<PAGE>
REGISTRATION STATEMENT NO. 33-58811
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
VITRONICS CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
COMMONWEALTH OF MASSACHUSETTS 04-2726873
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
1 FORBES ROAD
NEWMARKET, NEW HAMPSHIRE 03857
(603) 659-6550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES J. MANFIELD, JR., CHAIRMAN
VITRONICS CORPORATION
1 FORBES ROAD
NEWMARKET, NEW HAMPSHIRE 03857
(603) 659-6550
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
COPIES TO:
MICHAEL F. SWEENEY, ESQ. WILLIAM M. PRIFTI, ESQ.
HINCKLEY, ALLEN & SNYDER LAW OFFICES
1500 FLEET CENTER 220 BROADWAY, SUITE 204
PROVIDENCE, RHODE ISLAND 02903 LYNNFIELD, MASSACHUSETTS 01940
(401) 274-2000 (617) 593-4525
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this form, check the following box. [_]
----------------
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
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 18, 1995
PRELIMINARY PROSPECTUS
VITRONICS CORPORATION
1,920,000 SHARES OF COMMON STOCK
(PAR VALUE $.01 PER SHARE)
All of the above shares of common stock, $.01 par value per share ("Common
Stock"), of Vitronics Corporation (the "Company") being offered hereby are
being sold by Schneider Securities, Inc., the managing underwriter (the
"Underwriter"), pursuant to the terms of a letter of intent for a firm
commitment offering between the Underwriter, New England Growth Fund I, L.P. as
Selling Stockholder ("NEGF") and the Company. Under said letter of intent, the
Underwriter is purchasing 1,920,000 shares (the "Shares") of Common Stock from
NEGF for $ per share (the bid price on the American Stock Exchange ("AMEX")
as of the date of this Prospectus less a 12% discount) and reselling the Shares
to the public at the same discounted price. The Company will not receive any
proceeds from the sale of the Shares. See "Plan of Distribution."
An additional 968,225 shares of Common Stock are also being registered by the
Company pursuant to the Registration Statement of which this Prospectus is a
part, but such shares are not part of the firm commitment offering described in
this Prospectus. Such additional shares will be sold in market transactions on
a continuous or delayed basis, subject to certain limitations imposed by
Federal and state securities laws, at then current market prices at any time,
and from time to time, over the next two years. In connection with such sales,
it is expected that such selling stockholders will incur a standard commission
charge. The selling price of such additional shares cannot be determined at
this time. See "Other Selling Stockholders."
The Shares are listed on the AMEX where they trade under the symbol "VTC."
The average of the high and low prices for the Common Stock on July 7, 1995 was
$1.52 per share. See "Risk Factors -- Volatility of Stock Price" and "Market
for Registrant's Common Stock."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HASTHE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO COMMISSIONS AND PROCEEDS
PUBLIC EXPENSE ALLOWANCE(1) TO NEGF(2)
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<S> <C> <C> <C>
Per Share............................. $ . $ . $ .
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Total Offering........................ $ , , $ , $ , ,
</TABLE>
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(1) The Underwriter will receive a commission of 10% and a non-accountable
expense allowance of 3% from NEGF. Other brokers participating in the
Offering may receive all or a portion of the 10% commission. The Company
has agreed to reimburse NEGF for one half of the non-accountable expenses
of the Underwriter up to a maximum of $40,000. The Company and the
Underwriter have agreed to indemnify each other against certain civil
liabilities, including liabilities under the Securities Act of 1933.
-----------
SCHNEIDER SECURITIES, INC.
-----------
THE DATE OF THIS PROSPECTUS IS , 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New York,
New York 10048 and Room 1204, Everett McKinley Dirksen Building, 219 South
Dearborn Street, Chicago, Illinois 60604. Copies of such materials can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Such reports and other information
concerning the Company can also be inspected at the offices of the AMEX at 86
Trinity Place, New York, New York 10006.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained
in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Offering. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1994 (the "10-K").
(2) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended April 1, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the Offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed documents which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. The Company
will provide, without charge, to each person to whom a copy of this Prospectus
has been delivered, on the written or oral request of such person, a copy of
any or all of the documents referred to above which have been or may be
incorporated by reference herein other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference herein). Requests for
such copies should be directed to: Lorraine Giordano, Clerk, Vitronics
Corporation, 1 Forbes Road, Newmarket, New Hampshire 03857; 603-659-6550.
2
<PAGE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information included elsewhere or incorporated by reference in this Prospectus.
Each prospective investor is urged to read this Prospectus, and any document
incorporated by reference, in its entirety.
THE COMPANY
Vitronics Corporation (the "Company") designs, manufactures and markets high-
volume systems for the soldering of surface mounted devices to, and the
cleaning of, printed circuit boards ("PCBs"). The Company's solder reflow
systems generally sell for between $20,000 and $150,000, and its semi-aqueous
cleaning systems generally sell for between $110,000 and $160,000. Management
believes that the Company's systems have the largest market share of their
respective high end reflow markets (excluding Japan), with approximately 30% of
the domestic and one-quarter of the worldwide solder reflow market, and in
excess of 50% of the installed base of in-line, semi-aqueous cleaning systems.
Although none of the Company's customers named below have any ongoing
contractual obligation to purchase the Company's products, all have made
repeated purchases of the Company's products in the past and approximately 40%
of such customers currently have purchase orders pending in the Company's
backlog. United States customers during the past eighteen months have included
Allied Signal, AT&T, AVEX Electronics, Chrysler, GE, GM, GTE, Hughes Aircraft,
IBM, Intel, McDonnell Douglas, Motorola, Northern Telecom, Raytheon, SCI and
Xerox. International customers during such period have included Ericsson,
Fujitsu, Hitachi, Mitsubishi, NEC, Olympus, Phillips, Siemens and Toshiba.
During 1994, the Company successfully introduced two new solder reflow ovens
into the marketplace, and recorded total sales in excess of $17 million and net
income of $602,000, as compared with a net loss of $1,357,000 in 1993 on sales
of $12.7 million in 1993. During the last quarter of 1994, the Company had
record bookings of $5.5 million.
THE OFFERING
Shares Offered............ 1,920,000 shares of Common Stock (the "Shares").
Common Stock
Outstanding(1)........... 7,553,638 shares
American Stock Exchange
Symbol................... VTC
Use of Proceeds........... The Company will not receive any proceeds from the
sale of Shares.
Risk Factors.............. The Shares offered hereby are speculative in nature,
involve a high degree of risk and should not be
purchased by anyone who cannot afford the loss of
his entire investment. See "Risk Factors."
- --------
(1) As of July 1, 1995. Does not include the 976,200 shares reserved for
issuance pursuant to options presently outstanding under the Company's
stock option plans.
3
<PAGE>
RISK FACTORS
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL RESOURCES WHO CAN AFFORD THE
LOSS OF ALL OR A PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER, AMONG OTHER FACTORS, THE FOLLOWING MATTERS BEFORE
INVESTING:
Recent History of Losses. As reflected in the Company's financial
statements, the Company recorded net income of $602,000 in fiscal 1994, after
net losses of over $6 million in the aggregate for the preceding three fiscal
years. The Company attributes this turnaround to an aggressive cost control
program implemented in 1993, reduction in material and direct labor costs,
general improvement in the economy and the marketing of innovative new
products such as UNITHERM II(R) and ISOTHERM(TM). While the Company will
continue to build on this strategy, there can be no assurance of continued
profitability.
Bank Financing. The Company has obtained a $500,000 line of credit with the
First National Bank of Portsmouth. This line of credit is secured by
substantially all of the assets of the Company. Management believes this line
of credit, in addition to internally generated funds and capital equipment
lease financing expected to be available, will be sufficient to meet the
Company's working capital requirements in 1995. There can be no assurance,
however, that additional debt or equity financing will not be needed or that
such financing, if available, will be adequate to meet the Company's
requirements on terms satisfactory to the Company.
Business Cycles; Dependence of Company on Electronics-Related
Industries. Most of the Company's customers operate in electronics-related
industries that are subject to a decline in activity during recessions in the
general economy. During the recent recession, the Company experienced a steady
decline in net sales from $20.5 million in fiscal 1989 to a low of $12.3
million in fiscal 1992. Although the Company in 1994 experienced a significant
increase in sales and orders for its products, there can be no assurance that
the negative impact of the recent recession in the general economy, and in the
electronics-related industries in particular, is over. Moreover, the currently
forecasted slowdown in the economy, should it occur, could have a material
adverse impact on the Company's operations. In the future, it should be
expected that the Company's business will continue to be affected by general
business cycles and that such cycles will have a material impact upon the
Company's business from year to year.
Competition. The printed circuit board ("PCB") reflow soldering and cleaning
markets are highly competitive. Competition, and particularly price
competition, could adversely affect the Company's ability to maintain and/or
increase its sales and profitability. Many of the Company's current and
potential competitors have substantial financial, marketing and technical
resources, manufacturing capability, customer support organizations and name
recognition. There can be no assurance that the Company will be able to
compete successfully in the future.
The Company's solder reflow systems may also face competition from the
development of electrically conductive adhesives designed to eliminate the
need to solder components to PCBs. At this point in the development of
conductive adhesives the Company believes that even if the adhesives are
technologically successful, they will require heat treatment or curing.
Accordingly, a market will continue to exist for the Company's solder reflow
technology. The potential impact of electrically conductive adhesives on the
Company's semi-aqueous system business is uncertain.
The Company's semi-aqueous cleaning systems also face competition from the
growing acceptance and utilization of "no clean" solder pastes which produce
minimal flux residue, thus reducing and potentially eliminating the need for
post-assembly PCB cleaning and the emergence of electrically-conductive
adhesives. There can be no assurance that the technology necessary to make and
effectively use "no clean" solder pastes which meet high reliability standards
will not be developed. In such event, the market for semi-aqueous cleaning
systems could be substantially reduced.
4
<PAGE>
Component Supply. The microprocessor used in the Company's UNITHERM solder
reflow systems is presently being purchased from only one source. There can be
no assurance that this source will continue in business or continue to
manufacture the component upon which the Company's products currently depend.
The Company has not entered into a supply agreement with this vendor and is
dependent on the availability of its components on an as-needed basis.
Although management believes it can obtain the microprocessor component from
other sources on competitive terms, the inability to obtain the number of
these components required could result in delays or reductions in product
shipments which would adversely affect the Company's operating results.
Potential Increased Costs. Although management believes that it has defined
the production costs of its new product lines within fairly narrow ranges,
these costs may vary depending on the Company's ability to take advantage (or
not) of quantity discounts, etc. If the Company experiences working capital
shortages in 1995, its costs may increase and gross margins decrease, which
could have a material adverse impact on the Company and its prospects for
growth.
Technological Change and Dependence on New Products. The Company's product
markets are characterized by changing technology, evolving industry standards
and frequent new product introductions. The Company's success will depend upon
its ability to market its existing products (including its UNITHERM, UNITHERM
II(R), ISOTHERM(TM) and ENVIROCLEAN(R) product lines) and to introduce future
products on a timely basis. There can be no assurance that the Company will be
successful in selecting, developing, manufacturing, and marketing new products
or in continuing to market its existing products.
In 1994, the Company commenced the manufacture and marketing of its UNITHERM
II(R) and ISOTHERM(TM) reflow soldering systems. Management expects the sale
of the Company's older products to diminish over time. Management believes
that the success of the UNITHERM II(R) and ISOTHERM(TM) product lines is,
therefore, crucial to the future of the Company. Although sales of these
products to date have been encouraging, there can be no assurance that these
product lines will maintain profitable sales levels in 1995. The lack of sales
or profitability of these products could have a substantial and adverse impact
on the Company.
Narrow Product Line and Customer Base. The bulk of the Company's revenues
(92% in 1994) are derived from sales of its solder reflow systems. As a
result, the Company's revenues are subject to greater variability than would
be true if the Company had a broader product line. In addition, although the
Company may have as many as 160 customers in any given year, approximately 15%
of its net sales in fiscal 1994, 8% in fiscal 1993 and 11% in fiscal 1992 were
derived from the same customer. This concentration of business could subject
the Company's revenues to greater variability than would be true if the
Company's sales were distributed over a broader customer base, even though no
other single customer accounted for more than 10% of sales in any of the three
fiscal years preceding the date of this Prospectus.
Current Patent Litigation. On November 26, 1991, the Company filed suit
against a competitor ("Conceptronic") in the United States District Court for
the District of New Hampshire seeking an injunction and damages against
Conceptronic for infringement of two patents owned by the Company covering the
apparatus and operating methodology of its solder reflow systems. Conceptronic
filed a counterclaim against the Company alleging that the patent suit was
brought in bad faith to maliciously interfere with Conceptronic's business
relations. Conceptronic's counterclaims were dismissed in December 1993.
There has been a series of rulings on technical motions by each side since
the initiation of the suit which are described in detail under the heading
"Legal Proceedings" in the Company's 10-K for fiscal 1994. In short, the Court
at present has determined as a matter of law that the Company has produced
sufficient facts which, if proved at trial, will establish Conceptronic's
infringement of certain Company patents. A trial date has been set for July
25, 1995.
Trial by jury of any patent litigation can be both expensive and time
consuming, and there can be no assurance that the Company will ultimately
prevail. Although the Company intends to vigorously pursue this
5
<PAGE>
litigation, continued litigation costs may be substantial and will reduce the
Company's resources available to fund working capital requirements.
A detailed procedural history of the patent litigation is set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 which is incorporated herein by reference.
Dependence on Key Employees. The Company's success will depend in part on
key management and technical employees and on the Company's ability to
continue to attract, retain and motivate highly talented personnel. With the
exceptions of Messrs. Manfield, Lawler, Chanasyk and Spilling, the Company
does not have written employment agreements with its personnel, although the
Company's technical employees are required to enter into noncompetition
agreements. The loss of one or more of the Company's key employees could have
an adverse impact on the Company. There can be no assurance that the Company
can retain its key employees or that it can attract, assimilate, or retrain
other skilled personnel.
Limits of Current Plant and Equipment; Possible Need for Additional
Capital. The current plant and equipment of the Company is not fully utilized.
The Company estimates that its sales could increase to approximately
$30,000,000 per year before full utilization of its capacity would occur,
although there can be no assurance that such growth in sales will occur.
Should sales reach the Company's maximum capacity level, however, further
growth may be limited without the acquisition of additional plant space and
equipment.
Uncertainty of Forward-Looking Statements. Although no projections are
included in this Prospectus, in certain instances management has made forward-
looking statements regarding the Company's future prospects where it felt such
information was important to an investor's understanding of the Company. These
forward-looking statements are based on management's best estimates and
present intentions and on assumptions that may or may not prove true. No
assurance can be provided that the actual results achieved will conform with
management's present beliefs, and variances, if they occur, may be material
and adverse.
Volatility of Stock Price. The trading price of the Company's Common Stock
has been subject to substantial fluctuations in response to quarter to quarter
variations in operating results, announcements of technological innovations or
new products by the Company or its competitors, and other events or factors.
In addition, the stock market has, from time to time, experienced significant
price and volume fluctuations which have particularly affected the market
price for many high technology companies and which often have been unrelated
to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of the Company's Common
Stock.
Shares Eligible for Future Sale. There are 976,200 shares reserved for
issuance upon exercise of outstanding options granted under the Company's
stock option plan, which shares will become available for future sale in the
public market at prescribed times. Sales of substantial amounts of such shares
in the public market could exert downward pressure on the trading price of the
Common Stock.
Lack of Dividends. The Company has not paid any dividends on its Common
Stock since its inception and currently intends to retain any future earnings
for use in its business.
6
<PAGE>
SELLING STOCKHOLDER
The following table sets forth the name, amount of Common Stock owned by the
Selling Stockholder prior to the Offering, the amount to be offered for the
holder's account and the amount and percentage, if required, of Common Stock
to be owned by the holder after the Offering. Except as indicated in a
footnote, the Selling Stockholder and its affiliates have not held any
position, office or material relationship with the Company within three years
of the date of this Prospectus.
<TABLE>
<CAPTION>
SHARES ACQUIRABLE
(AND OFFERED HEREBY) SHARES ACQUIRABLE SHARES REMAINING
UPON CONVERSION (AND OFFERED HEREBY) IF ALL SHARES
10% CONVERTIBLE UPON EXERCISE OF OFFERED HEREBY
SHARES CURRENTLY SUBORDINATED COMMON STOCK ARE SOLD
NAME OWNED DEBENTURE PURCHASE WARRANTS (% IF GREATER THAN 1%)
---- ---------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
New England Growth
Fund I, L.P.(1)......... 0 1,920,000 0 480,000 (4.66%)(2)
</TABLE>
- --------
(1) John F. Rousseau, Jr. and Robert J. Hanks are general partners of the
general partner of New England Growth Fund I, L.P. ("NEGF") and have
served as directors of the Company since October 1993.
(2) If all of the 1,920,000 Shares registered and offered hereby are sold,
NEGF will continue to hold 480,000 shares of Common Stock of the Company.
These 480,000 shares are included in the additional 968,225 shares which
are covered by a separate Prospectus included in this Registration
Statement. NEGF has agreed not to sell the 480,000 shares for a period of
9 months from the date of this Prospectus. See "Plan of Distribution" and
"Other Selling Stockholders."
MARKET FOR THE COMPANY'S COMMON STOCK
The Company's Common Stock is traded on the American Stock Exchange under
the trading symbol VTC. As of July 1, 1995 there were a total of 7,553,638
shares of Common Stock issued and outstanding.
The following table presents high and low sales prices for the Common Stock
for each fiscal quarter within the fiscal years ended December 31, 1994 and
1993, and for the first and second fiscal quarters of 1995.
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
------------- -------------- -------------------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------ ------ ------- ------ ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995..................... 2 3/16 1 5/16 1 11/16 1 3/16 -- -- -- --
1994..................... 1 3/16 5/8 15/16 5/8 1 5/8 1 13/16 11/16
1993..................... 7/8 9/16 11/16 7/16 13/16 3/8 1 1/8 9/16
</TABLE>
PLAN OF DISTRIBUTION
New England Growth Fund I, L.P., the Selling Stockholder ("NEGF"), has
entered into a letter of intent with Schneider Securities, Inc., the
Underwriter, which contemplates the terms of a firm commitment underwriting
agreement (the "Underwriting Agreement") in connection with this offering. The
Underwriting Agreement shall be executed prior to the closing of the offering.
Pursuant to the Underwriting Agreement, the Underwriter will purchase from
NEGF the 1,920,000 Shares offered hereby at $ . per Share (the bid price on
the AMEX as of the date of this Prospectus less a 12% discount) and resell
such Shares in the public marketplace at the same discounted price. The
Underwriter may offer a portion of the Shares to certain other broker-dealers
and may reallow such dealers the usual and customary discount. In connection
with the Underwriting Agreement, NEGF has agreed not to sell a total of
480,000 shares of Common Stock of the Company, the balance of its holdings in
the Company, for a period of 9 months from the effective date of this
prospectus, and to request that Messrs. Hanks and Rousseau, general partners
of the general partner of NEGF, resign from the Company's Board of Directors.
7
<PAGE>
OTHER SELLING STOCKHOLDERS
An additional 968,225 shares of Common Stock of the Company which are not
part of the firm commitment offering (the "Non-Schneider Shares") have been
registered by the Company for NEGF (480,000 shares) and certain other selling
stockholders (488,225 shares). The distribution of the Non-Schneider Shares by
such selling stockholders may be effected from time to time in one or more
transactions (which may involve block transactions) on the AMEX, in negotiated
transactions, through the writing of options or shares (whether such options
are listed on an options exchange or otherwise), or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. Such
selling stockholders may effect such transactions by selling the Non-Schneider
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from such
selling stockholders and/or purchasers of shares for whom they may act as
agent (which compensation may be in excess of customary commissions). None of
the Non-Schneider Shares are included in the firm commitment underwriting and
the Underwriter is not expected to purchase and resell such shares.
DESCRIPTION OF THE COMMON STOCK
Common Stock. The Company's Articles of Organization authorizes the issuance
of 20,000,000 shares of Common Stock, par value $.01 per share. Each record
holder of Common Stock is entitled to one vote for each share held on all
matters properly submitted to the stockholders for their vote.
In accordance with Massachusetts Business Corporation Law, the Company has a
classified Board of Directors consisting of two directors whose terms expire
in 1995 (including one current vacancy in such class), three directors whose
terms expire in 1996 and two directors whose terms expire in 1997. Cumulative
voting for the election of directors is not permitted by the Articles of
Organization.
Holders of the outstanding shares of the Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out
of legally available funds therefor, although the Company has not declared
dividends and does not have a present intention to do so in the foreseeable
future and may be prohibited from doing so by its current lenders. In the
event of liquidation, dissolution or winding up of the affairs of the Company,
holders of the Common Stock are entitled to receive, ratably, the assets of
the Company net of liabilities. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All the issued and
outstanding shares of the Common Stock are, and all unissued shares when
issued against payment therefor will be, duly authorized, validly issued,
fully paid and non-assessable.
Transfer Agent. Registrar & Transfer Company, 10 Commerce Drive, Cranford,
New Jersey, acts as the Company's Transfer Agent.
INDEMNIFICATION
Section 67 of the Massachusetts Business Corporation Law (the "BCL")
authorizes and empowers the Company to indemnify the directors, officers,
employees and agents of the Company against liabilities incurred in connection
with, and related expenses resulting from, any claim, action or suit brought
against any such person as a result of his relationship with the Company,
provided that such persons acted in accordance with a stated standard of
conduct in connection with the acts or events on which such claim, action or
suit is based.
In addition, Section 13(b)(1 1/2) of the BCL permits the elimination or
limiting of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability; provided,
however, that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation
8
<PAGE>
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Sections 61 and 62 of the BCL (relating to the payment of unauthorized
distributions or the extension of unapproved loans to officers or directors),
or (iv) for any transaction from which the director derived an improper
personal benefit.
Under Article 6A of the Company's Articles of Organization (the "Articles")
the Company may indemnify its directors, officers, employees or other agents,
present or former, if provided in the Company's by-laws. Under Article 6I of
the Articles, as amended, the Company's directors do not have personal
liability to the Company or its stockholders for monetary damages for any
breach of their fiduciary duty as directors to the extent Section 13(b)(1 1/2)
of the BCL permits the limitation of such liability.
Article V(9) of the Company's by-laws further provides for the
indemnification of officers and directors to the fullest extent authorized by
the BCL, and for the prompt advancement of expenses, for costs, expenses
(including legal fees) and obligations paid or incurred in connection with or
arising out of the defense or disposition of any action, suit or other
proceeding whether civil or criminal, in which the director or officer may be
a defendant or with which the director or officer may be threatened or
otherwise involved, directly or indirectly, by reason of his being or having
been a director or officer; provided, however, that the Company shall provide
no indemnification with respect to any matter as to which any such indemnitee
shall be finally adjudicated in such action, suit or proceeding not to have
acted in good faith in the reasonable belief that his action was (i) in the
best interest of the Company or (ii) to the extent such matter relates to
federal or state securities laws, consonant with such laws.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Shares offered
hereby will be passed upon for the Company by Hinckley, Allen & Snyder, 1500
Fleet Center, Providence, Rhode Island 02903. Certain legal matters regarding
the underwriting of the Shares and the Underwriter will be passed upon by
William M. Prifti, Esq., Law Offices, 220 Broadway, Suite 204, Lynnfield, MA
01940.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the fiscal year ended December 31,
1994 have been audited by Coopers & Lybrand L.L.P., Independent Auditors, as
stated in their report dated February 21, 1995 incorporated herein by
reference, and have been so incorporated by reference in reliance upon such
report given upon the authority of that firm as experts in accounting and
auditing.
9
<PAGE>
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- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL ANY SECURITIES: (I) OTHER THAN THOSE SPECIFICALLY
OFFERED HEREBY, (II) IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED, (III) IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, (IV) TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION, OR (V) TO
ANY PERSON WHO IS NOT A UNITED STATES RESIDENT OR WHO IS OUTSIDE THE JURISDIC-
TION OF THE UNITED STATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE AS OF
WHICH SUCH INFORMATION IS PROVIDED IN THIS PROSPECTUS.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference.............................................................. 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Selling Stockholders....................................................... 7
Market for the Company's Common Stock...................................... 7
Plan of Distribution....................................................... 7
Other Selling Stockholders................................................. 8
Description of the Common Stock............................................ 8
Indemnification............................................................ 8
Legal Matters.............................................................. 9
Experts.................................................................... 9
</TABLE>
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF VITRONICS CORP. APPEARS HERE]
1,920,000 SHARES
--------------
PROSPECTUS
--------------
, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
- ----------
VITRONICS CORPORATION
968,225 SHARES OF COMMON STOCK
(PAR VALUE $.01 PER SHARE)
The Selling Stockholders are offering for sale (the "Offering") a total of
968,225 shares (the "Shares") of Common Stock, $.01 par value per share (the
"Common Stock"), of Vitronics Corporation (the "Company"). The Company will
not receive any proceeds from the sale of the Shares.
The Shares are being registered pursuant to the Registration Statement of
which this Prospectus is a part and the Selling Stockholders are identified in
the table captioned "Selling Stockholders" herein.
The Shares are listed on the American Stock Exchange (the "AMEX") where they
trade under the symbol "VTC." The average of the high and low prices for the
Common Stock on July 7, 1995 was $1.59 per share. See "Risk Factors--
Volatility of Stock Price." The Selling Stockholders intend to sell the Shares
in market transactions on a continuous or delayed basis, subject to certain
limitations imposed by Federal and state securities laws, at then current
market prices at any time, and from time to time, over the next two years. In
connection with sales, it is expected that the Selling Stockholders will incur
a standard commission charge. See "Plan of Distribution". The selling price of
the Shares cannot be determined at this time.
An additional 1,920,000 shares of Common Stock are being registered by the
Company pursuant to the Registration Statement of which this Prospectus is a
part. Such additional shares comprise a firm commitment offering by Schneider
Securities, Inc. as Underwriter for such shares for the account of New England
Growth Fund I, L.P., as selling stockholder ("NEGF"). Such additional shares
are being purchased by the Underwriter from NEGF for $ per share (the bid
price on the AMEX as of the date of this Prospectus less a 12% discount) and
are being resold to the public at the same discounted price. See "Plan of
Distribution" and "Other Selling Stockholders."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New York,
New York 10048 and Room 1204, Everett McKinley Dirksen Building, 219 South
Dearborn Street, Chicago, Illinois 60604. Copies of such materials can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Such reports and other information
concerning the Company can also be inspected at the offices of the AMEX at 86
Trinity Place, New York, New York 10006.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained
in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Offering. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1994 (the "10-K").
(2) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended April 1, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the Offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed documents which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. The Company
will provide, without charge, to each person to whom a copy of this Prospectus
has been delivered, on the written or oral request of such person, a copy of
any or all of the documents referred to above which have been or may be
incorporated by reference herein other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference herein). Requests for
such copies should be directed to: Lorraine Giordano, Clerk, Vitronics
Corporation, 1 Forbes Road, Newmarket, New Hampshire 03857; 603-659-6550.
2
<PAGE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information included elsewhere or incorporated by reference in this Prospectus.
Each prospective investor is urged to read this Prospectus, and any document
incorporated by reference, in its entirety.
THE COMPANY
Vitronics Corporation (the "Company") designs, manufactures and markets high-
volume systems for the soldering of surface mounted devices to, and the
cleaning of, printed circuit boards ("PCBs"). The Company's solder reflow
systems generally sell for between $20,000 and $150,000, and its semi-aqueous
cleaning systems generally sell for between $110,000 and $160,000. Management
believes that the Company's systems have the largest market share of their
respective high end reflow markets (excluding Japan), with approximately 30% of
the domestic and one-quarter of the worldwide solder reflow market, and in
excess of 50% of the installed base of in-line, semi-aqueous cleaning systems.
Although none of the Company's customers named below have any ongoing
contractual obligation to purchase the Company's products, all have made
repeated purchases of the Company's products in the past and approximately 40%
of such customers currently have purchase orders pending in the Company's
backlog. United States customers during the past eighteen months have included
Allied Signal, AT&T, AVEX Electronics, Chrysler, GE, GM, GTE, Hughes Aircraft,
IBM, Intel, McDonnell Douglas, Motorola, Northern Telecom, Raytheon, SCI and
Xerox. International customers during such period have included Ericsson,
Fujitsu, Hitachi, Mitsubishi, NEC, Olympus, Phillips, Siemens and Toshiba.
During 1994, the Company successfully introduced two new solder reflow ovens
into the marketplace, and recorded total sales in excess of $17 million and net
income of $602,000, as compared with a net loss of $1,357,000 in 1993 on sales
of $12.7 million in 1993. During the last quarter of 1994, the Company had
record bookings of $5.5 million.
THE OFFERING
Shares Offered............ 968,225 shares of Common Stock (the "Shares").
Common Stock
Outstanding(1)........... 7,553,638 shares
American Stock Exchange
Symbol................... VTC
Use of Proceeds........... The Company will not receive any proceeds from the
sale of Shares.
Risk Factors.............. The Shares offered hereby are speculative in nature,
involve a high degree of risk and should not be
purchased by anyone who cannot afford the loss of
his entire investment. See "Risk Factors."
- --------
(1) As of July 1, 1995. Does not include the 976,200 shares reserved for
issuance pursuant to options presently outstanding under the Company's
stock option plans.
3
<PAGE>
RISK FACTORS
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL RESOURCES WHO CAN AFFORD THE
LOSS OF ALL OR A PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER, AMONG OTHER FACTORS, THE FOLLOWING MATTERS BEFORE
INVESTING:
Recent History of Losses. As reflected in the Company's financial
statements, the Company recorded net income of $602,000 in fiscal 1994, after
net losses of over $6 million in the aggregate for the preceding three fiscal
years. The Company attributes this turnaround to an aggressive cost control
program implemented in 1993, reduction in material and direct labor costs,
general improvement in the economy and the marketing of innovative new
products such as UNITHERM II(R) and ISOTHERM(TM). While the Company will
continue to build on this strategy, there can be no assurance of continued
profitability.
Bank Financing. The Company has obtained a $500,000 line of credit with the
First National Bank of Portsmouth. This line of credit is secured by
substantially all of the assets of the Company. Management believes this line
of credit, in addition to internally generated funds and capital equipment
lease financing expected to be available, will be sufficient to meet the
Company's working capital requirements in 1995. There can be no assurance,
however, that additional debt or equity financing will not be needed or that
such financing, if available, will be adequate to meet the Company's
requirements on terms satisfactory to the Company.
Business Cycles; Dependence of Company on Electronics-Related
Industries. Most of the Company's customers operate in electronics-related
industries that are subject to a decline in activity during recessions in the
general economy. During the recent recession, the Company experienced a steady
decline in net sales from $20.5 million in fiscal 1989 to a low of $12.3
million in fiscal 1992. Although the Company in 1994 experienced a significant
increase in sales and orders for its products, there can be no assurance that
the negative impact of the recent recession in the general economy, and in the
electronics-related industries in particular, is over. Moreover, the currently
forecasted slowdown in the economy, should it occur, could have a material
adverse impact on the Company's operations. In the future, it should be
expected that the Company's business will continue to be affected by general
business cycles and that such cycles will have a material impact upon the
Company's business from year to year.
Competition. The printed circuit board ("PCB") reflow soldering and cleaning
markets are highly competitive. Competition, and particularly price
competition, could adversely affect the Company's ability to maintain and/or
increase its sales and profitability. Many of the Company's current and
potential competitors have substantial financial, marketing and technical
resources, manufacturing capability, customer support organizations and name
recognition. There can be no assurance that the Company will be able to
compete successfully in the future.
The Company's solder reflow systems may also face competition from the
development of electrically conductive adhesives designed to eliminate the
need to solder components to PCBs. At this point in the development of
conductive adhesives the Company believes that even if the adhesives are
technologically successful, they will require heat treatment or curing.
Accordingly, a market will continue to exist for the Company's solder reflow
technology. The potential impact of electrically conductive adhesives on the
Company's semi-aqueous system business is uncertain.
The Company's semi-aqueous cleaning systems also face competition from the
growing acceptance and utilization of "no clean" solder pastes which produce
minimal flux residue, thus reducing and potentially eliminating the need for
post-assembly PCB cleaning and the emergence of electrically-conductive
adhesives. There can be no assurance that the technology necessary to make and
effectively use "no clean" solder pastes which meet high reliability standards
will not be developed. In such event, the market for semi-aqueous cleaning
systems could be substantially reduced.
4
<PAGE>
Component Supply. The microprocessor used in the Company's UNITHERM solder
reflow systems is presently being purchased from only one source. There can be
no assurance that this source will continue in business or continue to
manufacture the component upon which the Company's products currently depend.
The Company has not entered into a supply agreement with this vendor and is
dependent on the availability of its components on an as-needed basis.
Although management believes it can obtain the microprocessor component from
other sources on competitive terms, the inability to obtain the number of
these components required could result in delays or reductions in product
shipments which would adversely affect the Company's operating results.
Potential Increased Costs. Although management believes that it has defined
the production costs of its new product lines within fairly narrow ranges,
these costs may vary depending on the Company's ability to take advantage (or
not) of quantity discounts, etc. If the Company experiences working capital
shortages in 1995, its costs may increase and gross margins decrease, which
could have a material adverse impact on the Company and its prospects for
growth.
Technological Change and Dependence on New Products. The Company's product
markets are characterized by changing technology, evolving industry standards
and frequent new product introductions. The Company's success will depend upon
its ability to market its existing products (including its UNITHERM, UNITHERM
II(R), ISOTHERM(TM) and ENVIROCLEAN(R) product lines) and to introduce future
products on a timely basis. There can be no assurance that the Company will be
successful in selecting, developing, manufacturing, and marketing new products
or in continuing to market its existing products.
In 1994, the Company commenced the manufacture and marketing of its UNITHERM
II(R) and ISOTHERM(TM) reflow soldering systems. Management expects the sale
of the Company's older products to diminish over time. Management believes
that the success of the UNITHERM II(R) and ISOTHERM(TM) product lines is,
therefore, crucial to the future of the Company. Although sales of these
products to date have been encouraging, there can be no assurance that these
product lines will maintain profitable sales levels in 1995. The lack of sales
or profitability of these products could have a substantial and adverse impact
on the Company.
Narrow Product Line and Customer Base. The bulk of the Company's revenues
(92% in 1994) are derived from sales of its solder reflow systems. As a
result, the Company's revenues are subject to greater variability than would
be true if the Company had a broader product line. In addition, although the
Company may have as many as 160 customers in any given year, approximately 15%
of its net sales in fiscal 1994, 8% in fiscal 1993 and 11% in fiscal 1992 were
derived from the same customer. This concentration of business could subject
the Company's revenues to greater variability than would be true if the
Company's sales were distributed over a broader customer base, even though no
other single customer accounted for more than 10% of sales in any of the three
fiscal years preceding the date of this Prospectus.
Current Patent Litigation. On November 26, 1991, the Company filed suit
against a competitor ("Conceptronic") in the United States District Court for
the District of New Hampshire seeking an injunction and damages against
Conceptronic for infringement of two patents owned by the Company covering the
apparatus and operating methodology of its solder reflow systems. Conceptronic
filed a counterclaim against the Company alleging that the patent suit was
brought in bad faith to maliciously interfere with Conceptronic's business
relations. Conceptronic's counterclaims were dismissed in December 1993.
There has been a series of rulings on technical motions by each side since
the initiation of the suit which are described in detail under the heading
"Legal Proceedings" in the Company's 10-K for fiscal 1994. In short, the Court
at present has determined as a matter of law that the Company has produced
sufficient facts which, if proved at trial, will establish Conceptronic's
infringement of certain Company patents. A trial date has been set for July
25, 1995.
Trial by jury of any patent litigation can be both expensive and time
consuming, and there can be no assurance that the Company will ultimately
prevail. Although the Company intends to vigorously pursue this
5
<PAGE>
litigation, continued litigation costs may be substantial and will reduce the
Company's resources available to fund working capital requirements.
A detailed procedural history of the patent litigation is set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 which is incorporated herein by reference.
Dependence on Key Employees. The Company's success will depend in part on
key management and technical employees and on the Company's ability to
continue to attract, retain and motivate highly talented personnel. With the
exceptions of Messrs. Manfield, Lawler, Chanasyk and Spilling, the Company
does not have written employment agreements with its personnel, although the
Company's technical employees are required to enter into noncompetition
agreements. The loss of one or more of the Company's key employees could have
an adverse impact on the Company. There can be no assurance that the Company
can retain its key employees or that it can attract, assimilate, or retrain
other skilled personnel.
Limits of Current Plant and Equipment; Possible Need for Additional
Capital. The current plant and equipment of the Company is not fully utilized.
The Company estimates that its sales could increase to approximately
$30,000,000 per year before full utilization of its capacity would occur,
although there can be no assurance that such growth in sales will occur.
Should sales reach the Company's maximum capacity level, however, further
growth may be limited without the acquisition of additional plant space and
equipment.
Uncertainty of Forward-Looking Statements. Although no projections are
included in this Prospectus, in certain instances management has made forward-
looking statements regarding the Company's future prospects where it felt such
information was important to an investor's understanding of the Company. These
forward-looking statements are based on management's best estimates and
present intentions and on assumptions that may or may not prove true. No
assurance can be provided that the actual results achieved will conform with
management's present beliefs, and variances, if they occur, may be material
and adverse.
Volatility of Stock Price. The trading price of the Company's Common Stock
has been subject to substantial fluctuations in response to quarter to quarter
variations in operating results, announcements of technological innovations or
new products by the Company or its competitors, and other events or factors.
In addition, the stock market has, from time to time, experienced significant
price and volume fluctuations which have particularly affected the market
price for many high technology companies and which often have been unrelated
to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of the Company's Common
Stock.
Shares Eligible for Future Sale. There are 976,200 shares reserved for
issuance upon exercise of outstanding options granted under the Company's
stock option plan, which shares will become available for future sale in the
public market at prescribed times. Sales of substantial amounts of such shares
in the public market could exert downward pressure on the trading price of the
Common Stock.
Lack of Dividends. The Company has not paid any dividends on its Common
Stock since its inception and currently intends to retain any future earnings
for use in its business.
6
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name, amount of Common Stock owned by the
Selling Stockholders prior to the Offering, the amount to be offered for the
holder's account and the amount and percentage, if required, of Common Stock
to be owned by the holder after the Offering. Except as indicated in a
footnote, none of the Selling Stockholders or their affiliates have held any
position, office or material relationship with the Company within three years
of the date of this Prospectus.
<TABLE>
<CAPTION>
SHARES ACQUIRABLE
(AND OFFERED HEREBY) SHARES ACQUIRABLE SHARES REMAINING
UPON CONVERSION (AND OFFERED HEREBY) IF ALL SHARES
10% CONVERTIBLE UPON EXERCISE OF OFFERED HEREBY
SHARES CURRENTLY SUBORDINATED COMMON STOCK ARE SOLD
NAME OWNED DEBENTURE PURCHASE WARRANTS (% IF GREATER THAN 1%)
---- ---------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
New England Growth Fund
I, L.P.(1)............. 0 480,000 0 0
Barclay Investments,
Inc.(2)................ 0 0 73,113(3) 0
James F. Twaddell....... 0 0 57,612 0
Edward R. Henderson..... 0 0 15,500 0
Paul Fiorini............ 0 0 30,000 0
Fred Luthy.............. 0 0 15,000 0
Joseph Guccione......... 0 0 15,000 0
Robert A. Neff.......... 0 0 15,000 0
A.W. Airflo Company(4).. 142,000 0 0 0
</TABLE>
- --------
(1) John F. Rousseau, Jr. and Robert J. Hanks are general partners of the
general partner of New England Growth Fund I, L.P. ("NEGF") and have
served as directors of the Company since October 1993. NEGF is selling
contemporaneously with this Prospectus a total of 1,920,000 shares of
Common Stock of the Company pursuant to a firm commitment underwriting by
Schneider Securities, Inc. As part of such firm commitment underwriting,
NEGF has agreed not to sell the 480,000 shares offered hereby for a period
of 9 months from the date of this Prospectus and to request that Messrs.
Rousseau and Hanks resign from the Company's Board of Directors. See "Plan
of Distribution" and "Other Selling Stockholders."
(2) Barclay Investments, Inc. served as standby underwriter for the Company's
1992 Rights Offering and as Advisor for the placement of the Company's 10%
Convertible Debenture to NEGF in October, 1993.
(3) Includes 125,000 shares acquirable upon exercise of a Common Stock Warrant
dated October 1, 1993, and 73,113 shares acquirable upon exercise of a
Common Stock Warrant dated March 9, 1994.
(4) A.W. Airflo Company supplies materials to the Company from time to time
which are used in the Company's manufacturing processes.
MARKET FOR THE COMPANY'S COMMON STOCK
The Company's Common Stock is traded on the American Stock Exchange under
the trading symbol VTC. As of July 1, 1995 there were a total of 7,553,638
shares of Common Stock issued and outstanding.
The following table presents high and low sales prices for the Common Stock
for each fiscal quarter within the fiscal years ended December 31, 1994 and
1993, and for the first fiscal quarter of 1995.
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
------------- -------------- -------------------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------ ------ ------- ------ ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995................. 2 3/16 1 5/16 1 11/16 1 3/16 -- -- -- --
1994................. 1 3/16 5/8 15/16 5/8 1 5/8 1 13/16 11/16
1993................. 7/8 9/16 11/16 7/16 13/16 3/8 1 1/8 9/16
</TABLE>
7
<PAGE>
PLAN OF DISTRIBUTION
The Shares are listed on the American Stock Exchange. The distribution of the
Shares by the Selling Stockholders may be effected from time to time in one or
more transactions (which may involve block transactions) on the AMEX, in
negotiated transactions, through the writing of options or shares (whether such
options are listed on an options exchange or otherwise), or a combination of
such methods of sale, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices. The
Selling Stockholders may effect such transactions by selling Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or purchasers of shares for whom they may act as agent (which compensation
may be in excess of customary commissions).
OTHER SELLING STOCKHOLDERS
In addition to the Shares offered hereby, one of the Selling Stockholders,
New England Growth Fund I, L.P., ("NEGF"), has entered into a letter of intent
with Schneider Securities, Inc. as underwriter, which contemplates the terms of
a firm commitment underwriting agreement (the "Underwriting Agreement")
covering 1,920,000 shares of Common Stock of the Company owned by NEGF. The
Underwriting Agreement shall be executed on or before the date of this
Prospectus. Pursuant to the Underwriting Agreement, the Underwriter will
purchase from NEGF 1,920,000 shares of Common Stock at $ . per share (the bid
price on the AMEX as of the date of this Prospectus less a 12% discount) and
shall resell such shares in the public marketplace at the same discounted
price. The Underwriter will receive a 10% commission and a 3% non-accountable
expense from NEGF. The Underwriter may offer a portion of the shares to certain
other broker-dealers and may reallow such dealers the usual and customary
discount. In connection with the Underwriting Agreement, NEGF has agreed not to
sell the 480,000 shares of Common Stock of the Company which it is offering
hereby, the balance of its holdings in the Company, for a period of 9 months
from the effective date of this Prospectus, and to request that Messrs. Hanks
and Rousseau, general partners of the general partner of NEGF, resign from the
Company's Board of Directors.
DESCRIPTION OF THE COMMON STOCK
Common Stock. The Company's Articles of Organization authorizes the issuance
of 20,000,000 shares of Common Stock, par value $.01 per share. Each record
holder of Common Stock is entitled to one vote for each share held on all
matters properly submitted to the stockholders for their vote.
In accordance with Massachusetts Business Corporation Law, the Company has a
classified Board of Directors consisting of two directors whose terms expire in
1995 (including any current vacancy in such class), three directors whose terms
expire in 1996 and two directors whose terms expire in 1997. Cumulative voting
for the election of directors is not permitted by the Articles of Organization.
Holders of the outstanding shares of the Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds therefor, although the Company has not declared
dividends and does not have a present intention to do so in the foreseeable
future and may be prohibited from doing so by its current holders. In the event
of liquidation, dissolution or winding up of the affairs of the Company,
holders of the Common Stock are entitled to receive, ratably, the assets of the
Company net of liabilities. Holders of outstanding shares of Common Stock have
no preemptive, conversion or redemptive rights. All the issued and outstanding
shares of the Common Stock are, and all unissued shares when issued against
payment therefor will be, duly authorized, validly issued, fully paid and non-
assessable.
Transfer Agent. Registrar & Transfer Company, 10 Commerce Drive, Cranford,
New Jersey, acts as the Company's Transfer Agent.
8
<PAGE>
INDEMNIFICATION
Section 67 of the Massachusetts Business Corporation Law (the "BCL")
authorizes and empowers the Company to indemnify the directors, officers,
employees and agents of the Company against liabilities incurred in connection
with, and related expenses resulting from, any claim, action or suit brought
against any such person as a result of his relationship with the Company,
provided that such persons acted in accordance with a stated standard of
conduct in connection with the acts or events on which such claim, action or
suit is based.
In addition, Section 13(b)(1 1/2) of the BCL permits the elimination or
limiting of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability; provided,
however, that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Sections 61 and 62 of the BCL (relating to the payment of unauthorized
distributions or the extension of unapproved loans to officers or directors),
or (iv) for any transaction from which the director derived an improper
personal benefit.
Under Article 6A of the Company's Articles of Organization (the "Articles")
the Company may indemnify its directors, officers, employees or other agents,
present or former, if provided in the Company's by-laws. Under Article 6I of
the Articles, as amended, the Company's directors do not have personal
liability to the Company or its stockholders for monetary damages for any
breach of their fiduciary duty as directors to the extent Section 13(b)(1 1/2)
of the BCL permits the limitation of such liability.
Article V(9) of the Company's by-laws further provides for the
indemnification of officers and directors to the fullest extent authorized by
the BCL, and for the prompt advancement of expenses, for costs, expenses
(including legal fees) and obligations paid or incurred in connection with or
arising out of the defense or disposition of any action, suit or other
proceeding whether civil or criminal, in which the director or officer may be
a defendant or with which the director or officer may be threatened or
otherwise involved, directly or indirectly, by reason of his being or having
been a director or officer; provided, however, that the Company shall provide
no indemnification with respect to any matter as to which any such indemnitee
shall be finally adjudicated in such action, suit or proceeding not to have
acted in good faith in the reasonable belief that his action was (i) in the
best interest of the Company or (ii) to the extent such matter relates to
federal or state securities laws, consonant with such laws.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Shares offered
hereby will be passed upon for the Company by Hinckley, Allen & Snyder, 1500
Fleet Center, Providence, Rhode Island 02903.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the fiscal year ended December 31,
1994 have been audited by Coopers & Lybrand L.L.P., Independent Auditors, as
stated in their report dated February 21, 1995 incorporated herein by
reference, and have been so incorporated by reference in reliance upon such
report given upon the authority of that firm as experts in accounting and
auditing.
9
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL ANY SECURITIES: (I) OTHER THAN THOSE SPECIFICALLY
OFFERED HEREBY, (II) IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED, (III) IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, (IV) TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION, OR (V) TO
ANY PERSON WHO IS NOT A UNITED STATES RESIDENT OR WHO IS OUTSIDE THE JURISDIC-
TION OF THE UNITED STATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE AS OF
WHICH SUCH INFORMATION IS PROVIDED IN THIS PROSPECTUS.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Selling Stockholders....................................................... 7
Market for the Company's Common Stock...................................... 7
Plan of Distribution....................................................... 8
Other Selling Stockholders................................................. 8
Description of the Common Stock............................................ 8
Indemnification............................................................ 9
Legal Matters.............................................................. 9
Experts.................................................................... 9
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF VITRONICS CORP. APPEARS HERE]
968,225 SHARES
--------------
PROSPECTUS
--------------
, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The registrant estimates that expenses in connection with the offering
described in this Registration Statement, all of which shall be borne by the
Company, will be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................. $ 1,464
Printing expenses*.................................................. $20,000
Accountant's fees and expenses...................................... $ 5,000
Legal fees and expenses............................................. $25,000
Blue Sky fees and expenses.......................................... $ 5,000
NASD filing fee..................................................... $ 775
Miscellaneous....................................................... $ 1,500
-------
Total............................................................. $58,739
=======
</TABLE>
- --------
* includes Edgar filing service charges
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of the Massachusetts Business Corporation Law (the "BCL")
authorizes and empowers the Company to indemnify the directors, officers,
employees and agents of the Company against liabilities incurred in connection
with, and related expenses resulting from, any claim, action or suit brought
against any such person as a result of his relationship with the Company,
provided that such persons acted in accordance with a stated standard of
conduct in connection with the acts or events on which such claim, action or
suit is based.
In addition, Section 13(b)(1 1/2) of the BCL permits the elimination or
limiting of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability; provided,
however, that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Sections 61 and 62 of the BCL (relating to the payment of unauthorized
distributions or the extension of unapproved loans to officers or directors),
or (iv) for any transaction from which the director derived an improper
personal benefit.
Under Article 6A of the Company's Articles of Organization (the "Articles")
the Company may indemnify its directors, officers, employees or other agents,
present or former, if provided in the Company's by-laws. Under Article 6I of
the Articles, as amended, the Company's directors do not have personal
liability to the Company or its stockholders for monetary damages for any
breach of their fiduciary duty as directors to the extent Section 13(b)(1 1/2)
of the BCL permits the limitation of such liability.
Article V(9) of the Company's by-laws further provides for the
indemnification of officers and directors to the fullest extent authorized by
the BCL, and for the prompt advancement of expenses, for costs, expenses
(including legal fees) and obligations paid or incurred in connection with or
arising out of the defense or disposition of any action, suit or other
proceeding whether civil or criminal, in which the director or officer may be
a defendant or with which the director or officer may be threatened or
otherwise involved, directly or indirectly, by reason of his being or having
been a director or officer; provided, however, that the Company shall provide
no indemnification with respect to any matter as to which any such indemnitee
shall be finally adjudicated in such action, suit or proceeding not to have
acted in good faith in the reasonable belief that his action was (i) in the
best interest of the Company or (ii) to the extent such matter relates to
federal or state securities laws, consonant with such laws.
II-1
<PAGE>
ITEM 16. EXHIBITS.
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits and is
hereby incorporated by reference herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective Amendment to this
Registration Statement to include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration Statement.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective Amendment and each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in this 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.
The undersigned registrant hereby undertakes to remove from registration by
means of a post-effective Amendment any of the securities being registered
which remain unsold at the termination of the Offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities
Act of 1933 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.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, 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 ITS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED ON THE DAY OF JULY, 1995.
Vitronics Corporation
/s/ James J. Manfield, Jr.
By: __________________________________
JAMES J. MANFIELD, JR.,
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE OFFICER, CHIEF
FINANCIAL OFFICER, TREASURER AND
DIRECTOR
/s/ Daniel J. Sullivan
By: __________________________________
DANIEL J. SULLIVAN,
CORPORATE CONTROLLER AND PRINCIPAL
ACCOUNTING OFFICER
/s/ Ronald W. Lawler
By: __________________________________
RONALD W. LAWLER,
PRESIDENT, CHIEF OPERATING
OFFICER AND DIRECTOR
/s/ David R.A. Steadman
By: __________________________________
DAVID R. A. STEADMAN,
DIRECTOR
/s/ Allen H. Keough
By: __________________________________
ALLEN H. KEOUGH,
DIRECTOR
/s/ John F. Rousseau, Jr.
By: __________________________________
JOHN F. ROUSSEAU, JR.,
DIRECTOR
/s/ Robert J. Hanks
By: __________________________________
ROBERT J. HANKS,
DIRECTOR
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. ITEM PAGE
--- ---- ----
<C> <S> <C>
1.0 Form of Underwriting Agreement between New England Growth Fund I,
L.P., Schneider Securities, Inc. and the Company..................
4.1 Specimen Common Stock Certificate(1)...............................
4.2 Form of Warrant issued to the Underwriter in the Company' 1992
Rights Offering(2).................................................
4.3 Form of 10% Convertible Subordinated Debenture(3)..................
4.4 Form of Common Stock Purchase Warrant(3)...........................
5.0 Opinion of Messrs. Hinckley, Allen & Snyder regarding the legality
of the securities offered(4).......................................
23.1 Consent of Coopers & Lybrand L.L.P. ...............................
23.2 Consent of Hinckley, Allen & Snyder (to be included in Exhibit
5.0)...............................................................
</TABLE>
- --------
(1) Exhibit 4.1 is hereby incorporated by reference from Exhibits to Annual
Report on Form 10-K (File No.2-90042) filed by the Company with the
Securities and Exchange Commission on April 1, 1985.
(2) Exhibit 4.2 is hereby incorporated by reference to Exhibits to Amendment
No. 2 to Form S-2 Registration Statement (File No. 33-50928) filed by the
Company with the Securities and Exchange Commission on November 12, 1992.
(3) Exhibits 4.3 and 4.4 are hereby incorporated by reference from Exhibits
to Annual Report on Form 10-K (File No. 0-13715) filed by the Company
with the Securities & Exchange Commission on April 13, 1994.
(4) To be filed by Amendment.
<PAGE>
EXHIBIT 1.0
-----------
VITRONICS CORPORATION
1,920,000 Shares of Common Stock
UNDERWRITING AGREEMENT
----------------------
, 1995
Schneider Securities, Inc.
104 Broadway
Denver, CO 80203
Dear Sirs:
New England Growth Fund I, L.P. ("Selling Stockholders"), a stockholder of
Vitronics Corporation, a Massachusetts corporation (the "Company"), proposes to
issue and sell to the Underwriter (the "Underwriter"), shares of Common Stock of
the Company, $.01 par value (the "Stock"). The Selling Stockholder and Company
hereby confirm the agreement made by the Selling Stockholder with respect to the
purchase of the Stock by the Underwriter, which Stock is more fully described in
the Registration Statement referred to below. Schneider Securities, Inc. is
referred to herein as the "Underwriter."
You have advised the Selling Stockholder and the Company that the Underwriter
desires to act on a firm commitment basis to publicly offer and sell the Stock
for the Selling Stockholder(s) and that you are authorized to execute this
Agreement. The Selling Stockholder(s) and the Company confirm the agreement made
by it with respect to the relationship with the Underwriter as follows:
1. Filing of Registration Statement with S.E.C. and Definitions. A
Registration Statement and Prospectus on Form S-3 (File No. 33-58811) with
respect to the Securities has been carefully and accurately prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the published rules and regulations (the "Rules and
Regulations") thereunder or under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and has been filed with the Securities and Exchange
Commission (the "Commission") and such other states that the Underwriter deems
necessary in its discretion to so file to permit a public offering and trading
thereunder.
2. Discount, Delivery, and Sale of the Securities.
(a) Subject to the terms and conditions of this Agreement, and on the basis
of the representations, warranties, and agreements herein contained, the Selling
Stockholder(s) agrees to sell to, and the Underwriter agrees to buy from the
Selling Stockholder(s) at a purchase price of $ per share of Common Stock
before any underwriter expense allowances, a total of shares of Common
Stock on a firm commitment basis.
It is understood that the Underwriter proposes to offer the Stock to be
purchased hereunder to the public upon the terms and conditions set forth in the
Registration Statement, after the Registration Statement becomes effective.
(b) Delivery of the Stock against payment therefor shall take place at the
offices of the clearing broker for the Underwriter at New York City, within five
(5) business days after the effective date (or at such other place as may be
designated by agreement between you and the Selling Stockholder(s)) at 10:00
A.M., New York time, or at such time and date as you and the Selling
Stockholder(s) may agree upon in writing, such time and date of payment and
delivery for the Stock being herein called the "Closing Date."
The Selling Stockholder(s) will make the certificates for the Stock to be
purchased by the Underwriter hereunder available to the Underwriter for
inspection and packaging at least two (2) full business days prior to the
Closing Date. The certificates shall be in such names and denominations as the
Underwriter may request to the Selling Stockholder(s) in writing at least two
(2) full business days prior to the Closing Date.
<PAGE>
(c) Definitive certificates in negotiable form for the Stock to be purchased
by the Underwriter hereunder will be delivered at the closing by the Selling
Stockholder(s) to the Underwriter against payment of the purchase price by the
Underwriter by certified or bank cashier's checks or wire transfer in next day
funds payable to the order of the Company.
(d) The information set forth under Plan of Distribution in any Prospectus
relating to the Stock proposed to be filed by the Company with the Commission
and states designated by the Underwriter (insofar as such information relates
to the Underwriters) and constitutes the only information furnished by the
Underwriter to the Company for inclusion therein, and you represent and warrant
to the Selling Stockholder(s) and the Company that the statements made therein
are correct.
3. Representations and Warranties of the Company.
(a) The Selling Stockholder(s) and the Company represent and warrant to you
as follows:
(i) The Company has prepared and filed with the Commission a registration
statement, and an amendment or amendments thereto, on Form S-3
(No. 33-58811), including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Stock, under the Act, which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the Rules and
Regulations. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriter
and will not file any other amendment thereto to which the Underwriter shall
have objected verbally or in writing after having been furnished with a copy
thereof. Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part
thereof or incorporated therein (including, but not limited to those
documents or information incorporated by reference therein) and all
information deemed to be a part thereof as of such time pursuant to paragraph
(b) of Rule 430(A) of the Rules and Regulations), is hereinafter called the
"Registration Statement," and the form of prospectus in the form filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations, is
hereinafter called the "Prospectus."
(ii) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Prospectus or the
Registration Statement or any part of any thereof and no proceeding for an
order suspending the effectiveness of the Registration Statement or any of
the Company's securities has been instituted or is pending or threatened.
Each such Prospectus and/or any supplement thereto has conformed in all
material respects with the requirements of the Act and the Rules and
Regulations and on its date did not include any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading, in light of the circumstances under which
they were made; the Prospectus and/or any supplement thereto will not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances under which they were made;
provided, however, that no representations, warranties or agreements are made
hereunder as to information contained in or omitted from the Prospectus in
reliance upon, and in conformity with, the written information furnished to
the Company by you as set forth in Section 2(d) above.
(iii) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Massachusetts,
with full power and authority (corporate and other) to own its properties and
conduct its businesses as described in the Prospectus and is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which the nature of its business or the character or
location of its properties requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the
business, properties or operations of the Company and the subsidiaries as a
whole.
(iv) The Selling Stockholder(s) have full legal right, power and authority
to authorize, issue, deliver and sell the Stock, and to enter into this
Agreement. This Agreement constitutes a valid and
2
<PAGE>
binding agreement, enforceable in accordance with their respective terms
(except as the enforceability thereof may be limited by bankruptcy or other
similar laws affecting the rights of creditors generally or by general
equitable principles and except as the enforcement of indemnification
provisions may be limited by federal or state securities laws).
(v) Except as disclosed in the Prospectus, the Company is not in
violation of its respective certificate or articles of incorporation or
bylaws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness or in any material
contract, indenture, mortgage, loan agreement, lease, joint venture,
partnership or other agreement or instrument to which the Company is a party
or by which it may be bound or is not in material violation of any law,
order, rule, regulation, writ, injunction or decree of any governmental
instrumentality or court, domestic or foreign; and the execution and delivery
of this Agreement and the consummation of the transaction contemplated
therein and in the Prospectus and compliance with the terms of such agreement
will not conflict with, or result in a material breach of any of the terms,
conditions or provisions of, or constitute a material default under, or
result in the imposition of any material lien, charge or encumbrance upon any
of the property or assets of the Company pursuant to, any material bond,
debenture, note or other evidence of indebtedness or any material contract,
indenture, mortgage, loan agreement, lease, joint venture, partnership or
other agreement or instrument to which the Company is a party nor will such
action result in the material violation by the Company of any of the
provisions of its respective certificate or articles of incorporation or
bylaws or any law, order, rule, regulation, writ, injunction, decree of any
government, governmental instrumentality or court, domestic or foreign,
except where such violation will not have a material adverse effect on the
financial condition of the Company.
(vi) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus and the Company will have the adjusted
capitalization set forth therein on the Closing Date; all of the shares of
issued and outstanding capital stock of the Company set forth therein have
been duly authorized, validly issued and are fully paid and nonassessable;
the holders thereof do not have any rights of rescission with respect
therefor and are not subject to personal liability for any obligations of the
Company by reason of being stockholders under the laws of the State in which
the Company is incorporated; none of such outstanding capital stock is
subject to or was issued in violation of any preemptive or similar rights of
any stockholder of the Company; and such capital stock (including the Stock)
conforms to all statements relating thereto contained in the Prospectus.
(vii) The Company is not a party to or bound by any instrument, agreement
or other arrangement providing for it to issue any capital stock, rights,
warrants, options or other securities, except for this Agreement or as
described in the Prospectus. The Stock is not and will not be subject to any
preemptive or other similar rights of any stockholder, will be validly
issued, fully paid and non-assessable and will conform to the description
thereof contained in the Prospectus; the public holders thereof will not be
subject to any liability solely as such holders; all corporate action
required to be taken for the authorization, issue and sale of the Stock, has
been duly and validly taken; and the certificates representing the Stock,
will be in due and proper form. Upon the issuance and delivery pursuant to
the terms hereof of the Stock, to be sold by the Selling Stockholder(s)
hereunder, the Underwriter will acquire good and marketable title to such
Stock free and clear of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction of any kind whatsoever other
than restrictions as may be imposed under the securities laws.
(viii) The Company has good and defensible title to all properties and
assets described in the Prospectus as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such as are described or
referred to in the Prospectus or which are not materially significant or
important in relation to its business or which have been incurred in the
ordinary course of business; except as described in the Prospectus all of the
leases and subleases under which the Company holds properties or assets as
lessee or sublessee as described in the Prospectus are in full force and
3
<PAGE>
effect, and the Company is not in material default in respect of any of the
terms or provisions of any of such leases or subleases, and no claim has been
asserted by anyone adverse to the Company's rights as lessor, sublessor,
lessee or sublessee under any of the leases or subleases mentioned above or
affecting or questioning the Company's right to the continued possession of
the leased or subleased premises or assets under any such lease or sublease;
and the Company owns or leases all such properties as are necessary to its
operations as now conducted and as contemplated to be conducted, except as
otherwise stated in the Prospectus.
(ix) The financial statements, together with related notes, set forth in
the Prospectus or incorporated by references therein, fairly present the
financial position and results of operations of the Company at the respective
dates and for the respective periods to which they apply. Said statements and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a basis which is consistent in all material
respects during the periods involved but any stub period has not been audited
by an independent accounting firm. There has been no adverse change or
development involving a prospective change in the condition, financial or
otherwise, or in the prospects, value, operation, properties, business or
results of operations of the Company whether or not arising in the ordinary
course of business, since the date of the financial statements included in
the Registration Statement and the Prospectus.
(x) Subsequent to the respective dates as of which information is given in
the Prospectus as it may be amended or supplemented, and except as described
in the Prospectus, the Company has not, directly or indirectly, incurred any
liabilities or obligations, direct or contingent, not in the ordinary course
of business or entered into any transactions not in the ordinary course of
business, which are material to the business of the Company as a whole and
there has not been any change in the capital stock of, or any incurrence of
long term debts by, the Company or any issuance of options, warrants or
rights to purchase the capital stock of the Company or declaration or payment
of any dividend on the capital stock of the Company or any material adverse
change in the condition (financial or other), net worth or results of
operations of the Company as a whole and the Company has not become a party
to, any material litigation whether or not in the ordinary course of
business.
(xi) Other than stated in the registration statement and prospectus, there
is no pending or threatened, action, suit or proceeding to which the Company
is a party before or by any court or governmental agency or body, which might
result in any material adverse change in the condition (financial or other),
business or prospects of the Company as a whole or might materially and
adversely affect the properties or assets of the Company as a whole nor are
there any actions, suits or proceedings against the Company related to
environmental matters or related to discrimination on the basis of age, sex,
religion or race; and no labor disturbance by the employees of the Company
individually exists or is, to the knowledge of the Company, imminent which
might be expected to materially and adversely affect the conduct of the
business, property, operations, financial condition or earnings of the
Company as a whole.
(xii) Except as may be disclosed in the Prospectus, the Company has
properly prepared and filed all necessary federal, state, local and foreign
income and franchise tax returns, has paid all taxes shown as due thereon,
has established adequate reserves for such taxes which are not yet due and
payable, and does not have any tax deficiency or claims outstanding, proposed
or assessed against it.
(xiii) The Company has sufficient licenses, permits, right to use trade
or service marks and other governmental authorizations currently required for
the conduct of its business as now being conducted and as contemplated to be
conducted and the Company is in all material respects complying therewith.
Except as set forth in the Prospectus, the expiration of any such licenses,
permits, or other governmental authorizations would not materially affect the
Company's operations. To its knowledge, none of the activities or businesses
of the Company are in material violation of, or cause the Company to
materially violate any law, rule, regulations, or order of the United States,
any state, county or locality, or of any agency or body of the United States
or of any state, county or locality.
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(xiv) Neither the Selling Stockholder(s) nor the Company have at any time
(i) made any contributions to any candidate for political office in violation
of law, or failed to disclose fully any such contribution, or (ii) made any
payment to any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasipublic duties, other than
payments required or allowed by applicable law.
(xv) On the closing date, all transfer or other taxes (other than income
taxes) which may be required to be paid in connection with the sale and
issuance of the Stock will have been fully paid or provided for by the
Selling Stockholder(s) and all laws imposing such taxes will have been fully
complied with.
(xvi) Except as set forth in the Prospectus neither the Selling
Stockholders nor the Company knows of any outstanding claims for services
either in the nature of a finder's fee, brokerage fee or otherwise with
respect to this financing for which the Selling Stockholder or the
Underwriter may be responsible, or which may affect the Underwriter's
compensation as determined by the National Association of Securities Dealers,
Inc. ("NASD") except as otherwise disclosed in the Prospectus or known by the
Underwriter.
(xvii) The Company has its property adequately insured against loss or
damage by fire and maintains such other insurance as is customarily
maintained by companies in the same or similar business.
(xviii) Except as set forth in the Prospectus, no default exists in the
due performance and observance of any term, covenant or condition of any
license, contract, indenture, mortgage, installment sale agreement, lease,
deed of trust, voting trust agreement, stockholders agreement, note, loan or
credit agreement, purchase order, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement
or instrument to which the Company is a party or by which the Company may be
bound or to which the property or assets (tangible or intangible) of the
Company is subject or affected.
(xix) The Company has generally enjoyed a satisfactory employer-employee
relationship with its employees and, to the best of its knowledge, is in
substantial compliance in all material respects with all federal, state,
local, and foreign laws and regulations respecting employment and employment
practices, terms and conditions of employment and wages and hours. There are
no pending investigations involving the Company, by the U.S. Department of
Labor, or any other governmental agency responsible for the enforcement of
such federal, state, local, or foreign laws and regulations. There is no
unfair labor practice charge or complaint against the Company pending before
the National Labor Relations Board or any strike, picketing, boycott,
dispute, slowdown or stoppage pending or threatened against or involving the
Company, or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of the Company, and
no collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
or threatened under any expired or existing collective bargaining agreements
of the Company. No labor dispute with the employees of the Company exists,
or, is imminent; and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors which may result in any material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs, position, prospects, value, operation, properties, business or
results of operations of the Company.
(xx) Except as may be set forth in the Registration Statement, the Company
does not maintain, sponsor or contribute to any program or arrangement that
is an "employee pension benefit plan," an "employee welfare benefit plan," or
a "multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") ("ERISA Plans"). The Company does not maintain or
contribute, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue
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Code (the "Code"), which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each
ERISA Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service
with respect to each ERISA Plan which is intended to comply with Code Section
401(a), stating that such ERISA Plan and the attendant trust are qualified
thereunder. The Company has never completely or partially withdrawn from a
"multiemployer plan."
(xxi) None of the Selling Stockholder(s) and the Company, or any of its
employees, directors, stockholders, or affiliates (within the meaning of the
Rules and Regulations) has taken or will take, directly or indirectly, any
action designed to or which has constituted or which might be expected to
cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Stock or otherwise. In addition and in order to comply
with the provisions of Section 10b-6 and 10b-7 of the Securities Exchange Act
of 1934, none of the foregoing persons will not until advised by the
Underwriter in writing or by wire that the offering has been distributed and
closed, bid for purchase Securities in the open market or otherwise make an
attempt to induce others to purchase the Securities in the open market.
(xxii) Except as disclosed in the registration statement and prospectus
none of the patents, patent applications, trademarks, service marks, trade
names, copyrights, and licenses and rights to the foregoing presently owned
or held by the Company, are in dispute or, to the best knowledge of the
Company's management are in any conflict with the right of any other person
or entity. The Company (i) except as disclosed in the Prospectus owns or has
the right to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be
conducted without infringing upon or otherwise acting adversely to the right
or claimed right of any person, corporation or other entity under or with
respect to any of the foregoing, and (ii) except as set forth in the
Prospectus or otherwise disclosed to the Underwriter in writing, to the best
knowledge of the Company's management is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner or licensee of, or other claimant to, any patent, trademark, service
mark, trade name, copyright, know-how, technology or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business or otherwise.
(xxiii) Except as disclosed in the Prospectus the Company owns and has the
unrestricted right to use to the best knowledge of the Company's management
all trade secrets, know-how (including all other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
inventions, designs, processes, works of authorship, computer programs and
technical data and information (collectively herein "intellectual property")
required for or incident to the development, manufacture, operation and sale
of all products and services sold or proposed to be sold by the Company, free
and clear of and without violating any right, lien, or claim of others,
including without limitation, former employers of its employees; provided,
however, that the possibility exists that other persons or entities,
completely independently of the Company or its employees or agents, could
have developed trade secrets or items of technical information similar or
identical to those of the Company. The Company is not aware of any such
development of similar or identical trade secrets or technical information by
others. The Company has valid and binding confidentiality agreements with all
of its officers, directors, employees and consultants covering its
intellectual property (subject to the equitable powers of any court), which
agreements have remaining terms of at least two years from the effective date
of the Registration Statement except where the failure to have such
agreements would not materially and adversely effect the Company's business
taken as a whole. The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
stated in the Prospectus, to be owned or leased by it free and clear of all
liens, charges, claims, encumbrances, pledges, security interests, defects,
or other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
(xxiv) Coopers & Lybrand, L.L.P., whose report is filed with the
Commission as a part of the Registration Statement, are independent certified
public accountants as required by the Act and the Rules and Regulations.
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(xxv) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which the Company has agreed not to,
directly or indirectly, sell, assign, transfer, or otherwise dispose of any
shares of Common Stock or securities convertible into, exercisable or
exchangeable for or evidencing any right to purchase or subscribe for any
shares of Common Stock (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) for a period of not less than 12 months following
such effective date without the prior written consent of the Underwriter
except in connection with acquisitions or pursuant to warrants and options
immediately outstanding prior to the closing.
(xxvi) The Registered Securities have been approved for listing on the
American Stock Exchange.
(xxvii) Except as set forth in the Prospectus or disclosed in writing to
the Underwriter (which writing specifically refers to this Section), no
officer or director of the Company, holder of 2% or more of securities of the
Company or any "affiliate" or "associate" (as these terms are defined in Rule
405 promulgated under the Rules and Regulations) of any of the foregoing
persons or entities has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold
by the Company, or (B) purchases from or sells or furnishes to the Company
any goods or services, or (ii) a beneficiary interest in any contract or
agreement to which the Company is a party or by which it may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions"
or disclosed in writing to the Underwriter (which writing specifically refers
to this Section) there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company, and any
officer, director, principal stockholder of the Company, or any partner,
affiliate or associate of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company, and
delivered to the Underwriter or to the Underwriter's counsel (as defined
herein) shall be deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
(xxix) Each of the minute books of the Company has been made available to
the Underwriter and contains a complete summary of all meetings and actions
of the directors and stockholders of the Company, for the period requested by
the Underwriter and reflect all transactions referred to in such minutes
accurately in all respects.
(xxx) Except and only to the extent described in the Prospectus or
disclosed in writing to the Underwriter (which writing specifically refers to
this Section), no holders of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company have
the right to include any securities issued by the Company in the Registration
Statement or any registration statement to be filed by the Company or to
require the Company to file a registration statement under the Act and no
person or entity holds any anti-dilution rights with respect to any
securities of the Company. Except as disclosed in the Prospectus, all rights
so described or disclosed have been waived or have not been triggered with
respect to the transactions contemplated by this Agreement.
(xxxi) The Company has not entered into any employment agreements with
members of management, except as disclosed in the Prospectus.
(xxxii) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic
or foreign, is required for the issuance of the Registered Stock pursuant to
the Prospectus and the Registration Statement, the performance of this
Agreement and the transactions contemplated hereby, including without
limitation, any waiver of any preemptive, first refusal or other rights that
any entity or person may have for the issue and/or sale of any of the Stock,
except such as have been or may be obtained under the Act or otherwise or may
be required under state securities or blue sky laws in connection with the
Underwriter's purchase and distribution of the Stock.
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(xxxiii) All executed agreements, contracts or other documents or copies
of executed agreements, contracts or other documents filed or incorporated by
reference as exhibits to the Registration Statement to which the Company is a
party or by which it may be bound or to which its assets, properties or
businesses may be subject have been duly and validly authorized, executed and
delivered by the Company and constitute the legal, valid and binding
agreements of the Company, enforceable against the Company, in accordance
with their respective terms. The descriptions in the Registration Statement
of agreements, contracts and other documents are accurate and fairly present
the information required to be shown with respect thereto by Form S-3, and
there are no contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to the
Registration Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(xxxiv) Within the past five (5) years, none of the Company's independent
public accountants has brought to the attention of the Company's management
any "material weakness" as defined in the Statement of Auditing Standard
No. 60 in any of the Company's internal controls.
4. Covenants of the Company. The Selling Stockholders and the Company
covenant and agree with you that:
(a) They will cooperate in all respects in making the Prospectus effective
and will not at any time, whether before or after the effective date, file
any amendment to or supplement to the Prospectus of which you shall not
previously have been advised and furnished with a copy or to which you or
your counsel shall have reasonably objected or which is not in compliance
with the Act and the Rules and Regulations or applicable state law.
As soon as the Company is advised thereof, the Company will advise you,
and confirm the advice in writing, of the receipt of any comments of the
Commission or any state securities department, when the Registration
Statement becomes effective if the provisions of Rule 430A promulgated under
the Act will be relied upon, when the Prospectus has been filed in accordance
with said Rule 430A, of the effectiveness of any posteffective amendment to
the Registration Statement or Prospectus, or the filing of any supplement to
the Prospectus or any amended Prospectus, of any request made by the
Commission or any state securities department for amendment of the Prospectus
or for supplementing of the Prospectus or for additional information with
respect thereto, of the issuance of any stop order suspending the
effectiveness of the Prospectus or any order preventing or suspending the use
of any Prospectus or any order suspending trading in the Common Stock of the
Company, or of the suspension of the qualification of the Securities for
offering in any jurisdiction, or of the institution of any proceedings for
any such purposes, and will use its best efforts to prevent the issuance of
any such order and, if issued, to obtain as soon as possible the lifting or
dismissal thereof.
The Company has caused to be delivered to you copies of such Prospectus,
and the Company has consented and hereby consents to the use of such copies
for the purposes permitted by law. The Company authorizes you and the dealers
to use the Prospectus and such copies of the Prospectus in connection with
the sale of the Securities for such period as in the opinion of your counsel
and our counsel the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. The Company will prepare
and file with the states, promptly upon your request, any such amendments or
supplements to the Prospectus, and take any other action, as, in the opinion
of your counsel, may be necessary or advisable in connection with the sale of
the Securities and will use its best efforts to cause the same to become
effective as promptly as possible.
The Company shall file the Prospectus (in form and substance satisfactory
to the Underwriter) or transmit the Prospectus by a means reasonably
calculated to result in filing with the Commission pursuant to rule 424(b)(1)
or pursuant to Rule 424(b)(3) not later than the Commission's close of
business on the earlier of (i) the second business day following the
execution and delivery of this Agreement, and (ii) the fifth business day
after the effective date of the Registration Statement.
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In case of the happening, at any time within such period as a Prospectus
is required under the Act to be delivered in connection with the sale of the
Securities, of any event of which the Company has knowledge and which
materially affects the Company, or the securities thereof, and which should
be set forth in an amendment of or a supplement to the Prospectus in order to
make the statements therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required under the Act
to be delivered, or in case it shall be necessary to amend or supplement the
Prospectus to comply with the Act, the Rules and Regulations or any other
law, the Company will forthwith prepare and furnish to you copies of such
amended Prospectus or of such supplement to be attached to the Prospectus, in
such quantities as you may reasonably request, in order that the Prospectus,
as so amended or supplemented, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances under which they are made. The preparation and
furnishing of any such amendment or supplement to the Prospectus or
supplement to be attached to the Prospectus shall be without expense to you.
The Selling Stockholders and the Company will to the best of their ability
comply with the Act, the Exchange Act and applicable state securities laws so
as to permit the offer and sales of the Stock under the Act, the Rules and
Regulations, and applicable state securities laws.
(b) It will cooperate to qualify the Stock for sale under the securities
laws of such jurisdictions as you may designate and will make such
applications and furnish such information as may be required for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or a dealer in securities. The Company will, from time to time,
prepare and file such statements and reports as are or may be required to
continue such qualification in effect for so long as the Underwriter may
reasonably request.
(c) So long as any of the Stock remain outstanding in the hands of the
public, the Company, at its expense, will annually furnish to its
stockholders a report of its operations to include financial statements
audited by independent public accountants, and will furnish to the
Underwriter as soon as practicable after the end of each fiscal year, a
balance sheet of the Company as at the end of such fiscal year, together with
statements of operations, stockholders' equity, and changes in cash flow of
the Company for such fiscal year, all in reasonable detail and accompanied by
a copy of the certificate or report thereon of independent public
accountants.
(d) It will deliver to you at or before the Closing Date two signed copies
of the Registration Statement including all financial statements and
requested exhibits filed therewith, whether or not incorporated by reference.
The Company will deliver to you, from time to time until the effective date
of the Prospectus, as many copies of the Prospectus as you may reasonably
request. The Company will deliver to you on the effective date of the
Prospectus and thereafter for so long as a Prospectus is required to be
delivered under the Act and the Rules and Regulations as many copies of the
Prospectus, in final form, or as thereafter amended or supplemented, as you
may from time to time reasonably request.
(e) As soon as it is practicable, but in any event not later than the
first (1st) day of the fifteenth (15th) full calendar month following the
effective date of the Registration Statement, the Company will make available
to its security holders and the Underwriter an earnings statement (which need
not be audited) covering a period of at least twelve (12) consecutive months
beginning after the effective date of the Registration Statement, which shall
satisfy the requirements of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations.
(f) As reimbursement for the Underwriter's nonaccountable expenses
relating to the transactions contemplated hereby, the Selling Stockholder(s)
shall pay to the Underwriter at the closing date, and to be
deducted from the purchase price for the Stock, an amount equal to three
percent (3%) of the gross proceeds received by the Selling Stockholder(s)
from the sale of the Stock at such closing date less the sum of $10,000
previously paid by the Selling Stockholder. The Company agrees to reimburse
the selling shareholders one half of the 3% but not to exceed $40,000. If the
sale of the Stock by the Underwriter is not consummated for any reason not
attributable to the Underwriter, or if (i) the Company withdraws the
Registration Statement from
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the Commission or does not proceed with the public offering, or (ii) the
representations in Section 3 hereof are not correct or the covenants cannot
be complied with, or (iii) there has been a materially adverse change in the
condition, prospects or obligations of the Company or a materially adverse
change in stock market conditions from current conditions, all as determined
by the Underwriter, then the Selling Stockholder's shall reimburse the
Underwriter for their out of pocket expenses including without limitation,
legal fees and disbursements all on an accountable basis up to $15,000
maximum.
(g) The Company or any shareholder who enters into an agreement referred
to in Section 3(a)(xxv), shall not, without the Underwriter's prior written
consent, sell or offer to sell any shares of Common Stock for twelve (12)
months after the effective date including other equity securities or warrants
or options to purchase any shares of Common Stock or equity securities.
(h) During a date five years after the date hereof, the Company will make
available to its stockholders, as soon as practicable, and deliver to the
Underwriter:
(i) as soon as they are available, copies of all reports (financial or
other) mailed to stockholders;
(ii) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission or any
securities exchange;
(iii) every press release and every material news item or article of
interest to the financial community in respect of the Company or its
affairs which was released or prepared by or on behalf of the Company; and
(iv) any additional information of a public nature concerning the
Company (and any future subsidiaries) or its businesses which the
Underwriter may request.
During such five-year period, if the Company has active subsidiaries, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will continue to maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
(j) The Company will furnish to the Underwriter or on the Underwriter's
order, without charge, at such place as the Underwriter may designate, copies
of each Preliminary Prospectus, the Registration Statement and any pre-
effective or post-effective amendments thereto (two of which copies will be
signed and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any
prospectus prepared after the effective date of the Registration Statement,
in each case as soon as available and in such quantities as the Underwriter
may request.
(k) Neither the Selling Stockholders nor Company nor any of its officers,
directors, stockholders or any of its affiliates will take, directly or
indirectly, any action designed to, or which might in the future reasonably
be expected to cause or result in stabilization or manipulation of the price
of any of the Company's securities and the Selling Stockholders will execute
a document giving effect to the foregoing.
(l) The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the Exchange
Act, and the Rules and Regulations, and all such reports, forms and documents
filed will comply as to form and substance with the applicable requirements
under the Act, the Exchange Act, and the Rules and Regulations.
(m) The Company shall cause the Stock to be appropriately listed on the
American Stock Exchange.
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(n) Until the completion of the distribution of the Securities, the
Company shall not without the prior written consent of the Underwriter and
its counsel, issue, directly or indirectly, any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
5. Conditions of the Underwriter's Obligations. The obligation of the
Underwriter to offer and sell the Stock is subject to the accuracy (as of the
date hereof, the Closing Date) of and compliance with the representations and
warranties of the Company to the performance by it of its agreement and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective as and when
cleared by the Commission, and you shall have received notice thereof; on or
prior to any closing date no stop order suspending the effectiveness of the
Prospectus shall have been issued and no proceedings for that or similar
purpose shall have been instituted or shall be pending, or, to your knowledge
or to the knowledge of the Company, shall be contemplated by the Commission;
any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
Underwriter; and qualification, under the securities laws of such states as
you may designate, of the issue and sale of the Securities upon the terms and
conditions herein set forth or contemplated and containing no provision
unacceptable to you shall have been secured, and no stop order shall be in
effect denying or suspending effectiveness of such qualification nor shall
any stop order proceedings with respect thereto be instituted or pending or
threatened under such law.
(b) On the closing date and, with respect to the letter referred to in
subparagraph (iii), as of the date hereof, you shall have received:
(i) the opinion, together with such number of signed or photostatic
copies of such opinion as you may reasonably request, addressed to you by
Hinckley, Allen & Snyder, securities counsel for the Company, in form and
substance satisfactory to the Underwriter and William M. Prifti, Esq.,
counsel to the Underwriter, dated such closing date, to the effect that:
(A) The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the
jurisdiction in which it is incorporated and has all necessary
corporate power and authority to carry on its business as described in
the Prospectus.
(B) The Company is qualified to do business in each jurisdiction
in which conducting its business requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the Company's business or assets.
(C) The Company has the full corporate power and authority to
enter into this Agreement and to consummate the transactions provided
for therein and such Agreement has been duly and validly authorized,
executed and delivered by the Company. This Agreement, assuming due
authorization, execution and delivery by each other party thereto,
constitutes a legal, valid and binding agreement of the Selling
Stockholders and the Company enforceable against each in accordance
with its terms, subject to bankruptcy, insolvency or similar laws
governing the rights of creditors and to general equitable principles,
and provided that no opinion need be given as to the enforceability of
any indemnification or contribution provisions, and none of the
Selling Stockholder(s) or the Company's execution or delivery of this
Agreement its performance hereunder or thereunder, its consummation of
the transaction contemplated herein or therein, or the conduct of its
business as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any material breach or
violation of any of the terms or provisions of, or constitutes or will
constitute a material default under, or result in the creation or
11
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imposition of any material lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of (A) the articles of incorporation or by-laws
of the Company, (B) to the knowledge of such counsel, any material
license, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders' agreement, note, loan or credit agreement or
any other agreement or instrument to which the Company is a party or
by which it is or may be bound, or (C) to the knowledge of such
counsel, any statute, judgment, decree, order, rule or regulation
applicable to the Company, whether domestic or foreign.
(D) The Company had authorized and outstanding capital stock as
set forth in the Prospectus under the heading "Capitalization" as of
the date set forth therein, and all of such issued and outstanding
shares of capital stock have been duly and validly authorized and
issued, and to the knowledge of such counsel are fully paid and
nonassessable, and no stockholder of the Company is entitled to any
preemptive rights to subscribe for, or purchase shares of the capital
stock. The purchasers from the Selling Stockholder(s) of such capital
stock are not and will not be subject to personal liability for
obligations of the Company, by reason of being stockholders, under the
laws of the jurisdiction in which it is incorporated, and to the
knowledge of such counsel none of such securities were issued in
violation of the preemptive rights of any holders of any securities of
the Company.
(E) To the knowledge of such counsel, the Company is not a party
to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options
or other securities, except for this Agreement and except as described
in the Prospectus. The Stock and all other securities issued or
issuable by the Company as of the date of this Agreement conform in
all material respects to all statements with respect thereto contained
in the Registration Statement and the Prospectus. The Stock to be sold
by the Selling Stockholder(s) hereunder are not and will not be
subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof will be validly issued, fully paid
and non-assessable and conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any
liability solely as such holders; all corporate action required to be
taken for the authorization, issue and sale of the Stock has been duly
and validly taken; and the certificates representing the Stock are in
due and proper form. Upon payment for and delivery of the Stock, with
all necessary endorsements and in accordance with the terms of this
Agreement, and assuming the Underwriter is acquiring the Stock in good
faith without notice of any adverse claim, the Underwriter will be the
owner of the Stock free and clear of any adverse claim.
(F) The specimen forms of certificates evidencing the Stock are
in due and proper form under Massachusetts law; provided herein, will
be duly and validly issued, fully paid and nonassessable.
(G) To the knowledge of such counsel, there are no claims, suits
or other legal proceedings pending or threatened against the Company
in any court or before or by any governmental body which might
materially affect the business of the Company or the financial
condition of the Company as a whole, except as set forth in or
contemplated by the Prospectus.
(H) Based on oral and/or written advice from the staff of the
Commission, the Registration Statement has become effective and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Prospectus is in effect and no proceedings for
that purpose are pending before, or threatened by, federal or by a
state securities administrator.
12
<PAGE>
(I) To the knowledge of such counsel, there are no legal or
governmental proceedings, actions, arbitrations, investigations,
inquiries or the like pending or threatened against the Company of a
character required to be disclosed in the Prospectus which have not
been so disclosed, questions the validity of the capital stock of the
Company or this Agreement or might adversely affect the condition,
financial or otherwise, or the prospects of the Company or which could
adversely affect the Company's ability to perform any of its
obligations under this Agreement.
(J) To such counsel's knowledge, there are no material
agreements, contracts or other documents known to such counsel
required by the Act to be described in the Registration Statement and
the Prospectus and filed as exhibits to the Registration Statement (or
required to be filed under the Exchange Act if upon such filing they
would be incorporated, in whole or in part, by reference therein)
other than those described in the Registration Statement and the
Prospectus and filed as exhibits thereto, and to such counsel's
knowledge (A) the exhibits which have been filed are correct copies of
the documents of which they purport to be copies; (B) the descriptions
in the Registration Statement and the Prospectus and any supplement or
amendment thereto of contracts and other documents to which the
Company is a party or by which it is bound, including any document to
which the Company is a party or by which it is bound incorporated by
reference into the Prospectus and any supplement or amendment thereto,
are accurate in all material respects and fairly represent the
information required to be shown by Form S-3.
(K) No consent, approval, order or authorization from any
regulatory board, agency or instrumentality having jurisdiction over
the Company, or its properties (other than registration under the Act
or qualification under state or foreign securities laws) is required
for the valid authorization, issuance, sale and delivery of the Stock
except from the American Stock Exchange.
Such counsel shall also state that it has participated in the
preparation of the Registration Statement and Prospectus and, although
such counsel has not independently verified the accuracy and completeness
of the information contained therein, nothing has come to such counsel's
attention which causes such counsel to believe that the Registration
Statement (other than the financial statements together with related
notes, and other financial and statistical data contained in the
Registration Statement or omitted therefrom, as to which such counsel need
express no opinion) on the date it became effective and on the date of
such opinion contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary, in light
of the circumstances under which they were made, to make the statements
therein not misleading, or that the Prospectus (other than the financial
statements together with related notes, and other financial and
statistical data contained in the Prospectus or omitted therefrom, as to
which such counsel need express no opinion), as amended or supplemented,
contains on the date it became effective and on the date of such opinion
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary, in light of the circumstances
under which they were made, in order to make the statements therein not
misleading.
Such opinion shall also cover such other matters incident to the
transactions contemplated hereby and the offering Prospectus as you or
counsel to the Underwriter shall reasonably request. In rendering such
opinion, to the extent deemed reasonable by them, such counsel may rely
upon certificates of any officer of the Company or public officials as to
matters of fact of which the maker of such certificate has knowledge.
(ii) a certificate, signed by the Chief Executive Officer and the
Principal Financial or Accounting Officer of the Company dated the Closing
Date, to the effect that with regard to the Company, each of the conditions
set forth in Section 5(d) have been satisfied.
13
<PAGE>
(iii) a letter, addressed to the Underwriter and in form and substance
satisfactory to the Underwriter in all respects (including the nonmaterial
nature of the changes or decreases, if any, referred to in clause (D) below),
from Coopers & Lybrand, LLP, dated, respectively, as of the effective date of
the Registration Statement and as of the Closing Date, as the case may be:
(A) Confirming that they are independent public accountants with
respect to the Company and its consolidated subsidiaries, if any,
within the meaning of the Act and the applicable published Rules and
Regulations.
(B) Stating that, in their opinion, the financial statements,
related notes and schedules of the Company and its consolidated
subsidiaries, if any, included in the Registration Statement
examined by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the published
Rules and Regulations thereunder.
(C) Stating that, with respect to the period from December 31,
1994, to a specified date (the "specified date") not earlier than
five (5) business days prior to the date of such letter, they have
read the minutes of meetings of the stockholders and board of
directors (and various committees thereof) of the Company and its
consolidated subsidiaries, if any, for the period from December 31,
1994 through the specified date, and made inquiries of officers of
the Company and its consolidated subsidiaries, if any, responsible
for financial and accounting matters and, especially as to whether
there was any decrease in sales, income before extraordinary items
or net income as compared with the corresponding period in the
preceding year; or any change in the capital stock of the Company or
any change in the longterm debt or any increase in the shortterm
bank borrowings or any decrease in net current assets or net assets
of the Company or of any of its consolidated subsidiaries, if any,
and further stating that while such procedures and inquiries do not
constitute an examination made in accordance with generally accepted
auditing standards, nothing came to their attention which caused
them to believe that during the period from December 31, 1994,
through the specified date there were any decreases as compared with
the corresponding period in the preceding year in sales, income
before extraordinary items or net income; or any change in the
capital stock of the Company or consolidated subsidiary, if any, or
any change in the longterm debt or any increase in the shortterm
bank borrowings (other than any increase in shortterm bank
borrowings in the ordinary course of business) of the Company or any
consolidated subsidiary, if any, or any decrease in the net current
assets or net assets of the Company or any consolidated subsidiary,
if any; and
(D) stating that they have carried out certain specified
procedures (specifically set forth in such letter or letters) as
specified by the Underwriter (after consultations with Coopers &
Lybrand LLP, relating to such procedures), not constituting an
audit, with respect to certain tables, statistics and other
financial data in the Prospectus specified by the Underwriter and
such financial data not included in the Prospectus but from which
information in the Prospectus is derived, and which have been
obtained from the general accounting records of the Company or
consolidated subsidiaries, if any, or from such accounting records
by analysis or computation, and having compared such financial data
with the accounting records of the Company or the consolidated
subsidiaries, if any, stating that they have found such financial
data to agree with the accounting records of the Company.
(c) All corporate proceedings and other legal matters relating to this
Agreement, the Prospectus and other related matters shall be satisfactory to
or approved by counsel to the Underwriter and you shall have received from
Hinckley, Allen & Snyder, a signed opinion dated as of each closing date,
with respect to the incorporation of the Company, the validity of the Stock,
the form of the Prospectus, (other than the financial statements together
with related notes and other financial and statistical data contained in the
Prospectus or omitted therefrom, as to which such counsel need express no
opinion), the execution of this Agreement and other related matters as you
may reasonably require.
14
<PAGE>
(d) At any closing date, (i) the representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects with the same effect as if made on and as of such closing date; (ii)
the Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations and in all material respects conform to the
requirements thereof, and neither the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary,
in light of the circumstances under which they were made, in order to make
the statements therein not misleading; (iii) there shall have been since the
respective dates as of which information is given no material adverse change
in the business, properties or condition (financial or otherwise), results of
operations, capital stock, longterm debt or general affairs of the Company
from that set forth in the Prospectus, except changes which the Prospectus
indicates might occur after the effective date of the Prospectus, and the
Company shall not have incurred any material liabilities or material
obligations, direct or contingent, or entered into any material transaction,
contract or agreement not in the ordinary course of business other than as
referred to in the Prospectus and which would be required to be set forth in
the Prospectus; and (iv) except as set forth in the Prospectus, no action,
suit or proceeding at law or in equity shall be pending or threatened against
the Company which would be required to be set forth in the Prospectus, and no
proceedings shall be pending or threatened against the Company or any
subsidiary before or by any commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business, property,
condition (financial or otherwise), results of operations or general affairs
of the Company.
(e) On or before the Closing Date, the Stock of the Selling Stockholders
shall have been duly approved for listing on the American Stock Exchange.
(f) On or before the Closing Date, there shall have been delivered to
the Underwriter the Lock-up Agreement required to be delivered pursuant to
Section 3(a)(xxv), in form and substance satisfactory to the Underwriter and
Underwriter's counsel.
If any condition to the Underwriter's obligations hereunder to be
fulfilled prior to or at the Closing Date is not so fulfilled, the
Underwriter may terminate this Agreement or, if the Underwriter so elects, it
may waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
6. Conditions of the Selling Stockholders and Company's Obligations. The
obligation of the Selling Stockholder(s) to sell and deliver the Stock is
subject to the following:
(a) The provisions regarding the effective date, as described in Section
10.
(b) At the Closing Date, no stop order suspending the effectiveness of the
Prospectus shall have been issued under the Act or any proceedings therefor
initiated or threatened by the Commission or by any state securities
department.
(c) Tender of payment by the Underwriter in accord with Section 2 hereof.
(d) Tender of certificate(s) of Common Stock freely transferable and
negotiable.
7. Indemnification.
(a) The Selling Stockholder(s) and the Company agrees to indemnify and hold
harmless the Underwriter and its employees and each person, if any, who
controls you within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several (which shall, for any purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which each Underwriter or such
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission
15
<PAGE>
or alleged omission made in the Prospectus, or such amendment or supplement
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, which is in reliance upon and in conformity
with written information furnished by the Selling Stockholder or the Company to
you specifically for use in the preparation thereof, and provided further that
the indemnity agreement contained in this subsection (a) shall not inure to the
benefit of you with respect to any person asserting any such loss, claim,
damage or liability who has purchased the Stock which are the subject thereof
if you or any participants failed to send or give a copy of the Prospectus to
such person at or prior to the written confirmation of the sale of such Stock
to such person.
(b) Each Underwriter will indemnify and hold harmless the Selling
Stockholder and the Company, each of its directors, each of its officers, each
person, if any, who controls the Company within the meaning of the Act against
any losses, claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees) to which the Company or any
such director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission was made in the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Selling Stockholder and the Company by you
specifically for use in the preparation thereof. This indemnity will be in
addition to any liability which any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party, similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel 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, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel satisfactory to the indemnified party; provided that,
if the indemnified party is you or a person who controls you, the fees and
expenses of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in writing
by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both you or such controlling person
and the indemnifying party and you or such controlling person shall have been
advised by such counsel that there is a conflict of interest which would
prevent counsel for the indemnifying party from representing the indemnifying
party and you or such controlling person (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of you
or such controlling person, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction or which are
consolidated into the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for you and all such controlling
persons, which firm shall be designated in writing by you). No settlement of
any action against an indemnified party shall be made without the consent of
the indemnified party, which shall not be unreasonably withheld in light of all
factors of importance to such indemnified party.
16
<PAGE>
8. Contribution. In order to provide for just and equitable contribution
under the Act in any case in which (i) the indemnifying party makes a claim for
indemnification pursuant to Section 7 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 7 provide for
indemnification in such case, or (ii) contribution under the Act may be
required on the part of the Underwriters, then the Selling Stockholder(s) and
the Company and the Underwriters in the aggregate shall contribute to the
aggregate losses, claims, damages, or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees) in either
such case (after contribution from others) in such proportions that the
Underwriters are responsible in the aggregate for that portion of such losses,
claims, damages or liabilities determined by multiplying the total amount of
such losses, claims, damages or liabilities times the difference between the
public offering price and the commission to the Underwriter and dividing the
product thereof by the public offering price, and the Selling Stockholder(s)
and the Company, if applicable, shall be responsible for that portion of such
losses, claims, damages or liabilities times the commission to the Underwriters
and dividing the product thereof by the public offering price; provided,
however, that the Underwriters shall not be required to so contribute any
amount in excess of the underwriting discount applicable to the Securities
purchased by the Underwriters hereunder if such allocation is not permitted by
applicable law, then the relative fault of the Selling Stockholder(s) and the
Company and the Underwriters in connection with the statements or omissions
which resulted in such damages and other relevant equitable considerations
shall also be considered. No person guilty of a fraudulent misrepresentation
(within the meaning of Section 12(2) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. The foregoing contribution agreement shall in no way affect
the contribution liabilities of any person having liability under Section 12 of
the Act other than the Selling Stockholder(s) and the Company and the
Underwriter. As used in this paragraph, the term "Underwriter" includes any
person who controls the Underwriters within the meaning of Section 15 of the
Act. If the full amount of the contribution specified in this paragraph is not
permitted by law, then any Underwriter and each person who controls any
Underwriter shall be entitled to contribution from the Company, to the full
extent permitted by law.
9. Costs and Expenses. Subject to the provisions of Section 4(f) the Company
will pay all costs and expenses incident to the performance of this Agreement
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the
Registration Statement and Prospectus (including the fee of the Commission, any
securities exchange and the NASD in connection with the filing required by the
NASD relating to the offering of the Stock contemplated hereby); all expenses,
including fees of counsel, which shall be due and payable on the Closing Date
in connection with the qualification of the Stock under the state securities or
blue sky laws; the cost of furnishing to you copies of the Prospectus, this
Agreement, the cost of printing the certificates representing the Stock and of
preparing and photocopying the Underwriting Agreement, the cost of three
underwriter's bound volumes, any advertising costs and expenses, including but
not limited to the "road show" information meetings and presentations,
(except that the underwriter will bear its own costs with respect to such
meetings, including the cost of airfare, food and lodging) any advertisements
printed in connection with the sale of the Stock, prospectus memorabilia, issue
and transfer taxes, if any. The Company will also pay all costs and expenses
incident to the furnishing of any amended Prospectus of or any supplement to be
attached to the Prospectus.
10. Effective Date. This Agreement shall become effective at 10:00 p.m. New
York time on the next full business day following the effective date of the
Registration Statement, or at such other time after the effective date of the
Prospectus as you in your discretion shall first commence the public offering
of any of the Securities covered thereby, provided, however, that at all times
the provisions of Sections 7, 8, 9 and 11 shall be effective.
17
<PAGE>
11. Termination.
(a) This Agreement, may be terminated at any time prior to the Closing Date
by you if in your judgment it is impracticable to offer for sale or to enforce
contracts made by you for the sale of the Securities agreed to be sold
hereunder by reason of (i) the Company as a whole having sustained a material
loss, whether or not insured, by reason of fire, earthquake, flood, accident or
other calamity, or from any labor dispute or court or government action, order
or decree, (ii) trading in securities of the Company having been suspended by a
state securities administrator or by the Commission, (iii) material
governmental restrictions having been imposed on trading in securities
generally (not in force and effect on the date hereof) or trading on the New
York Stock Exchange, American Stock Exchange, Boston Stock Exchange or in the
over-the-counter market shall have been suspended, (iv) a banking moratorium
having been declared by federal or New York State authorities, (v) an outbreak
or escalation of hostilities or other national or international calamity having
occurred, (vi) the passage by the Congress of the United States or by any state
legislative body, of any act or measure, or the adoption of any orders, rules
or regulations by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is believed likely by
you to have a material impact on the business, financial condition or financial
statements of the Company; or (vii) any material adverse change having
occurred, since the respective dates as of which information is given in the
Prospectus, in the condition, financial or otherwise, of the Company as a
whole, whether or not arising in the ordinary course of business, (viii) James
J. Manfield, Jr. ceases to be employed by the Company in his present
capacity; (ix) the Securities are not listed on the American Stock Exchange.
(b) If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11 or in Section 10, the
Selling Stockholder(s) and the Company shall be promptly notified by you, by
telephone or telegram, and confirmed by letter.
12. Representations, Warrants and Agreements to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company (or its officers) and the Underwriter set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriter, the
Selling Stockholders and the Company, or any of their officers or directors and
will survive delivery of and payment for the Securities.
13. Notices. All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to you, will be mailed, delivered
or telephoned and confirmed to you at Schneider Securities, Inc., 104 Broadway,
Denver, CO 80203, Attention: Thomas J. O'Rourke, President; if to the Company
at 1 Forbes Road, Newmarket, New Hampshire 03857, Attention: James J.
Manfield, Jr. Chairman, and to New England Growth Fund I, L.P., 313 Congress
Street, Boston, MA 02210, Attention: John F. Rousseau, Principal.
14. Parties at Interest. This Agreement is made solely for the benefit of
the Underwriter(s), and the Company, and their respective controlling persons,
directors and officers, and their respective successors, assigns, executors and
administrators. No other person shall acquire or have any right under or by
virtue of this Agreement.
15. Headings. The Section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
16. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of law principles.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same
instrument.
18
<PAGE>
If the foregoing correctly sets forth the understanding between the Selling
Stockholder(s) and the Company and you, as Underwriter, please so indicate in
the space provided below for such purpose, whereupon this letter and your
acceptance shall constitute a binding agreement among us.
Very truly yours,
New England Growth Fund I, L.P.
By New England Partners I, L.P.
General Partners
By:
---------------------------------
(Authorized Officer/Partner)
John F. Rousseau
Vitronics Corporation
By:
---------------------------------
(Authorized Officer)
James J. Manfield, Jr., Chairman
Accepted as of the date first above
written:
Schneider Securities, Inc.
By:
--------------------------------
(Authorized Officer)
Thomas Schneider, Chairman
19
<PAGE>
SCHEDULE I
UNDERWRITER
<TABLE>
<CAPTION>
Company
Underwriter Stock
----------- -------
<S> <C>
Schneider Securities, Inc. ...........................................
-------
TOTAL ..............................................................
=======
</TABLE>
<PAGE>
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. NO
OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE
CAN BE RECEIVED UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE, AND ANY
SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY
KIND, AT ANY TIME PRIOR TO NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE EFFECTIVE
DATE. YOUR EXECUTION HEREOF WILL INVOLVE NO OBLIGATION OR COMMITMENT OF ANY KIND
UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE.
VITRONICS CORPORATION
SELECTED DEALERS AGREEMENT
--------------------------
, 1995
Dear Sirs:
1. Schneider Securities, Inc. named as the Underwriter ("Underwriter") in
the enclosed preliminary Prospectus, proposes to offer on a firm commitment
basis, subject to the terms and conditions and execution of the Underwriting
Agreement, Shares of Common Stock at $ per share ("Securities")
of the above Company. The Securities are more particularly described in the
enclosed preliminary Prospectus, additional copies of which will be supplied in
reasonable quantities upon request. Copies of the definitive Prospectus will be
supplied after the effective date of the Registration Statement.
2. The Underwriter is soliciting offers to buy, upon the terms and
conditions hereof, a part of the Securities from Selected Dealers, including
you who are to act as principal and who are (i) registered with the Securities
and Exchange Commission ("Commission") as broker-dealers under the Securities
Exchange Act of 1934, as amended ("1934 Act"), and members in good standing
with the National Association of Securities Dealers, Inc. ("NASD"), or (ii)
dealers or institutions with their principal place of business located outside
the United States, its territories and possessions who are not eligible for
membership in the NASD and who agree to make no sales within the United States,
its territories or possessions or to persons who are nationals thereof or
residents therein and, in making sales, to comply with the NASD's
Interpretation with Respect to FreeRiding and Withholding and with Sections 8,
24, 25, to the extent applicable to foreign nonmember brokers or dealers, and
Section 36 of the NASD's Rules of Fair Practice. The Securities are to be
offered at a public price of $ per share. Selected Dealers will be allowed
a concession of not less than $ per share of Common Stock, except as
provided below. You will be notified of the precise amount of such concession
prior to the effective date of the Registration Statement. You may reallow not
in excess of $ per share of Common Stock to dealers who meet the
requirements set forth in this Section 2. This offer is solicited subject to
the issuance and delivery of the Securities and their acceptance by the
Underwriter, to the approval of legal matters by counsel and to the terms and
conditions as herein set forth.
3. Your offer to purchase may be revoked in whole or in part without
obligation or commitment of any kind by you and any time prior to acceptance
and no offer may be accepted by us and no sale can be made until after the
registration statement covering the Securities has become effective with the
<PAGE>
Commission. Subject to the foregoing, upon execution by you of the Offer to
Purchase below and the return of same to us, you shall be deemed to have
offered to purchase the number of Securities set forth in your offer on the
basis set forth in paragraph 2 above. Any oral notice by us of acceptance of
your offer shall be immediately followed by written or telegraphic confirmation
preceded or accompanied by a copy of the Prospectus. If a contractual
commitment arises hereunder, all the terms of this Selected Dealers Agreement
shall be applicable. We may also make available to you an allotment to purchase
Securities, but such allotment shall be subject to modification or termination
upon notice from us any time prior to an exchange of confirmations reflecting
completed transactions. All references hereafter in this Agreement to the
purchase and sale of Securities assume and are applicable only if contractual
commitments to purchase are completed in accordance with the foregoing.
4. You agree that in reoffering said Securities, if your offer is accepted
after the effective date, you will make a bona fide public distribution of
same. You will advise us upon request of Securities purchased by you remaining
unsold and we shall have the right to repurchase such Securities upon demand at
the public offering price without paying the concession with respect to any
Securities so repurchased. Any of the Securities purchased by you pursuant to
this Agreement are to be subject to the terms hereof. Securities shall not be
offered or sold by you below the public offering price before the termination
of this Agreement.
5. Payment for Securities which you purchase hereunder shall be made by you
on or before five (5) business days after the date of each confirmation by
certified or bank cashier's check payable to the Underwriter. Certificates for
the Securities shall be delivered as soon as practicable after delivery
instructions are received by the Underwriter.
6. A registration statement covering the offering has been filed with the
Securities and Exchange Commission in respect to the Securities. You will be
promptly advised when the registration statement becomes effective. Each
Selected Dealer in selling Securities pursuant hereto agrees (which agreement
shall also be for the benefit of the Company) that it will comply with the
applicable requirements of the Securities Act of 1933 and of the Securities
Exchange Act of 1934 and any applicable rules and regulations issued under said
Acts. No person is authorized by the Company or by the Underwriter to give any
information or to make any representations other than those contained in the
Prospectus in connection with the sale of the Securities. Nothing contained
herein shall render the Selected Dealers a member of the Underwriting Group or
partners with the Underwriter or with one another.
7. You will be informed by us as to the states in which we have been advised
by counsel the Securities have been qualified for sale or are exempt under the
respective securities or blue sky laws of such states, but we have not assumed
and will not assume any obligation or responsibility as to the right of any
Selected Dealer to sell Securities in any state. You agree not to sell
Securities in any other state or jurisdiction and to not sell Securities in any
state or jurisdiction unless you are qualified or licensed to sell securities
in such state or jurisdiction. The Securities are listed on the American Stock
Exchange.
8. The Underwriter shall have full authority to take such action as it may
deem advisable in respect of all matters pertaining to the offering or arising
thereunder. The Underwriter shall not be under any liability to you, except
such as may be incurred under the Securities Act of 1933 and the rules and
regulations thereunder, except for lack of good faith and except for
obligations assumed by us in this Agreement, and no obligation on our part
shall be implied or inferred herefrom.
9. Selected Dealers will be governed by the conditions herein set forth
until this Agreement is terminated. This Agreement will terminate when the
offering is completed. Nothing herein contained shall be deemed a commitment on
our part to sell you any Securities; such contractual commitment can only be
made in accordance with the provisions of paragraph 3 hereof.
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10. You represent that you are a member in good standing of the NASD and
registered as a broker-dealer with the Commission, or that you are a foreign
broker-dealer not eligible for membership under Section 1 of the Bylaws of the
NASD who agrees to make no sales within the United States, its territories or
possessions or to persons who are nationals thereof or residents therein and,
in making sales, to comply with the NASD's interpretation with Respect to
FreeRiding and Withholding and with Sections 8, 24, 25 to the extent applicable
to foreign nonmember brokers and dealers, and Section 36 of the NASD's Rules of
Fair Practice. Your attention is called to and you agree to comply with the
following: (a) Article III, Section 1 of the Rules of Fair Practice of the NASD
and the interpretations of said Section promulgated by the Board of Governors
of the NASD including Section 24 and the interpretation with respect to
"Free-Riding and Withholding;" (b) Section 10(b) of the 1934 Act and Rules
10b-6, 10b-10 of the general rules and regulations promulgated under the 1934
Act; and (c) Rule 15c2-8 of the general rules and regulations promulgated under
the 1934 Act requiring the distribution of a preliminary Prospectus to all
persons reasonably expected to be purchasers of the Securities from you at
least 48 hours prior to the time you expect to mail confirmations. You, as a
member of the NASD, by signing this Agreement, acknowledge that you are
familiar with the cited laws and rules and agree that you will not directly
and/or indirectly violate any provisions of applicable law in connection with
your participation in the distribution of the Securities.
11. In addition to compliance with the provisions of paragraph 10 hereof you
will not, until advised by us in writing or by wire that the entire offering has
been distributed and closed, bid for or purchase Securities in the open market
or otherwise make a market in the Securities or otherwise attempt to induce
others to purchase the Securities in the open market. Nothing contained in this
paragraph 11 shall, however, preclude you from acting as agent in the execution
of unsolicited orders of customers in transactions effectuated for them through
a market maker.
12. You understand that the Underwriter may in connection with the offering
engage in stabilizing transactions. If the Underwriter contracts for or
purchases in the open market in connection with such stabilization any
Securities sold to you hereunder and not effectively placed by you, the
Underwriter may charge you the Selected Dealer's concession originally allowed
you on the Securities so purchased and you agree to pay such amount to us on
demand.
13. By submitting an Offer to Purchase you confirm that you may, in
accordance with Rule 15c3-1 adopted under the 1934 Act, agree to purchase the
number of Securities you may become obligated to purchase under the provisions
of this Agreement.
14. All communications from you should be directed to us at Two Charles
Street, Providence, RI 02904 (401-861-0320) and (fax 401-274-8942). All
communications from us to you shall be directed to the address to which this
letter is mailed.
Very truly yours,
Schneider Securities, Inc.
By
---------------------------------
(Authorized Officer)
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OFFER TO PURCHASE
The undersigned does hereby offer to purchase (subject to the right to
revoke as set forth in paragraph 3) ______ * Securities in accordance with the
terms and conditions set forth above. We hereby acknowledge receipt of the
Prospectus referred to in the first paragraph thereof relating to such
Securities. We further state that in purchasing such Securities we have relied
upon such Prospectus and upon no other statement whatsoever, written or oral.
----------------------------------
By
-------------------------------
(Authorized Officer)
*If a number appears here which does not correspond with what you wish to
offer to purchase, you may change the number by crossing out the number,
inserting a different number and initializing the change.
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Exhibit 23.1
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Vitronics Corporation on Form S-3 (File No. 33-58811) of our report dated
February 21, 1995, on our audits of the consolidated financial statements and
financial statement schedule of Vitronics Corporation, which report is included
in the Company's Annual Report on Form 10-K. We also consent to the reference
to our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
/s/ Coopers & Lybrand L.L.P.
Manchester, New Hampshire
July 13, 1995
