set forth in the Prospectus. To the knowledge of Company Counsel, there are no
options or warrants for the purchase of, other outstanding rights to purchase,
agreements or obligations to issue or agreements or other rights to convert or
exchange any obligation or security into, capital stock of the Company or
securities convertible into or exchangeable for capital stock of the Company,
except as described in the Registration Statement or the Prospectus.
(vi) The authorized capital stock of the Company, including, without
limitation, the outstanding Common Shares and the Shares being issued on the
Closing Date and any Option Closing Date, conforms in all material respects
with the descriptions thereof in the Prospectus, and such descriptions conform
in all material respects with the descriptions thereof set forth in the
instruments defining the same. The information in the Prospectus set forth
under the captions "Summary," "Risk Factors," "Capitalization," "Dilution,"
"Management -Employment Agreements," "Management - 1997 Equity Incentive
Plan," "Principal Stockholders" and "Shares Eligible for Future
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Sale" insofar as it relates to the Employee Options is accurate in all material
respects.
(vii) The Common Shares outstanding immediately prior to the Closing Date,
including the Common Shares to be sold by the Selling Stockholder, have been
duly authorized and are validly issued, fully paid and nonassessable; the
Employee Options have been duly authorized and validly issued; the Common Shares
issuable pursuant to the Employee Options, when issued in accordance with the
respective terms thereof, will be duly authorized and validly issued, fully-paid
and nonassessable; the Company has reserved a sufficient number of Common Shares
for issuance pursuant to the Employee Options, and none of such outstanding
Common Shares or Employee Options are, and none of such issuable Common Shares
will be, issued in violation of any preemptive rights, known to Company Counsel,
of any security holder of the Company that have not been waived.
(viii) All of the issued shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and non-assessable,
and, to the knowledge of Company Counsel, except for AEMI, are, and, in the case
of AEMI, will be, owned beneficially by the Company free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders agreements,
voting trusts, equities or claims of any nature whatsoever. To such counsel's
knowledge, other than the subsidiaries listed on Exhibit 21.1 to the
Registration Statement, the Company does not own, directly or indirectly, any
capital stock or other equity securities of any other corporation or any
ownership interest in any partnership, joint venture or other association.
(ix) The issuance and sale of the Shares by the Company have been duly
authorized and, when the Shares have been duly delivered against payment
therefor as contemplated by this Agreement, the Shares will be validly issued,
fully paid and nonassessable. None of the Shares will be issued in violation of
any preemptive rights of any stockholder of the Company pursuant to the
Certificate of Incorporation or By-laws, as amended to the date hereof, of the
Company and, to the knowledge of Company Counsel, there are no contractual
preemptive rights that have not been waived that exist with respect to the
Shares. The certificates representing the Shares are in proper legal form
under, and conform in all respects to the requirements of, the DGCL. To the
knowledge of Company Counsel, neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this Agreement gives
any security holder of the Company any rights, other than those which have been
waived, for or relating to the registration of any Common Shares and there are
no contracts, agreements or understandings known to such counsel between the
Company and any person granting such
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person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person.
(x) No consent, approval, authorization, order, registration, license or
permit of any court, government, governmental agency, instrumentality or other
regulatory body or official is required for the valid authorization, issuance,
sale and delivery by the Company of any of the Shares or for the execution,
delivery or performance by the Company of this Agreement, except such as may be
required for the registration of the Shares under the Act, the Regulations or
the Exchange Act, or for compliance with the applicable state securities or Blue
Sky laws, or the By-laws, rules and other pronouncements of the NASD.
(xi) The descriptions contained in the Registration Statement and the
Prospectus of statutes or regulations, legal and governmental proceedings and of
contracts and other documents under the captions "Risk Factors," "The Company,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," "Management - Board of Directors," "Management -
Employment Agreements," "Management - 1997 Equity Incentive Plan," "Certain
Transactions," "Principal Stockholders," "Description of Securities" and
"Shares Eligible for Future Sale" are accurate summaries in all material
respects. To a company Counsel's knowledge, there are no contracts, agree a
or other documents required to be described or referred to in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement under the Act or the Regulations that have not been so described,
referred to or filed as required.
(xii) To Company Counsel's knowledge, there are no claims, actions, suits,
proceedings, arbitrations, investigations or inquiries pending before, or
threatened or contemplated by, any governmental agency, instrumentality, court
or tribunal, domestic or foreign, or before any private arbitration tribunal, to
which the Company is a party or is threatened to be made a party that, if
determined adversely to the Company, would, in any case or in the aggregate,
result in any material adverse change in the general affairs, material
properties, condition (financial or otherwise), results of operations,
stockholders' equity or business of the Company and the Subsidiaries.
(xiii) The Registration Statement has become effective under the Act, as of
the Effective Date, and, to Company Counsel's knowledge, the SEC has not issued
any stop order suspending the effectiveness of the Registration Statement, nor
has the SEC instituted or threatened to institute proceedings with respect to
any such order. Any and all
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filings required to be made by Rule 424 and Rule 430A under the Act have been
made.
(xiv) The Registration Statement and the Prospectus, as of the Effective
Date, and each amendment or supplement thereto as of its effective or issue date
(except for the financial statements and notes thereto, and related schedules,
and other financial, statistical, technical or scientific information, included
therein or omitted therefrom, as to which Company Counsel need not express an
opinion) comply as to form in all material respects with the applicable
requirements of the Act and Regulations.
(xv) The Company is not, and will not be as a result of the consummation of
the transactions contemplated by this Agreement, an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940.
(xvi) Company Counsel has participated in the preparation of the Registration
Statement and the Prospectus, including reviews and discussions of the contents
thereof, and while such Counsel has no particular expertise and is not
expressing any view with respect to the financial statements and notes thereto
and related schedules and the other financial, statistical, technical and
scientific information contained in the Prospectus, and is not passing upon the
accuracy or completeness of the statements contained in the Registration
Statement or the Prospectus, other than those specifically referred to in clause
(v), clause (vi) and clause (xi) of this subsection (f) of this Section 7, in
the course of such reviews and discussions, no facts came to its attention that
would cause it to have reason to believe that (A) the Registration Statement or
any post-effective amendment thereto, on the date it became effective and on the
Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or that (B) the Prospectus on the Effective Date, on the
date it was filed pursuant to Rule 424(b) and on the Closing Date or Option
Closing Date, as the case may be, contained any untrue statement of material
fact or omitted any material fact necessary to make the statements therein, in
light of the circumstances under which made, not misleading.
(xvii) Nothing has come to the attention of Company Counsel that causes it to
believe that each of the Company and the Subsidiaries (other than AEMI and
Engineering) does not have sufficient licenses, permits, certifications,
registrations, approvals, consents and franchises (collectively, "Permits")
required to conduct its business as described in the Prospectus in all material
respects.
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(xviii) The Common Shares have been approved for inclusion on the Nasdaq
National Market.
The foregoing opinion may be limited to the laws of the United States and
the DGCL and Company Counsel may rely as to certain legal matters on other
counsel to the Company provided that, in each case, Company Counsel shall state
that they believe that they and the Underwriters are justified in relying on
such other counsel and shall deliver signed copies of any such opinion to the
Representatives and as to questions of fact upon the representations of the
Company set forth in this Agreement and upon certificates of officers of the
Company and of government officials, all of which certificates must be
reasonable and satisfactory in form and scope to counsel to the Underwriters
provided that, in each case, Company Counsel shall deliver signed copies of any
such certificate to the Representatives. As to matters of Israeli law relating
to the Selling Shareholder included in the opinion of Jacob Sabo delivered
concurrently with the foregoing opinion, Company Counsel shall state that it is
reasonable for the Underwriters to rely on such opinion. The foregoing opinion
shall also include the opinions set forth in Section 7(i)(iii) and Section
7(i)(v) of this Agreement to the extent based upon U.S. law.
(g) On the Closing Date and any Option Closing Date, there shall have been
delivered to the Representatives a signed opinion of Jacob Sabo dated as of each
such date and addressed to the Representatives, individually and as the
Representatives of the several Underwriters, to the effect that:
(i) Engineering has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Israel and has
the corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus.
(ii) The execution, delivery and performance of this Agreement by the
Company and the Selling Stockholder does not and will not, with or without
the giving of notice or the lapse of time, or both, (A) conflict with any
terms or provisions of the Certificate of Incorporation or By-laws, as
amended to the date hereof of Engineering; (B) result in a breach of, or
constitute a default under, result in the termination or modification of or
result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the material properties of Engineering pursuant
to, any material indenture, mortgage, deed of trust, contract, commitment
or other agreement or instrument , known to such counsel, to which
Engineering is a party or by which any of the material properties or assets
of the Engineering is bound or subject or (C) violate any law, rule or
regulation, or violate any judgment, order or decree, known to such
counsel, of any government or govern mental agency, instrumentality or
court, domestic or for-
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eign having jurisdiction over Engineering or any of the material properties
of Engineering.
(iii) All of the issued shares of capital stock of Engineering have
been duly authorized and validly issued, are fully paid and non-assessable,
and, are owned beneficially by the Company free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders
agreements, voting trusts, equities or claims of any nature whatsoever.
(h) On the Closing Date and any Option Closing Date, there shall have been
delivered to the Representatives a signed opinion of counsel reasonably
satisfactory to the Representatives dated as of each such date and
addressed to the Representatives individually and as the
Representatives of the several Underwriters to the effect that:
(i) AEMI has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus.
(ii) the execution, delivery and performance of this Agreement by the
Company and the Selling Stockholder does not and will not, with or without
the giving of notice or the lapse of time, or both, (A) conflict with any
terms or provisions of the Certificate of Incorporation or By-laws, as
amended to the date hereof of AEMI; (B) result in a breach of, or
constitute a default under, result in the termination or modification of or
result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the material properties of AEMI pursuant to,
any material indenture, mortgage, deed of trust, con tract, commitment or
other agreement or instrument, known to such counsel, to which AEMI is a
party or by which any of the material properties or assets of the AEMI is
bound or subject or (C) violate any law, rule or regulation, or violate any
judgment, order or decree, known to such counsel, of any government or
governmental agency, instrumentality or court, domestic or
foreign, having jurisdiction over AEMI or any of the material properties of
AEMI.
(iii) All of the issued shares of capital stock of AEMI have been duly
authorized and validly issued, are fully paid and non-assessable, and, upon
the consummation of the transactions contemplated by the March 31, 1997
agreement among the Company, AEMI and the stockholders of AEMI
simultaneously on the Closing Date, will be owned beneficially by the
Company free and clear of all liens, security inter interests, pledges,
charges, encumbrances, stockholders agree agreements, voting trusts,
equities or claims of any nature whatsoever.
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(i) On the Closing Date and any Option Closing Date, there shall have been
delivered to the Representatives a signed opinion of Jacob Sabo, counsel to the
Selling Stockholder, dated as of each such date and addressed to the
Representatives, individually and as Representatives of the several
Underwriters, in form and substance satisfactory to counsel to the Underwriters,
to the effect that:
(i) The Selling Stockholder is an existing corporation in good standing
under the laws of the State of Is Israel. The Selling Stockholder has full
power and authority to own its assets and to conduct its business.
(ii) This Agreement and the Agreement and Power of Attorney have been
duly authorized, executed and delivered by or on behalf of the Selling
Stockholder; to the best of such counsel's knowledge, the sale of the
Shares to be sold by the Selling Stockholder at the Option Closing Date and
the performance of this Agreement and the Agreement and Power of Attorney
and the consummation of the transactions therein and herein contemplated
will not, in any material respect, conflict with, or, with or without the
giving of notice or the passage of time or both, result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any material indenture, mort gage, deed of trust, loan agreement,
lease or other agree agreement or instrument to which such Selling
Stockholder is a party or to which any of its material properties or assets
is subject, nor will such action conflict with or violate any provision of
the charter documents or Bylaws of the Selling Stockholder or any statute,
rule or regulation or, to the best of such counsel's knowledge, any order,
judgment or decree of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or any of the Selling
Stockholder's material properties or assets.
(iii) No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares being sold by the Selling Stockholder or the consummation of the
transactions contemplated by this Agreement and the Agreement and
Power of Attorney.
(iv) To the best of such counsel's knowledge, the Selling Stockholder
has, and immediately prior to the Option Closing Date the Selling
Stockholder will have, good and valid title to the Shares to be sold by the
Selling Stockholder hereunder, free and clear of all liens, securities
interests, pledges, charges, encumbrances, defects, stockholders'
agreements, voting trusts, equities or claims of any nature whatsoever;
and, upon delivery of such Shares against payment therefor as provided
herein, good and valid title to such Shares, free and clear of all liens,
security interests, pledges, charges, encumbrances, defects, stock-
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holders' agreements, voting trusts, equities or claims of any nature
whatsoever, will pass to the several Underwriters.
(v) There are no transfer or similar taxes payable in connection with
the sale and delivery of the Optional Shares by the Selling Stockholder to
the Underwriters.
In rendering such opinion, such counsel may rely as to certain legal
matters on other legal counsel to the Selling Stockholder provided that, in each
case, such counsel shall state that they believe that they and the Underwriters
are justified in relying on such other counsel and shall deliver signed copies
of any such opinion to the Representatives and, as to questions of fact, upon
the representations of the Selling Stockholder set forth in this Agreement and
upon certificates of officers of the Selling Stockholder and of government
officials, all of which certificates must be reasonable and satisfactory in form
and scope to counsel to the Underwriters provided that, in each case, such
counsel shall deliver signed copies of any such certificate to the
Representatives.
(j) At the Closing Date and any Option Closing Date: (i) the Registration
Statement and any post-effective amendment thereto and the Prospectus and any
amendments or supplements thereto shall contain all statements that are required
to be stated therein in accordance with the Act and the Regulations and in all
material respects shall conform to the requirements of the Act and the
Regulations, and neither the Registration Statement nor any post-effective
amendment thereto nor the Prospectus and any amendments or supplements thereto
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (ii) since the respective dates as of which information is given in
the Registration Statement and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto, except as otherwise stated
therein, there shall have been no material adverse change in the material
properties, assets, condition (financial or otherwise), results of operations,
stockholders' equity, business or management of the Company and the Subsidiaries
taken as a whole from that set forth therein, whether or not arising in the
ordinary course of business, other than as referred to in the Registration
Statement or the Prospectus; (iii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus or any
amendment or supplement thereto, there shall have been no transaction, contract
or agreement entered into by the Company or any Subsidiary, other than in the
ordinary course of business or as set forth in the Registration Statement or the
Prospectus, that has not been, but would be required to be, set forth in the
Registration Statement or the Prospectus and (iv) no action, suit or proceeding
at law or in equity shall be pending or, to the knowledge of the Company,
threatened against the Company or
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any Subsidiary that would be required to be set forth in the Prospectus, other
than as set forth therein, and no proceedings shall be pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary
before or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding would materially
adversely affect the material properties, assets, condition (financial or
otherwise), results of operations, stockholders' equity or business of the
Company and the Subsidiaries taken as a whole other than as set forth in the
Prospectus. The Representatives shall have received at the Closing Date
certificates of the Chief Executive Officer and the Chief Financial Officer of
the Company dated as of the date of the Closing Date or Option Closing Date, as
the case may be, and certificates of the Chief Executive Officer and the Chief
Financial Officer of the Selling Stockholder dated as of the date of any Option
Closing Date, and addressed to the Representatives, individually and as the
Representatives of the several Underwriters, to the effect that, to the
knowledge of such persons, the conditions set forth in this subsection have been
satisfied and as to the accuracy and performance, to the knowledge of such
persons, as of the Closing Date or the Option Closing Date, as the case may be,
of the agreements, representations and warranties of the Company set forth
herein and as to the accuracy and performance to the knowledge of such persons,
as of the Option Closing Date, the agreements, representations and warranties of
the Selling Stockholder set forth herein.
(k) At the time this Agreement is executed and at the Closing Date and any
Option Closing Date, the Representatives shall have received a letter addressed
to the Representatives, individually and as the Representatives of the several
Under writers, and in form and substance satisfactory to the Representatives in
all respects, including the non-material nature of the changes or decreases, if
any, referred to in clause (iv) below, from Ernst & Young LLP dated as of the
date of this Agreement, the Closing Date or any Option Closing Date, as the case
may be:
(i) confirming that they are independent public accountants with
respect to the Company and its consolidated subsidiaries within the
meaning of the Act and the Regulations and stating that the section of the
Registration Statement under the caption "Experts" is correct insofar as
it relates to them;
(ii) stating that, in their opinion, the consolidated financial
statements of the Company and the Subsidiaries (other than AEMI) audited by
them and included in the Registration Statement and in the Prospectus
comply in form in all material respects with the applicable accounting
requirements of the Act and the Regulations;
(iii) the consolidated financial statements of the Company and the
Subsidiaries (other than AEMI) as of and
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for the three-month period ended March 31, 1997, were reviewed by them in
accordance with the standards established by the American Institute of
Certified Public Accountants and based upon their review they are not
aware of any material modifications that should be made to such financial
statements for them to be in conformity with generally accepted accounting
principles, and such financial statements comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Regulations thereunder;
(iv) stating that, on the basis of specified procedures, not
constituting an audit in accordance with generally accepted accounting
principles, which included a reading of the unaudited interim consolidated
financial statements of the Company and the Subsidiaries (other than AEMI)
for period ended March 31, 1997, a reading of the minutes of the meetings
of the stockholders and the Board of Directors of the Company and audit and
compensation committees of such Board, if any, and inquiries to certain
officers and other employees of the Company who are responsible for
financial and accounting matters and other specified procedures and
inquiries, nothing has come to their attention that would cause them to
believe that (A) the unaudited consolidated financial statements and
related schedules of the Company and the Subsidiaries included in the
Registration Statement, if any (1) do not comply in form in all material
respects with the applicable accounting requirements of the Act and the
Regulations or (2) were not fairly presented in conformity with generally
accepted accounting principles on a basis substantially consistent with
that of the audited consolidated financial statements and related schedules
included in the Registration Statement or (B)(1) at a specified date, not
more than five business days prior to the date of such letter, there was
more than a 10% change in the capital stock, inventories or short-term or
long-term debt of the Company and the Subsidiaries or any decrease
(increase) of more than 10% in net current assets, total assets or
stockholders' equity compared with the amounts shown in the March 31, 1997
consolidated balance sheet of the Company included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement and the Prospectus, or if there was any such change or decrease
(increase), setting forth the amount of such change or decrease
(increase), and (2) during the period from March 31, 1997 to a specified
date not more than five business days prior to the date of such letter,
there has been any decrease of more than 10% in revenues or any increase of
more than 10% in loss before interest income (expense), net and taxes or
net loss of the Company and the Subsidiaries on a consolidated basis other
than as set forth in or contemplated by the Registration Statement or the
Prospectus; and
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<PAGE>
(v) stating that they have compared specific dollar amounts,
percentages, numbers of shares and other information (including pro forma
information) pertaining to the Company and the Subsidiaries set forth in
the Registration Statement and the Prospectus that have been specified by
the Representatives prior to the date of this Agreement, to the extent that
such amounts, percentages, numbers and information may be derived from the
general accounting or other records of the Company and the Subsidiaries,
with the results obtained from the application of specified readings,
inquiries and other appropriate procedures, which procedures do not
constitute an audit in accordance with generally accepted auditing
standards, set forth in the letter, and found them to be in agreement.
(vi) in the event that the letters referred to in this Section 7(i) set
forth any changes, decreases or increases in the items specified in
subsection (v) of this Section 7(i), it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied
by a written explanation by the Company as to the significance thereof,
unless the Representatives deem such explanation unnecessary, and (B) such
changes, decreases or increases do not, in their sole judgment, make it
impractical or inadvisable to proceed with the purchase, sale and delivery
of the Shares being delivered at the Closing Date or any Option Closing
Date, as the case may be, as contemplated by the Registration Statement, as
amended as of the date of such letter.
(l) At the time the Agreement is executed and at the Closing Date and any
Option Closing Date, the Representatives shall have received a letter addressed
to the Representatives individually and as the Representatives of the several
Underwriters, and in form and substance satisfactory to the Representatives in
all respects, from Messina, Ceci, Archer & Company, P.C. dated as of the date of
this Agreement, the Closing Date or any Option Closing Date, as the case may be:
(i) confirming that they are independent public accountants with
respect to Flam & Russell within the meaning of the Act and the Regulations
and stating that the section of the Registration Statement under the
caption "Experts" is correct insofar as it relates to them; and
(ii) stating that, in their opinion, the financial statements of Flam &
Russell audited by them and included in the Registration Statement and in
the Prospectus comply in form in all material respects with the applicable
accounting requirements of the Act and the Regulations.
(m) There shall have been duly tendered to the Representatives for the
respective accounts of the Underwriters certificates representing all of the
Shares to be purchased by the
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Underwriters on the Closing Date or any Option Closing Date, as the case may be.
(n) At the Closing Date and any Option Closing Date, the Representatives
shall have been furnished such additional documents and certificates as they
shall reasonably request.
(o) No action shall have been taken by the NASD the effect of which is to
make it improper, at any time prior to the Closing Date or any Option Closing
Date, for members of the NASD to execute transactions as principal or as agent
in the Shares or to trade or deal in the Shares, and no proceedings for the
purpose of taking such action shall have been instituted or shall be pending or,
to the Company's or the Representatives' knowledge, shall be threatened by the
NASD.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or any Option Closing Date, as the case may be,
is not fulfilled, the Representatives may on behalf of the several Underwriters
terminate this Agreement or, if they so elect, waive any such conditions which
have not been fulfilled or extend the time for their fulfillment.
8. Indemnification.
(a) The Company and the Selling Stockholder, jointly and severally, shall
indemnify and hold harmless each Underwriter, and each person, if any, who
controls each Underwriter within the meaning of the Act or the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever,
whether joint or several, to which such Underwriter may become subject, under
the Act or otherwise, including, but not limited to, any and all expense
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever or in connection
with any investigation or inquiry of, or action or proceeding that may be
brought against, the respective indemnified parties, arising out of or based
upon any untrue statements or alleged untrue statements of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any application or other document (in this Section 8
collectively called "application") executed by the Company and based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify all or any part of the Shares under the
securities laws thereof or filed with the SEC or the NASD, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
indemnity of the Company and the Selling Stockholder (i) shall not apply in
respect of any statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
the Representatives expressly for use in any Preliminary Prospectus, the
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Registration Statement or the Prospectus, or any amendment thereto or supplement
thereof, or in any application or in any communication to the SEC, as the case
may be, (ii) with respect to any Preliminary Prospectus, shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the Shares that are the
subject thereof (or to the benefit of any person controlling such Underwriter)
if at or prior to the written confirmation of the sale of such Shares a copy of
an amended Preliminary Prospectus or the Prospectus (or the Prospectus as
amended or supplemented) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the amended Preliminary Prospectus or Prospectus (or
the Prospectus as amended or supplemented) and (iii) the Selling Stockholder's
total liability under this Section 8 shall be limited to an amount equal to the
purchase price received by the Selling Stockholder from the sale of the Optional
Shares by it pursuant to this Agreement. Neither the Company nor the Selling
Stockholder will, without the prior written consent of the Underwriters,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification may be sought hereunder,
whether or not any Underwriter is a party to such claim, action, suit or
proceeding, unless such settlement, compromise or consent includes an
unconditional release of each Underwriter from all liability arising out of such
claim, action, suit or proceeding (or related cause of action or portion
thereof). This indemnity agreement will be in addition to any liability the
Company may otherwise have; provided, however, that with respect to the Selling
Stockholder, the provisions of this Section 8(a) will be the exclusive remedy of
the Underwriters.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company and the Selling Stock holder, each of the directors of the
Company and the Selling Stockholder, each of the officers of the Company who
shall have signed the Registration Statement and each other person, if any, who
controls the Company or the Selling Stockholder within the meaning of the Act or
the Exchange Act to the same extent as the foregoing indemnities from the
Company and the Selling Stock holder to the several Underwriters, but only with
respect to any loss, liability, claim, damage or expense resulting from
statements or omissions, or alleged statements or omissions, if any, made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment thereto or supplement thereof or any application in reliance upon, and
in conformity with written information furnished to the Company by any
Underwriter through the Representatives or with respect to any Underwriter by or
on behalf of such Underwriter expressly for use in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any amendment thereto or
supplement thereof or any application, as the case may be, or from the failure
of any Underwriter at or prior to the written confirmation of the sale
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of Shares to send or deliver a copy of an amended Preliminary Prospectus or the
Prospectus (or the Prospectus as amended or supplemented) to the person
asserting any such losses, claims, damages, liabilities or expenses who
purchased the Shares that are the subject thereof and the untrue statement or
omission of a material fact contained in such Preliminary Prospectus was
corrected in the amended Preliminary Prospectus or Prospectus (or the Prospectus
as amended or supplemented). This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.
(c) If any action, inquiry, investigation or proceeding is brought against
any person in respect of which indemnity may be sought pursuant to any of the
two preceding paragraphs, such person (hereinafter called the "indemnified
party") shall, promptly after formal notification of, or receipt of service of
process for, such action, inquiry, investigation or proceeding, notify in
writing the party or parties against whom indemnification is to be sought
(hereinafter called the "indemnifying party") of the institution of such action,
inquiry, investigation or proceeding and the indemnifying party, upon the
request of the indemnified party, shall assume the defense of such action,
inquiry, investigation or proceeding, including the employment of counsel,
reasonably satisfactory to such indemnified party, and payment of expenses. No
indemnification provided for in this Section 8 shall be available to any
indemnified party who shall fail to give such notice if the indemnifying party
does not have knowledge of such action, inquiry, investigation or proceeding and
shall have been materially prejudiced by the failure to give such notice, but
the omission so to notify the indemnifying party shall not relieve the
indemnifying party otherwise than under this Section 8. Such indemnified party
or controlling person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action or the indemnifying party shall not have employed counsel, within
a reasonable period of time, to have charge of the defense of such action,
inquiry, investigation or proceeding or such indemnified party or parties shall
have been advised by counsel that there is a conflict of interest that would
prevent counsel to the indemnifying party from representing both parties, in
any of which events the reasonable fees and expenses of such counsel shall be
borne by the indemnifying party. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
counsel, in addition to one local counsel in each jurisdiction in which any
proceeding may be brought, for all indemnified parties. In the case of any such
separate counsel for the Underwriters, such firm shall be designated in writing
by the Representatives. Expenses covered by the indemnification in this
subsection (c) of this Section 8 shall be paid by the indemnifying party as
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they are incurred by the indemnified party. Anything in this subsection to the
contrary notwithstanding, the indemnifying party shall not be liable for any
settlement of any such claim effected without its written consent. The
indemnifying party shall promptly notify the indemnified party of the
commencement of any litigation, inquiry, investigation or proceeding against the
indemnifying party or any of its officers or directors in connection with the
issue and sale of any of the Shares or in connection with such Preliminary
Prospectus, Registration Statement or Prospectus, or any amendment thereto or
supplement thereof or any such application.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) of this Section 8 in respect of any losses, liabilities, claims, damages or
expenses (or actions, inquiries, investigations or proceedings in respect
thereof) referred to therein except either by reason of the proviso set forth in
subsection (a) or the failure to give notice as required in subsection (c)
(provided that the indemnifying party does not have knowledge of the action,
inquiry, investigation or proceeding and has been materially prejudiced by the
failure to give such notice), then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
liabilities, claims, damages or expenses (or actions, inquiries, investigations
or proceedings in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other from the offering
of the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or the indemnified party failed to
give the notice required under subsection (c) then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stock holder on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, liabilities, claims or reasonable expenses (or
actions, inquiries, investigations or proceedings in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Stockholders on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Stockholder 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. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Stockholder on
the one hand or the Underwriters on the other hand and the
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parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, the Selling
Stockholder and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined
by pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, liabilities, claims, damages or reasonable expenses
(or actions, inquiries, investigations or proceedings in respect thereof)
referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
9. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date and any Option Closing Date; and such
representations, warranties and agreements of the Underwriter, the Company and
the Selling Stock holder, including without limitation the indemnity and
contribution agreements contained in Section 8 hereof and the agreements
contained in Sections 6, 9, 10 and 13 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling person thereof, and shall survive delivery of the
Shares and termination of this Agreement, whether before or after the Closing
Date or any Option Closing Date. With respect to any obligation of the Company
and the Selling Stockholder hereunder to make any payment, to indemnify for any
liability or to reimburse for any expense, notwithstanding the fact that such
obligation is a joint and several obligation of the Company and the Selling
Stockholder, the Underwriters, or any other person to whom such payment,
indemnification or reimbursement is owed, may pursue the Company with respect
thereto prior to pursuing the Selling Stockholder.
10. Effective Date of this Agreement and Termination Thereof.
(a) This Agreement shall become effective immediately as to Sections
6, 8, 9, 10 and 13 and, as to all other provisions,
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(i) if at the time of execution and delivery of this Agreement the
Registration Statement has not become effective, at 11:00 a.m.,
Philadelphia time, on the first business day following the Effective Date,
or (ii) if at the time of execution and delivery of this Agreement the
Registration Statement has been declared effective, at 11:00 a.m.,
Philadelphia time, on the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after
the Registration Statement becomes effective as the Representatives may
determine by notice to the Company or by release of any of the Shares for
sale to the public. For the purposes of this Section 10, the Shares shall
be deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by the
Representatives of telegrams (i) advising the Underwriters that the Shares
are released for public offering or (ii) offering the Shares for sale to
securities dealers, whichever may occur first. The Representatives may
prevent the provisions of this Agreement (other than those contained in
Sections 6, 8, 9, 10 and 13) from becoming effective without liability of
any party to any other party, except as noted below, by giving the notice
indicated in subsection (c) of this Section 10 before the time the other
provisions of this Agreement become effective.
(b) The Representatives shall have the right to terminate this
Agreement at any time prior to the Closing Date as provided in Sections 7
and 11 hereof or if any of the following have occurred: (i) since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and the
Subsidiaries taken as a whole, or the earnings, business affairs,
management or business prospects of the Company and the Subsidiaries,
whether or not arising in the ordinary course of business; (ii) any
outbreak of hostilities or other national or international calamity or
crisis or change in economic, political or financial market conditions if
such outbreak, calamity, crisis or change would, in the Representatives'
reasonable judgment, have a material adverse effect on the Company, the
financial markets of the United States or the offering or delivery of the
Shares; (iii) suspension of trading generally in securities on the New York
Stock Exchange, the American Stock Exchange or the over-the-counter market
or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities or the promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental
authority which in the Representatives' reasonable opinion materially and
adversely affects trading on such Exchange or the over-the-counter market;
(iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in the Representatives' reasonable opinion
materially and adversely affects or will materially or adversely affect the
business or operations of the Company and the Subsidiaries; (v) declaration
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<PAGE>
of a banking moratorium by either federal or state authorities; (vi) the taking
of any action by any federal, state or local government or agency in respect of
its monetary or fiscal affairs which in the Representatives' reasonable opinion
has a material adverse effect on the securities markets in the United States;
(vii) declaration of a moratorium in foreign exchange trading by major
international banks or other institutions or (viii) trading in any securities of
the Company shall have been suspended or halted by the NASD or the SEC.
(c) If the Representatives elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10, the
Representatives shall notify the Company and the Selling Stockholder thereof
promptly by telephone, telex, telegraph, telegram or facsimile, confirmed by
letter.
11. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Offered Shares or Optional Shares hereunder, and if the
Offered Shares or Optional Shares with respect to which such default relates do
not exceed the aggregate of 10% of the number of Offered Shares or Optional
Shares, as the case may be, that all Underwriters have agreed to purchase
hereunder, then such Offered Shares or Optional Shares to which the default
relates shall be purchased severally by the non-defaulting Underwriters in
proportion to their respective commitments hereunder.
(b) If such default relates to more than 10% of the Offered Shares or the
Optional Shares, as the case may be, the Representatives may in their discretion
arrange for another party or parties (including a non-defaulting Underwriter) to
purchase such Offered Shares or Optional Shares to which such default relates,
on the terms contained herein. In the event that the Representatives do not
arrange for the purchase of the Offered Shares or the Optional Shares to which a
default relates as provided in this Section 11, this Agreement may be terminated
by the Representatives or by the Company, in the case of the Offered Shares, or
by the Representatives or by the Selling Stockholder, in the case of the
Optional Shares, without liability on the part of the several Underwriters
(except as provided in Section 8 hereof) or the Company or the Selling
Stockholder (except as provided in Sections 6 and 8 hereof), but nothing herein
shall relieve a defaulting Underwriter of its liability, if any, to the other
several Underwriters and to the Company or the Selling Stockholder for damages
occasioned by its default hereunder.
(c) If the Offered Shares or Optional Shares to which the default relates
are to be purchased by the non-defaulting Underwriters, or are to be purchased
by another party or parties as aforesaid, the Representatives or the Company
shall have the right to postpone the Closing Date or the Representatives or the
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Selling Stockholder shall have the right to postpone any Option Closing Date,
as the case may be, for a reasonable period but not in any event exceeding
seven days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment to the
Registration Statement or supplement to the Prospectus which in the opinion of
counsel for the Underwriters may thereby be made necessary. The terms
"Underwriters" and "Underwriter" as used in this Agreement shall include any
party substituted under this Section 11 with like effect as if it had
originally been a party to this Agreement with respect to such Offered Shares
or Optional Shares.
12. Information Furnished by Underwriters. The statement set forth on the
inside cover page regarding stabilization and under the caption "Underwriting"
in any Preliminary Prospectus and the Prospectus constitutes the written
information furnished by or on behalf of any Underwriter referred to in
subsection (ii) of Section 1(a) hereof and subsection (a) and (b) of Section 8
hereof.
13. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to any Underwriter,
shall be mailed, delivered, telexed, telegrammed, telegraphed or telecopied and
confirmed to such Underwriter, c/o Pennsylvania Merchant Group Ltd, Four Falls
Corporate Center, West Conshohocken, Pennsylvania 19428, Attention: Mr. Richard
A. Hansen, with a copy to Duane, Morris & Heckscher LLP, 4200 One Liberty Place,
Philadelphia, Pennsylvania 19103, Attention: Frederick W. Dreher, Esquire; if
sent to the Company or the Selling Stockholder shall be mailed, delivered,
telexed, telegrammed, telegraphed or telecopied and confirmed to Orbit/FR, Inc.,
506 Prudential Road, Horsham, Pennsylvania 19044, Attention: Aryeh Trabelsi,
with a copy to Blank Rome Comisky & McCauley, 1200 Four Penn Center Plaza,
Philadelphia, Pennsylvania 19103, Attention: Arthur H. Miller, Esquire, and to
Orbit-Alchut Technologies, Ltd., 18 Hakadar/Industrial Zone, P.O. Box 3171,
Netanya 42131, Israel, Attention: Joseph Aviv, with a copy to Jacob Sabo,
Esquire, 33 Jabotinsky Street, Twin Tower 1, Ramat-gam, Israel.
14. Parties. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the several Underwriters, the Company, the Selling Stockholder
and the controlling persons, directors and officers referred to in Section 8
hereof, and their respective successors, assigns, heirs and legal
representatives, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provision herein contained. The terms "successors" and
"assigns" shall not include any purchaser of the Shares merely because of such
purchase.
15. Definition of Business Day. For purposes of this Agreement, "business
day" means any day on which the New York Stock Exchange, Inc. is opened for
trading.
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<PAGE>
16. Counterparts. This Agreement may be executed in one or more counterparts
and all such counterparts will constitute one and the same instrument.
17. Waiver of Jury Trial. The Company, the Selling Stockholder and the
Underwriters each hereby irrevocably 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.
18. Construction. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements made and performed entirely within such Commonwealth.
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<PAGE>
If the foregoing correctly sets forth the understanding among the
Underwriters, the Company and the Selling Stockholder, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement by and among the Underwriters, the Company and the Selling
Stockholder.
Very truly yours,
ORBIT/FR, INC.
By: /s/ Aryeh Trabelsi
---------------------------
Aryeh Trabelsi, President
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By: /s/ Joseph Aviv
---------------------------
Joseph Aviv, Chairman
---------------------
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
By: Pennsylvania Merchant Group Ltd
Acting severally on behalf of itself
and the several Underwriters named
in Schedule I hereto
By: /s/ P. S. Rawlings
--------------------------
Authorized Officer
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<PAGE>
SCHEDULE I
Schedule of Underwriters
<TABLE>
<CAPTION>
Number of Offered
Underwriter Shares to be Purchased
- ----------- ----------------------
<S> <C>
Pennsylvania Merchant Group Ltd............................ 500,500
Unterberg Harris........................................... 500,500
Alex. Brown & Sons Incorporated............................ 45,000
Cowen & Company............................................ 45,000
Donaldson, Lufkin & Jenrette
Securities Corporation................................... 45,000
A.G. Edwards & Sons, Inc................................... 45,000
Hambrecht & Quist LLC...................................... 45,000
Lehman Brothers Inc........................................ 45,000
Montgomery Securities...................................... 45,000
Oppenheimer & Co., Inc..................................... 45,000
PaineWebber Incorporated................................... 45,000
William Blair & Company, L.L.C............................. 25,000
J .C. Bradford & Co........................................ 25,000
Cuttenden Roth Incorporated................................ 25,000
EVEREN Securities, Inc..................................... 25,000
Fahnestock & Co. Inc....................................... 25,000
Friedman, Billings, Ramsey & Co., Inc...................... 25,000
Furman Selz LLC............................................ 25,000
Gruntal & Co., L.L.C....................................... 25,000
Janney Montgomery Scott Inc................................ 25,000
Legg Mason Wood Walker, Incorporated....................... 25,000
McDonald & Company Securities, Inc......................... 25,000
Morgan Keegan & Company, Inc............................... 25,000
Piper Jaffray Inc.......................................... 25,000
Raymond James & Associates, Inc............................ 25,000
The Robinson-Humphrey Company, Inc......................... 25,000
Roney & Co................................................. 25,000
Stephens Inc............................................... 25,000
Tucker Anthony Incorporated................................ 25,000
Brean Murray & Co., Inc.................................... 18,000
Ferris, Baker Watts, Inc................................... 18,000
Hanifen, Imhoff Inc........................................ 18,000
ISG Capital Markets, LLC................................... 18,000
Parker/Hunter Incorporated................................. 18,000
Scott & Stringfellow,Inc................................... 18,000
The Seidler Companies Incorporated......................... 18,000
Southcoast Capital Corp.................................... 18,000
---------
Total.................................... 2,000,000
=========
</TABLE>
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SCHEDULE II
List of Persons Who Are to Deliver 180-Day Lock-Up Agreements
Called for Sections 5(a)(xii), 5(b)(i) and 7(d)
Name
----
Joseph Aviv
Aryeh Trabelsi
Moshe Pinkasy
Marcel Boumans
Joseph Sullivan
David Farina
John Aubin
Sean Mallon
Zeev Stein
David Ben-Bassat
Orbit-Alchut Technologies, Ltd.
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<PAGE>
EXHIBIT A
---------
PRICE DETERMINATION AGREEMENT
June 16, 1997
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
As Representatives of the
several Underwriters
Four Falls Corporate Center
West Conshohocken, PA 19428
Dear Sirs:
Reference is made to the Underwriting Agreement, dated June 16, 1997 (the
"Underwriting Agreement"), among Orbit/FR, Inc., a Delaware corporation (the
"Company"), Orbit-Alchut Technologies, Ltd. (the "Selling Stockholder") and the
several Underwriters named in Schedule I thereto or hereto (the "Underwriters"),
for whom Pennsylvania Merchant Group Ltd and Unterberg Harris are acting as
representatives (the "Representatives"). The Underwriting Agreement provides for
the purchase by the Underwriters from the Company, subject to the terms and
conditions set forth therein, of an aggregate of 2,000,000 shares (the "Offered
Shares") of the Company's Common Stock, $.01 par value per share (the "Common
Shares") and for the purchase by the Under writers, at their sole option to
cover over-allotments in the sale of the Offered Shares, from the Selling
Stockholder, subject to the terms and conditions set forth therein, of an
aggregate of 300,000 Common Shares (the "Optional Shares"). This Agreement is
the Price Determination Agreement referred to in the Underwriting Agreement.
Pursuant to the Underwriting Agreement, the undersigned agree with the
Representatives as follows:
1. The initial public offering price per share for the Offered Shares and
the Optional Shares shall be $8.25.
2. The purchase price per share for the Offered Shares and, if the
Representatives shall exercise their option as to the Optional Shares, for the
Optional Shares to be paid by the several Underwriters shall be $7.635
representing an amount equal to the initial public offering price set forth
above, less $0.615 per share.
The Company represents and warrants to each of the Underwriters that the
representations and warranties of the Company set forth in Section 1(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
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The Selling Stockholder represents and warrants to each of the Underwriters
that the representations and warranties of the Selling Stockholder set forth in
Section 1(b) of the Underwriting Agreement are accurate as though expressly made
at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule I is a
completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
If the foregoing is in accordance with your understanding of the agreement
among the Underwriters, the Company and the Selling Stock holder, please sign
and return to the Company a counterpart hereof, whereupon this instrument along
with all counterparts and together with the Underwriting Agreement, shall be a
binding agreement among the Underwriters, the Company and the Selling
Stockholder in accordance with its terms and the terms of the Underwriting
Agreement.
Very truly yours,
ORBIT/FR, INC.
By: /s/ Aryeh Trabelsi
------------------------------
Aryeh Trabelsi, President
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By: /s/ Joseph Aviv
------------------------------
Joseph Aviv, Chairman
Confirmed as of the date
first above mentioned:
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
By: PENNSYLVANIA MERCHANT GROUP LTD
Acting severally and on behalf
of and the several Underwriters
named in Schedule I hereto
By: /s/ P. S. Rawlings
------------------------------
Authorized Officer
A-2
<PAGE>
EXHIBIT B
---------
AGREEMENT AND POWER OF ATTORNEY
ORBIT/FR, INC.
Common Stock
Aryeh Trabelsi
Joseph Aviv
c/o Orbit/FR, Inc.
506 Prudential Road
Horsham, PA 19044
Dear Sirs:
The undersigned understands that Orbit/FR, Inc., a Delaware corporation
(the "Company"), has filed a registration statement (together with any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act") relating to the prior
registration statement, the "Registration Statement") under the Act, in
connection with the proposed public offering and sale by the Company and Orbit-
Alchut Technologies, Ltd. (the "Selling Stockholder") of the Company's Common
Stock, par value $.01 per share (the "Common Shares").
The Selling Stockholder desires to sell certain Common Shares and to
include such shares among the shares covered by the Registration Statement. The
number of Common Shares which the undersigned desires to sell (the "Shares") are
set forth beneath the signature of the Selling Stockholder below.
Concurrently with the execution and deliver of this Agreement and Power of
Attorney (the "Power of Attorney"), the undersigned is delivering to you, or
requesting the Company to deliver to you, certificates for the Shares, which you
are authorized to deposit with Aryeh Trabelsi as custodian (the "Custodian"),
pursuant to a custody agreement in the form attached as Attachment A hereto (the
"Custody Agreement").
1. In connection with the foregoing, the Selling Stockholder hereby
makes, constitutes and appoints you collectively, and each of you, individually
(a "Member") and each of your respective substitutes under Section 3, the true
and lawful attorneys-in-fact of the undersigned (the Members or any of them or
their respective substitutes being herein referred to collectively as the
"Committee"), with
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<PAGE>
full power and authority, in the name and on behalf of the Selling Stockholder:
(a) To enter into the Custody Agreement and deposit with the
Custodian pursuant thereto the certificates for the Shares delivered to the
Committee concurrently herewith;
(b) For the purpose of effecting the sale of the Shares, to execute
and deliver (i) an Underwriting Agreement (the "Underwriting Agreement"),
by and among the Company, the Selling Stockholder and the representatives
(the "Representatives") of the several Underwriters (the "Underwriters")
and (ii) a Price Determination Agreement (as defined in the Underwriting
Agreement) by and among the Company, the Selling Stockholder and the
Representatives of the several Underwriters;
(c) To endorse, transfer and deliver certificates for the Shares to
or on the order of the Representatives or their nominee or nominees, and to
give such orders and instructions to the Custodian as the Committee may in
its sole discretion determine with respect to (i) the transfer on the books
of the Company of the Shares in order to effect such sale, including the
names in which new certificates for such Shares are to be issued and the
denominations thereof, (ii) the delivery to or for the account of the
Representatives of the certificates for the Shares against receipt by the
Custodian of the full purchase price to be paid therefor, (iii) the
remittance to the Selling Stockholder of the Selling Stockholder's share of
the proceeds, after payment of the expenses described in the Underwriting
Agreement, from any sale of Shares and (iv) the return to the Selling
Stockholder of certificates representing the number of Shares, if any,
deposited with the Custodian but not sold by the Selling Stockholder under
the Registration Statement for any reason;
(d) To take for the Selling Stockholder all steps deemed necessary or
advisable by the Committee in connection with the registration of the
Shares under the Act, including without limitation filing amendments to the
Registration Statement, filing a registration statement under Rule 462(b)
relating to the Registration Statement, requesting acceleration of the
effectiveness of the Registration Statement, informing the Securities and
Exchange Commission (the "SEC") that the Selling Stockholder has no
knowledge of any material adverse information with regard to the current
and prospective operations of the Company which is not stated in the
Registration Statement, and such other steps as the Committee may in its
absolute discretion deem necessary or advisable;
(e) To make, acknowledge, verify and file on the behalf of the
Selling Stockholder applications, consents to service of process and such
other undertakings or reports as may be required by law with state
commissioners or officers administering state securities or Blue Sky laws
and to take any other action required to facilitate the qualification of
the Shares under the
B-2
<PAGE>
securities or Blue Sky laws of the jurisdictions in which the Shares are to
be offered;
(f) If necessary, to endorse (in blank or otherwise) on behalf of the
Selling Stockholder the certificate or certificates representing the
Shares, or a stock power or powers attached to such certificate or
certificates; and
(g) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions,
certificates, letters and other writings and, in general, to do all things
and to take all action which the Committee in its sole discretion may
consider necessary or proper in connection with or to carry out the
aforesaid sale of Shares, as fully as could the Selling Stockholder if
personally present and acting.
2. This Power of Attorney and all authority conferred hereby is granted
and conferred subject to and in consideration of the interest of the Company,
the Representatives and the Underwriters and, for the purpose of completing the
transactions contemplated by this Power of Attorney, this Power of Attorney and
all authority conferred hereby shall be irrevocable and shall not be terminated
by any act of the Selling Stockholder or by operation of law, whether by the
liquidation of the Selling Stockholder or by the occurrence of any other event
or events, and if, after the execution hereof, the Selling Stockholder shall be
liquidated, or if any other such event or events shall occur before the
completion of the transactions contemplated by this Power of Attorney, the
Committee shall nevertheless be authorized and directed to complete all such
transactions as if such liquidation or other event or events had not occurred
and regardless of notice thereof.
3. Each Member shall have the full power to make and substitute any
person in the place and stead of such Member, and the Selling Stockholder hereby
ratifies and confirms all that each Member or substitute or substitutes shall do
by virtue of these presents. All actions hereunder may be taken by any one
Member or his substitute. In the event of the death, disability or incapacity
of any Member, the remaining Member or Members shall appoint a substitute
therefor.
4. The Selling Stockholder hereby represents, warrants and covenants
that:
(a) All information furnished to the Company by or on behalf of the
Selling Stockholder for use in connection with the preparation of the
Registration Statement is and will be true and correct in all material
respects and does not and will not omit any material fact necessary to make
such information not misleading;
(b) The Selling Stockholder, having full right, power and authority
to do so, has duly executed and delivered this Power of Attorney.
B-3
<PAGE>
(c) The Selling Stockholder has carefully reviewed the Registration
Statement and will carefully review each amendment thereto immediately upon
receipt thereof from the Company and will promptly advise the Company in
writing if:
(i) The name and address of the Selling Stockholder is not
properly set forth in each preliminary prospectus (collectively, the
"Preliminary Prospectus") contained in the Registration Statement at
the time it becomes effective;
(ii) The Selling Stockholder has reason to believe the (A) any
information furnished to the Company by or on behalf of the Selling
Stockholder for use in connection with the Registration Statement, the
Preliminary Prospectus or the final prospectus (the "Prospectus") is
not true and complete; and (B) any Preliminary Prospectus, the
Prospectus or any supplements thereto contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
(iii) The Selling Stockholder knows of any material adverse
information with regard to the current or prospectus operations of
the Company or any of its subsidiaries which is not disclosed in any
Preliminary Prospectus, the Prospectus or the Registration Statement;
or
(iv) Except as indicated in the Prospectus, the Selling
Stockholder knows of any arrangements made or to be made by any
person, or of any transaction already effected, (A) to limit or
restrict the sale of the Common Shares during the period of the public
distribution, (B) to stabilize the market for the Common Shares or
(C) to withhold commissions or otherwise to hold any other person
responsible for the distribution of the Shares;
(d) In connection with the offering of the Shares, the Selling
Stockholder has not taken and will not knowingly take, directly or
indirectly, any action intended to, or which might reasonably be expected
to, cause or result in stabilization or manipulation of the price of the
Shares or the Common Shares to facilitate the sale or resale of the Shares;
(e) The Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares other than a Preliminary Prospectus, the
Prospectus or other material permitted by the Act;
(f) The Selling Stockholder will notify the Company in writing
immediately of any changes in the foregoing information which should be
made as a result of developments occurring after the date hereof and prior
to the Closing Date and any Option
B-4
<PAGE>
Closing Date under the Underwriting Agreement, and the Committee may
consider that there has not been any such development unless advised to the
contrary;
(g) The Selling Stockholder has, and at the time of delivery of the
Shares to the Representatives it will have, full power and authority to
enter into this Power of Attorney, to carry out the terms and provisions
hereof and to make all the representations, warranties and covenants
contained herein; and
(h) This Power of Attorney is the valid and binding agreement of the
Selling Stockholder and is enforceable against the Selling Stockholder in
accordance with its terms, except as such enforceability may be limited by
general principles of equity, whether applied in a court of law or a court
of equity, and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
5. The representations, warranties and covenants of the Selling
Stockholder in this Power of Attorney are made for the benefit of, and may be
relied upon by the Committee, the Company and its counsel, and their
representatives, agents and counsel, the Custodian, the Underwriters and the
Representatives.
6. The Committee shall be entitled to act and rely upon any statement,
request, notice or instructions respecting this Power of Attorney given to it by
the Selling Stockholder, not only as to the authorization, validity and
effectiveness thereof, but also as to truth and acceptability of any information
therein contained.
It is understood that the Committee assumes no responsibility or liability
to any person other than to deal with the Shares deposited with it and the
proceeds from the sale of the Shares in accordance with the provisions hereof.
The Committee makes no representations with respect to and shall have no
responsibility for the Registration Statement, the Prospectus or any Preliminary
Prospectus nor, except as herein expressly provided, for any aspect of the
offering of the Common Shares, and it shall not be liable for any error of
judgment or for any act done or omitted or for any mistake of fact or law except
for its own gross negligence or bad faith. The Selling Stockholder agrees to
indemnify the Committee for and to hold the Committee harmless against any loss,
claim, damage or liability incurred on its part arising out of or in connection
with it acting as the Committee under this Power of Attorney, as well as the
cost and expense of investigating and defending against any such loss, claim,
damage or liability, except to the extent such loss, claim, damage or liability
is due to the gross negligence or bad faith of the Member seeking
indemnification; provided that the maximum amount for which the Selling
Stockholder shall be liable under this Agreement shall be the net proceeds from
the offering received by such Selling Stockholder less any amounts for which
such Selling Stockholder is liable under Section 8 of the Underwriting
Agreement and Section 7 of the Custodian Agreement. The Selling Stockholder
agrees that the Committee may consult with the counsel of its own choice, who
may be counsel for the Company, and it shall have full and
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<PAGE>
complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
7. It is understood that the Committee shall serve entirely without
compensation.
8. This Power of Attorney shall be governed by the laws of the
Commonwealth of Pennsylvania.
This Power of Attorney may be signed in two or more counterparts with the
same effect as if the signature thereto and hereto upon the same instrument.
In case any provision in this Power of Attorney 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 Power of Attorney shall be binding upon the Committee and the Selling
Stockholder and the legal representatives, distributees, successors and assigns
of the Selling Stockholder.
Dated: June 16, 1997
Very truly yours,
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By: /s/ Joseph Aviv
--------------------------------
Joseph Aviv, Chairman
SHARES TO BE SOLD:
__________ shares of Common Stock
ACKNOWLEDGED AND ACCEPTED
THE COMMITTEE:
/s/ Aryeh Trabelsi
- -------------------------------
/s/ Joseph Aviv
- -------------------------------
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<PAGE>
ATTACHMENT A
------------
CUSTODY AGREEMENT
CUSTODY AGREEMENT, dated June 16, 1997, among Aryeh Trabelsi, as Custodian
(the "Custodian"), and Orbit-Alchut Technologies, Ltd. (the "Selling
Stockholder").
Orbit/FR, Inc., a Delaware corporation (the "Company"), has filed a
registration statement (together with any subsequent registration statement
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act") relating to the prior registration statement, the "Registration
Statement") with the Securities and Exchange Commission to register for sale to
the public under the Act, shares of the Company's Common Stock, par value $.01
per share (the "Common Shares").
The shares to be covered by the Registration Statement shall consist of (a) up
to 2,000,000 Common Shares to be sold by the Company and (b) up to 300,000
Common Shares (the "Shares") to be sold by the Selling Stockholder.
The Selling Stockholder has executed and delivered a Power of Attorney (the
"Power of Attorney") naming Joseph Aviv and Aryeh Trabelsi, and each of them, as
its attorney-in-fact (the "Committee"), for certain purposes, including the
execution, delivery and performance of this Agreement in its name, place and
stead, in connection with the proposed sale by the Selling Stockholder of the
Shares.
1. A custody arrangement is hereby established by the Selling Stockholder
with the Custodian with respect to the Shares, and the Custodian is hereby
instructed to act in accordance with this Agreement and any amendments or
supplements hereto authorized by the Committee.
2. There are herewith delivered to the Custodian, and the Custodian hereby
acknowledges receipt of, certificates representing the Shares, which
certificates have been endorsed in blank or are accompanied by duly executed
stock powers, in each case with all signatures accompanied by the signature of
another officer of the Selling Stockholder. Such certificates are to be held by
the Custodian for the account of the Selling Stockholder and are to be disposed
of by the Custodian in accordance with this Agreement.
3. The Custodian is authorized and directed by the Selling Stockholder:
(a) To hold the certificates representing the Shares delivered by the
Selling Stockholder in the Custodian's custody;
(b) On or prior to any closing date for any Shares sold pursuant to the
Registration Statement (an "Option Closing Date"), to cause such Shares to be
transferred on the books of
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<PAGE>
the Company into such names as the Custodian shall have been instructed by
the representatives (the "Representatives") of the several Underwriters (the
"Underwriters"); to cause to be issued, against surrender of the
certificates for the Shares, a new certificate or certificates for such
Shares, free of any restrictive legend, registered in such name or names; to
deliver such new certificates in such name or names, to deliver such new
certificates representing such Shares to the Representatives, as instructed
by the Representatives on the Option Closing Date for their account or
accounts against full payment therefor and to give receipt for such payment;
and
(c) To disburse such payments in the following manner: (i) to itself,
as agent for the Selling Stockholder, a reserve amount to be designated in
writing by the Committee from which amount the Custodian shall pay, as soon
as reasonably practicable, any applicable stock transfer taxes and (ii) to
the Selling Stockholder, pursuant to the written instructions of the
Committee, (A) on the Option Closing Date, a sum equal to the proceeds to
which the Selling Stockholder is entitled, as determined by the Committee,
less the reserve amount designated by the Committee and (B) promptly after
all proper charges, disbursements, costs and expenses shall have been paid,
any remaining balance of the amount reserved under clause (i) above. Before
making any payment from the amount reserved under clause (i) above, except
payments made pursuant to subclause (B) of clause (ii) above, the Custodian
shall request and receive the written approval of the Committee.
4. Subject in each case to the indemnification obligations set forth in
Section 7, in the event Shares of the Selling Stockholder are not sold prior to
August 31, 1997, the Custodian shall deliver to the Selling Stockholder as soon
as practicable after the earlier to occur of such date and termination of the
offering of the Shares, certificates representing such Shares deposited by the
Selling Stockholder. Certificates returned to the Selling Stockholder shall be
returned with any related stock powers, and any new certificates issued to the
Selling Stockholder with respect to such Shares shall bear any appropriate
legend reflecting the unregistered status thereof under the Act.
5. This Agreement is for the express benefit of the Company and the
Selling Stockholder, the Underwriters and the Representatives. The obligations
and authorizations of the Selling Stockholder hereunder are irrevocable and
shall not be terminated by any act of the Selling Stockholder or by operation of
law, whether by the incapacity of the Selling Stockholder or by the occurrence
of any other event or events, and if after the execution hereof the Selling
Stockholder shall be incapacitated, or if any other event or events shall occur
before the delivery of the Selling Stockholder's Shares hereunder to the
Representatives, such Shares shall be delivered to the Representatives in
accordance with the terms and conditions of this Agreement, as if such event had
not occurred, regardless of whether or not the Custodian shall have received
notice of such event.
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<PAGE>
6. Until payment of the purchase price for the Shares has been made to the
Selling Stockholder or to the Custodian, the Selling Stockholder shall remain
the owner of, and shall retain the right to receive dividends and distributions
on, and to vote, the number of Shares delivered by it to the Custodian
hereunder. Until such payment in full has been made or until the offering of
Shares has been terminated, the Selling Stockholder agrees that it will not
give, assign, sell, agree to sell, pledge, hypothecate, grant any lien on,
transfer, or otherwise dispose of the Shares or any interests therein.
7. The Custodian shall assume no responsibility to any person other than to
deal with the certificates for the Shares and the proceeds from the sale of the
Shares represented thereby in accordance with the provisions hereof, and the
Selling Stockholder hereby agrees to indemnify the Custodian for and to hold the
Custodian harmless against any and all losses, claims, damages or liabilities
incurred on its part arising out or in connection with it acting as the
Custodian pursuant hereto, as well as the costs and expenses of investigating
and defending any such losses, claims, damages or liabilities, except to the
extent such losses, claims, damages or liabilities are due to the negligence or
bad faith of the Custodian; provided that the maximum amount for which the
Selling Stockholder shall be liable under this Agreement shall be the net
proceeds from the offering received by the Selling Stockholder less any amounts
for which the Selling Stockholder is liable for indemnification under Section 8
of the Underwriting Agreement and Section 6 of the Agreement and Power of
Attorney. The Selling Stockholder agrees that the Custodian may consult with
counsel of its own choice, who may be counsel for the Company, and the Custodian
shall have full and complete authorization and protection for any action taken
or suffered by the Custodian hereunder in good faith and in accordance with the
opinion of such counsel.
8. The Selling Stockholder hereby represents and warrants that: (a) it has,
and at the time of delivery of its Shares to the Representatives it will have,
full power and authority to enter into this Agreement and the Power of Attorney,
to carry out the terms and provisions hereof and thereof and to make all of the
representations, warranties and agreements contained herein and therein and (b)
this Agreement and the Power of Attorney are the valid and binding agreements
of the Selling Stockholder and are enforceable against the Selling Stockholder
in accordance with their respective terms.
9. The Custodian's acceptance of this Agreement by the Custodian's execution
hereof shall constitute an acknowledgment by the Custodian of the authorization
herein conferred and shall evidence the Custodian's agreement to carry out and
perform this Agreement in accordance with its terms.
10. The Custodian shall be entitled to act and rely upon any statement,
request, notice or instruction with respect to this Agreement given to it on
behalf of the Selling Stockholder if the same shall be made or given to the
Custodian by the Committee, not only as to the authorization, validity and
effectiveness thereof, but
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<PAGE>
also as to the truth and acceptability of any information therein contained.
11. This Agreement may be executed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Execution by the Custodian of one counterpart hereof and its delivery thereof
to the Committee shall constitute the valid execution of this Agreement by the
Custodian.
12. This Agreement shall be binding upon the Custodian, the Selling
Stockholder and the respective, legal representatives, distributees, successors
and assigns of the Selling Stockholder.
13. This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
14. Any notice given pursuant to this Agreement shall be deemed given if in
writing and delivered in person, or if given by telephone or telegraph if
subsequently confirmed by letter: (i) if to the Selling Stockholder, to it, c/o
Orbit/FR, Inc., 506 Prudential Road, Horsham, Pennsylvania 19044 and (ii) if to
the Custodian, to him, c/o Orbit/FR, Inc., 506 Prudential Road, Horsham,
Pennsylvania 19044.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
/s/ Aryeh Trabelsi
------------------------------
Aryeh Trabelsi, as Custodian
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By: /s/ Joseph Aviv
---------------------------
Joseph Aviv, Chairman
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<PAGE>
EXHIBIT C
---------
June 16, 1997
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
As Representatives of the
several Underwriters
Four Falls Corporate Center
West Conshohocken, PA 19428
Dear Sirs:
In consideration of the agreement (the "Underwriters Agreement") of the
several Underwriters for which Pennsylvania Merchant Group Ltd and Unterberg
Harris (the "Representatives"), intend to act as Representatives, to underwrite
a proposed public offering (the "Offering") of common stock, $.01 par value (the
"Common Shares") of Orbit/FR, Inc., a Delaware corporation (the "Company"), as
contemplated by a registration statement with respect to such shares filed with
the Securities and Exchange Commission on Form S-1 (Registration No. 333-
25015)(the "Registration Statement"), the undersigned hereby agrees that the
undersigned will not, for a period of 180 days after the effective date of the
Registration Statement, without the prior written consent of the
Representatives:
(i) directly or indirectly assign, transfer, offer, sell, agree to sell, make
any short sale, pledge, hypothecate or otherwise dispose (collectively, a
"Disposition") of any Common Shares of the Company or securities convertible
into or exchangeable for or any rights to acquire Common Shares or
(ii) engage in any hedging or other transactions with respect to the Common
Shares that may have an impact on the market price of the Common Shares, or that
is designed to result in a Disposition of Common Shares, even if such Common
Shares would be disposed of by someone other than the undersigned, including,
without limitation, any short sale (whether or not against the box) or any
purchase, sale, or grant of any right (including, without limitation, any put or
call option) with respect to any Common Shares or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from Common Shares;
provided, however, that (i) bona fide gifts to persons who agree in writing with
the Representatives to be bound by the provisions hereof, and sales of Common
Shares pursuant to the Underwriting Agreement, shall not be prohibited, and (ii)
nothing in this Agreement shall prohibit any Disposition by Orbit-Alchut
Technologies,
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<PAGE>
Ltd. ("Alchut") of any capital stock or other securities of Alchut or any of
Alchut's subsidiaries other than the Company.
Very truly yours,
By:
---------------------------
-------------------------------
[Print Name]
C-2
