<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL , 2000
REGISTRATION NO. 333-34184
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AEROFLEX INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 11-1974412
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
35 SOUTH SERVICE ROAD MICHAEL GORIN, PRESIDENT
PLAINVIEW, NEW YORK 11803 AEROFLEX INCORPORATED
(516) 694-6700 35 SOUTH SERVICE ROAD
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE PLAINVIEW, NEW YORK 11803
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S (516) 694-6700
PRINCIPAL EXECUTIVE OFFICES) (NAME ADDRESS AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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COPIES TO:
<TABLE>
<S> <C>
NANCY D. LIEBERMAN, ESQ. RICHARD H. GILDEN, ESQ.
BLAU, KRAMER, WACTLAR & LIEBERMAN, P.C. FULBRIGHT & JAWORSKI L.L.P.
100 JERICHO QUADRANGLE 666 FIFTH AVENUE
JERICHO, NEW YORK 11753 NEW YORK, NEW YORK 10103
(516) 822-4820 (212) 318-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box [ ].
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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. [ ]
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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 number of the earlier effective registration statement for the same
offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY(1) OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.10 par
value....................... 3,737,500 46.56(2) $174,018,000 $45,940(3)
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(c) under the Securities Act of 1933, the proposed
maximum offering price of each share of the Registrant's Common Stock is
estimated to be the average of the high and low sale prices of a share as of
a date five business days before the filing of this Registration Statement.
Accordingly, the Registrant has used $46.56 as such price per share, which
is the average of the high bid of $49.00 and the low ask of $44.125 reported
by the Nasdaq National Market on April 3, 2000.
(3) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 45,940
Nasdaq Filing Fee........................................... 17,500
NASD Filing Fee............................................. 17,902
Blue Sky Fees and Expenses*................................. 5,000
Transfer Agent Fees*........................................ 3,500
Accounting Fees and Expenses................................ 85,000
Legal Fees and Expenses*.................................... 150,000
Printing and Engraving...................................... 85,000
Miscellaneous*.............................................. 15,158
--------
Total............................................. $425,000
========
</TABLE>
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* Estimated
The Company will pay all of these expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under provisions of the By-Laws of the Company, each person who is or was a
director or officer of the Company may be indemnified by the Company to the full
extent permitted or authorized by the General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the merits of
defense of a suit or proceeding brought against him by reason of the fact that
he is a director or officer of the Company, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action.
If unsuccessful in defense of a third-party civil suit or if a criminal suit is
settled, such a person may be indemnified under such law against both (1)
expenses (including attorneys' fees) and (2) judgements, fines and amounts paid
in settlement if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Company, and with respect
to any criminal action, had no reasonable cause to believe his conduct was
unlawful.
If unsuccessful in defense of a suit brought by or in the right of the Company,
or if such suit is settled, such a person may be indemnified under such law only
against expenses (including attorneys' fees) incurred in the defense or
settlement of such suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company except
that if such a person is adjudged to be liable in such suit for negligence or
misconduct in the performance of his duty to the Company, he cannot be made
whole even for expenses unless the court determines that he is fairly and
reasonably entitled to indemnity for such expenses.
The Company and its officers and directors are covered by officers and directors
liability insurance. The policy coverage is $50,000,000, which includes
reimbursement for costs and fees. There is a maximum deductible under the policy
of $250,000 for each claim. The Company has entered into Indemnification
Agreements with certain of its officers and directors. The Agreements provide
for reimbursement for all direct and indirect costs of any type or nature
whatsoever (including attorneys' fees and related disbursements) actually and
reasonably incurred in connection with either the investigation, defense or
appeal of a Proceeding, as defined, including amounts paid in settlement by or
on behalf of an Indemnitee.
II-1
<PAGE> 3
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement.
4.1 Specimen Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on
Form S-3, File No. 333-46689)
5 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C.*
23.1 Consent of KPMG LLP*
23.2 Consent of Blau, Kramer, Wactlar & Lieberman, P.C.*
24 Powers of Attorney*
</TABLE>
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* Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Act"), each filing of the registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned Registrant hereby undertakes:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part
of the registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Plainview, New York on the 12th day of April, 2000.
Aeroflex Incorporated
By: /s/ HARVEY R. BLAU
------------------------------------
Harvey R. Blau
Chairman of the Board
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1
to Registration Statement has been signed below on April 12, 2000 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ HARVEY R. BLAU Chairman of the Board (Chief Executive
- ----------------------------------------------------- Officer)
Harvey R. Blau
/s/ MICHAEL GORIN* President and Director (Chief Financial
- ----------------------------------------------------- Officer and Principal Accounting Officer)
Michael Gorin
/s/ LEONARD BOROW* Executive Vice President, Secretary and
- ----------------------------------------------------- Director (Chief Operating Officer)
Leonard Borow
/s/ PAUL ABECASSIS* Director
- -----------------------------------------------------
Paul Abecassis
/s/ MILTON BRENNER* Director
- -----------------------------------------------------
Milton Brenner
/s/ ERNEST E. COURCHENE, JR.* Director
- -----------------------------------------------------
Ernest E. Courchene, Jr.
/s/ DONALD S. JONES* Director
- -----------------------------------------------------
Donald S. Jones
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ EUGENE NOVIKOFF* Director
- -----------------------------------------------------
Eugene Novikoff
/s/ JOHN S. PATTON* Director
- -----------------------------------------------------
John S. Patton
*By: /s/ HARVEY R. BLAU
- -----------------------------------------------------
Attorney-In-Fact
</TABLE>
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<S> <C>
EXHIBITS
---- DESCRIPTION
------------------------------------------------------------
1.1 Form of Underwriting Agreement.
4.1 Specimen Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on
Form S-3, File No. 333-46689)
5 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C.*
23.1 Consent of KPMG LLP*
23.2 Consent of Blau, Kramer, Wactlar & Lieberman, P.C.*
24 Powers of Attorney*
</TABLE>
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* Previously filed.
II-5
<PAGE> 1
Exhibit 1.1
3,250,000 Shares
Aeroflex Incorporated
Shares of Common Stock
UNDERWRITING AGREEMENT
April __, 2000
CIBC World Markets Corp.
A.G. Edwards & Sons, Inc.
Wit SoundView Corporation
Wasserstein Perella Securities
As representatives of the several Underwriters
named in Schedule I to the Underwriting Agreement
c/o CIBC World Markets Corp.
425 Lexington Avenue, 6th Floor
New York, New York 10017
Ladies and Gentlemen:
Aeroflex Incorporated, a Delaware corporation (the "Company"),
and certain stockholders of the Company listed on Schedule II hereto (the
"Selling Stockholders"), propose, subject to the terms and conditions contained
herein, to sell to you and the other underwriters named on Schedule I to this
Agreement (the "Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 3,250,000 shares (the "Firm Shares") of the
Company's common stock, $.10 par value per share (the "Stock"), of which
2,500,000 shares of Stock will be sold by the Company and 750,000 will be sold
by the Selling Stockholders. The respective amounts of the Firm Shares to be so
purchased by the several Underwriters are set forth opposite their names in
Schedule I hereto, and the respective amounts of Firm Shares to be sold by the
Selling Stockholders are set forth opposite their names in Schedule II hereto.
The Company and the Selling Stockholders are sometimes referred to herein
collectively as the "Sellers." In addition, the Selling Stockholders propose to
grant to the Underwriters options to purchase up to an additional 487,500 shares
of Stock (the "Option Shares") for the purpose of covering over-allotments in
connection with the sale of the Firm Shares. The Firm Shares and the Option
Shares are together called the "Shares."
<PAGE> 2
1. Sale and Purchase of the Shares. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) Each of the Sellers agrees to sell to the
Underwriters the number of Firm Shares set forth opposite the name of such
Seller on Schedule II to this Agreement at $[ ] per share (the "Initial Price"),
and each of the Underwriters agrees, severally and not jointly, to purchase from
the Sellers, at the price set forth above, the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule I to this Agreement. The
number of Firm Shares to be purchased by each Underwriter from each Seller shall
be in the same proportion (adjusted by the Representatives to eliminate
fractions) as the number of Firm Shares to be purchased hereunder by each
Underwriter bears to the total number of Firm Shares being purchased hereunder.
(b) Certificates in negotiable form for the total
number of the Shares to be sold hereunder by each of the Selling Stockholders
have been placed in custody with Blau Kramer, Wactlar & Lieberman, P.C., as
custodian (the "Custodian"), pursuant to the Custody Agreement and Power of
Attorney (the "Custody Agreement") executed by each Selling Stockholder for
delivery of all Shares to be sold hereunder by such Selling Stockholder. Each of
the Selling Stockholders specifically agrees that the Shares represented by the
certificates held in custody for such Selling Stockholder under the Custody
Agreement are subject to the interests of the Underwriters hereunder, that the
arrangements made by such Selling Stockholder for such custody are to that
extent irrevocable, and that the obligations of such Selling Stockholder
hereunder shall, subject to applicable law, not be terminable by any act or deed
of the Selling Stockholder (or by any other person, firm or corporation
including the Company, the Custodian or the Underwriters) or by operation of law
(including the death of such Selling Stockholder) or by the occurrence of any
other event or events, except as set forth in the Custody Agreement. If any such
event should occur prior to the delivery to the Underwriters of the Shares to be
sold by the Selling Stockholders hereunder, certificates for the Shares shall,
except as set forth herein or in the Custody Agreement, be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such event has not occurred. The Custodian is authorized to receive and
acknowledge receipt of the proceeds of sale of the Shares to be sold by the
Selling Stockholders held by each of them against delivery of such Shares.
(c) The Selling Stockholders hereby grant to the
several Underwriters an option to purchase all or any part of up to 487,500
Option Shares at the Initial Price. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option Shares to
be purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such options may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters and may be exercised in whole or in part
at any time on or before 12:00 noon, New York City time, on the business day
before the Firm Shares Closing Date (as defined below), and on one or more
occasions thereafter within 30 days after the date of this Agreement, in each
case upon written, facsimile or telegraphic notice, or oral or telephonic notice
confirmed by written, facsimile or telegraphic notice, by the Representatives to
the Company no later than 12:00 noon, New York City time, on the
-2-
<PAGE> 3
business day before the Firm Shares Closing Date or at least two business days
before the Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the time and date
(if other than the Firm Shares Closing Date) of such purchase. Any partial
exercise of the options granted hereby shall be made on a pro rata basis in
proportion to the respective maximum number of Option Shares to be sold by the
Selling Stockholders. The number of Option Shares to be purchased by each
Underwriter from the Selling Stockholders shall be in the same proportion
(adjusted by the Representatives to eliminate fractions) as the number of Option
Shares to be purchased hereunder by each Underwriter bears to the total number
of Option Shares.
2. Delivery and Payment. Delivery by the Company and the Custodian
of the Firm Shares to the Representatives for the respective accounts of the
Underwriters, and payment of the purchase price therefor to the Sellers in
Federal or other funds immediately available in New York City shall take place
at the offices of CIBC World Markets Corp., at 425 Lexington Avenue, 6th Floor,
New York, New York 10017, at 10:00 a.m., New York City time, on the fourth
business day following the date of this Agreement, or at such time on such other
date, not later than 10 business days after the date of this Agreement, or at
such other place, as shall be agreed upon by the Company and the Representatives
(such time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the options with respect to the Option Shares are
exercised, delivery by the Selling Stockholders of the Option Shares to the
Representatives for the respective accounts of the Underwriters, and payment of
the purchase price to the Selling Stockholders in Federal or other funds
immediately available in New York City, shall take place at the offices of CIBC
World Markets Corp. specified above, or at such other place as shall be agreed
upon by the Selling Stockholders and the Representatives, at the time and on the
date (which may be the same date as, but in no event shall be earlier than, the
Firm Shares Closing Date) specified in the notice referred to in Section 1(c)
(such time and date of delivery and payment are called the "Option Shares
Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request at
least two full business days before the Firm Shares Closing Date or, in the case
of Option Shares, on the day of notice of exercise of the option as described in
Section l(c) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, at least 24
hours prior to the Firm Shares Closing Date (or the Option Shares Closing Date
in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-[ ]), including a preliminary prospectus relating to the Shares, and has
filed with the
-3-
<PAGE> 4
Commission the Registration Statement (as hereinafter defined) and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and of
the related preliminary prospectus have previously been delivered by the Company
to you. The term "preliminary prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement. The Registration Statement as amended at the time and on
the date it becomes effective (the "Effective Date"), including all exhibits
(including those exhibits permitted by the Rules to be incorporated by reference
therein) and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b), Rule 434 and Rule 430A of the Rules, is
called the "Registration Statement." The term "Prospectus" means the prospectus
in the form first used to confirm sales of the Shares (whether such prospectus
was included in the Registration Statement at the time of effectiveness or was
subsequently filed with the Commission pursuant to Rule 424(b) of the Rules) or
if the Company relies on Rule 434 under the Securities Act, the "Term Sheet"
relating to the Shares, together with the preliminary prospectus that such Term
Sheet supplements. "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Securities Act.
The Company and each of the Selling Stockholders understands that
the Underwriters propose to make a public offering of the Shares, as set forth
in and pursuant to the Prospectus, as soon after the Effective Date and the date
of this Agreement as the Representatives deem advisable. The Company and each of
the Selling Stockholders hereby confirm that the Underwriters and dealers have
been authorized to distribute or cause to be distributed each preliminary
prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company or the Selling Stockholders furnishes
amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company hereby represents and warrants to each Underwriter as
follows:
(i) On the Effective Date, the Registration Statement complied, and on
the date of the Prospectus, on the date any post-effective amendment to the
Registration Statement shall become effective, on the date any supplement or
amendment to the Prospectus is filed with the Commission and on each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the applicable provisions of the Securities Act and the Rules; the
Registration Statement did not, as of the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
and on the other dates referred to above, neither the Registration Statement
nor the Prospectus, nor any amendment thereof or supplement thereto, will
contain any untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. When any related
-4-
<PAGE> 5
preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto or
pursuant to Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or
warranty as to the statements contained under the caption
"Underwriting" in the Prospectus. The Company acknowledges that the
statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of
the several Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus.
(ii) The documents that are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is
so incorporated by reference, when they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable,
and the rules and regulations of the Commission promulgated under the
Securities Act and the Exchange Act, as applicable, except as amended
and superseded by statements made in the Registration Statement; and
any documents so filed and incorporated by reference subsequent to the
Effective Date shall, when they are filed with the Commission, conform
in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission promulgated under the Securities Act and the Exchange Act,
as applicable.
(iii) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the Company, are
threatened under the Securities Act. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules has been or will be made in the manner and within the time period
required by such Rule 424(b).
(iv) The consolidated financial statements of the Company
(including all notes and schedules thereto) included in the
Registration Statement and Prospectus present fairly the financial
position, the results of operations and cash flows and the
stockholders' equity and the other information purported to be shown
therein of the Company and its subsidiaries, listed on Schedule III
hereto (the "Subsidiaries"), at the respective dates and for the
respective periods to which they apply; and such financial statements
(including all notes and schedules thereto) have been prepared in
conformity with generally accepted accounting principles, consistently
applied throughout the periods involved, and all adjustments
-5-
<PAGE> 6
necessary for a fair presentation of the results for such periods have
been made. The other financial and statistical information and data set
forth in the Registration Statement and the Prospectus is accurately
presented and, to the extent such information and data are derived from
the financial statements and books and records of the Company and the
Subsidiaries, are prepared on a basis consistent with such financial
statements and books and records.
(v) KPMG LLP, whose report is filed with the Commission as a
part of the Registration Statement, are and, during the periods covered
by its reports, were independent public accountants as required by the
Securities Act and the Rules.
(vi) The Company has been duly incorporated and is a validly
existing corporation under the laws of the State of Delaware, and the
Subsidiaries have been duly incorporated and are validly existing
corporations under the laws of their respective jurisdictions. Other
than the Subsidiaries, the Company has no subsidiaries and does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization, except as
described in the Registration Statement and the Prospectus. Each of the
Company and the Subsidiaries is duly qualified and in good standing as
a foreign corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or the
nature of its business makes such qualification necessary except for
such jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business, results
of operations or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole (a "Material Adverse Effect").
Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor the Subsidiaries own, lease or license any
material asset or property or conduct any material business outside the
United States of America. Each of the Company and the Subsidiaries have
all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity, to own, lease and license their assets and properties
and conduct their businesses as now being conducted and as described in
the Registration Statement and the Prospectus except for such
authorizations, approvals, consents, orders, licenses, certificates and
permits the failure to so obtain would not have a Material Adverse
Effect; no such authorization, approval, consent, order, license,
certificate or permit contains a materially burdensome restriction
other than as disclosed in the Registration Statement and the
Prospectus; and the Company has all such corporate power and authority,
and such authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this
Agreement and to issue and sell the Shares (except as may be required
under the Securities Act and state and foreign Blue Sky laws).
(vii) The Company and the Subsidiaries own, license or possess
adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service
marks, service mark registrations, copyrights, copyright applications,
licenses, know-how and other similar rights and proprietary knowledge
(collectively,
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<PAGE> 7
"Intangibles") material to or necessary for the conduct of their
business as described in the Registration Statement and the Prospectus.
Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor any of the Subsidiaries have received any
notice of, and to their knowledge are not aware of, any infringement of
or conflict with asserted rights of others with respect to any
Intangibles which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could be reasonably expected
to have a Material Adverse Effect, and neither the Company nor the
Subsidiaries know of any reasonable basis therefor. Except as disclosed
in the Registration Statement and the Prospectus, to the knowledge of
the Company, no Intangibles of the Company or the Subsidiaries are in
dispute or are in any conflict with the right of any other person or
entity and the Company and each of the Subsidiaries (A) has or will
have the right (subject to applicable agreements, which agreements
provide for use to the extent necessary and desirable for the conduct
of its business as currently conducted and as proposed to be conducted)
to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects, restrictions or equities of any
kind whatsoever all licenses and rights to the Intangibles used in the
conduct of their business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or
claimed right of any other person and (B) is not or will not become, as
the case may be, obligated or in any way liable for any payment by way
of royalties, fees or otherwise and to any owner or licensee of, or
other claimant to, any Intangibles with respect to the use thereof or
in connection with the conduct of their business or otherwise, except
in each case as disclosed in the Prospectus or except for any such
payments, claims, uses, liens, charges, encumbrances, pledges, security
interests, defects, restrictions and equities which would not have a
Material Adverse Effect.
(viii) The Company and the Subsidiaries have good and
marketable title to each of the items of personal property which are
reflected in the financial statements referred to in Section 4(a)(iii)
or are referred to in the Registration Statement and the Prospectus as
being owned by them and valid and enforceable leasehold interests in
each of the items of real and personal property which are referred to
in the Registration Statement and the Prospectus as being leased by
them, in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the
Registration Statement and the Prospectus and those which do not and
will not have a Material Adverse Effect.
(ix) Except as described in the Registration Statement and the
Prospectus, there is no litigation or governmental or other proceeding
or investigation before any court or before or by any public body or
board pending or, to the Company's knowledge, threatened (and the
Company does not know of any reasonable basis therefor) against, or
involving the assets, properties or business of, the Company or the
Subsidiaries which, if adversely determined, could be reasonably
expected to have a Material Adverse Effect.
(x) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, (A) there has not
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<PAGE> 8
been any material adverse change in the assets or properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Company or the Subsidiaries taken as a whole, whether or not
arising from transactions in the ordinary course of business; (B)
neither the Company nor any of the Subsidiaries has sustained any loss
or interference with its assets, businesses or properties (whether
owned, leased or licensed) from fire, explosion, earthquake, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree; and (C) since the date of the latest balance sheet included
in the Registration Statement and the Prospectus, except as reflected
therein, neither the Company nor any of the Subsidiaries has (x) issued
any securities (other than options or shares issued pursuant to
exercise of employee stock options or warrants described in the
Registration Statement and Prospectus) or incurred any liability or
obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(y) entered into any transaction not in the ordinary course of business
or (z) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its
stock.
(xi) There is no material document or contract of a character
required to be described in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required. Each description of a contract,
document or other agreement in the Registration Statement and the
Prospectus fairly reflects in all material respects the terms of the
underlying document, contract or agreement. Each agreement described in
the Registration Statement and Prospectus or incorporated by reference
is in full force and effect and is valid and enforceable by and against
the Company in accordance with its terms (except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency or
other laws affecting creditors' rights generally or by general
principles of equity, regardless of whether such enforceability is
considered in equity or at law). Neither the Company, the Subsidiaries
nor to the Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by
them under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any
such case which default or event would have a Material Adverse Effect.
No default exists, and no event has occurred which with notice or lapse
of time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or the
Subsidiaries of any other agreement or instrument to which the Company
or the Subsidiaries are a party or by which they or their properties or
business may be bound or affected which default or event would have a
Material Adverse Effect.
(xii) Neither the Company nor the Subsidiaries is in violation
of any term or provision of their respective Certificate of
Incorporation and By-laws, in each case as amended to the date hereof,
or other governing documents, or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse Effect.
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<PAGE> 9
(xiii) Neither the execution, delivery and performance of this
Agreement by the Company or the Subsidiaries nor the consummation of
any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Shares) will
give rise to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach of any term
or provision of, or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets of the
Company or any of the Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which it
or any of its properties or businesses are bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of the Subsidiaries or violate any
provision of the Certificate of Incorporation and By-laws of the
Company or any of the Subsidiaries, except for such consents or waivers
which have already been obtained and are in full force and effect or as
would not have a Material Adverse Effect. No consent, approval,
authorization, order, registration or qualification of or with any
United States court or governmental agency or body is required for the
issue and sale of the Shares or the consummation of the other
transactions contemplated by this Agreement, which have not been
obtained prior to the date hereof, except the registration under the
Securities Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(xiv) The authorized, issued and outstanding capital stock of
the Company and the capital stock reserved or committed for issuance is
as set forth under the caption "Capitalization" in the Prospectus. All
of the outstanding shares of Stock have been duly and validly issued
and are fully paid and nonassessable, none of them was issued in
violation of any preemptive or other similar right and, to the
Company's knowledge, since 1991 none of them were issued in violation
of any Federal or state securities laws. The Shares, when issued and
sold pursuant to this Agreement, will be duly and validly issued, fully
paid and nonassessable, none of them will be issued in violation of any
preemptive or other similar right, any contractual right, including,
without limitation, rights of first refusal, and since 1991 none of
them were issued in violation of any (subject to compliance with
Section 1(c) hereof), Federal or state securities laws. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and there is no commitment, plan or arrangement to issue, any shares of
Common Stock of the Company or any security convertible into, or
exercisable or exchangeable for, such shares of Stock. The shares of
Stock conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. The
Company has a sufficient number of authorized but unissued shares of
Stock to enable the Company to issue, without further stockholder
action, or approve all the Shares to be sold by the Company.
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<PAGE> 10
(xv) As of the date hereof, and as of each Closing Date, all
of the outstanding shares of capital stock of the Subsidiaries are duly
and validly authorized and issued, are fully paid and nonassessable and
are and will be owned by the Company and there is and will be no
outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue any share of capital
stock of the Subsidiaries or any security convertible or exchangeable
or exercisable for capital stock of the Subsidiaries, except as
otherwise described in the Registration Statement and Prospectus.
(xvi) No holder of any security of the Company has the right
to have any security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder during the period ending 90 days after the date of this
Agreement. Each director and executive officer of the Company has
delivered to the Representatives his written agreement that he will
not, for a period of 90 days after the date of this Agreement, offer
for sale, sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Stock (or any
securities convertible into, exercisable for, or exchangeable for any
shares of Stock) owned by him, without the prior written consent of
CIBC World Markets Corp. on behalf of the several Underwriters, or is
bound by comparable restrictions pursuant to an existing agreement with
the Company.
(xvii) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of Shares to be
sold by the Company and the sale of the Shares by the Selling
Stockholders. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will
constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
(A) as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
(xviii) Neither the Company nor any of the Subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is
any such dispute threatened, which dispute would have a Material
Adverse Effect. The Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
subassemblers, agents, contractors or original equipment manufacturers
which would have a Material Adverse Effect. The Company is not aware of
any threatened or pending litigation between the Company or any of the
Subsidiaries, on one hand, and any of its executive officers, on the
other hand, which, if adversely determined, could have a Material
Adverse Effect, and no officer of the Company or any of the
Subsidiaries has advised the Company of a present intention to leave
the employment of the Company or any of the Subsidiaries.
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<PAGE> 11
(xix) No transaction has occurred between or among the Company
or any of the Subsidiaries and any of its officers or directors or any
affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the Registration
Statement and the Prospectus. All transactions between the Company and
its Subsidiaries or affiliates which are required to be described are
completely and accurately described in all material respects in the
Registration Statement and the Prospectus.
(xx) Neither the Company nor any of the Subsidiaries has
taken, nor will any of them take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
shares of Stock to facilitate the sale or resale of any of the Shares.
(xxi) Neither the Company nor any of the Subsidiaries has ever
been denied a license, permit or authorization material to the present
operation of its business, and the operating practices and procedures
of the Company and to the Company's knowledge, the Subsidiaries are in
material compliance with all applicable laws, rules and regulations,
except where such denial or failure to comply would not have a Material
Adverse Effect, and except for applicable Federal and state securities
laws in connection with this offering.
(xxii) The Company and the Subsidiaries have such licenses,
permits and other approvals or authorizations of and from governmental
or regulatory authorities ("Permits") as are necessary under applicable
law to own their respective properties and to conduct the Company's
business in the manner now being conducted and as described in the
Registration Statement and the Prospectus except for those Permits
which the failure to have individually or in the aggregate would not
have a Material Adverse Effect; and the Company and the Subsidiaries
have fulfilled and performed all of their respective obligations with
respect to such Permits, and to the Company's knowledge, no event has
occurred which allows, or after notice or lapse of time or both would
allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such Permits
except such Permits which individually or in the aggregate would not
have a Material Adverse Effect.
(xxiii) The Company and the Subsidiaries have timely filed all
tax returns which are required to be filed through the date hereof, or
have received extensions thereof, and have paid all taxes shown on such
returns and all assessments received by them to the extent that the
same have become due. The Company has no knowledge, nor any reasonable
grounds to know, of any tax deficiencies which would have a Material
Adverse Effect; the Company has paid all taxes which have become due,
whether pursuant to any assessment, or otherwise, and there is no
further liability (whether or not disclosed on such returns) or
assessment for any such tax, and no interest or penalties accrued or
accruing with respect thereto, except as may be set forth or adequately
reserved for in the financial statements included in the Registration
Statement and the Prospectus; the amounts currently set up as
provisions for taxes or otherwise by the Company on its books and
records are sufficient for the payment
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<PAGE> 12
of all its unpaid taxes accrued through the dates as of which they
speak, and for which the Company may be liable in its own right, or as
a transferee of the assets of, or as successor to any other
corporation, association, partnership, joint venture or other entity.
(xxiv) The Company and the Subsidiaries are insured by
insurers against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged; and neither the
Company nor any of the Subsidiaries has any reason to believe that it
will not be able to renew such existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue the Company's business at a
cost that would not have a Material Adverse Effect.
(xxv) The books, records and accounts of the Company and the
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and the Subsidiaries. The Company and each
of the Subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(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 the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxvi) To the best knowledge of the Company, there are no
affiliations with the NASD of any five percent or greater stockholder
of the Company, except as set forth in the Registration Statement or
otherwise disclosed in writing to the Representatives.
(xxvii) The Shares have been duly authorized for quotation on
the Nasdaq Stock Market.
(xxviii) The Company is not an "Investment Company" within the
meaning of the Investment Company Act of 1940.
(xxix) Neither the Company nor the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any of the
Subsidiaries has made any payment of funds of the Company or received
or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required
to be disclosed in the Registration Statement and Prospectus. Neither
the Company nor any of the Subsidiaries, nor to the Company's
knowledge, any director, officer or employee of the Company or the
Subsidiaries, has, in the course of his actions for, or on behalf of,
the Company and the Subsidiaries, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity or made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
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<PAGE> 13
corporate funds, and neither the Company nor any of the Subsidiaries,
nor to the Company's knowledge, any director, officer, employee, agent
or other person acting on behalf of the Company has, in the course of
his actions for, or on behalf of, the Company, violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977
or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(b) Each Selling Stockholder, severally and not
jointly, represents and warrants to each Underwriter as follows:
(i) Such Selling Stockholder has duly executed and delivered a
Custody Agreement appointing Blau, Kramer, Wactlar & Lieberman, P.C.,
as attorney-in-fact with authority to execute and deliver this
Agreement on behalf of such Selling Stockholder and to take certain
other actions with respect hereto, and all authorizations and consents
necessary for the execution and delivery by such Selling Stockholder of
this Agreement and the Custody Agreement on behalf of such Selling
Stockholder have been duly given and received.
(ii) Such Selling Stockholder has and at the applicable
Closing Date will have the sole right to dispose of the Shares to be
sold by it hereunder and good and valid title to the Shares to be sold
by such Selling Stockholder on the applicable Closing Date, free of any
liens, encumbrances, equities and claims, and full right, power and
authority to effect the sale and delivery of such Shares pursuant to
this Agreement, and good and valid title thereto, free of any liens,
encumbrances, equities and claims, will be transferred to the several
Underwriters. Such Selling Stockholder will have paid all shares
transfer and stamp taxes which are required to be paid in connection
with the sale of the Shares.
(iii) This Agreement and the Custody Agreement have been duly
and validly authorized, executed and delivered by or on behalf of such
Selling Stockholder and constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with their terms, except as the
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (B) indemnification
provisions under Federal and state securities laws; and that the remedy
of specific forms of equitable relief may be subject to equitable
defenses and the discretion of the court before which any such action
may be brought.
(iv) Neither the execution, delivery and performance of this
Agreement or the Custody Agreement by such Selling Stockholder nor the
consummation of any of the transactions contemplated hereby or thereby
(including, without limitation, the sale of the Shares) will give rise
to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or require any
consent or waiver under, or result in the imposition of any lien,
charge
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<PAGE> 14
or encumbrance upon any properties or assets of such Selling
Stockholder pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument by which such Selling
Stockholder is a party or by which such Selling Stockholder is bound,
or of any order, rule or regulation applicable to such Selling
Stockholder of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction except for
applicable requirements under the Securities Act and state Blue Sky
laws.
(v) Such Selling Stockholder has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of the shares of Stock of the Company to
facilitate the sale or resale of any Shares.
(vi) There are no affiliations with the NASD among the each of
the Selling Shareholders, or to the best knowledge of each of the
Selling Shareholder, any five percent or greater stockholder of the
Company, except as set forth in the Registration Statement or otherwise
disclosed in writing to the Representatives.
(vii) The sale of the Shares by each Selling Stockholder
pursuant to this Agreement is not prompted by such Selling
Stockholder's knowledge of any material information concerning the
Company or its Subsidiaries which is not set forth in the Prospectus.
(viii) All information in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, relating to such
Selling Stockholder (including, without limitation, the information
relating to the Selling Stockholders which is set forth in the
Prospectus under the caption "Principal and Selling Stockholders"), and
all representations and warranties of such Selling Stockholders in the
Custody Agreement are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the information in light of the circumstances in which presented not
misleading. The sale of the Shares by such Selling Stockholder pursuant
hereto is not prompted by such Selling Stockholder's knowledge of any
material information concerning the Company or the Subsidiaries which
is not set forth in the Prospectus or the documents incorporated by
reference therein.
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a)(i) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in effect
and no order suspending the
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<PAGE> 15
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of the
Representatives.
(c) The representations and warranties of the Company and
the Selling Stockholders contained in this Agreement and in the certificates
delivered pursuant to Sections 5(d) and 5(e) shall be true and correct when made
and on and as of each Closing Date as if made on such date, and the Company and
the Selling Stockholders shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by them or it at or before such Closing Date.
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such Closing
Date, of the chief operating officer and the chief financial officer of the
Company to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement and that
the representations and warranties of the Company in this Agreement are true and
correct in all material respects on and as of such Closing Date with the same
effect as if made on such Closing Date and the Company has performed all
covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(e) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such Closing
Date, of each Selling Stockholder selling Shares on such Closing Date (or, if
such Selling Stockholder is not a natural person, an authorized officer thereof)
to the effect that the representations and warranties of such Selling
Stockholder in this Agreement are true, correct and complete in all material
respects on and as of such Closing Date with the same effect as if made on such
Closing Date and that such Selling Stockholder has performed all covenants and
agreements and satisfied all conditions contained in this Agreement required to
be performed or satisfied by such Selling Stockholder at or prior to such
Closing Date.
(f) The Representatives shall have received on the
Effective Date, at the time this Agreement is executed and on each Closing Date
a signed letter from KPMG LLP addressed to the Representatives and dated,
respectively, the Effective Date, the date of this Agreement and each such
Closing Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants within the
meaning of the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and stating in
effect that:
(i) in their opinion the consolidated financial statements and the
consolidated financial statement schedules included in the Registration
Statement and the Prospectus
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<PAGE> 16
audited and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Consolidated Financial Data" and "Selected Consolidated Financial
Data," carrying out certain procedures, including a reading of the
latest available interim financial statements of the Company and the
Subsidiaries (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such letter,
a reading of the minutes of the meetings of the directors of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as
to transactions and events subsequent to the date of the latest audited
financial statements, except as disclosed in the Registration Statement
and the Prospectus, nothing came to their attention which caused them
to believe that (A) the amounts in "Summary Consolidated Financial
Data" and "Selected Consolidated Financial Data" included in the
Registration Statement and the Prospectus do not agree with the
corresponding amounts in the audited consolidated financial statements
from which such amounts were derived; and (B) as of a specified date
not more than five days prior to the date of such letter there was any
change in the capital stock, increase in long-term debt, or decrease in
consolidated net current assets or stockholders' equity of the Company
and its Subsidiaries as compared with the amounts shown in the balance
sheet as of December 31, 1999 included in the Registration Statement or
any decrease from January 1, 2000 to the specified date, as compared to
the corresponding period of the preceding year, in consolidated net
sales, net income and net income per common share, except in all
instances for changes, decreases or increases which the Registration
Statement and the Prospectus disclose have occurred or may occur; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and specified by the Representatives
agrees with the accounting records of the Company and the Subsidiaries.
References to the Registration Statement and the Prospectus
in this paragraph (g) are to such documents as amended and supplemented at the
date of the letter.
(g) The Representatives shall have received on each Closing
Date from Blau, Kramer, Wactlar & Lieberman, P.C., counsel for the Company and
the Selling Stockholders, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the
State of Delaware. To counsel's knowledge,
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<PAGE> 17
the Company has no operating subsidiaries other than the Subsidiaries
and does not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business organization.
The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character of
the business conducted by it or the location of the properties owned,
leased or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify would not have a Material
Adverse Effect. To counsel's knowledge, no proceeding has been
instituted by the Secretary of State of Delaware for the dissolution of
the Company.
(ii) The Subsidiaries have been duly and validly incorporated
and are validly existing as corporations under the laws of their
respective jurisdictions of incorporation, and are duly qualified and
in good standing in each jurisdiction in which the character or
location of their assets or properties (owned, leased or licensed) or
the nature of their business makes such qualification necessary, except
for such jurisdictions where the failure to so qualify would not have a
Material Adverse Effect.
(iii) The Company and the Subsidiaries have all requisite
corporate power and authority to own, lease and license their assets
and properties and conduct their business as described in the
Registration Statement and the Prospectus; and each of the Company and
the Subsidiaries has all requisite corporate power and authority and
all necessary authorizations, approvals, consents, orders, licenses,
certificates and permits under applicable law to enter into, deliver
and perform this Agreement and, with respect to the Company, to issue
and sell the Shares (subject to compliance with Section 1(c)) other
than those required under the Securities Act and state and foreign Blue
Sky laws.
(iv) All of the outstanding shares of Stock have been, and the
Shares to be sold by the Company, upon issuance and delivery and
payment therefor in the manner herein described, will be, duly
authorized, validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof. There are no
preemptive or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Stock
pursuant to the Certificate of Incorporation or By-laws, or other
governing documents or any agreements or other instruments known to
such counsel to which the Company is a party or by which it is bound
except as described in the Registration Statement and the Prospectus.
To such counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have
been waived or satisfied, for or relating to the registration of any
shares of Stock or other securities of the Company. The Company has all
requisite corporate power and authority to issue, sell and deliver the
Shares in accordance with and upon the terms and conditions set forth
in this Agreement and in the Prospectus. All corporate action required
to be taken by the Company for the due and proper authorization,
issuance, sale and delivery of the Shares has been duly and validly
taken.
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<PAGE> 18
(v) All of the outstanding shares of the Subsidiaries are duly
and validly authorized and issued, are fully paid and nonassessable
and, are owned by the Company and, to the knowledge of counsel, there
is no outstanding option, warrant or other right calling for the
issuance of, and there is no commitment, plan or arrangement to issue
any share of capital stock of the Subsidiaries or any security
convertible or exchangeable or exercisable or capital stock of the
Subsidiaries.
(vi) Upon issuance and delivery of the Shares and payment
therefor in accordance with the terms of this Agreement, each of the
Underwriters will receive good, valid and marketable title to the
Shares being sold by the Company hereunder, free and clear of any lien,
claim, encumbrance, security interest, restrictions on transfer,
stockholders' agreements, voting trusts and other defects of title
whatsoever.
(vii) The certificates for the shares of Stock to be sold by
the Company and the Selling Stockholders and delivered on each Closing
Date are in due and proper form.
(viii) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations under this Agreement. All necessary corporate action has
been duly and validly taken by the Company to authorize the execution,
delivery and performance of this Agreement, the issuance and sale of
Shares by the Company and the sale of Shares by the Selling
Stockholders. This Agreement has been duly and validly authorized,
executed and delivered by the Company, and this Agreement constitutes
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) indemnification
provisions under Federal and state securities laws; and that the remedy
of specific forms of equitable relief may be subject to equitable
defenses and the discretion of the court before which any such action
may be brought.
(ix) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any material term or
provision of, or constitute a material default (or any event which with
notice or lapse of time, or both, would constitute a material default)
under, or require consent or waiver under, or result in the execution
or imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or the Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, note or other agreement or
instrument of which such counsel is aware and which would have a
Material Adverse Effect and to which the Company or the Subsidiaries
are a party or by which they or any of their properties or businesses
is bound, or any franchise, license, permit, judgment, decree, order,
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<PAGE> 19
statute, rule or regulation of which such counsel is aware or violate
any provision of the Certificate of Incorporation or By-laws of the
Company or the Subsidiaries.
(x) The Registration Statement and the Prospectus and their
respective filings with the Commission have been duly authorized by and
on behalf of the Company.
(xi) To the knowledge of such counsel, there are no contracts,
indentures, mortgages, loan agreement, notes, leases or other agreement
or instruments or other documents required to be described or referred
to in the Registration Statement other than those described or referred
to therein or filed as exhibits thereto. The statements in the
Prospectus, insofar as such statements refer to the Certificate of
Incorporation or By-laws or other governing documents of the Company
and contracts, indentures, mortgages, loan agreements, notes, leases,
joint ventures and other agreements, arrangements or instruments to
which the Company or the Subsidiaries is a party, are adequately and
accurately described in all material respects, and insofar as such
statements refer to statements of United States Federal and state
securities law or legal conclusions, have been reviewed by such counsel
and, in such counsel's opinion, are accurate in all material respects.
(xii) The Shares have been approved for quotation on the
Nasdaq Stock Market subject to official notice of issuance of the
Shares.
(xiii) The statements set forth in the Registration Statement
and the Prospectus describing laws and regulations and the consequences
to the Company and others under such laws and regulations, including
the statements describing law under the captions "Risk Factors - "Our
certificate of incorporation and bylaws include antitakeover provisions
which may deter or prevent a takeover attempt," , "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and "Business - Legal Proceedings," are fair summaries of
the information set forth therein and are accurate in all material
respects. All licenses, approvals or permits described in the
Prospectus as having been issued by any authority have been duly issued
and, to the best knowledge of such counsel, have not been rescinded or
modified and are in full force and effect; and to the knowledge of such
counsel, no proceedings to rescind or modify such licenses, approvals
or permits have been instituted and are pending or threatened by any
governmental authority.
(xiv) To the knowledge of such counsel, (A) The Company and
the Subsidiaries own, possess or have obtained all governmental
licenses, permits, certificates, consents, orders, approvals and other
authorizations and have all requisite corporate power and authority
necessary, to own or lease, as the case may be, and to operate their
properties and to conduct their business as presently conducted, where
the failure to so own, possess or obtain would have a Material Adverse
Effect and (B) neither the Company nor any of the Subsidiaries has
received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates, consents,
orders, approvals or authorizations.
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<PAGE> 20
(xv) To the knowledge of such counsel, there is no tax
deficiency that has been asserted against the Company that would, if
adversely determined have a Material Adverse Effect.
(xvi) To the knowledge of such counsel, there is no action,
suit, investigation or proceeding, governmental or otherwise, pending
or threatened to which the Company or any of the Subsidiaries is or may
be a party or of which the business or property of the Company is or
may be subject that is material to the Company and which is not
disclosed in the Registration Statement and the Prospectus or that
seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance of the Shares or the execution and delivery of
this Agreement or any of the other transactions contemplated hereby, or
that questions the legality or validity of any of such transactions or
that seeks to recover damages or obtain other relief in connection with
any of such transactions, that would have a Material Adverse Effect.
(xvii) To the knowledge of such counsel, the Company is not in
violation of any term or provision of its Certificate of Incorporation
or By-laws or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such violation
would have a Material Adverse Effect.
(xviii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or supplement
thereto (except for the financial statements and schedules and other
financial and statistical data included therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Securities Act and the Rules.
(xix) The Registration Statement has become effective under
the Securities Act, and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or to such counsel's knowledge, are
threatened, pending or contemplated; and any required filing of the
Prospectus pursuant to Rule 424(b) of the Rules has been made in
accordance with the provisions thereof. The Company meets all the
conditions necessary for the use of Form S-3.
(xx) The Company is not and, upon sale of the Shares and
application of the net proceeds as described in the Prospectus under
"Use of Proceeds" will not be, an "Investment Company" within the
meaning of Section 3(a) of the Investment Company Act of 1940.
(xxi) To such counsel's knowledge, this Agreement and the
Custody Agreement have been executed and delivered by each of the
Selling Stockholders and constitute the legal, valid and binding
obligations of each of the Selling Stockholders enforceable in
accordance with their terms, except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and (ii) indemnification provisions under Federal
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<PAGE> 21
and state securities laws; and that the remedy of specific forms of
equitable relief may be subject to equitable defenses and the
discretion of the court before which any such action may be brought.
(xxii) Each Selling Stockholder has full legal right, power
and authority, and any approval required by law (other than as required
by State Securities and Blue Sky laws), to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder. Upon
delivery by the Selling Stockholders against payment therefor as
provided herein by the Underwriters, the Selling Stockholders will
convey good and marketable title to such Shares free of any liens,
charges, encumbrances, equities or claims. All share transfer and stamp
taxes which are required to be paid in connection with the sale of the
Shares have been paid.
(xxiii) To such counsel's knowledge, the sale of the Shares to
the Underwriters by each Selling Stockholder pursuant to this
Agreement, the compliance by such Selling Stockholder with the other
provisions of this Agreement and the provisions of the Custody
Agreement and the consummation of the other transactions herein or
therein contemplated do not give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a
default (or an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver under, or
result in the imposition of any lien, charge or encumbrance upon any
properties or assets of such Selling Stockholder pursuant to the terms
of any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound, or any franchise, license, permit,
judgment, decree, order, rule or regulation applicable to such Selling
Stockholder.
(xxiv) To such counsel's knowledge, the issuance and sale by
the Company of Shares and the sale by the Selling Stockholders of
Shares will not violate any right of first refusal or anti-dilution
provision contained in any agreement to which the Company or the
Selling Stockholders are a party or by which they may be bound.
In rendering such opinion, counsel may rely, to the
extent such counsel deems such reliance proper, upon an opinion or opinions,
each dated the Closing Date, of other counsel as to matters governed by the laws
of jurisdictions other than the United States or the States of Delaware or New
York, provided that (i) each such local counsel is acceptable to you and your
counsel, (ii) counsel shall state in its opinion that it believes that it and
you are justified in relying thereon, and (iii) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to you and is in form and substance satisfactory to you and your
counsel. In rendering such opinion, counsel may rely, to the extent such counsel
deems such reliance proper, as to matters of fact upon certificates of officers
of the Company, the Selling Stockholders, and government officials. Copies of
all such certificates shall be acceptable to you and your counsel and furnished
to you and your counsel on the Closing Date.
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<PAGE> 22
In addition, such counsel shall state that such counsel
has participated in conferences with officers and other representatives of the
Company, the Selling Stockholders, representatives of the Representatives and
representatives of the independent certified public accountants of the Company,
at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
that have caused such counsel to believe that the Registration Statement at the
time it became effective (except with respect to the financial statements and
notes and schedules thereto and other financial and statistical data, as to
which such counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements and notes schedules thereto and other financial data, as to which
such counsel need express no belief) on the date thereof contained or at any
Closing Date contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(h) All proceedings taken in connection with the sale
of the Shares as herein contemplated shall be reasonably satisfactory in form
and substance to the Representatives and their counsel and the Underwriters
shall have received from Fulbright & Jaworski L.L.P., counsel for the
Underwriters, a favorable opinion, addressed to the Representatives and dated
such Closing Date, with respect to the Shares, the Registration Statement and
the Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to Fulbright & Jaworski
L.L.P. such documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(i) The Shares to be purchased on Closing Date by the
Underwriters shall have been approved for quotation on the Nasdaq Stock Market.
(j) The directors and officers of the Company shall
have agreed in writing, in form and substance satisfactory to the
Representatives, that such person or entity will not, for a period of 90 days
after the date of this Agreement directly or indirectly, except with prior
written consent of CIBC World Markets Corp. offer, sell, grant any option to
purchase, or otherwise dispose (or announce any offer, sale, grant of an option
to purchase or other disposition) of any shares of Stock or any securities
convertible into, or exchangeable or exercisable for, such shares of Stock.
(k) The Representatives shall have been furnished with
such additional documents and certificates as the Representatives or counsel for
the Underwriters may reasonably request related to this Agreement and the
transactions contemplated hereby.
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<PAGE> 23
All such opinions, certificates, letters and documents
shall be in compliance with the provisions hereof only if they are satisfactory
in form and substance to the Representatives and to counsel for the
Underwriters, in each case in their reasonable judgment. The Company shall
furnish to the Representatives conformed copies of such opinions, certificates,
letters and other documents in such number as the Representatives shall
reasonably request.
6. Covenants of the Company and the Selling
Stockholders.
(a) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus in a form
approved by the Representatives and file such Prospectus pursuant to
Rule 424(b) or Rule 434 under the Securities Act within the time period
required thereby following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act, and shall promptly advise the
Representatives (A) when any amendment to the Registration Statement
shall have become effective, (B) of any request by the Commission for
any amendment of the Registration Statement or the Prospectus or for
any additional information, (C) of the prevention or suspension of the
use of any preliminary prospectus or the Prospectus or of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (D) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a copy
for their review prior to filing and shall not file any such proposed
amendment or supplement to which the Representatives reasonably object.
The Company shall use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a Prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (i) of this Section 6(a), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iii) For a period of one year, the Company shall make
generally available to its security holders and to the Representatives
as soon as practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of the
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<PAGE> 24
Company during which the Effective Date occurs (or 90 days if such
12-month period coincides with the Company's fiscal year), an earning
statement (which need not be audited) of the Company, covering such
12-month period, which shall satisfy the provisions of Section 11(a) of
the Securities Act or Rule 158 of the Rules.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable, but
not later than 45 days after the end of each fiscal quarter in each
fiscal year of the Company, a balance sheet of the Company as of the
end of such fiscal quarter and statements of operations and cash flows
of the Company for the portion of such fiscal year ended with the last
day of such fiscal quarter, all in reasonable detail and stating in
comparative form the figures as of the corresponding date and for the
corresponding period in the previous fiscal year, all such material to
be prepared and certified by an authorized financial officer of the
Company.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
under the laws of such jurisdictions as the Representatives reasonably
may designate and shall maintain such qualifications in effect so long
as required for the distribution of the Shares; provided, however, that
the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(vii) For a period of five years after the date of this
Agreement, the Company shall supply to the Representatives, and to each
other Underwriter who may so request in writing, copies of such
financial statements and other periodic and special reports as the
Company may from time to time distribute generally to the holders of
any class of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to file with
the Commission.
(viii) Without the prior written consent of the CIBC World
Markets Corp., on behalf of the Underwriters, for a period of 90 days
after the date of this Agreement, the Company shall not issue, sell or
register with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities convertible into or
exercisable or exchangeable for equity securities of the Company),
except for the issuance of the Shares pursuant to the Registration
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<PAGE> 25
Statement and the issuance of shares pursuant to the Company's existing
stock option plans or stock purchase plan or upon the exercise of
currently outstanding options and warrants. In the event that during
this period, (A) any shares are issued pursuant to the Company's
existing stock option plans or stock purchase plan pursuant to options
not currently outstanding other than in the ordinary course, or (B) any
registration is effected on Form S-8 or on any successor form, the
Company shall use reasonable efforts to obtain the written agreement of
such grantee or purchaser or holder of such registered securities that,
for a period of 90 days after the date of this Agreement, such person
will not, without the prior written consent of the Representatives,
offer for sale, sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or any
securities convertible into, exercisable for, or exchangeable for any
shares of Common Stock) owned by such person.
(ix) On or before the Firm Shares Closing Date, the Company
shall make all filings required under applicable securities laws and by
the Nasdaq Stock Market in order to permit the consummation of the
transactions contemplated hereby.
(x) The Company intends to apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of Proceeds"
in the Prospectus.
(xi) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of
the obligations of the Company and the Selling Stockholders under this
Agreement including those relating to: (A) the preparation, printing,
filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all
amendments and supplements to the Registration Statement and the
Prospectus, and the printing, filing and distribution of this
Agreement; (B) the preparation and delivery of certificates for the
Shares to the Underwriters; (C) the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of
the various jurisdictions referred to in Section 6(a)(vi), including
the reasonable fees and disbursements of counsel for the Underwriters
in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (D) the furnishing (including costs
of shipping and mailing) to the Representatives and to the Underwriters
of copies of each preliminary prospectus, the Prospectus and all
amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale
of the Shares by the Underwriters or by dealers to whom Shares may be
sold; (E) the filing fees of the National Association of Securities
Dealers, Inc. in connection with its review of the terms of the public
offering; (F) the furnishing (including costs of shipping and mailing)
to the Representatives and to the Underwriters of copies of all reports
and information required by Section 6(a)(vii); (G) inclusion of the
Shares for quotation on the Nasdaq Stock Market; and (viii) all
transfer
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<PAGE> 26
taxes, if any, with respect to the sale and delivery of the Shares by
the Company or the Shares by the Selling Stockholders to the
Underwriters. Subject to the provisions of Section 9, the Underwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company pursuant to the
preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters, except as otherwise set
forth herein.
(xii) The Company will not take, directly or indirectly, any
action designed to cause or result in the stabilization or manipulation
of the price of the Stock of the Company to facilitate the sale or
resale of any of the Shares.
(b) Each Selling Stockholder covenants and agrees with
the Company that:
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of
1986, as amended, such Selling Stockholder shall deliver to you on or
prior to the Firm Shares Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable
statement specified by Treasury Department regulations in lieu
thereof).
(ii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in the stabilization
or manipulation of the price of the shares of Stock of the Company to
facilitate the sale or resale of any of the Shares.
(iii) Such Selling Stockholder will not, for a period of 90
days from the date of this Agreement, without the prior written consent
of CIBC World Markets Corp. on behalf of the Underwriters, sell, grant
any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares (or any securities convertible into, exercisable
for, or exchangeable for any shares of Common Stock) owned by such
Selling Stockholder.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment thereof or supplement
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<PAGE> 27
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that such indemnity
shall not inure to the benefit of any Underwriter (or any person controlling
such Underwriter) on account of any losses, claims, damages or liabilities
arising from the sale of the Shares to any person by such Underwriter if such
untrue statement or omission or alleged untrue statement or omission was made in
such preliminary prospectus, the Registration Statement or the Prospectus, or
such amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives on behalf
of any Underwriter specifically for use therein and provided further, that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter (or any person controlling such Underwriter)
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability. This indemnity agreement will be in addition
to any other liability which the Company may otherwise have.
(b) Each Selling Stockholder agrees, severally and not
jointly, to indemnify and hold harmless each Underwriter, and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only insofar as
such losses, claims, damages or liabilities arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which was
made in any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, in reliance upon and
in conformity with information furnished in writing to the Company by such
Selling Stockholder specifically for use therein; provided, however, that the
obligation of each Selling Stockholder to indemnify each Underwriter (including
any controlling person thereof) shall be limited to an amount equal to the net
proceeds received by such Selling Stockholder from such Underwriter from the
sale of the Shares hereunder. This indemnity agreement will be in addition to
any other liability which the Selling Stockholders may otherwise have.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, each director of the Company, and each officer of the
Company who signed the Registration Statement and each Selling Stockholder, to
the same extent as the foregoing indemnity from the Company and each Selling
Stockholder to each Underwriter, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in any preliminary
prospectus, the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, with respect to the statements contained under
the caption "Underwriting" in the Prospectus; provided, however, that the
obligation of each Underwriter to
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<PAGE> 28
indemnify the Company or a Selling Stockholder (including any controlling
person, director or officer thereof) shall be limited to an amount equal to the
net proceeds received by such Underwriter from the sale of the Shares hereunder.
This indemnity agreement will be in addition to any other liability which the
Underwriters may otherwise have.
(d) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 7(a), 7(b) or 7(c) shall be available to any party who
shall fail to give notice as provided in this Section 7(d) if the party to whom
notice was not given was unaware of the proceeding to which such notice would
have related and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
8. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 7(a), 7(b)
or 7(c) is due in accordance with its terms but for any reason is held to be
unavailable, the Company, the Selling Stockholders and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other reasonable expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received
by the Company or the Selling Stockholders
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<PAGE> 29
from persons other than the Underwriters, such as persons who control the
Company within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement and directors of the Company, who may also be
liable for contribution) to which the Company, the Selling Stockholders and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the offering
of the Shares or, if such allocation is not permitted by applicable law in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company or the Selling Stockholders
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders shall
be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts but before deducting expenses) received
by the Company and the Selling Stockholders, as set forth in the table on the
cover page of the Prospectus, bear to (y) the total price to the public of the
offering as set forth in the table on the cover page of the Prospectus, and the
relative benefits received by each Underwriter shall be deemed to be in the same
proportion as (x) the underwriting discounts received by the Underwriters, as
set forth in the table on the cover page of the Prospectus, bear to (y) the
total price to the public of the offering as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company or the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact related to information supplied by
the Company, the Selling Stockholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, and (ii) the Company and the Selling Stockholders shall be liable and
responsible for any amount in excess of such underwriting discount; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company and the Selling Stockholders, subject in each case
to clauses (i) and (ii) in the immediately preceding sentence of this Section 8.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section, notify such party
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<PAGE> 30
or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to their
respective underwriting commitments, and not joint, and the Selling
Stockholders' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of Shares sold hereunder, and
not joint.
9. Termination. This Agreement may be terminated with
respect to the Shares to be purchased on a Closing Date by the Representatives
by notifying the Company and the Selling Stockholders at any time,
(a) in the absolute discretion of the Representatives
at or before any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Representatives will in the future materially disrupt, the
securities markets; (ii) if there has occurred any new outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, inadvisable to proceed with the offering; (iii) if there
shall be such a material adverse change in general financial, political or
economic conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of the
Representatives, inadvisable or impracticable to market the Shares; (iv) if
trading in the Shares has been suspended by the Commission or trading generally
on the Nasdaq Stock Market, Inc. or on the New York Stock Exchange, Inc. has
been suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
have been required, by said exchanges or by order of the Commission, the
National Association of Securities Dealers, Inc., or any other governmental or
regulatory authority; or (v) if a banking moratorium has been declared by any
state or Federal authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Sellers shall not be under any liability to any Underwriter, and
no Underwriter shall be under any liability to the Seller, except that (A) if
this Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company to comply in any
material respect with the terms or to fulfill any of the material conditions of
this Agreement, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) incurred by them in connection with the proposed purchase and sale of
the Shares or in contemplation of performing their obligations hereunder and (B)
no Underwriter who shall have failed or refused to purchase the Shares agreed to
be purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination
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<PAGE> 31
of its obligations under this Agreement, shall be relieved of liability to the
Company or to the other Underwriters for damages occasioned by its failure or
refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum number of
Shares that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of such number of
Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it may, but
is not obligated to, find one or more substitute underwriters reasonably
satisfactory to the Representatives to purchase such Shares upon the terms set
forth in this Agreement.
In any such case, either the Representatives or the
Company shall have the right to postpone the applicable Closing Date for a
period of not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representatives and
the Company. If the number of Shares to be purchased on such Closing Date by
such defaulting Underwriter or Underwriters shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, and none of
the nondefaulting Underwriters or the Company shall make arrangements pursuant
to this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company or any Selling
Stockholder and without liability on the part of the Company, except in both
cases as provided in Sections 6(a)(xi), 7, 8 and 9. The provisions of this
Section shall not in any way affect the liability of any defaulting Underwriter
to the Company or any Selling Stockholder or the nondefaulting Underwriters
arising out of such default. A substitute underwriter hereunder shall become an
Underwriter for all purposes of this Agreement.
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<PAGE> 32
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers, the
Selling Stockholders and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Sections 7 and 8
hereof, and shall survive delivery of and payment for the Shares. The provisions
of Sections 6(a)(xi), 7, 8 and 9 shall survive the termination or cancellation
of this Agreement.
This Agreement has been and is made for the benefit of
the Underwriters and the Company and the Selling Stockholders and their
respective heirs, executors, administrators, successors and assigns, and, to the
extent expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
Subject to the provisions of Section 12 hereof, all
notices and communications hereunder shall be in writing and mailed or delivered
or by telephone or telegraph if subsequently confirmed in writing, (a) if to the
Representatives, c/o CIBC World Markets Corp., 425 Lexington Avenue, 6th Floor,
New York, New York 10017 Attention: Syndicate Department, (b) if to the Company,
to its agent for service as such agent's address appears on the cover page of
the Registration Statement, with a copy to Blau, Kramer, Wactlar & Lieberman,
P.C., 100 Jericho Quadrangle, Jericho, New York 11753 and (c) if to the Selling
Stockholders to Blau, Kramer, Wactlar & Lieberman, P.C., 100 Jericho Quadrangle,
Jericho, New York 11753.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
This Agreement (including the Schedules and Exhibits
hereto) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and supersedes all other agreements
relating to the subject matter hereof.
This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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<PAGE> 33
Please confirm that the foregoing correctly sets forth
the agreement among us.
Very truly yours,
AEROFLEX INCORPORATED
By:
----------------------------
Harvey R. Blau
Chief Executive Officer
SELLING STOCKHOLDERS LISTED
IN SCHEDULE II
By:
----------------------------
Attorney-in-fact
Confirmed:
CIBC WORLD MARKETS CORP.
A.G. EDWARDS & SONS, INC.
WIT SOUNDVIEW CORPORATION
WASSERSTEIN PERELLA SECURITIES, INC.
Acting severally on behalf of themselves
and as representatives of the several
Underwriters named in Schedule I annexed
hereto.
By: CIBC WORLD MARKETS CORP.
By:
----------------------------
Name:
Title:
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<PAGE> 34
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Firm Shares to
Name Be Purchased
- ---- ------------
<S> <C>
CIBC World Markets Corp........................................................... [ ]
A.G. Edwards & Sons, Inc.......................................................... [ ]
Wit SoundView Corporation......................................................... [ ]
Wasserstein Perella Securities.................................................... [ ]
--------------
Total Underwriters (__): 3,250,000
</TABLE>
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<PAGE> 35
SCHEDULE II
<TABLE>
<CAPTION>
Number of Firm Number of Option
Name Shares to Be Sold Shares to be Sold
- ---- ----------------- -----------------
Selling Stockholders:
<S> <C> <C>
Harvey R. Blau 285,000 206,000
Michael Gorin 155,000 112,000
Leonard Borow 215,000 155,000
Carl Caruso 38,000 6,000
Charles Badlato 25,000 3,500
Milton Brenner 25,000 4,000
Paul Abecassis 7,000 1,000
------- -------
Total 750,000 487,500
</TABLE>
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<PAGE> 36
SCHEDULE III
<TABLE>
<CAPTION>
Subsidiaries
- ------------
JURISDICTION OF
COMPANY INCORPORATION
- ------- -------------
<S> <C>
Aeroflex Laboratories, Inc. Delaware
Aeroflex Systems Corp. Delaware
Aeroflex Lintek Corp. Ohio
Vibration Mountings & Controls, Inc. New York
MIC Technology Corporation Texas
Aeroflex International Inc. Delaware
UTMC Microelectronic Systems, Inc. Delaware
Europtest France
</TABLE>
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