AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 1999
REGISTRATION NO. 333-70579
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CREE RESEARCH, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NORTH CAROLINA 56-1572719
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
</TABLE>
4600 SILICON DRIVE
DURHAM, NORTH CAROLINA 27703
(919) 313-5300
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
F. NEAL HUNTER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CREE RESEARCH, INC.
4600 SILICON DRIVE
DURHAM, NORTH CAROLINA 27703
(919) 313-5300
(Name, address, including zip code and telephone number, including area code,
of agent for service)
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COPIES TO:
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<S> <C>
GERALD F. ROACH, ESQ. PHILIP P. ROSSETTI, ESQ.
AMY J. MEYERS, ESQ. HALE AND DORR LLP
SMITH, ANDERSON, BLOUNT, 60 STATE STREET
DORSETT, MITCHELL & JERNIGAN, L.L.P. BOSTON, MASSACHUSETTS 02109
2500 FIRST UNION CAPITOL CENTER (617) 526-6000
RALEIGH, NORTH CAROLINA 27601
(919) 821-1220
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses of the Company payable in
connection with the issuance and distribution of the Common Stock being
registered hereby, excluding underwriting discounts and commission. All
expenses of the offering will be borne by the Company. All amounts shown are
estimates except the SEC registration fee, the NASD filing fee and the Nasdaq
fee:
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<S> <C>
SEC Registration Fee ................................... $ 17,431
NASD Filing Fee ........................................ 6,770
Nasdaq Fee ............................................. 17,500
Printing and Engraving Expenses ........................ 125,000
Legal Fees and Expenses ................................ 250,000
Accounting Fees ........................................ 175,000
Blue Sky Expenses ...................................... 10,000
Transfer Agent and Registrar Fees and Expenses ......... 5,000
Miscellaneous Expenses ................................. 43,299
--------
Total ............................................... $650,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation Act
permit a corporation to indemnify its directors, officers, employees or agents
under either or both a statutory or nonstatutory scheme of indemnification.
Under the statutory scheme, a corporation may, with certain exceptions,
indemnify a director, officer, employee or agent of the corporation who was,
is, or is threatened to be made, a party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative, or investigative, because of the fact that such person was a
director, officer, agent or employee of the corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. This indemnity may include the obligation to
pay any judgment, settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan) and reasonable expenses incurred in
connection with a proceeding (including counsel fees), but no such
indemnification may be granted unless such director, officer, agent or employee
(i) conducted himself in good faith, (ii) reasonably believed (1) that any
action taken in his official capacity with the corporation was in the best
interest of the corporation or (2) that in all other cases his conduct at least
was not opposed to the corporation's best interest and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. Whether a director has met the requisite standard of conduct for the
type of indemnification set forth above is determined by the board of
directors, a committee of directors, special legal counsel or the shareholders
in accordance with Section 55-8-55. A corporation may not indemnify a director
under the statutory scheme in connection with a proceeding by or in the right
of the corporation in which the director was adjudged liable to the corporation
or in connection with a proceeding in which a director was adjudged liable on
the basis of having received an improper personal benefit.
In addition to, and separate and apart from the indemnification described above
under the statutory scheme, Section 55-8-57 of the North Carolina Business
Corporation Act permits a corporation to indemnify or agree to indemnify any of
its directors, officers, employees or agents against liability and expenses
(including attorney's fees) in any proceeding (including proceedings brought by
or on behalf of the corporation) arising out of their status as such or their
activities in such capacities, except for any liabilities or expenses incurred
on account of activities that were, at the time taken, known or believed by the
person to be clearly in conflict with the best interests of the corporation.
The Company's bylaws provide for indemnification to the fullest extent
permitted under the North Carolina Business Corporation Act. Accordingly, the
Company may indemnify its directors, officers and employees in accordance with
either the statutory or the non-statutory standard.
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<PAGE>
Sections 55-8-52 and 55-8-56 of the North Carolina Business Corporation Act
require a corporation, unless its articles of incorporation provide otherwise,
to indemnify a director or officer who has been wholly successful, on the
merits or otherwise, in the defense of any proceeding to which such director or
officer was a party. Unless prohibited by the articles of incorporation, a
director or officer also may make application and obtain court-ordered
indemnification if the court determines that such director or officer is fairly
and reasonably entitled to such indemnification as provided in Sections 55-8-54
and 55-8-56.
Finally, Section 55-8-57 of the North Carolina Business Corporation Act
provides that a corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee or agent of the
corporation against certain liabilities incurred by such persons, whether or
not the corporation is otherwise authorized by the North Carolina Business
Corporation Act to indemnify such party. The Company's directors and officers
are currently covered under directors' and officers' insurance policies
maintained by the Company.
As permitted by North Carolina law, Article VII of the Company's Articles of
Incorporation limits the personal liability of directors for monetary damages
for breaches of duty as a director provided that such limitation will not apply
to (i) acts or omissions not made in good faith that the director at the time
of the breach knew or believed were in conflict with the best interests of the
Company, (ii) any liability for unlawful distributions under N.C. Gen. Stat.
Section 55-8-33, (iii) any transaction from which the director derived an
improper personal benefit, or (iv) acts or omissions occurring prior to the
date the provision became effective.
Section 7 of the Underwriting Agreement to be filed as Exhibit 1.01 hereto also
contains certain provisions pursuant to which certain officers, directors and
controlling persons of the Company may be entitled to be indemnified by the
underwriters named therein.
ITEM 16. EXHIBITS
The following documents (unless indicated) are filed herewith and made a part
of this Registration Statement.
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
1.01 Form of Underwriting Agreement
4.01(1) Specimen Common Stock Certificate
4.02* Amended and Restated Articles of Incorporation
4.03* Amended and Restated Bylaws
5.01* Opinion of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
23.01* Consent of PricewaterhouseCoopers LLP
23.02* Consent of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
24.01* Powers of Attorney
27.01* Financial Data Schedule
</TABLE>
- -------------------
(1) Exhibit 4.2 to the Company's Registration Statement on Form SB-2, File No.
33-55998, declared effective by the Securities and Exchange Commission on
Febuary 8, 1993, and incorporated herein by reference.
* Previously filed.
ITEM 17. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the
II-2
<PAGE>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
2. 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 provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of the 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.
3. The undersigned Registrant hereby undertakes that: (a) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective; and (b) for the purpose of determining any
liability under the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bone fide offering
thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Durham, State of North Carolina, on
February 8, 1999.
CREE RESEARCH, INC.
BY: /s/ F. NEAL HUNTER
------------------------------------
F. NEAL HUNTER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
II-4
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment No.
2 to the Registration Statement has been signed by the following persons on
February 8, 1999 in the capacities indicated.
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SIGNATURE TITLE
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<S> <C>
/s/ F. NEAL HUNTER Chairman and Chief Executive Officer
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F. NEAL HUNTER
/s/ CYNTHIA B. MERRELL Chief Financial Officer and Treasurer
-------------------------------------- (Chief Accounting and Financial
CYNTHIA B. MERRELL Officer)
* Director
--------------------------------------
CALVIN H. CARTER, JR., PH.D.
* Director
--------------------------------------
JAMES E. DYKES
* Director
--------------------------------------
MICHAEL W. HALEY
* Director
--------------------------------------
WALTER L. ROBB, PH.D.
* Director
--------------------------------------
DOLPH W. VON ARX
* Director
--------------------------------------
JOHN W. PALMOUR, PH.D.
* By: /s/ F. NEAL HUNTER * By: /s/ CYNTHIA B. MERRELL
--------------------------------- ------------------------
F. NEAL HUNTER AS ATTORNEY-IN-FACT CYNTHIA B. MERRELL AS ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
1.01 Form of Underwriting Agreement
4.01(1) Specimen Common Stock Certificate
4.02* Amended and Restated Articles of Incorporation
4.03* Amended and Restated Bylaws
5.01* Opinion of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
23.01* Consent of PricewaterhouseCoopers LLP
23.02* Consent of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
24.01* Powers of Attorney
27.01* Financial Data Schedule
</TABLE>
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(1) Exhibit 4.2 to the Company's Registration Statement on Form SB-2, File No.
33-55998, as declared effective by the Securities and Exchange Commission
on Febuary 8, 1993, and incorporated herein by reference.
* Previously filed
1,495,000 Shares
CREE RESEARCH, INC.
Common Stock
UNDERWRITING AGREEMENT
February__, 1999
CIBC Oppenheimer Corp.
Prudential Securities Incorporated
Morgan Keegan & Company, Inc.
c/o CIBC Oppenheimer Corp.
Oppenheimer Tower
World Financial Center
New York, New York 10281
On behalf of the Several Underwriters named on Schedule I attached hereto.
Ladies and Gentlemen:
Cree Research, Inc., a North Carolina corporation (the
"Company"), proposes to sell to you and the other underwriters named on Schedule
I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 1,300,000 shares (the "Firm Shares") of the
Company's Common Stock, $0.005 par value (the "Common Stock"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 195,000 shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
1
<PAGE>
(a) The Company agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at $_____ per share (the "Initial Price"), the number of Firm Shares
set forth opposite the name of such Underwriter on Schedule I to this Agreement.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares at the
Initial Price. The number of Option Shares to be purchased by each Underwriter
shall be the same percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares. Such option
may be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below), and only once thereafter within 30 days
after the date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined below), as
the case may be, setting forth the number of Option Shares to be purchased and
the time and date (if other than the Firm Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price by wire transfer or certified or official bank
check or checks payable in New York Clearing House (same day) funds to the
Company, shall take place at the offices of CIBC Oppenheimer Corp., at
Oppenheimer Tower, World Financial Center, New York, New York 10281, at 10:00
a.m., New York City time, on the third business day following the date of this
Agreement, or at such time on such other date, not later than 10 business days
after the date of this Agreement, as shall be agreed upon by the Company and the
Representatives (such time and date of delivery and payment are called the "Firm
Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by wire transfer or certified or official bank check or checks payable in
New York Clearing House (same day) funds to the Company shall take place at the
offices of CIBC Oppenheimer Corp. specified above at the time and on the date
(which may be the same date as, but in no event shall be earlier than, the Firm
Shares Closing Date) specified in the notice referred to in Section 1(b) (such
time and date of delivery and payment are called the "Option Shares Closing
Date"). The Firm Shares Closing Date and the Option Shares Closing Date are
called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request at
least two full business days before the Firm Shares Closing Date or, in the case
of Option Shares, on the day of notice of exercise of the
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<PAGE>
option as described in Section l(b) and shall be made available to the
Representatives for checking and packaging, at such place as is designated by
the Representatives, on the full business day before the Firm Shares Closing
Date (or the Option Shares Closing Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering.
(a) A registration statement (No. 333-70579) relating to the
Shares, including a form of prospectus, has been filed with the Securities and
Exchange Commission ("Commission") and either (A) has been declared effective
under the Securities Act of 1933 (the "Securities Act") and is not proposed to
be amended or (B) is proposed to be amended by amendment or post-effective
amendment. If such registration statement (the "initial registration statement")
has been declared effective, either (A) an additional registration statement
(the "additional registration statement") relating to the Shares may have been
filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)") under the
Securities Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Shares all have been duly registered under the Securities Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (B) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule 462(b)
and will become effective upon filing pursuant to such Rule and upon such filing
the Shares will all have been duly registered under the Securities Act pursuant
to the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial registration
statement or if an additional registration statement has been filed and the
Company does not propose to amend it, and if any post-effective amendment to
either such registration statement has been filed with the Commission prior to
the execution and delivery of this Agreement, the most recent amendment (if any)
to each such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Securities Act or, in the case of the additional registration
statement, Rule 462(b). For purposes of this Agreement, "Effective Time" with
respect to the initial registration statement or, if filed prior to the
execution and delivery of this Agreement, the additional registration statement
means (A) if the Company has advised the Representatives that it does not
propose to amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto (if
any) filed prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing pursuant to Rule
462(c), or (B) if the Company has advised the Representatives that it proposes
to file an amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared effective
by the Commission. If an additional registration statement has not been filed
prior to the execution and delivery of this Agreement but the Company has
advised the Representatives that it proposes to file one, "Effective Time" with
respect to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant to
Rule 462(b). "Effective Date" with respect to the initial registration statement
or the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended at its
Effective Time, including all material incorporated by reference therein,
including all information contained in the additional registration
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<PAGE>
statement (if any) and deemed to be a part of the initial registration statement
as of the Effective Time of the additional registration statement pursuant to
the General Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration statement
as of its Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the
Securities Act, is hereinafter referred to as the "Initial Registration
Statement". The additional registration statement, as amended at its Effective
Time, including the contents of the initial registration statement incorporated
by reference therein and including all information (if any) deemed to be a part
of the additional registration statement as of its Effective Time pursuant to
Rule 430A(b), is hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the Additional Registration
Statement, if any, are hereinafter referred to collectively as the "Registration
Statements" and individually as a "Registration Statement". The form of
prospectus relating to the Shares, as first filed with the Commission pursuant
to and in accordance with Rule 424(b) ("Rule 424(b)") under the Securities Act
or (if no such filing is required) as included in a Registration Statement,
including all material incorporated by reference in such prospectus, is
hereinafter referred to as the "Prospectus". No document has been or will be
prepared or distributed in reliance on Rule 434 under the Securities Act.
(b)The Company understands that the Underwriters propose to make
a public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Time and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Underwriter as follows:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective Date
of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Securities Act and the
rules and regulations of the Commission (the "Rules") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) on the Effective Date of the Additional Registration Statement (if any),
each Registration Statement conformed or will conform, in all respects to the
requirements of the Securities Act and the Rules and did not include, or will
not include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and (iii) on the date of this
Agreement, the Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at the time
of filing of the Prospectus pursuant to Rule 424(b) or (if no such filing is
required) at the Effective Date of the Additional Registration Statement in
which the Prospectus is included, each Registration Statement and the Prospectus
will conform, in all respects to the requirements of the Securities Act and
the Rules, and
4
<PAGE>
neither of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. If
the Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the Prospectus
will conform in all material respects to the requirements of the Act and the
Rules, neither of such documents will include any untrue statement of a material
fact or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no Additional
Registration Statement has been or will be filed. Notwithstanding the foregoing,
the Company makes no representation or warranty as to the statements contained
under the caption "Underwriting" (except for the seventh, eighth and ninth
paragraphs therein) in the Prospectus. The Company acknowledges that the
statements referred to in the previous sentence constitute the only information
furnished in writing by the Representatives on behalf of the several
Underwriters specifically for inclusion in the Registration Statements, any
preliminary prospectus or the Prospectus. The Company and the transactions
contemplated by this Agreement meet the requirements for using Form S-3 under
the Securities Act.
(b) All contracts and other documents required to be filed as
exhibits to the Registration Statements have been filed with the Commission as
exhibits to the Registration Statements.
(c) The consolidated financial statements of the Company (including
all notes and schedules thereto) included or incorporated by reference in the
Registration Statements and Prospectus present fairly the financial position,
the results of operations and cash flows and the shareholders' equity and the
other information purported to be shown therein of the Company at the respective
dates and for the respective periods to which they apply; and such financial
statements have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for such periods
have been made.
(d) PricewaterhouseCoopers LLP, whose reports are filed with the
Commission as a part of the Registration Statements, are and, during the periods
covered by their reports, were independent public accountants as required by the
Securities Act and the Rules. Ernst & Young LLP, who are providing a letter
pursuant to Section 5(e)(i), are independent public accountants as required by
the Securities Act and the Rules.
(e) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of North Carolina.
The Company is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business makes such
qualification necessary except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the business, results of
operations or financial condition of the Company and its subsidiaries taken as a
whole. Each of the Company and its subsidiaries has all
5
<PAGE>
requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity, to own, lease
and license its assets and properties and conduct its businesses as now being
conducted and as described in the Registration Statements and the Prospectus
except for such authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a material
adverse effect upon the business, results of operations or financial condition
of the Company and its subsidiaries taken as a whole; no such authorization,
approval, consent, order, license, certificate or permit contains a materially
burdensome restriction other than as disclosed in the Registration Statements
and the Prospectus; and the Company has all such corporate power and authority,
and such authorizations, approvals, consents, orders, licenses, certificates and
permits to enter into, deliver and perform this Agreement and to issue and sell
the Shares. The Company has no "Significant Subsidiary" as such term is defined
in Rule 1-02(w) of Regulation S-X under the Securities Act.
(f) Except as described in the Registration Statements and the
Prospectus, each of the Company and its subsidiaries owns or possesses adequate
and enforceable rights to use all trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses, know-how and
other similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as described in the Registration
Statements and the Prospectus. Neither the Company nor any of its subsidiaries
has received any notice of, or to its best knowledge is aware of, any
infringement of or conflict with asserted rights of others with respect to any
Intangibles which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect upon the
assets or properties, business, results of operations or financial condition of
the Company and its subsidiaries taken as a whole.
(g) Each of the Company and its subsidiaries has good title to each
of the items of personal property which are reflected in the financial
statements referred to in Section 4(c) or are referred to in the Registration
Statements and the Prospectus as being owned by it and valid and enforceable
leasehold interests in each of the items of real and personal property which are
referred to in the Registration Statements and the Prospectus as being leased by
it, in each case free and clear of all liens, encumbrances, claims, security
interests and defects, other than those described in the Registration Statements
and the Prospectus and those which do not and will not have a material adverse
effect upon the business, results of operations or financial condition of the
Company and its subsidiaries taken as a whole.
(h) Except as set forth in the Registration Statements and the
Prospectus, there is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the Company's best knowledge, threatened against, or involving the
assets, properties or business of, the Company or any of its subsidiaries which
would materially adversely affect the business, results of operations, prospects
or financial condition of the Company and its subsidiaries taken as a whole.
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(i) Subsequent to the respective dates as of which information is
given in the Registration Statements and the Prospectus, except as described
therein, (i) there has not been any material adverse change in the business,
results of operations, or financial condition of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business; (ii) neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree; and (iii) and since the date of the latest balance sheet
included in the Registration Statements and the Prospectus, except as reflected
therein, neither the Company nor any of its subsidiaries has (A) issued any
securities (except pursuant to the Company's existing stock option plan or bonus
plan or outstanding warrants) or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations incurred
in the ordinary course of business, (B) entered into any material transaction
not in the ordinary course of business or (C) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares
of its stock.
(j) There is no document or contract of a character required to be
described in the Registration Statements or Prospectus or to be filed as an
exhibit to the Registration Statements which is not described or filed as
required. Each agreement listed in the Exhibits to the Registration Statements
or incorporated by reference therein is in full force and effect and is valid
and enforceable against the Company in accordance with its terms in all material
respects, assuming the due authorization, execution and delivery thereof by each
of the other parties thereto. Neither the Company, nor to the best of the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event would
have a material adverse effect on the business, results of operations, financial
or condition of the Company and its subsidiaries taken as a whole. No default
exists, and, to the Company's knowledge, no event has occurred which with notice
or lapse of time or both would constitute a default, in the due performance and
observance of any term or obligation, by the Company or any of its subsidiaries
of any other agreement or instrument to which the Company or any such
subsidiaries is a party or by which it or its properties or business may be
bound or affected which default or event would have a material adverse effect on
the business, results of operations or financial condition of the Company and
its subsidiaries taken as a whole.
(k) Neither the Company nor any of its subsidiaries is in violation
of any term or provision of its charter or by-laws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a material adverse effect on the
business, results of operations or financial condition of the Company and its
subsidiaries taken as a whole.
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(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or require any
consent or waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or any of its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of its subsidiaries or violate any provision of
the articles of incorporation or by-laws of the Company or any of its
subsidiaries, except (i) in any such case, where such right to terminate or
accelerate, or such conflict, breach, default, execution, imposition or
violation would not have a material adverse effect on the business, results of
operations or financial condition of the Company and its subsidiaries taken as a
whole, or (ii) in the case of such consents or waivers, for such consents or
waivers as may be required under state or foreign securities or Blue Sky laws or
which have already been obtained and are in full force and effect.
(m) The Company has an authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable and none of them was issued in violation of any
preemptive or other similar right. The Shares, when issued and sold pursuant to
this Agreement, will be duly and validly issued, fully paid and nonassessable
and none of them will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statements and the Prospectus,
there is no outstanding option, warrant or other right calling for the issuance
of any share of stock of the Company or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the Shares
conform in all material respects to the description thereof contained or
incorporated by reference in the Registration Statements and the Prospectus.
(n) No holder of any security of the Company has the right to have
any security owned by such holder included in the Registration Statements or to
demand registration of any security owned by such holder during the period
ending 90 days after the date of this Agreement, except such rights as may have
been duly waived. Each director and executive officer of the Company has
delivered to the Representatives his or her enforceable written agreement that
he or she will not, for a period of 90 days after the date of this Agreement,
without the prior written consent of CIBC Oppenheimer Corp., offer for sale,
sell, distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by him or her, other than
Common Stock transferred as a gift or gifts (provided that any donee thereof
agrees in writing to be bound by the terms of such agreement).
8
<PAGE>
(o) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Company. This Agreement
has been duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to the extent that rights
to indemnity or contribution under this Agreement may be limited by Federal and
state securities laws or the public policy underlying such laws.
(p) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a material adverse effect on the business,
results of operations or financial condition of the Company and its subsidiaries
taken as whole.
(q) No transaction has occurred between or among the Company or any
of its subsidiaries and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described in
and is not described in the Registration Statements and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
(s) The Company has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof, or has received
extensions thereof, and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same have become due, except
where the failure to do so would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(t) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to notice of issuance.
(u) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds therefrom as
described in the Prospectus, will not be, an "investment company" as defined in
the Investment Company Act of 1940.
5. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares on each
Closing Date are subject to each of the following terms and conditions:
9
<PAGE>
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(A)(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d) shall
be true and correct when made and on and as of each Closing Date as if made on
such date and the Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
the chief executive or chief operating officer and the chief financial officer
or chief accounting officer of the Company to the effect that the signers of
such certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties of the
Company in this Agreement are true and correct on and as of such Closing Date
with the same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(e) (i) The Representatives shall have received on the Effective
Time, at the time this Agreement is executed and on each Closing Date a signed
letter from Ernst & Young LLP addressed to the Representatives and dated,
respectively, the Effective Time, the date of this Agreement and each such
Closing Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants within the
meaning of the Securities Act and the Rules and stating in effect that:
(A) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards No.
71, Interim Financial Information, on the unaudited financial statements
as of December 27, 1998 and for the six months ended December 27, 1998
included in the Registration Statements;
(B) on the basis of the review referred to in clause (A)
above, a reading of the latest available interim financial statements of
the Company, inquiries of officials of the
10
<PAGE>
Company who have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that caused
them to believe that:
(1) the amounts set forth for the six-month period ended,
December 27, 1998 in "Summary Consolidated Financial Information,"
and "Selected Consolidated Financial Data" included in the
Registration Statements and the Prospectus do not agree with the
corresponding amounts in the unaudited financial statements from
which such amounts were derived; or
(2) with respect to the Company, there were, at a specified
date not more than five business days prior to the date of the
letter, any increases in the current liabilities and long term
liabilities of the Company or any decreases in net income or in
working capital or the shareholders' equity in the Company, as
compared with the amounts shown on the Company's audited balance
sheet for the fiscal year ended June 28, 1998 and the six months
ended December 27, 1998 included in the Registration Statement; and
(C) they have performed certain other procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Registration Statements and the Prospectus
and reasonably specified by the Representatives agrees with the accounting
records of the Company.
(ii) The Representatives shall have received on the Effective
Time, at the time this Agreement is executed and on each Closing Date a
signed letter from PricewaterhouseCoopers LLP addressed to the
Representatives and dated, respectively, the Effective Time, the date of
this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Securities Act and the
Rules and stating in effect that:
(A) in their opinion the audited financial statements and
financial statement schedules examined by them and included in the Registration
Statements and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act and the Rules;
(B) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of interim
financial information as described in Statements of Accounting Standards
No. 71, Interim Financial Information, on the unaudited financial
statements for the six months ended December 28, 1997 included in the
Registration Statements;
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<PAGE>
(C) on the basis of the review referred to in clause (B)
above, a reading of the latest available interim financial statements of the
Company, inquiries of officials of the Company who have responsibility for
financial and accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that the amounts set forth for the
six-month period ended December 28, 1997 in "Summary Consolidated Financial
Information," and "Selected Consolidated Financial Data" included in the
Registration Statements and the Prospectus do not agree with the corresponding
amounts in the unaudited financial statements from which such amounts were
derived; and
(D) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Registration Statements and the Prospectus
and reasonably specified by the Representatives agrees with the accounting
records of the Company.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "Registration Statements" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective Time, and
(iii) "Prospectus" shall mean the prospectus included in the Registration
Statements. All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in the
Registration Statements for purposes of this subsection.
(f) The Representatives shall have received on each Closing Date
from Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P, counsel for
the Company, an opinion, addressed to the Representatives and dated such Closing
Date, and stating in effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of North Carolina. The
Company is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its businesses makes such
qualification necessary, except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the business, results of
operations, or financial condition of the Company and its subsidiaries taken as
a whole.
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and conduct its
business as described in the Registration
12
<PAGE>
Statements and the Prospectus; and the Company has all requisite corporate power
and authority and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits to enter into, deliver and perform this
Agreement and to issue and sell the Shares, except as may be required under
state or foreign securities or Blue Sky laws.
(iii) The Company has authorized capital stock as set forth in
the Registration Statements and the Prospectus; the certificates evidencing the
Shares are in due and proper legal form and have been duly authorized for
issuance by the Company; all of the outstanding shares of Common Stock of the
Company issued since the Company's initial public offering on ______________,
have been duly and validly authorized and have been duly and validly issued and
are fully paid and nonassessable. The Shares when issued and sold pursuant to
this Agreement, will be duly and validly issued, outstanding, fully paid and
nonassessable and none of them will have been issued in violation of any
preemptive or other similar right under any North Carolina statutes or the
Company's articles of incorporation or by-laws. To the best of such counsel's
knowledge, except as disclosed in the Registration Statements and the
Prospectus, there is no outstanding option, warrant or other right calling for
the issuance of any share of stock of the Company or any security convertible
into, exercisable for, or exchangeable for stock of the Company. The Common
Stock and the Shares conform in all material respects to the descriptions
thereof contained in the Registration Statements and the Prospectus.
(iv) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles and (B) to the
extent that rights to indemnity or contribution under this Agreement may be
limited by Federal or state securities laws or the public policy underlying such
laws.
(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets of the Company or any
of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, note or other agreement or instrument filed as an Exhibit to the
Registration Statements or incorporated by reference therein, or violate any
provision of the articles of incorporation or by-laws of the Company or any of
its subsidiaries or, to such counsel's knowledge, violate any applicable law or
any judgment or order of any governmental authority or court that is binding on
the Company or any of its subsidiaries or any of their respective properties,
except (i) in any such case, where such right to
13
<PAGE>
terminate or accelerate, or such conflict, breach, default, execution,
imposition or violation would not have a material adverse effect on the
business, results of operations or financial condition of the Company and its
subsidiaries taken as a whole, or (ii) in the case of such consents or waivers,
for such consents or waivers as may be required under state or foreign
securities or Blue Sky laws or which have already been obtained and are in full
force and effect.
(vi) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of any term or provision of its articles of
incorporation or by-laws.
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the performance of this
Agreement by the Company or the consummation of the transactions contemplated
hereby or thereby, except such as have been obtained under the Securities Act
and such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the several
Underwriters.
(viii) To such counsel's knowledge, and other than as set
forth in the Prospectus, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by any public body or
board pending or threatened against, or involving the assets, properties or
businesses of, the Company or any of its subsidiaries which would have a
material adverse effect upon the business, results of operations or financial
condition of the Company and its subsidiaries taken as a whole.
(ix) The statements in the Prospectus under the captions
"Capitalization" (as to authorized shares of Capital Stock), "Certain
Transactions" and in Item 15 of the Registration Statement, insofar as such
statements constitute a summary of documents referred to therein or matters of
law, are fair summaries in all material respects and accurately present the
information called for with respect to such documents and matters. To such
counsel's knowledge, all contracts and other documents required to be filed as
exhibits to, or described in, each Registration Statement have been so filed
with the Commission or are fairly described in such Registration Statement, as
the case may be.
(x) Each Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except for the
financial statements and schedules and other financial and statistical data
included therein, as to which such counsel expresses no opinion) comply as to
form in all material respects with the requirements of the Securities Act and
the Rules.
(xi) Each Registration Statement has become effective under
the Securities Act, and, to such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened, pending or
contemplated.
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<PAGE>
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to special matters or matters which are governed by laws
other than the laws of the State of North Carolina and the Federal laws of the
United States; provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions. Copies of
such certificates and other opinions shall be furnished to the Representatives
and counsel for the Underwriters. In rendering their opinion in subparagraph
(iv), such counsel may assume that the laws of the State of North Carolina and
the laws of the State of New York are the same.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that any Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus as amended or supplemented (except with respect to the
financial statements and notes schedules thereto and other financial data, as to
which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their counsel and
the Underwriters shall have received from Hale and Dorr LLP a favorable opinion,
addressed to the Representatives and dated such Closing Date, with respect to
the Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representatives may reasonably request, and the Company
shall have furnished to Hale and Dorr LLP such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
6. Covenants of the Company.
(A) The Company covenants and agrees as follows:
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(a) The Company shall prepare the Prospectus in a form
approved by the Representatives and file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act, and shall promptly advise the Representatives, after the
Company receives notice thereof (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request by the Commission for
any amendment of the Registration Statement or the Prospectus or for any
additional information, (iii) of the prevention or suspension of the use of any
preliminary prospectus or the Prospectus or of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the Prospectus unless
the Company has furnished the Representatives a copy for its review prior to
filing and shall not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 6(A), an amendment or
supplement which shall correct such statement or omission or an amendment which
shall effect such compliance.
(c) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Time occurs (or 90 days if
such 12-month period coincides with the Company's fiscal year), an earnings
statement (which need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a) of the Securities
Act.
(d) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the Registration
Statements (including all exhibits thereto and amendments thereof) and to each
other Underwriter a copy of the Registration Statements (without exhibits
thereto) and all amendments thereof and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Securities Act or the Rules, as
many copies of any preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may reasonably request.
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(e) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale under the
laws of such jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the distribution
of the Shares; provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction.
(f) For a period of five years after the date of this
Agreement, the Company shall supply to the Representatives, and to each other
Underwriter who may so request in writing, copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock and to
furnish to the Representatives a copy of each annual or other report it shall be
required to file with the Commission.
(g) Without the prior written consent of CIBC Oppenheimer
Corp., on behalf of the Representatives, for a period of 90 days after the date
of this Agreement, the Company shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or otherwise
dispose of, directly or indirectly, any equity securities of the Company (or any
securities convertible into or exercisable or exchangeable for equity securities
of the Company), except for the issuance of the Shares pursuant to the
Registration Statement and the issuance of shares pursuant to the Company's
existing stock option plan or bonus plan or pursuant to outstanding warrants.
(h) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws and by the
Nasdaq National Market System (including any required registration under the
Exchange Act).
(B)The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statements including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statements and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the various jurisdictions referred to in Section 6(A)(e), including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and the preparation, printing, distribution and shipment
of preliminary and supplementary Blue Sky memoranda; (iv) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus and all
amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be
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reasonably requested for use in connection with the offering and sale of the
Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the
filing fees of the National Association of Securities Dealers, Inc. in
connection with its review of the terms of the public offering; (vi) the
furnishing (including costs of shipping and mailing) to the Representatives and
to the Underwriters of copies of all reports and information required by Section
6(A)(f); (vii) inclusion of the Shares for quotation on the Nasdaq National
Market System; and (viii) all transfer taxes, if any, with respect to the sale
and delivery of the Shares by the Company to the Underwriters. Subject to the
provisions of Section 9, the Underwriters agree to pay, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the Company
pursuant to the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
7. Indemnification.
(a) The Company agrees, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, any Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims, damages
or liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, such Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein; and
provided, further, that with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary prospectus,
the foregoing indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Underwriter from whom the person asserting any
losses, claims, damages or liabilities purchased the Shares concerned, to the
extent that a prospectus relating to such Shares was required to be delivered by
such Underwriter under the Securities Act in connection with such purchase and
any such loss, claim, damage or liability of such Underwriter results from the
fact that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Shares to such person, a copy of the Prospectus
(exclusive of material incorporated by reference) if the Company had previously
furnished or caused to be
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<PAGE>
furnished copies thereof to such Underwriter. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs any Registration Statement, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, such Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, and was contained under the caption
"Underwriting" in the Prospectus (except for the seventh, eighth and ninth
paragraphs therein); provided, however, that the obligation of each Underwriter
to indemnify the Company (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by the Company from such
Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a) or 7(b) shall be available to any party who shall fail to give
notice as provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified party
shall have reasonably concluded that there may be a conflict of interest between
the indemnifying parties and the indemnified party in the conduct of the defense
of such action (in which case the indemnifying parties shall not have the right
to direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the commencement
thereof, in
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each of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7 is due in accordance with its terms but for any reason is held to be
unavailable to an indemnified party, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed any Registration Statement and directors of the Company, who may also
be liable for contribution) to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or alleged omission to
state a material fact related to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
8, (i) in no case shall any Underwriter (except as may be provided in the
Agreement Among Underwriters) be liable or responsible for any amount in excess
of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder, and (ii) the Company shall be liable and responsible for
any amount in excess of such underwriting discount; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as such Underwriter, and each person, if
any, who
20
<PAGE>
controls the Company within the meaning of the Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed any Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
Section, notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company at any time
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if there shall have occurred any change, or any
development or event involving a prospective change, in the business, results of
operation or financial condition of the Company and its subsidiaries taken as a
whole which, in the judgment of the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Shares; (ii) if on or prior to such
date, any domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representatives will in the future
materially disrupt, the securities markets; (iii) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or crisis the
effect of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iv) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make it,
in the judgment of the Representatives, inadvisable or impracticable to market
the Shares; (v) if trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock Exchange, Inc. or on the Nasdaq Stock
Market has been suspended or limited, or minimum or maximum ranges for prices
for securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the Commission,
the National Association of Securities Dealers, Inc., or any other governmental
or regulatory authority; or (vi) if a banking moratorium has been declared by
any New York state or Federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter, and
no Underwriter shall be under any liability
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<PAGE>
to the Company, except that (y) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure, refusal or inability
on the part of the Company to comply with the terms or to fulfill any of the
conditions of this Agreement, the Company will reimburse the Underwriters for
all out-of-pocket expenses (including the reasonable fees and disbursements of
their counsel) incurred by them in connection with the proposed purchase and
sale of the Shares or in contemplation of performing their obligations hereunder
and (z) no Underwriter who shall have failed or refused to purchase the Shares
agreed to be purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its obligations
under this Agreement, shall be relieved of liability to the Company or to the
other Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then each of
the nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to this Section 10 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
shall be entitled to an additional business day within which it may, but is not
obligated to, find one or more substitute underwriters reasonably satisfactory
to the Representatives to purchase such Shares upon the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration
Statements or Prospectus) may be effected by the Representatives and the
Company. If the number of Shares to be purchased on such Closing Date by such
defaulting Underwriter or Underwriters shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on
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<PAGE>
such Closing Date, and none of the nondefaulting Underwriters or the Company
shall make arrangements pursuant to this Section within the period stated for
the purchase of the Shares that the defaulting Underwriters agreed to purchase,
this Agreement shall terminate with respect to the Shares to be purchased on
such Closing Date without liability on the part of any nondefaulting Underwriter
to the Company and without liability on the part of the Company, except in both
cases as provided in Sections 6(B), 7, 8 and 9. The provisions of this Section
shall not in any way affect the liability of any defaulting Underwriter to the
Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes of
this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC Oppenheimer Corp., Oppenheimer
Tower, World Financial Center, New York, New York 10281 Attention: Richard D.
White, and (b) if to the Company, to its agent for service as such agent's
address appears on the cover page of the Initial Registration Statement.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
CREE RESEARCH, INC.
By
-----------------------------
Name:
Title:
Confirmed:
CIBC OPPENHEIMER CORP.
PRUDENTIAL SECURITIES INCORPORATED
MORGAN KEEGAN & COMPANY, INC.
Acting severally on behalf of itself and as representative of the several
Underwriters named in Schedule I annexed hereto.
By CIBC OPPENHEIMER CORP.
By
----------------------------
Title:
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- ------------
CIBC Oppenheimer Corp.
Prudential Securities Incorporated
Morgan Keegan & Company, Inc.
------------
Total 1,300,000
25
