Exhibit 1.1
PARLEX CORPORATION
1,610,000 Shares*
Common Stock
($0.10 par value per share)
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Underwriting Agreement
________, 2000
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxxxx & Company, Inc.
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
Parlex Corporation, a Massachusetts corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you (collectively, the "Underwriters") an aggregate of 1,250,000 shares (the
"Company Firm Shares") and, at the election of the Underwriters, up to 210,000
additional shares (the "Optional Shares") of common stock of the Company, $0.10
par value per share ("Common Stock"), and the Selling Stockholders named in
Schedule II hereto (the "Selling Stockholders") propose, subject to the terms
and conditions stated herein, to sell to the Underwriters an aggregate of
150,000 shares (the "Selling Stockholder Firm Shares", and together with the
Company Firm Shares, the "Firm Shares") of Common Stock. The Firm Shares and the
Optional Shares which the Underwriters elect to purchase pursuant to Section 3
hereof are herein collectively called the "Shares."
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-33836)
(the "Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement including any pre-effective amendments thereto and any
post-effective amendments thereto, each in the form heretofore delivered to you
and, excluding exhibits thereto, but including all documents incorporated by
reference in the prospectus contained therein, delivered to you for each of the
other Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the offering
(a "Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial
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* Includes 210,000 shares subject to an option to purchase additional
shares to cover over-allotments.
Registration Statement or document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission under the
Act is hereinafter called a "Preliminary Prospectus"); the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto, including any exhibits incorporated by
reference in the Initial Registration Statement and the Rule 462(b) Registration
Statement, and including (i) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 6(a) hereof and deemed by virtue of Rule 430A under the
Act to be part of the Initial Registration Statement at the time it was declared
effective or the Rule 462(b) Registration Statement, if any, at the time it
became effective and (ii) the documents incorporated by reference in the
prospectus contained in the Initial Registration Statement at the time such part
of the Initial Registration Statement became effective, each as amended at the
time such part of such Initial Registration Statement became effective, are
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus"; and any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be;
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein. The Company acknowledges that
the statements set forth [IN THE THIRD TO LAST PARAGRAPH ON PAGE 3 AND UNDER THE
HEADING "UNDERWRITING" IN THE PROSPECTUS] constitute the only information
relating to any Underwriter furnished in writing to the Company by any
Underwriter specifically for inclusion in the Registration Statement;
(c) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material respects to
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder, and
none of such documents contained an 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;
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(d) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date and the applicable
Time of Delivery as to the Prospectus and any amendment or supplement thereto
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or, in the case of the Registration Statement or
any amendment thereto, necessary to make the statements therein not misleading
and, in the case of the Preliminary Prospectus, the Prospectus or any supplement
thereto, necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through you expressly for use therein;
(e) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the rules and regulations thereunder
which have not been described or filed or incorporated by reference in the
Registration Statement, as required; the contracts so described in the
Prospectus to which the Company or any of its subsidiaries is a party have been
duly authorized, executed and delivered by the Company or its subsidiaries,
constitute valid and binding agreements of the Company or its subsidiaries and
are enforceable against and by the Company or its subsidiaries in accordance
with their respective terms, and are in full force and effect on the date
hereof; and neither the Company nor any of its subsidiaries, nor, to the best of
the Company's knowledge, any other party is in breach of or default under any of
such contracts;
(f) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, that is in each case material to the Company and its subsidiaries
taken as a whole, otherwise than as set forth or contemplated in the Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in the
capital stock (other than issuances of Common Stock pursuant to Company stock
option and stock purchase plans described in the Registration Statement and
Prospectus) or long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development that is reasonably likely to result
in a material adverse change, in or affecting the business, assets, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(g) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
other properties and assets
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described in the Prospectus as owned by it, in each case free and clear of all
liens, charges, encumbrances or restrictions, except such as are described in
the Prospectus or are not material to the business of the Company; any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries; the
Company and its subsidiaries own or lease all such properties as are necessary
to its operations as now conducted or as proposed to be conducted, except where
the failure to so own or lease would not result in a material adverse change in
or affecting the business, assets, management, financial position, stockholders'
equity or results of operations of the Company;
(h) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of organization, each with full power and
authority (corporate and otherwise) to own its properties and conduct its
business as described in the Prospectus, and each has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction;
(i) The Company has an authorized capitalization as set forth
in the Prospectus, and all the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Common Stock contained or
incorporated by reference in the Prospectus; all of the issued shares of capital
stock of each subsidiary of the Company (i) have been duly and validly
authorized and issued, are fully paid and non-assessable and (ii) except as
disclosed in the Prospectus, are owned directly by the Company, free and clear
of all liens, encumbrances, equities or claims; except as disclosed in or
contemplated by the Prospectus and the consolidated financial statements of the
Company, and the related notes thereto, included in the Prospectus, neither the
Company nor any subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase any securities
or obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations; and the description of the Company's stock option and
stock purchase plans and the options or other rights granted and exercised
thereunder set forth in the Prospectus accurately and fairly presents in all
material respects the information required to be shown with respect to such
plans, options and rights;
(j) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable and will conform to the
description of the Common Stock contained or incorporated by reference in the
Prospectus; no preemptive rights or other rights to subscribe for or purchase
exist with respect to the issuance and sale of the Shares by the Company
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pursuant to this Agreement; no stockholder of the Company has any right, which
has not been waived, to require the Company to register the sale of any shares
of capital stock owned by such stockholder under the Act in the public offering
contemplated by this Agreement; and no further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Shares to be sold by the Company as contemplated
herein;
(k) The Company has full corporate power and authority to
enter into this Agreement; and this Agreement has been duly authorized, executed
and delivered by the Company, constitutes a valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms;
(l) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or material instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result in
any violation of the provisions of the Articles of Organization or By-laws of
the Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws or the bylaws and rules of the
National Association of Securities Dealers, Inc. ("NASD") in connection with the
purchase and distribution of the Shares by the Underwriters;
(m) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of its subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its subsidiaries is or may be
the subject, or related to environmental or discrimination matters, which
actions, suits or proceedings, would reasonably be expected, individually or in
the aggregate, to prevent or adversely affect the transactions contemplated by
this Agreement or result in a material adverse change in the business, assets,
management, financial position, stockholders' equity or results of operations of
the Company; no labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to affect materially and adversely such business, assets,
management, financial position, stockholders' equity or results of operations;
and neither the Company nor any of its subsidiaries is a party or subject to the
provisions of any material injunction, judgment, decree or order of any court,
regulatory body,
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administrative agency or other governmental body, that would reasonably be
expected to affect materially and adversely such business, assets, management,
financial position, stockholders' equity or results of operations;
(n) The Company and its subsidiaries possess all licenses,
certificates, authorizations or permits issued by the appropriate governmental
or regulatory agencies or authorities that are necessary to enable them to own,
lease and operate their respective properties and to carry on their respective
businesses as presently conducted except, where the failure to possess such
licenses, certificates, authorization or permits would not reasonably be
expected to affect materially and adversely such business, assets, management
financial position, stockholders' equity or results of operations, and neither
the Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such license, certificate,
authority or permit which, singly or in the aggregate, would reasonably be
expected to materially and adversely affect the business, assets, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries;
(o) The Company and its subsidiaries (i) are in compliance in
all material respects with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, including, without limitation, those relating to occupational safety and
health, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants, including, without limitation, those relating to the storage,
handling or transportation of hazardous or toxic materials (collectively,
"Environmental Laws") and (ii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, reasonably be
expected to have a material adverse effect on the Company and its subsidiaries,
taken as a whole. The Company, in its reasonable judgment, has concluded that
any costs or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) would not, singly or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(p) Deloitte & Touche LLP, who have audited certain financial
statements of the Company, are independent public accountants as required by the
Act and the rules and regulations of the Commission thereunder;
(q) The consolidated financial statements and schedules of the
Company, and the related notes thereto, included or incorporated by reference in
the Registration Statement and the Prospectus present fairly in all material
respects the financial position of the Company as of the respective dates of
such financial statements and schedules, and the results of
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operations and cash flows of the Company for the respective periods covered
thereby; such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis as certified by the independent public accountants named in paragraph (p)
above; no other financial statements or schedules are required to be included in
the Registration Statement; and the selected financial data set forth in the
Prospectus under the captions "Capitalization" and "Selected Consolidated
Financial Data" fairly present in all material respects the information set
forth therein on the basis stated in the Registration Statement;
(r) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks, trade
names, patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct their business as now conducted; the Company has no
knowledge of any material infringement by the Company of trademark, trade name
rights, patent rights, copyrights, licenses, trade secret or other similar
rights of others; and there is no claim of infringement being made against the
Company regarding trademark, trade name, patent, copyright, license, trade
secret or other similar rights which would reasonably be expected to have a
material adverse effect on the business, assets, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries;
(s) The Company and each of its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and have
paid all taxes shown as due thereon; and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
or any of its subsidiaries which could materially and adversely affect the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company;
(t) The Company is not an "investment company" or an
"affiliated person" of, or "Promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(u) Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts which it deems adequate for its
business, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(v) Neither the Company nor any of its subsidiaries has at any
time during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any foreign, federal or state
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof;
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(w) The Company has not taken and will not take, directly or
indirectly through any of its directors, officers or controlling persons, any
action which is designed to or which has constituted or which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares; and
(x) The Common Stock of the Company has been registered
pursuant to Section 12(g) of the Exchange Act and the Company is not required to
take any further action for the inclusion of the Shares on the Nasdaq National
Market.
2. REPRESENTATIONS OF THE SELLING STOCKHOLDERS. Each of the Selling
Stockholders, severally and not jointly, represents and warrants to, and agrees
with, each of the Underwriters that:
(a) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of this
Agreement and the Power of-Attorney and Custody Agreement (the "Custody
Agreement") hereinafter referred to, and for the sale and delivery of the Shares
to be sold by such Selling Stockholder hereunder, have been obtained; and such
Selling Stockholder has full right, power and authority to enter into this
Agreement and the Custody Agreement and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Stockholder hereunder;
(b) This Agreement and the Custody Agreement have each been
duly authorized, executed and delivered by such Selling Stockholder and each
such document constitutes a valid and binding obligation of such Selling
Stockholder, enforceable in accordance with its terms;
(c) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body with
respect to such Selling Stockholder is required in connection with the sale of
the Shares by such Selling Stockholder or the consummation by such Selling
Stockholder of the transactions on his or its part contemplated by this
Agreement and the Custody Agreement, except such as have been obtained under the
Act or the rules and regulations thereunder and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the Shares;
(d) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the performance by such Selling Stockholder of this
Agreement and the Custody Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or give any party
a right to terminate any of its obligations under, or result in the acceleration
of any obligation under, any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract, agreement or instrument to which such Selling
Stockholder is a
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party or by which such Selling Stockholder or any of his or its properties is
bound or affected, or violate or conflict with any judgment, ruling, decree,
order, statute, rule or regulation of any court or other governmental agency or
body applicable to such Selling Stockholder;
(e) Such Selling Stockholder has, and at the First Time of
Delivery (as defined in Section 5 hereof) will have, good and valid title to the
Shares to be sold by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares, free and
clear of all liens, encumbrances, equities or claims, will pass to each of the
several Underwriters who have purchased such Shares in good faith and without
notice of any such lien, encumbrance, equity or claim or any other adverse claim
within the meaning of the Uniform Commercial Code;
(f) Such Selling Stockholder will not, directly or indirectly,
offer, sell or otherwise dispose of any shares of Common Stock within 90 days
after the date of the Prospectus otherwise than hereunder, or as a bona fide
gift or gifts to, or in trust for, a person or entity who or which agrees in
writing to be bound by this restriction or with your written consent;
(g) Such Selling Stockholder has not taken and will not at any
time take, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of shares of Common Stock to facilitate the sale or
resale of any of the Shares; and
(h) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity with
written information about such Selling Stockholder furnished to the Company by
such Selling Stockholder expressly for use therein, such Preliminary Prospectus
and the Registration Statement did, and the Prospectus and any further
amendments or supplements to the Registration Statement and the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In addition to the foregoing representations, Xxxxxxx X. Xxxxxxx, a
Selling Stockholder, represents and warrants to, and agrees with, each of the
Underwriters that he has reviewed the Registration Statement and Prospectus and,
although he has not independently verified the accuracy or completeness of all
the information contained therein, nothing has come to his attention that would
lead him to believe that (i) on the Effective Date, the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, (ii) on the Effective Date the
Prospectus contained and, at each Time of
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Delivery, contains any untrue statement of a material fact or omitted or omits
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, each Selling
Stockholder agrees to deliver to you prior to or at the First Time of Delivery a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
Each of the Selling Stockholders represents and warrants that a
certificate in negotiable form representing all of the Shares to be sold by such
Selling Stockholder has been placed in custody under the Custody Agreement, in
the form heretofore furnished to you, duly executed and delivered by such
Selling Stockholder to the Custodian (as defined in the Custody Agreement), and
that such Selling Stockholder has duly executed and delivered a
power-of-attorney, in the form heretofore furnished to you and included in the
Custody Agreement (the "Power-of-Attorney"), appointing Xxxxxxx X. Xxxxxxx and
Xxxxx X. Xxxxxx, and each of them, as such Selling Stockholder's
attorney-in-fact (the "Attorney-in-Fact") with authority to execute and deliver
this Agreement on behalf of such Selling Stockholder, to determine (subject to
the provisions of the Custody Agreement) the purchase price to be paid by the
Underwriters to such Selling Stockholder as provided in Section 3 hereof, to
authorize the delivery of the Shares to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement and the Custody
Agreement.
Each of the Selling Stockholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Stockholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Stockholder for such
custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power-of-Attorney, are to that extent irrevocable. Each
of the Selling Stockholders specifically agrees that the obligations of such
Selling Stockholder hereunder shall not be terminated by operation of law,
whether by the death or incapacity of such Selling Stockholder or, in the case
of an estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by the
occurrence of any other event. If such Selling Stockholder or any such executor
or trustee should die or become incapacitated, or if any such estate or trust
should be dissolved, or if such corporation or partnership should be dissolved,
or if any other such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares to be sold by such Selling
Stockholder shall be delivered by or on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement and of the Custody
Agreement, and actions taken by the Attorneys-in-Fact pursuant to the
Powers-of-Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or
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not the Custodian, the Attorneys-in-Fact, or any of them, shall have received
notice of such death, incapacity, termination, dissolution or other event.
3. SHARES SUBJECT TO SALE.
(a) On the basis of the representations, warranties and
agreements of the Company and the Selling Stockholders contained herein, and
subject to the terms and conditions of this Agreement, (i) the Company agrees to
issue and sell the Company Firm Shares to the several Underwriters, (ii) each of
the Selling Stockholders agrees to sell its Selling Stockholder Firm Shares to
the several Underwriters and (iii) each of the Underwriters agrees, severally
and not jointly, to purchase from the Company and the Selling Stockholders, at a
purchase price per share of $[____], the respective number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares by a fraction, the numerator of which is the
aggregate number of Firm Shares to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the aggregate number of Firm Shares to be purchased by all the
Underwriters; and
(b) In the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, (i) the
Company agrees to issue and sell the Optional Shares to the several Underwriters
and (ii) each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at the purchase price per share set forth in clause (a) of
this Section 3, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction, the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of the Optional Shares which all of the Underwriters are entitled to
purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 210,000 Optional Shares at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering overallotments in
the sale of the Firm Shares. Any such election to purchase Optional Shares may
be exercised on one occasion by written notice from you to the Company, given
within a period of 30 calendar days after the date of this Agreement and setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by you but in no
event (i) earlier than the First Time of Delivery or, (ii) unless you and the
Company otherwise agree in writing, earlier than two or later than three
business days after the date of such notice.
4. OFFERING. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
11
5. CLOSING. Certificates in definitive form for the Shares to be
purchased by each Underwriter hereunder, and in such denominations and
registered in such names as Xxxxx, Xxxxxxxx & Xxxx, Inc. may request upon at
least forty-eight hours' prior notice to the Company and the Attorneys-in-Fact,
shall be delivered by or on behalf of the Company and each of the Selling
Stockholders to you for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
same day funds, all at the office of Xxxxx, Xxxxxxxx & Xxxx, Inc., 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., Boston time, on
_________, 2000 or such other time and date as you and the Company may agree
upon in writing, and, with respect to the Optional Shares, 9:30 a.m., Boston
time, on the date specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as you and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of Delivery,"
such time and date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery," and each such time and
date for delivery is herein called a "Time of Delivery." Such certificates will
be made available for checking and packaging at least twenty four hours prior to
each Time of Delivery at such location as you may specify.
6. COVENANTS OF THE COMPANY. The Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than
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 Act, to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be reasonably disapproved by you promptly giving reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of the time
when the Registration Statement, or any amendment thereto, has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish you copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or Prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly, from time to time, to take such action as you
may reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete
12
the distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as you may from time to time reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issuance of the Prospectus in connection with the
offering or sale of the Shares and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such same
period to amend or supplement the Prospectus in order to comply with the Act, to
notify you and upon your request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from time
to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required by law to deliver a
prospectus in connection with sales of any of the Shares at any time nine months
or more after the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as many
copies as you may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act;
(d) To make generally available to its security holders as
soon as practicable, but in any event not later than the forty-fifth (45th) day
following the end of the full fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement (as defined in
Rule 158(c)), an earning statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of any securities of
the Company which are substantially similar to the Shares, without your prior
written consent other than (i) the sale of the Shares to be sold by the Company
hereunder and (ii) the Company's issuance of shares and the award of options
under its stock plans in amounts not in excess of the amount shown as available
for grant in the Prospectus;
(f) Not to grant options to purchase shares of Common Stock
which would become exercisable during a period beginning from the date hereof
and continuing to and including the date 90 days after the date of the
Prospectus;
13
(g) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flow of the Company and
its consolidated subsidiaries certified by independent public accountants) and
to make available (within the meaning of Rule 158(b) under the Act) as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail;
(h) During a period of five years from the effective date of
the Registration Statement, to furnish to you upon your request copies of all
reports or other communications (financial or other) furnished to stockholders
generally, and deliver to you as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission, the
Nasdaq National Market or any national securities exchange on which any class of
securities of the Company is listed (such financial statements to be on a
combined or consolidated basis to the extent the accounts of the Company and its
subsidiaries are combined or consolidated in reports furnished to its
stockholders generally or to the Commission);
(i) To use the net proceeds acquired by it from the sale of
the Shares in the manner specified in the Prospectus under the caption "Use of
Proceeds" and in a manner such that the Company will not become an "investment
company" as that term is defined in the Investment Company Act; and
(j) Not to accelerate the vesting of any option issued under
any stock option plan such that any such option may be exercised within 90 days
from the date of the Prospectus.
7. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
agrees to pay or cause to be paid all taxes, if any, on the transfer and sale of
the Shares to be sold by such Selling Stockholder hereunder and the fees and
expenses, if any, of counsel and accountants retained by such Selling
Stockholders. The Company agrees with the Selling Stockholder to pay all costs
and expenses incident to the performance of the obligations of the Selling
Stockholders under this Agreement (except as set forth above), including, but
not limited to, all expenses incident to the delivery of the certificates for
the Shares to be sold by such Selling Stockholder, the costs and expenses
incident to the preparation, printing and filing of the Registration Statement
(including all exhibits thereto) and the Prospectus and any amendments or
supplements thereto, the expenses of qualifying the Shares to be sold by the
Selling Stockholders under the state securities or Blue Sky laws, all filing
fees and the reasonable fees and expenses of counsel for the Underwriters
payable in connection with the review of the offering of the Shares by the NASD,
and the cost of furnishing to the Underwriters the required copies of the
Registration Statement and Prospectus and any amendments or supplements thereto;
provided that each Selling Stockholder agrees to pay or cause to be paid its pro
rata share (based on the percentage which the number of Shares sold by such
Selling
14
Stockholder bears to the total number of Shares sold) of all underwriting
discounts and commissions.
8. EXPENSES. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of reproducing any
Agreement among Underwriters, this Agreement, the Blue Sky Memorandum and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses and filing fees in connection with the
qualification of the Shares for offering and sale under state securities laws as
provided in Section 6(b) hereof and securing any required review by the NASD of
the terms of the sale of the Shares, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and review
and in connection with the Blue Sky survey, subject to a maximum of $5,000; (iv)
the cost of preparing stock certificates; (v) the cost and charges of any
transfer agent or registrar; and (vi) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, Section 10 and Section 13 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company and each
Selling Stockholder herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and each Selling Stockholder shall each
have performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
6(a) hereof, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to your reasonable satisfaction;
(b) Xxxxxxx, Procter & Xxxx LLP, counsel to the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to this Agreement, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request;
15
(c) Ropes & Xxxx, counsel to the Company and special counsel
to the Selling Stockholders, shall have furnished to you their written opinion,
dated such Time of Delivery, in form and substance reasonably satisfactory to
you, with respect to the matters set forth in Annex I hereto;
(d) Xxxxxxxxxx Schurgin Xxxxxxxx & Xxxxx, intellectual
property counsel to the Company, shall have furnished to you their written
opinion, dated such time of delivery in form and substance reasonably
satisfactory to you, with respect to the matters set forth in Annex II hereto;
(e) At 10:00 a.m., Boston time, on the effective date of the
Registration Statement and the effective date of the most recently filed
post-effective amendment to the Registration Statement and also at each Time of
Delivery, Deloitte & Touche LLP, shall have furnished to you a letter or
letters, dated the respective date of delivery thereof, in form and substance
reasonably satisfactory to you, to the effect set forth in Annex III hereto;
(f) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, that is in each case material to the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated in
the Prospectus, and (ii) since the respective dates as of which information is
given in the Prospectus, there shall not have been any change in the capital
stock (other than issuances of Common Stock pursuant to Company stock option and
stock purchase plans described in the Registration Statement and Prospectus) or
long-term debt of the Company or any change, or any development that is
reasonably likely to result in a material adverse change, in or affecting the
business, assets, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in your judgment so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares being delivered at such Time of Delivery on the terms
and in the manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred
any of the following: (i) additional material governmental restrictions, not in
force and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over the counter market by the NASD, or trading in securities generally
shall have been suspended on either such Exchange or in the over the counter
market by the NASD, or a general banking moratorium shall have been established
by federal or New York authorities, (ii) an outbreak of major hostilities or
other national or international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have accelerated
or escalated to such an extent, as, in the judgment
16
of the Underwriters, to affect materially and adversely the marketability of the
Shares, or (iii) there shall be any action, suit or proceeding pending or
threatened, or there shall have been any development or prospective development
involving particularly the business or properties or securities of the Company
or any of its subsidiaries or the transactions contemplated by this Agreement,
which, in the judgment of the Underwriters, has materially and adversely
affected the Company's business or earnings and makes it impracticable or
inadvisable to offer or sell the Shares;
(h) The Shares to be sold by the Company at such Time of
Delivery shall have been accepted for quotation, subject to notice of issuance,
on the Nasdaq National Market System;
(i) Each director and officer of the Company and each Selling
Stockholder shall have executed and delivered to you agreements in which such
holder undertakes, for 90 days or, after the date of the Prospectus, subject to
certain exceptions stated therein, not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock, or any securities convertible
into or exchangeable for, or any rights to purchase or acquire, shares of Common
Stock, without the prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc.; and
(j) The Company and each Selling Stockholder shall have
furnished or caused to be furnished to you at such Time of Delivery certificates
of officers of the Company and of such Selling Stockholder, respectively, in
their capacities as such, satisfactory to you, as to the accuracy of the
representations and warranties of the Company and of such Selling Stockholder,
respectively, herein at and as of such Time of Delivery, as to the performance
by the Company and of such Selling Stockholder, respectively, of all of its or
his obligations hereunder to be performed at or prior to such Time of Delivery,
and as to such other matters as you may reasonably request and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (f) of this Section, and as to such other matters
as you may reasonably request.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or, in the case of
the Registration Statement or any amendment thereto, necessary to make the
statements therein not misleading and, in the case of the Preliminary
Prospectus, the Prospectus or any supplement thereto, necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, and will
17
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you expressly for use
therein.
(b) Each of the Selling Stockholders, severally and not
jointly, will indemnify and hold harmless each Underwriter and any person, if
any, who control's such Underwriter, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or, in the case of the Registration Statement or any amendment thereto,
necessary to make the statements therein not misleading and, in the case of the
Preliminary Prospectus, the Prospectus or any supplement thereto, necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information about such Selling Stockholder furnished to
the Company by such Selling Stockholder expressly for use therein, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Each Underwriter will indemnify and hold harmless the
Company and each Selling Stockholder against any losses, claims, damages or
liabilities to which the Company or each Selling Stockholder may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or, in the case of the Registration Statement or any amendment thereto,
necessary to make the statements therein not misleading and, in the case of the
Preliminary Prospectus, the Prospectus or any supplement thereto, necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or
18
supplement in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through you expressly for use therein; and
will reimburse the Company and the Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or the Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action 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 therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of; or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party. No indemnifying party shall be liable for
any settlement of any action or claim effected without its written consent,
which consent shall not be unreasonably withheld.
(e) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling
19
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling
Stockholders, respectively, bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or any Selling Stockholder on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) 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 in this subsection (e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (e), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Selling Stockholder
shall be liable for contribution under this Section 10 in circumstances where
such Selling Stockholder would not be required to provide indemnification if
indemnification were available. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling
Stockholders under this Section 10 shall be in addition to any liability which
the Company and the Selling Stockholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriter under this Section 10 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company or any Selling Stockholder within the
meaning of the Act.
(g) Notwithstanding anything to the contrary contained herein,
the aggregate liability of each Selling Stockholder under this Agreement shall
not exceed the total initial
20
public offering price of the Shares sold by the Selling Stockholder under this
Agreement, less underwriters' discounts.
11. TERMINATION.
(a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six (36) hours after such default by any Underwriter you do not arrange
for the purchase of such Shares, then the Company and the Selling Stockholders
shall be entitled to a further period of thirty-six (36) hours within which to
procure another party or other parties satisfactory to you to purchase such
Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company and the Selling Stockholders that you have so
arranged for the purchase of such Shares, or the Company and the Selling
Stockholders notify you that they have so arranged for the purchase of such
Shares, you or the Company and the Selling Stockholders shall have the right to
postpone such Time of Delivery for a period of not more than seven (7) days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-tenth of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-tenth of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares) shall thereupon
21
terminate, without liability on the part of any non-defaulting Underwriter, the
Company or any Selling Stockholder, except for the expenses to be borne by the
Company, any Selling Stockholder and the Underwriters as provided in Section 8
hereof and the indemnity and contribution agreements in Section 10 hereof, but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
12. SURVIVAL. The respective indemnities, agreements, representations,
warranties and other statements of the Company, each Selling Stockholder and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company or any Selling Stockholder, or any officer or
director or controlling person of the Company or any Selling Stockholder, and
shall survive delivery of and payment for the Shares.
13. EXPENSES OF TERMINATION. If this Agreement shall be terminated
pursuant toe Section 11 hereof, neither the Company nor any Selling Stockholder
shall then have any liability to any Underwriter except as provided in Section 8
and Section 10 hereof; but, if for any other reason this Agreement is terminated
(other than solely as a result of a failure to meet the conditions set forth in
paragraph (b) or clauses (i) or (ii) of paragraph (d) of Section 9), the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but neither the Company nor
any Selling Stockholder shall have any further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Section 8 and
Section 10 hereof.
14. NOTICE. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf of you
as the Underwriters.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you. as the Underwriters in care of Xxxxx, Xxxxxxxx &
Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx; if
to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: President; and if to any Selling Stockholder shall be
delivered or sent by mail, telex or facsimile transmission to the address of
such Selling Stockholder set forth in Schedule II hereto; provided, however,
that any notice to an Underwriter pursuant to Section 10(d) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriter's Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
by you on request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
22
15. MISCELLANEOUS.
(a) This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company and the Selling Stockholders and,
to the extent provided in Sections 10 and 12 hereof, the officers and directors
of the Company and each person who controls the Company, any Selling Stockholder
or any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
(b) Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
(d) This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Stockholders. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company for examination, upon request, but without warranty on
your part as to the authority of the signors thereof.
23
Any person executing and delivering this Agreement as Attorney-in-Fact
for the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in-Fact by each Selling Stockholder pursuant to a validly
existing and binding Power-of-Attorney which authorizes such Attorney-in-Fact to
take such action.
Very truly yours,
PARLEX CORPORATION
By:
-----------------------------------------
Xxxxx X. Xxxxxx, President and Chief
Executive Officer
SELLING STOCKHOLDERS
(Named in Schedule II to the Agreement)
By:
-----------------------------------------
Xxxxx X. Xxxxxx, Attorney-in-Fact
Accepted as of the date hereof at Boston,
Massachusetts
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXXX & COMPANY, INC.
By:
-----------------------------------------
(Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf
of each of the Underwriters)
24
SCHEDULE I
Number of
Optional Shares
Total Number to be Purchased
of Firm Shares if Maximum
to be Purchased Option Exercised
--------------- ----------------
Xxxxx, Xxxxxxxx & Xxxx, Inc.....
Xxxxxxx & Company, Inc..........
TOTAL...........................
25
SCHEDULE II
Total Number Total Number
of Firm Shares of Optional
to be Sold Shares to be Sold
-------------- -----------------
The Company........................... 1,250,000 210,000
The Selling Stockholders:
Xxxxxxx X. Xxxxxxx............... 75,000 -
Xxxxxx Xxxxxxx................... 75,000 -
TOTAL................................. 1,400,000 210,000
26
ANNEX I
Form of Ropes & Xxxx Opinion
1. The Company is a corporation duly incorporated, validly existing and
in good standing with the Secretary of State of The Commonwealth of
Massachusetts with corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus. The Company
is duly qualified to do business and is in good standing in each jurisdiction
within the United States in which it owns or leases real property or maintains
an office.
2. The authorized capitalization of the Company as of [DECEMBER 26,
1999] is as set forth under the caption "Capitalization" in the Prospectus. All
of the issued and outstanding shares of capital stock have been duly authorized
and validly issued and are fully paid and nonassessable and have not been issued
in violation of any statutory preemptive right or, to such counsel's knowledge,
any other similar right. The Shares have been duly authorized and, when issued
and delivered in accordance with the Underwriting Agreement, will be validly
issued, fully paid and nonassessable and will conform in all material respects
to the description of the capital stock contained in the Prospectus.
3. Each domestic subsidiary of the Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization. All of the issued and outstanding shares of
capital stock of each such subsidiary (i) have been duly authorized and validly
issued and are fully paid and nonassessable and (ii) except as disclosed in the
Prospectus, are owned of record and, to such counsel's knowledge, beneficially
by the Company or another subsidiary of the Company, free and clear of all
liens, encumbrances, equities or claims other than those imposed by applicable
securities laws. Each domestic subsidiary of the Company is duly qualified to do
business and is in good standing in each jurisdiction within the United States
in which it owns or leases real property or maintains an office. Such counsel is
entitled to rely in respect of the opinions in the second sentence of paragraph
2 above and this entire paragraph 3 upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the Company and its
subsidiaries, provided that such counsel shall state that they believe that both
you and they are justified in relying upon such opinions and certificates.
4. The Company has the corporate power and authority to enter into the
Underwriting Agreement and the Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
5. The issuance and sale by the Company of the Shares and the
performance by the Company of its obligations under the Underwriting Agreement
does not and will not (i) violate the articles of organization or by-laws of the
Company, (ii) breach or result in a default under any agreement, indenture or
other instrument filed as an exhibit to the Registration Statement or any
document incorporated by reference into the Registration Statement to which the
I-1
Company is a party or by which it is bound, or to which any of its properties is
subject, or (iii) violate any existing Massachusetts or federal law, rule or
administrative regulation or any decree known to such counsel of any court or
any governmental agency or body having jurisdiction over the Company or any of
its properties, except that such counsel need express no opinion as to state
securities or "Blue Sky" laws or as to compliance with the anti-fraud provisions
of federal and state securities laws.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States or The Commonwealth of Massachusetts is required for the issuance and
sale of the Shares by the Company or the consummation by the Company of the
transactions contemplated by the Underwriting Agreement, except the registration
under the Act of the Shares.
7. The Company is not subject to regulation as an "investment company"
under the Investment Company Act of 1940, as amended.
8. The Shares have been authorized for inclusion on the Nasdaq National
Market System, subject to notice of issuance.
9. The documents incorporated by reference in the Prospectus (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion), when they were filed with the Commission,
complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder.
10. The Underwriting Agreement has been duly authorized, executed and
delivered by each of the Selling Stockholders (by such Selling Stockholder or
his or its duly authorized attorney-in-fact).
11. A Custody Agreement has been duly authorized, executed and
delivered by each of the Selling Stockholders and, pursuant to such Custody
Agreement, each Selling Stockholder has authorized its attorney-in-fact to carry
out the transactions contemplated in the Underwriting Agreement on its behalf
and to deliver the Shares being sold by such Selling Stockholder pursuant to the
Underwriting Agreement.
12. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States or The Commonwealth of Massachusetts is required to be obtained by any
Selling Stockholder to sell, assign, transfer and deliver the Shares to be sold
by such Selling Stockholder in the manner provided in the Underwriting Agreement
and the Custody Agreement, other than as have been obtained or made under the
Act.
13. Immediately prior to the First Time of Delivery, each Selling
Stockholder was the sole registered owner and, to our knowledge, the sole
beneficial owner of the Shares to be
I-2
sold by such Selling Stockholder. Upon payment by the Underwriters of the
purchase price in accordance with the Underwriting Agreement, and upon
registration of the Shares in the names of the Underwriters in the stock records
of the Company (or in the name of a nominee for DTC in such stock records, with
appropriate entries to the account of the Underwriters having been made in the
records of DTC, the Underwriters will have acquired all the rights in the Shares
that such Selling Stockholder had or had the power to transfer, free of any
claim by any other person that such person has a property interest in the Shares
and that it is a violation of such other person's rights for the Underwriters to
hold, transfer or deal with the Shares (assuming that the Underwriters are
without notice of any such claim).
Such counsel shall also state that in the course of the preparation by
the Company of the Registration Statement and the Prospectus, they have
participated in discussions with your representatives and those of the Company
and its independent accountants in which the business and affairs of the Company
and the contents of the Registration Statement and Prospectus were discussed.
Such counsel shall state that on the basis of information that such counsel has
gained in the course of such counsel's representation of the Company in
connection with its preparation of the Registration Statement and Prospectus and
such counsel's participation in the discussions referred to above, such counsel
believes that the Registration Statement, as of its effective date, and the
Prospectus, as of its date, complied as to form in all material respects with
the requirements of the Act and the published rules and regulations of the
Commission thereunder and such counsel does not know of any legal or
governmental proceedings pending to which the Company is a party or of which any
property of the Company is the subject that are required to be described in the
Registration Statement or Prospectus that are not so described or of any
contracts or any other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described or
incorporated by reference in the Registration Statement or Prospectus that are
not filed, described or incorporated by reference as required. Further, such
counsel shall state that based on such information and participation, nothing
came to the attention of such counsel that caused such counsel to believe that
(i) the Registration Statement as of its effective date contained an untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
that the Prospectus as of its date contained or as of such Time of Delivery
contains any untrue statement of a material fact or omitted or omits 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 (iii) it is
necessary to amend the Registration Statement. Such counsel need express no
opinion, however, as to the financial statements, including the notes and
schedules thereto, or any other financial or accounting information set forth or
referred to in the Registration Statement and Prospectus.
Such counsel may state that the limitations inherent in the independent
verification of factual matters and the character of the determinations involved
in such counsel's review are such that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements made
or the information contained in the Registration Statement and Prospectus except
for those made under the caption "Underwriting," which accurately
I-3
summarize in all material respects the provisions of the laws and documents
referred to therein.
Such counsel shall also include a statement in such opinion as to the
matters set forth in this paragraph. The Registration Statement has become
effective under the Act. To the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued by
the Commission nor has any proceeding been instituted or contemplated for that
purpose under the Act. The Prospectus has been filed with the Commission
pursuant to Rule 424(b) of the rules and regulations under the Act within the
time period required thereby.
I-4
ANNEX II
Matters to be Covered in the Opinion of
Xxxxxxxxxx Schurgin Xxxxxxxx & Xxxxx
Such counsel are generally familiar with the technology used by the
Company and its subsidiaries in their businesses and the manner of its use
thereof and have read the Registration Statement and the Prospectus, including
particularly the portions of the Registration Statement and the Prospectus
referring to trademarks, trade names, patents, licenses, trade secrets or other
intellectual property rights and:
(i) such counsel have no reason to believe that the Registration
Statement or the Prospectus (A) contains any untrue statement of a material fact
with respect to trademarks, trade names, patents, licenses, trade secrets or
other intellectual property rights owned or used by the Company or any of its
subsidiaries, or the manner of its use thereof, or any allegation on the part of
any person that the Company or any of its subsidiaries is infringing any
trademarks, trade names, patent rights, licenses, trade secrets or other
intellectual property rights of any such person or (B) omits to state any
material fact relating to trademarks, trade names, patents, licenses, trade
secrets or other intellectual property rights owned or used by the Company or
any of its subsidiaries, or the manner of its use thereof, or any allegation of
which such counsel have knowledge, that is required to be stated in the
Registration Statement or the Prospectus or is necessary to make the statements
therein not misleading;
(ii) to the best of such counsel's present knowledge and except as set
forth in the Prospectus under the captions "Risk Factors - If we become involved
in a protracted intellectual property dispute, or one with a significant damages
award or which requires us to cease selling some of our products, we could be
subject to significant liability and the time and attention of our management
could be diverted" and "Business - Intellectual Property," there are no legal or
governmental proceedings pending relating to trademarks, trade names, patent
rights, licenses, trade secrets or other intellectual property rights of the
Company or any of its subsidiaries, and to the best of such counsel's knowledge
no such proceedings are threatened or contemplated by governmental authorities
or others;
(iii) to the best of such counsel's present knowledge, the Company and
its subsidiaries duly and properly hold the patents, and have duly and properly
filed the patent applications, listed in the Prospectus under the caption
"Business-Intellectual Property";
(iv) such counsel have no present knowledge of any contracts or other
documents relating to the Company's or any of its subsidiaries' trademarks,
trade names, patents, licenses, trade secrets or other intellectual property
rights of a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or the
Prospectus that are not filed or described as required;
II-1
(v) to the best of such counsel's present knowledge, neither the
Company nor any of its subsidiaries is infringing or otherwise violating any
trademarks, trade names, patents, licenses, trade secrets or other intellectual
property rights of others, and to the best of such counsel's knowledge there are
no infringements by others of any of the Company's or any of its subsidiaries'
trademarks, trade names, patents, licenses, trade secrets or other intellectual
property rights which in the judgment of such counsel could affect materially
the use thereof by the Company or any of its subsidiaries; and
(vi) to the best of such counsel's present knowledge, the Company owns
or possesses sufficient licenses or other rights to use all trademarks, trade
names, patents, licenses, trade secrets or other intellectual property rights
necessary to conduct the business now being or proposed to be conducted by the
Company and its subsidiaries as described in the Prospectus.
II-2
ANNEX III
Pursuant to Section 9(e) of the Underwriting Agreement, Deloitte &
Touche LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, pro forma financial
information) examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act or the Exchange
Act, if applicable, and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of the
consolidated interim financial statements, selected financial data, pro forma
financial information and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been separately
furnished to the Underwriters;
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or included
in the Company's Quarterly Reports on Form 10-Q incorporated by reference into
the Prospectus as indicated in their reports thereon, copies of which have been
separately furnished to the Underwriters; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that caused
them to believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the most recent fiscal year, agrees with the corresponding amounts (after
restatements where applicable) in the audited consolidated financial statements
for such five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
III-1
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as a
result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute books
of the Company and its subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus,
inquiries of officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that caused them to
believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by reference in the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form 10-Q and the
related published rules and regulations, or (ii) any material modifications
should be made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows included
in the Prospectus or included in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus, for them to be conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the corresponding items
in the unaudited consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were not determined on
a basis substantially consistent with the basis for the corresponding amounts in
the audited consolidated financial statements included in the Prospectus or
incorporated by reference to the Company's Annual Report on Form 10-K for the
most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Prospectus or
incorporated by reference to the Company's Annual Report on Form 10-K for the
most recent fiscal year;
III-2
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do not comply
as to form in all material respects with the applicable accounting requirements
of the Act and the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon conversions
of convertible securities, in each case which were outstanding on the date of
the latest financial statements included or incorporated by reference in the
Prospectus) or any increase in the combined long-term debt of the Company and
its subsidiaries, or any decreases in combined net current assets or net assets
or other items specified by the Underwriters, or any increases in any items
specified by the Underwriters, in each case as compared with amounts shown in
the latest balance sheet included or incorporated by reference in the
Prospectus, except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to the
specified date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per share amounts
of consolidated net income or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each case as compared
with the comparable period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in each case for
decreases or increases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Underwriters which are derived from the
general accounting records of the Company and its subsidiaries, which appear in
the Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Underwriters, and have compared certain
of such amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement.
III-3
