CERADYNE, INC. (a Delaware corporation) 2.875% Senior Subordinated Convertible Notes due 2035 PURCHASE AGREEMENT
EXHIBIT
1.1
CERADYNE,
INC.
(a
Delaware corporation)
2.875%
Senior Subordinated Convertible Notes due 2035
Dated:
December 13, 2005
CERADYNE,
INC.
(a
Delaware corporation)
$110,000,000
2.875%
Senior Subordinated Convertible Notes due 2035
December
13, 2005
Citigroup
Global Markets Inc.
as
Representative of the several Underwriters
| c/o |
Citigroup
Global Markets Inc.
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Ceradyne,
Inc., a Delaware corporation (the “Company”), confirms its agreement with
Citigroup Global Markets Inc. and each of the other Underwriters named in
Schedule A hereto (collectively, the “Underwriters”, which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Citigroup Global Markets Inc. is acting as representative
(in
such capacity, the “Representative”), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective principal amounts set forth in said Schedule A of
$110,000,000 aggregate principal amount of the Company’s 2.875% Senior
Subordinated Convertible Notes due 2035 (the “Notes”), and with respect to the
grant by the Company to the Underwriters, acting severally and not jointly,
of
the option described in Section 2(b) hereof to purchase all or any part of
an
additional $11,000,000 aggregate principal amount of the Notes to cover
over-allotments, if any. The aforesaid $110,000,000 principal amount of the
Notes (the “Initial Securities”) to be purchased by the Underwriters and all or
any part of the $11,000,000 aggregate principal amount of Notes subject to
the
option described in Section 2(b) hereof (the “Option Securities”) are
hereinafter called, collectively, the “Securities.” The Securities are to be
issued pursuant to the first supplemental indenture dated as of the Closing
Time
to the indenture dated as of the Closing Time (the indenture as so supplemented,
the “Indenture”) between the Company and Union Bank of California, as trustee
(the “Trustee”). Securities issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company (“DTC”) pursuant
to a letter agreement, to be dated as of the Closing Time (as defined in
Section 2(c)) (the “DTC Agreement”), among the Company, the Trustee and
DTC.
The
Securities are convertible into shares of common stock, par value $0.01 per
share, of the Company (the “Underlying Common Stock”) in accordance with the
terms of the Securities and the Indenture, at the initial conversion price
specified in Schedule B hereto.
The
Company understands that the Underwriters propose to make a public offering
of
the Securities as soon as the Representative deems advisable after this
Agreement has been executed and delivered. The Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the “1939 Act”).
The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a registration statement on Form S-3 (No. 333-129197), including the related
preliminary prospectus or prospectuses, for the registration of the Securities
and other securities of the Company (including the Securities) under the
Securities Act of 1933, as amended (the “1933 Act”), and the offering thereof
from time to time in accordance with Rule 415 of the rules and regulations
of
the Commission under the 1933 Act (the “1933 Act Regulations”). The prospectus
contained in the Registration Statement at the time it was declared effective
is
referred to herein as the “Base Prospectus.” Such registration statement was
declared effective on December 1, 2005. Such registration statement, as amended,
including the financial statements, exhibits and schedules thereto, in the
form
in which it was declared effective by the Commission under the 1933 Act,
including all documents incorporated or deemed incorporated by reference therein
and any information deemed to be a part thereof and included in such
registration statement pursuant to Rule 430B (the “Rule 430B Information”) under
the 1933 Act (“Rule 430B”) or the Securities Exchange Act of 1934, as amended
(the “1934 Act”), is called the “Registration Statement.” Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations (“Rule
462(b)”) is herein referred to as the “Rule 462(b) Registration Statement,” and
after such filing, the term “Registration Statement” shall include the Rule
462(b) Registration Statement. Each preliminary prospectus supplement to the
Base Prospectus, together with the Base Prospectus, that describes the
Securities and the offering therof, that omitted the Rule 430B Information
and
that was used prior to the filing of the final prospectus supplement referred
to
in the following sentence (together with all documents incorporated or deemed
incorporated therein by reference) is herein called a “Preliminary Prospectus.”
Promptly after execution and delivery of this Agreement, the Company will
prepare and file with the Commission a final prospectus supplement to the Base
Prospectus relating to the Securities and the offering thereof, together with
the Base Prospectus, in accordance with the provisions of Rule 430B and Rule
424(b) of the 1933 Act Regulations (“Rule 424(b)”). Such final prospectus
supplement, together with the Base Prospectus, in the form first furnished
to
the Underwriters to confirm sales of the Securities, together with all documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
1933
Act or the 1934 Act, at the time of the execution of this Agreement, is herein
called the “Prospectus.” For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include
the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system (“▇▇▇▇▇”).
All
references in this Agreement to financial statements and schedules and other
information which is “described,” “contained,” “included” or “stated” in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in or otherwise deemed by the 1933 Act Regulations to be a part
of
or included in the Registration Statement, any Preliminary Prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to mean and include the filing
of
any document under the 1934 Act which is incorporated by reference in or
otherwise deemed by the 1933 Act Regulations to be a part of or included in
the
Registration Statement, any Preliminary Prospectus or the Prospectus, as the
case may be.
Concurrent
with the offering and sale of the Securities by the Company pursuant to the
terms of this Agreement, the Company is offering to sell 1,800,000 shares of
common stock, par value $0.01 per share (“Common Stock”) (or 2,070,000 shares of
Common Stock if the underwriters exercised their over allotment option) pursuant
to the terms of a Purchase Agreement, dated of even date herewith, among the
Company, Citigroup Global Markets Inc., ▇▇▇▇▇▇▇ & Company, LLC, Wachovia
Capital Markets, LLC, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc., JMP Securities LLC and Wedbush
▇▇▇▇▇▇ Securities Inc. (the “Concurrent Stock Offering”). The offering, issuance
and sale of the Securities by the Company pursuant to the terms of this
Agreement are not contingent on the successful completion of the Concurrent
Stock Offering.
SECTION
1. Representations
and Warranties.
-2-
(a) Representations
and Warranties by the Company.
The
Company represents and warrants to each Underwriter as of the date hereof,
the
Applicable Time referred to in Section 1(a)(ii) and as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Ineligible
Issuer.
At
the
time of filing the Registration Statement, at the earliest time thereafter
that
the Company or another offering participant made a bona
fide
offer
(within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the
Securities and at the date hereof, the Company was not and is not an “ineligible
issuer,” as defined in Rule 405, including the Company or any other subsidiary
in the preceding three years not having been convicted of a felony or
misdemeanor or having been made the subject of a judicial or administrative
decree or order as described in Rule 405, without taking account of any
determination by the Commission pursuant to Rule 405 that it is not necessary
that the Company be considered an “ineligible issuer.”
(ii) Registration
Statement, Prospectus and Disclosure at Time of Sale.
The
Company meets the requirements for use of Form S-3 under the 1933 Act and has
complied with the requirements of Rule 415 with respect to the Registration
Statement. Each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement or any post-effective
amendment thereto has been issued under the 1933 Act and no proceedings for
that
purpose have been instituted or are pending or, to the knowledge of the Company,
are contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
Any
offer
that is a written communication relating to the Securities made prior to the
filing of the Registration Statement by the Company or any person acting on
its
behalf (within the meaning, for this paragraph only, of Rule 163(c) of the
1933
Act Regulations) has been filed with the Commission in accordance with the
exemption provided by Rule 163 of the 1933 Act Regulations (“Rule 163”) and
otherwise complied with the requirements of Rule 163, including without
limitation the legending requirement, to qualify such offer for the exemption
from Section 5(c) of the 1933 Act provided by Rule 163.
At
the
respective times the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto became effective, at each
deemed effective date with respect to the Underwriters pursuant to Rule
430B(f)(2) of the 1933 Act Regulations and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the
requirements of the 1933 Act and the 1933 Act Regulations, the 1934 Act and
the
rules and regulations of the Commission thereunder (the “1934 Act Regulations”)
and the 1939 Act and the rules and regulations of the Commission thereunder
(the
“1939 Act Regulations”) and did not and will 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 not misleading.
Neither
the Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the Closing
Time (and, if any Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or omitted
or
will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
-3-
Each
Preliminary Prospectus and the prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto complied
when
so filed in all material respects with the 1933 Act Regulations and each
Preliminary Prospectus and the Prospectus delivered to the Underwriters for
use
in connection with this offering was or will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
As
of the
Applicable Time and at Closing, neither (x) the Issuer-Represented General
Free
Writing
Prospectus(es) (as defined below) issued at or prior to the Applicable Time
(as
defined below), the Preliminary Prospectus and the information included on
Exhibit D hereto, all considered together (collectively, the “General Disclosure
Package”), nor (y) any individual Issuer-Represented Limited Use Free Writing
Prospectus, when considered together with the General Disclosure Package,
included any untrue statement of a material fact or omitted 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.
As
used
in this subsection and elsewhere in this Agreement:
“Applicable
Time” means 7:00
p.m.
(Eastern time) on the date hereof or such other time as agreed by the Company
and Citigroup Global Markets Inc.
“Issuer-Represented
Free Writing Prospectus” means any “issuer free writing prospectus,” as defined
in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Securities
that (i) is required to be filed with the Commission by the Company or (ii)
is a
“road show that is a written communication” within the meaning of Rule
433(d)(8)(i), whether or not required to be filed with the
Commission
or is
exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a
description of the Securities or of the offering that does not reflect the
final
terms, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed,
in the
form retained in the Company’s records pursuant to Rule 433(g).
“Issuer-Represented
General Free Writing Prospectus” means any Issuer-Represented Free Writing
Prospectus that is intended for general distribution to prospective investors,
as evidenced by its being specified in Schedule E hereto.
“Issuer-Represented
Limited Use Free Writing Prospectus” means any Issuer-Represented Free Writing
Prospectus that is not an Issuer-Represented General Free Writing Prospectus.
Each
Issuer-Represented Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Securities or until any earlier date that the issuer notified or notifies
Citigroup Global Markets Inc., did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus, including any
document incorporated by reference therein and any preliminary or other
prospectus deemed to be a part thereof that has not been superseded or
modified.
The
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement,
the
Preliminary Prospectus, the Prospectus or any Issuer-Represented Free
Writing
Prospectus made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Citigroup Global Markets
Inc. expressly for use therein.
-4-
(iii) Incorporated
Documents.
The
documents incorporated or deemed to be incorporated by reference in the
Registration Statement, the Preliminary Prospectus and the Prospectus, at the
time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the 1934 Act and the
1934 Act Regulations, and, when read together with the other information (a)
in
the Prospectus at the time the Registration Statement became effective
(including each deemed effective date with respect to the Underwriters pursuant
to Rule 430(B)(f)(2) of the 1933 Act Regulations), (b) in the Preliminary
Prospectus at the earlier of the time the Preliminary Prospectus was first
used
and the date and time of the first contract of sale of Securities in this
offering and (c) in the Prospectus at the Closing Time (and if any Option
Securities are purchased, at the Date of Delivery), did not and will 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 not
misleading.
(iv) Independent
Accountants.
The
accountants who certified the financial statements and supporting schedules
of
the Company and ESK Ceramics GmbH & Co. KG (“ESK”) included or incorporated
by reference in the Registration Statement are independent public accountants
as
required by the 1933 Act and the 1933 Act Regulations.
(v) Financial
Statements.
The
financial statements of the Company and ESK included or incorporated by
reference in the Registration Statement, the Preliminary Prospectus and the
Prospectus, together with the related schedules and notes, present fairly the
financial position of the Company, ESK and their respective consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders’ equity and cash flows of the Company, ESK and their respective
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included or incorporated by reference in the
Registration Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the summary
financial information included or incorporated by reference in the Preliminary
Prospectus and the Prospectus present fairly the information shown therein
and
have been compiled on a basis consistent with that of the audited financial
statements included or incorporated by reference in the Registration Statement,
the Preliminary Prospectus and the Prospectus. The pro forma financial
statements and the related notes thereto included or incorporated by reference
in the Registration Statement, the Preliminary Prospectus and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission’s rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and
circumstances referred to therein. All disclosures contained in the Registration
Statement, the General Disclosure Package or the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of the
Commission) comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable.
(vi) No
Material Adverse Change in Business.
Since
the respective dates as of which information is given in the Registration
Statement, the General Disclosure Package and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change in
the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business (a
“Material Adverse Effect”), (B) there have been no transactions entered into by
the Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its capital
stock.
-5-
(vii) Good
Standing of the Company.
The
Company has been duly organized and is validly existing as a corporation in
good
standing under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and the General Disclosure Package and to enter
into and perform its obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether
by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(viii) Good
Standing of Subsidiaries.
Each
“significant subsidiary” of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a “Subsidiary” and, collectively, the “Subsidiaries”) has
been duly organized and is validly existing and in good standing under the
laws
of the jurisdiction of its organization, has power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and the General Disclosure Package and is duly qualified to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or
to be in good standing would not result in a Material Adverse Effect; except
as
otherwise disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, (A) all of the issued and outstanding capital stock
of each such Subsidiary that is a corporation has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity, (B) all of the issued
and
outstanding limited liability company interests of each such Subsidiary that
is
a limited liability company have been duly authorized and validly issued (under
applicable law and the limited liability company agreement of such Subsidiary),
is fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity and (C) all of the issued and outstanding
limited and general partnership interests of each such Subsidiary that is a
partnership have been duly authorized and validly issued, and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding equity interests of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary. The
only
subsidiaries of the Company are the subsidiaries listed on Schedule C
hereto.
(ix) Capitalization.
The
authorized, issued and outstanding capital stock of the Company is as set forth
in the Preliminary Prospectus and the Prospectus in the column entitled “Actual”
under the caption “Capitalization” (except for subsequent issuances, if any,
pursuant to this Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Preliminary Prospectus or the Prospectus or
pursuant to the exercise of convertible securities or options referred to in
the
Preliminary Prospectus or the Prospectus). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
-6-
(x) Power
and Authority.
The
Company has all requisite corporate or other similar power and authority to
enter into and perform its obligations under this Agreement, the Indenture,
the
Securities and the DTC Agreement, in each case to the extent a party thereto,
and to consummate all of the transactions in connection therewith as
contemplated in the Registration Statement, the General Disclosure Package
and
the Prospectus.
(xi) Authorization
of Agreement.
This
Agreement has been duly authorized, executed and delivered by the
Company.
(xii) Authorization
of the Indenture.
The
Indenture has been duly authorized by the Company and duly qualified under
the
1939 Act and, when duly executed and delivered by the Company and the Trustee,
will constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors’ rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of
whether enforcement is considered in a proceeding in equity or at law).
(xiii) Authorization
of the Securities.
The
Securities have been duly authorized and, at the Closing Time, will have been
duly executed by the Company and, when authenticated, issued and delivered
in
the manner provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute valid
and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited
by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors’ rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement
is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(xiv) Description
of the Securities and the Indenture.
The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Preliminary Prospectus
and the Prospectus and will be in substantially the respective forms last
delivered to the Underwriters prior to the date of this Agreement.
(xv) Authorization
and Description of the Underlying Common Stock.
The
Underlying Common Stock conforms to all statements relating thereto contained
or
incorporated by reference in the Preliminary Prospectus and the Prospectus.
Upon
issuance and delivery of the Securities in accordance with this Agreement and
the Indenture, the Securities will be convertible at the option of the holder
thereof for shares of Underlying Common Stock in accordance with the terms
of
the Securities and the Indenture; the shares of the Underlying Common Stock
issuable upon conversion of the Securities have been duly authorized and
reserved for issuance upon such conversion by all necessary corporate action
and
such shares, when issued upon such conversion, will be validly issued and will
be fully paid and non-assessable; no holder of such shares will be subject
to
debts or liabilities of the Company by reason of being such a holder; and the
issuance of such shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the
Company.
-7-
(xvi) Absence
of Defaults and Conflicts.
Neither
the Company nor any of its subsidiaries is in violation of its respective
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries
is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(collectively, “Agreements and Instruments”), except for such defaults that
would not result in a Material Adverse Effect; and the execution, delivery
and
performance of this Agreement, the Indenture, the DTC Agreement and the
Securities and any other agreement or instrument entered into or issued or
to be
entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Prospectus and the consummation of
the
transactions contemplated herein and in the Registration Statement, the General
Disclosure Package and the Prospectus (including the offering, issuance and
sale
of the Securities pursuant to this Agreement and the Indenture and the use
of
the proceeds from the sale of the Securities as described in the Preliminary
Prospectus and the Prospectus under the caption “Use of Proceeds” and the
issuance of the shares of Underlying Common Stock issuable upon conversion
of
the Securities) and in the Concurrent Stock Offering and compliance by the
Company with its obligations hereunder and under the Indenture and the
Securities have been duly authorized by all necessary corporate action and
do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any
lien, charge or encumbrance upon any property or assets of the Company or any
of
its subsidiaries pursuant to, the Agreements and Instruments (except for such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will
such
action result in any violation of the provisions of the charter or by-laws
of
the Company or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets, properties or
operations. As used herein, a “Repayment Event” means any event or condition
which gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness
by
the Company or any of its subsidiaries.
(xvii) Absence
of Labor Dispute.
No
labor dispute with the employees of the Company or any subsidiary exists or,
to
the knowledge of the Company, is imminent, and the Company is not aware of
any
existing or imminent labor disturbance by the employees of any of its or any
subsidiary’s principal suppliers, manufacturers, customers or contractors,
which, in either case, would result in a Material Adverse Effect.
(xviii) Absence
of Proceedings.
There
is no action, suit, proceeding, inquiry or investigation before or brought
by
any court or governmental agency or body, domestic or foreign, now pending,
or,
to the knowledge of the Company, threatened, against or affecting the Company
or
any subsidiary, which is required to be disclosed in the Registration Statement,
the Preliminary Prospectus or the Prospectus (other than as disclosed therein),
or which might result in a Material Adverse Effect, or which might materially
and adversely affect the properties or assets thereof or the consummation of
the
transactions contemplated in this Agreement or the performance by the Company
of
its obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which any
of
their respective property or assets is the subject which are not described
in
the Registration Statement, the Preliminary Prospectus or the Prospectus,
including ordinary routine litigation incidental to the business, could not
result in a Material Adverse Effect.
-8-
(xix) Accuracy
of Exhibits.
There
are no contracts or documents which are required to be described in the
Registration Statement, the Preliminary Prospectus, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits thereto
which have not been so described and filed as required.
(xx) Possession
of Intellectual Property.
The
Company
and its subsidiaries own or license, all Intellectual Property necessary for
the
conduct of the Company’s business as now conducted or as proposed in the
Registration Statement, the General Disclosure Package and Prospectus to be
conducted except as such failure to own or license such rights would not have
a
Material Adverse Effect. Except as set forth in the Registration Statement,
the
Preliminary Prospectus and Prospectus under the caption “Business—Patents,
Licenses and Trademarks” and “Risk Factors—Risks Related to Our Business—We may
not be able to adequately safeguard our intellectual property and trade secrets
from unauthorized use, and we may become subject to claims that we infringe
on
others’ intellectual property,” (i) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any such
Intellectual Property, except as such infringement, misappropriation or
violation would not have a Material Adverse Effect; (ii) there is no pending
or,
to the knowledge of the Company, threatened action, suit, proceeding or claim
by
others challenging the Company’s rights in or to any such Intellectual Property,
and the Company has
no
knowledge
of any
facts which would form a reasonable basis for any such claim; (iii) the
Intellectual Property owned by the Company and to the knowledge of the Company,
the Intellectual Property licensed to the Company have not been adjudged invalid
or unenforceable, in whole or in part, and there is no pending or to
the
knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the validity or scope
of
any such Intellectual Property, and the Company has
no
knowledge of
any
facts which would form a reasonable basis for any such claim; (iv) there is
no
pending or to
the
knowledge of the Company, threatened
action, suit, proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, the Company has not received any written notice
of
such claim and the Company has no
knowledge
of any
other fact which would form a reasonable basis for any such claim; and (v)
to
the Company’s knowledge, no employee of the Company is in or
has
ever been in violation of any term
of
any employment contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement, nondisclosure
agreement or any restrictive covenant to or with a former employer where the
basis of such violation relates to such employee’s employment with the Company
or actions undertaken by the employee while employed with the Company, except
as
such violation would not have a Material Adverse Effect. “Intellectual
Property” shall mean all patents, patent rights, patent applications, trade and
service marks, trade and service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures.
(xxi) Absence
of Manipulation.
Neither
the Company nor any of its officers, directors or affiliates has taken, nor
will
take, directly or indirectly, any action which is designed to or which has
constituted or which would 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 Securities.
(xxii) Absence
of Further Requirements.
No
filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency is
necessary or required for the performance by the Company of its obligations
hereunder, in connection with the offering, issuance or sale of the Securities
hereunder, the issuance of shares of Underlying Common Stock upon conversion
of
the Securities, the consummation of the transactions contemplated by this
Agreement, or for the due execution, delivery or performance of this Agreement,
the Indenture or the DTC Agreement by the Company, in each case on the terms
contemplated by the Prospectus and the General Disclosure Package, except such
as have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws.
-9-
(xxiii) Possession
of Licenses and Permits.
The
Company and its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, the “Governmental Licenses”) issued by
the appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the failure
so to possess would not, singly or in the aggregate, result in a Material
Adverse Effect; the Company and its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure of
such
Governmental Licenses to be in full force and effect would not, singly or in
the
aggregate, result in a Material Adverse Effect; and neither the Company nor
any
of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xxiv) Title
to Property.
The
Company and its subsidiaries have good and marketable title to all real property
owned by the Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except
such
as (a) are described in the Prospectus and the General Disclosure Package or
(b)
do not, singly or in the aggregate, materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company or any of its subsidiaries; and all of the leases and subleases
material to the business of the Company and its subsidiaries, considered as
one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectus or the General Disclosure Package, are
in
full force and effect, and neither the Company nor any subsidiary has any notice
of any material claim of any sort that has been asserted by anyone adverse
to
the rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises
under
any such lease or sublease.
(xxv) Investment
Company Act.
The
Company is not required, and upon the issuance and sale of the Securities as
herein contemplated and as contemplated in the Concurrent Stock Offering and
the
application of the net proceeds herefrom and therefrom as described in the
Prospectus and the General Disclosure Package, will not be required, to register
as an “investment company” under the Investment Company Act of 1940, as amended
(the “1940 Act”).
(xxvi) No
Prohibited Transaction.
No
“prohibited transaction” (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue
Code of 1986, as amended from time to time (the “Code”)) or “accumulated funding
deficiency” (as defined in Section 302 of ERISA) or any of the events set forth
in Section 4043(b) of ERISA (other than events with respect to which the 30-day
notice requirement under Section 4043 of ERISA has been waived) has occurred
with respect to any employee benefit plan which could have a Material Adverse
Effect; each employee benefit plan is in compliance in all material respects
with applicable law, including ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with respect
to
the termination of, or withdrawal from, any “pension plan”; and each “pension
plan” (as defined in ERISA) for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified
in
all material respects and nothing has occurred, whether by action or by failure
to act, which could cause the loss of such qualifications.
-10-
(xxvii) Environmental
Laws.
Except
as described in the Registration Statement, the Preliminary Prospectus and
the
Prospectus and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its subsidiaries
is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of
human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products, asbestos-containing
materials or mold (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with
their requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings relating
to
any Environmental Law against the Company or any of its subsidiaries and (D)
there are no events or circumstances that would reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous Materials
or any Environmental Laws.
(xxviii) Accounting
Controls and Disclosure Controls.
The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (1) transactions
are
executed in accordance with management’s general or specific authorization; (2)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(3) access to assets is permitted only in accordance with management’s general
or specific authorization; and (4) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Except as described in the General
Disclosure Package and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (I) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (II) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect,
the
Company’s internal control over financial reporting.
The
Company and its consolidated subsidiaries employ disclosure controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.
-11-
(xxix) Compliance
with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
There
is and has been no failure on the part of the Company or any of the Company’s
directors or officers, in their capacities as such, to comply in all material
respects with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules
and
regulations promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”),
including Section 402 related to loans and Sections 302 and 906 related to
certifications.
(xxx) Payment
of Taxes.
All
United States federal income tax returns of the Company and its subsidiaries
required by law to be filed have been filed and all taxes shown by such returns
or otherwise assessed, which are due and payable, have been paid, except
assessments against which appeals have been or will be promptly taken and as
to
which adequate reserves have been provided. No United States federal income
tax
returns of the Company are currently being audited by the Internal Revenue
Service (the “IRS”); the most recent year for which the Company’s tax returns
were audited by the IRS was the fiscal year ended December 31, 1994; the federal
income tax returns of the Company for that year have been settled and no
assessment in connection therewith has been made against the Company. The
Company and its subsidiaries have filed all other tax returns that are required
to have been filed by them pursuant to applicable foreign, state, local or
other
law except insofar as the failure to file such returns would not result in
a
Material Adverse Effect, and has paid all taxes due pursuant to such returns
or
pursuant to any assessment received by the Company and its subsidiaries, except
for such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves on
the
books of the Company in respect of any income and corporation tax liability
for
any years not finally determined are adequate to meet any assessments or
re-assessments for additional income tax for any years not finally determined,
except to the extent of any inadequacy that would not result in a Material
Adverse Effect.
(xxxi) Nasdaq
Listing.
The
Common Stock is registered pursuant to Section 12(g) of the 1934 Act and is
listed on the Nasdaq National Market, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration
of
the Common Stock under the 1934 Act or delisting the Common Stock from the
Nasdaq National Market, nor has the Company received any notification that
the
Commission or the National Association of Securities Dealers, Inc. (the “NASD”)
is contemplating terminating such registration or listing.
(xxxii) Insurance.
The
Company and its subsidiaries carry or are entitled to the benefits of insurance,
with financially sound and reputable insurers, in such amounts and covering
such
risks as is generally maintained by companies of established repute engaged
in
the same or similar business, and all such insurance is in full force and
effect. The Company has no reason to believe that it or any subsidiary will
not
be able (A) to renew its existing insurance coverage as and when such
policies expire or (B) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as
now
conducted and at a cost that would not result in a Material Adverse Effect.
Neither the Company nor any subsidiary has been denied any insurance coverage
which it has sought or for which it has applied.
(xxxiii) Statistical
and Market-Related Data.
Any
statistical and market-related data included in the Registration Statement,
the
General Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the Company
has obtained the written consent to the use of such data from such sources
to
the extent such consent is required.
(xxxiv) Foreign
Corrupt Practices Act.
Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or other person acting on behalf of the Company or any
of
its subsidiaries is aware of or has taken any action, directly or indirectly,
that would result in a violation by such persons of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder
(the
“FCPA”), including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything
of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company and, to the
knowledge of the Company, its affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue
to
ensure, continued compliance therewith.
-12-
(xxxv) Money
Laundering Laws.
The
operations of the Company and its subsidiaries are and have been conducted
at
all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
(xxxvi) OFAC.
Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or person acting on behalf of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute
or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by
OFAC.
(xxxvii) Certain
Relationships.
No
relationship, direct or indirect, exists between or among the Company on the
one
hand, and the directors, officers, stockholders, customers or suppliers of
the
Company on the other hand, which is required to be described in the Registration
Statement, the Preliminary Prospectus and the Prospectus and which is not so
described.
(xxxviii) Registration
Rights.
No
person or entity has the right to require registration of shares of Common
Stock
or other securities of the Company as a result of or in connection with the
transactions contemplated by this Agreement.
(xxxix) Pending
Proceedings and Examinations.
The
Registration Statement is not the subject of a pending proceeding or examination
under Section 8(d) or 8(e) of the 1933 Act, and the Company is not the subject
of a pending proceeding under Section 8A of the 1933 Act in connection with
the
offering of the Securities.
(b) Officer’s
Certificates.
Any
certificate signed by any officer of the Company or any of its subsidiaries
delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as
to
the matters covered thereby.
-13-
SECTION
2. Sale
and Delivery to Underwriters; Closing.
(a) Initial
Securities.
On the
basis of the representations and warranties herein contained and subject to
the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and
not
jointly, agrees to purchase from the Company, the respective principal amount
of
Securities set forth opposite that Underwriter’s name in Schedule A, at the
purchase price set forth in Schedule B, plus any additional number of Initial
Securities which such Underwriter may become obligated to purchase pursuant
to
the provisions of Section 10 hereof.
(b) Option
Securities.
In
addition, on the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company hereby
grants an option to the Underwriters, severally and not jointly, to purchase
up
to an additional $11,000,000 aggregate principal amount of Option Securities
at
the purchase price set forth in Schedule B for the Initial Securities, plus
accrued interest, if any, from the Closing Time to the Date of Delivery (as
defined below). The option hereby granted will expire 13 days after the date
hereof and may be exercised in whole or in part from time to time only for
the
purpose of covering overallotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by Citigroup
Global Markets Inc. to the Company setting forth the number of Option Securities
as to which the several Underwriters are then exercising the option and the
time
and date of payment and delivery for such Option Securities. Any such time
and
date of delivery (a “Date of Delivery”) shall be determined by Citigroup Global
Markets Inc., but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of
the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total aggregate principal amount of Option
Securities then being purchased which the aggregate principal amount of Initial
Securities set forth in Schedule A opposite the name of such Underwriter bears
to the total aggregate principal amount of Initial Securities, subject, in
each
case, to such adjustments as Citigroup Global Markets Inc., in its discretion,
shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment.
Payment
of the purchase price for, and delivery of certificates for, the Initial
Securities shall be made at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon
by
the Representative and the Company, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representative and the Company
(such time and date of payment and delivery being herein called the “Closing
Time”).
In
addition, in the event that any or all of the Option Securities are purchased
by
the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representative
and the Company, on each Date of Delivery as specified in the notice from the
Representative to the Company.
Payment
shall be made to the Company by wire transfer of immediately available funds
to
a bank account designated by the Company, against delivery to the Representative
for the respective accounts of the Underwriters of certificates for the
Securities to be purchased by them. It is understood that each Underwriter
has
authorized the Representative, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Initial Securities and
the
Option Securities, if any, which it has agreed to purchase. Citigroup Global
Markets Inc., individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
-14-
(d) Denominations;
Registration.
Certificates for the Initial Securities and the Option Securities, if any,
shall
be evidenced by one or more global securities registered in the name of Cede
& Co., as nominee of the DTC for the account of the Underwriters against
payment to or upon the order of the Company of the purchase price by wire
transfer in immediately available funds. The certificates for the Initial
Securities and the Option Securities, if any, will be made available for
examination and packaging by the Representative in The City of New York not
later than 10:00 A.M. (Eastern Time) on the business day prior to the Closing
Time or the relevant Date of Delivery, as the case may be.
(e) Appointment
of Qualified Independent Underwriter.
The
Company hereby confirms its engagement of Citigroup Global Markets Inc. as,
and
Citigroup Global Markets Inc. hereby confirms its agreement with the Company
to
render services as, a “qualified independent underwriter” within the meaning of
Rule 2720 of the Conduct Rules of the NASD with respect to the offering and
sale
of the Securities. Citigroup Global Markets Inc., solely in its capacity as
qualified independent underwriter and not otherwise, is referred to herein
as
the “Independent Underwriter”.
SECTION
3. Covenants
of the Company.
The
Company covenants with each Underwriter as follows:
(a) Compliance
with Securities Regulations and Commission Requests.
The
Company, subject to Section 3(b), will comply with the requirements of Rule
430B
and will notify the Representatives immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or any
amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement, or any 462(b) Registration
Statement, or any amendment or supplement to the Prospectus or any document
incorporated by reference therein or otherwise deemed part thereof or for
additional information and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any
order preventing or suspending the use of any Preliminary Prospectus, or of
the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any
of
such purposes or of any examination pursuant to Section 8(c) of the 1933 Act
concerning the Registration Statement, (v) if the Company becomes the subject
of
a proceeding under Section 8A of the 1933 Act in connection with the offering
of
the Securities and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in
any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will effect the filings required under Rule 424(b), in
the manner and within the time period required by Rule 424(b) (without reliance
on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus supplement transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus supplement. The Company
will make every reasonable effort to prevent the issuance of any stop order
and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment, including, if necessary, by filing an amendment to the
Registration Statement or a new registration statement and using its best
efforts to have such amendment or new registration statement declared effective
as soon as practicable.
(b) Filing
of Amendments.
The
Company will give the Representative notice of its intention to file or prepare
any amendment to the Registration Statement (including any filing under Rule
462(b)) or any amendment, supplement or revision to either any Preliminary
Prospectus (including any prospectus included in the Registration Statement
or
any amendment thereto at the time it became effective) or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Representative with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file
or
use any such document to which the Representative or counsel for the
Underwriters shall object.
-15-
(c) Delivery
of Registration Statements.
The
Company has furnished or will deliver to the Representative and counsel for
the
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein or otherwise deemed to be a
part
thereof) and signed copies of all consents and certificates of experts, and
will
also deliver to the Representative, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery
of Prospectuses.
The
Company has delivered to each Underwriter, without charge, as many copies of
each Preliminary Prospectus as such Underwriter reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by
the
1933 Act. The Company will furnish to each Underwriter, without charge, during
the period when the Prospectus is required to be delivered under the 1933 Act
(including in circumstances where such requirement may be satisfied pursuant
to
Rule 172), such number of copies of the Prospectus (as amended or supplemented)
as such Underwriter may reasonably request. The Prospectus and any amendments
or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued
Compliance with Securities Laws.
The
Company will comply with the 1933 Act and the 1933 Act Regulations, the 1934
Act
and the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations
so as
to permit the completion of the distribution of the Securities as contemplated
in this Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities (including in circumstances where such requirement may be satisfied
pursuant to Rule 172), any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the Underwriters
or for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will (i) notify the Representative of such event, (ii) promptly prepare
and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make
the Registration Statement or the Prospectus comply with such requirements,
(iii) use its best efforts to have any amendment to the Registration Statement
or new registration statement declared effective as soon as practicable in
order
to avoid any disruption in the use of the Prospectus and (iv) furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request. If
at any
time following issuance of an Issuer-Represented Free Writing Prospectus there
occurred or occurs an event or development as a result of which such
Issuer-Represented Free Writing Prospectus conflicted or would conflict with
the
information contained in the Registration Statement or included or would include
an untrue statement of a material fact or omitted or would omit to state a
material fact necessary in order to make the statements therein, in the light
of
the circumstances prevailing at that subsequent time, not misleading, the
Company will promptly notify Citigroup Global Markets Inc. and will promptly
amend or supplement, at its own expense, such Issuer-Represented Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission.
-16-
(f) Blue
Sky Qualifications.
The
Company will use its best efforts, in cooperation with the Underwriters, to
qualify the Securities and the shares of Underlying Common Stock for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representative may designate and
to
maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any
Rule
462(b) Registration Statement; provided, however, that the Company shall not
be
obligated to file any general consent to service of process or to qualify as
a
foreign corporation or as a dealer in securities in any jurisdiction in which
it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will also supply the Underwriters with such information as is necessary
for the determination of the legality of the Securities for investment under
the
laws of such jurisdictions as the Underwriters may request.
(g) Rule
158.
The
Company will timely file such reports pursuant to the 1934 Act as are necessary
in order to make generally available to its securityholders as soon as
practicable an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
(h) Use
of Proceeds.
The
Company will use the net proceeds received by it from the sale of the Securities
in the manner specified in the Prospectus under “Use of Proceeds”.
(i) Listing.
The
Company will use its best efforts to effect and maintain the quotation of the
Underlying Common Stock issuable upon conversion of the Securities on the Nasdaq
National Market.
(j) Restriction
on Sale of Common Stock.
During
a period of 90 days from the date of the Prospectus, the Company will not,
without the prior written consent of Citigroup Global Markets Inc., (i) directly
or indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any share
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file, or cause to be filed, any registration
statement or prospectus under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or
such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder, (B) any shares of Common Stock
issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in
the
Prospectus, (C) any shares of Common Stock issued or options to purchase Common
Stock granted pursuant to existing employee benefit plans of the Company
referred to in the Prospectus or (D) the Common Stock issued or to be issued
pursuant to the purchase agreement dated the date hereof with respect to the
Concurrent Stock Offering. Notwithstanding the foregoing, if (1) during the
last
17 days of the 90-day restricted period the Company issues an earnings release
or material news or a material event relating to the Company occurs or (2)
prior
to the expiration of the 90-day restricted period, the Company announces that
it
will release earnings results or
becomes aware that material news or a material event will occur during
the 16-day period beginning on the last day of the 90-day restricted period,
the
restrictions imposed in this clause (j) shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event, as applicable,
unless Citigroup Global Markets Inc. waive, in writing, such
extension.
-17-
(k) Reservation
of Securities.
The
Company will reserve and keep available at all times, free of preemptive or
other similar rights, a sufficient number of shares of Common Stock, for the
purposes of enabling the Company to satisfy any obligations to issue Underlying
Common Stock upon conversion of the Securities.
(l) Reporting
Requirements.
The
Company, during the period when the Prospectus is required to be delivered
under
the 1933 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the 1934 Act Regulations.
(m) No
Advisory or Fiduciary Relationship.
The
Company acknowledges and agrees that (i) the purchase and sale of the
Securities pursuant to this Agreement, including the determination of the public
offering price of the Securities and any related discounts and commissions,
is
an arm’s-length commercial transaction between the Company, on the one hand, and
the several Underwriters, on the other hand, (ii) in connection with the
offering contemplated hereby and the process leading to such transaction each
Underwriter is and has been acting solely as a principal and is not the agent
or
fiduciary of the Company or its stockholders, creditors, employees or any other
party, (iii) no Underwriter has assumed or will assume an advisory or
fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether
such
Underwriter has advised or is currently advising the Company on other matters)
and no Underwriter has any obligation to the Company with respect to the
offering contemplated hereby except the obligations expressly set forth in
this
Agreement, (iv) the Underwriters and their respective affiliates may be engaged
in a broad range of transactions that involve interests that differ from those
of the Company and (v) the Underwriters have not provided any legal,
accounting, regulatory or tax advice with respect to the offering contemplated
hereby and the Company has consulted its own legal, accounting, regulatory
and
tax advisors to the extent it deemed appropriate.
(n) DTC.
The
Company will cooperate with the Underwriters and use its best efforts to permit
the offered Securities to be eligible for clearance and settlement through
the
facilities of the DTC.
(o) Issuer
Free Writing Prospectuses.
The
Company represents and agrees that, unless it obtains the prior consent of
the
Representative, it has not made and will not make any offer relating to the
Securities that would constitute an “issuer free writing prospectus,” as defined
in Rule 433, or that would otherwise constitute a “free writing prospectus,” as
defined in Rule 405, required to be filed with the Commission. Any such free
writing prospectus consented to by the Company and the Representative is
hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company
represents that it has treated or agrees that it will treat each Permitted
Free
Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule
433, and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely filing
with the Commission where required, legending and record keeping.
(p) Final
Term Sheet.
The
Company agrees to prepare a final term sheet, containing solely a description
of
the Securities, in a form approved by the Underwriters and to file such term
sheet pursuant to Rule 433(d) within the time required by such Rule.
(q) Stabilization
or Manipulation.
The
Company will not take, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in,
under the 1934 Act or otherwise, stabilization or manipulation of the price
of
any security of the Company to facilitate the sale or resale of the
Securities.
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SECTION
4. Payment
of Expenses
(a) Expenses.
The
Company will pay all expenses incident to the performance of its obligations
under this Agreement, including (i) the preparation, printing and filing of
the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities or the issuance or delivery of the Underlying Common Stock issuable
upon conversion thereof, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes, any stamp or other duties payable upon the sale, issuance
and delivery of the Securities to the Underwriters and any charges of DTC in
connection therewith, and the certificates for the Underlying Common Stock
issuable upon conversion thereof, (iv) the fees and disbursements of the
Company’s counsel, accountants and other advisors, (v) the qualification of the
Securities and the Underlying Common Stock under securities laws in accordance
with the provisions of Section 3(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and
any
supplement thereto, (vi) the fees and expenses of the Trustee, including the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities, (vii) the printing and delivery to the
Underwriters of copies of each Preliminary Prospectus, any Permitted Free
Writing Prospectus and of the Prospectus and any amendments or supplements
thereto (including without limitation any costs associated with electronic
delivery of these materials), (viii) the preparation, printing and delivery
to
the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(ix) the fees and expenses of any transfer agent or registrar for the
Securities, (x) the costs and expenses of the Company relating to investor
presentations on any “road show” undertaken in connection with the marketing of
the Securities, including without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations, travel
and
lodging expenses of the representatives and officers of the Company and any
such
consultants, and the cost of aircraft and other transportation chartered in
connection with the road show; provided, however, that the Underwriters shall
be
responsible for one-half of the cost of any chartered aircraft used in
connection with the road show, (xi) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (xii)
the fees and expenses incurred in connection with the inclusion of the
Underlying Common Stock issuable upon conversion of the Securities in the Nasdaq
National Market and (xiii) the fees and expenses of the Independent Underwriter.
Notwithstanding the foregoing, the Underwriters agree to reimburse the Company
for $200,000 of the aggregate expenses incurred by the Company in performance
of
its obligations under this Agreement and under the purchase agreement relating
to the Concurrent Stock Offering.
(b) Termination
of Agreement.
If this
Agreement is terminated by the Representative in accordance with the provisions
of Section 5 or Section 9(a)(i) hereof, the Company shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriters.
SECTION
5. Conditions
of Underwriters’ Obligations.
The
obligations of the several Underwriters hereunder are subject to the accuracy
of
the representations and warranties of the Company contained in Section 1 hereof
or in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness
of Registration Statement.
The
Registration Statement, including any Rule 462(b) Registration Statement, has
become effective and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement or any notice that would prevent
its
use shall have been issued under the 1933 Act or proceedings therefor initiated
or threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. A prospectus supplement containing
the Rule 430B Information shall have been filed with the Commission in the
manner and within the time required by Rule 424(b) without reliance on Rule
424(b)(8) (or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430B). The final term sheet contemplated by Section 3(p) hereto, any other
material required to be filed by the Company pursuant to Rule 433(d) under
the
1933 Act Regulations, shall have been filed with the Commission within the
applicable time periods prescribed for such filings by Rule 433.
-19-
(b) Opinion
of Counsel for Company.
At the
Closing Time, the Representative shall have received the favorable opinion,
dated as of the Closing Time, of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each
of the other Underwriters to the effect set forth in Exhibit A hereto and to
such further effect as counsel to the Underwriters may reasonably request.
(c) Opinion
of Foreign Counsel for Company.
At the
Closing Time, the Representative shall have received the favorable opinion,
dated as of the Closing Time, of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., foreign counsel for
the Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit B hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(d) Opinion
of Counsel for Underwriters.
At the
Closing Time, the Representative shall have received the favorable opinion,
dated as of the Closing Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each
of the other Underwriters with respect to such matters as the Representative
may
reasonably require. In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of
New York, the federal law of the United States and the General Corporation
Law
of the State of Delaware, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon
certificates of officers of the Company and its subsidiaries and certificates
of
public officials.
(e) Officers’
Certificate.
At the
Closing Time, there shall not have been, since the date hereof or since the
respective dates as of which information is given in the Prospectus or the
General Disclosure Package, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of the Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force
and
effect as though expressly made at and as of the Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration
Statement or any notice that would prevent its use has been issued and no
proceedings for that purpose have been instituted or are pending or, to their
knowledge, contemplated by the Commission.
(f) Accountant’s
Comfort Letter.
At the
time of the execution of this Agreement, the Representative shall have received
from PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the Representative, together with signed or reproduced copies
of
such letter for each of the other Underwriters containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Preliminary
Prospectus.
-20-
(g) Closing
Comfort Letter.
At the
Closing Time, the Representative shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the
type
ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(h) Notification
of Listing.
At the
Closing Time, the Company shall have submitted to the Nasdaq National Market
a
Notification Form: Listing of Additional Shares related to the Underlying Common
Stock.
(i) No
Objection.
The
NASD has confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and
arrangements.
(j) Lock-up
Agreements.
At the
date of this Agreement, the Representative shall have received an agreement
substantially in the form of Exhibit C hereto signed by the persons listed
on
Schedule D hereto.
(k) Conditions
to Purchase of Option Securities.
In the
event that the Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary of
the
Company hereunder shall be true and correct as of each Date of Delivery and,
at
the relevant Date of Delivery, the Representative shall have
received:
(i) Officers’
Certificate.
A
certificate, dated such Date of Delivery, of the President or a Vice President
of the Company and of the chief financial or chief accounting officer of the
Company confirming that the certificate delivered at the Closing Time pursuant
to Section 5(e) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion
of Counsel for Company.
The
favorable opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the
Company, together with the favorable opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.,
foreign counsel for the Company, each in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and otherwise to
the
same effect as the opinions required by Sections 5(b) and 5(c)
hereof.
(iii) Opinion
of Counsel for Underwriters.
The
favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(iv) Bring-down
Comfort Letter.
A
letter from PricewaterhouseCoopers LLP, in form and substance satisfactory
to
the Representative and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Representative pursuant to
Section 5(g) hereof, except that the “specified date” in the letter furnished
pursuant to this paragraph shall be a date not more than five days prior to
such
Date of Delivery.
-21-
(l) Additional
Documents.
At the
Closing Time and at each Date of Delivery, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may require for
the
purpose of enabling them to pass upon the issuance and sale of the Securities
as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representative and counsel for the
Underwriters.
(m) Termination
of Agreement.
If any
condition specified in this Section shall not have been fulfilled when and
as
required to be fulfilled, this Agreement, or, in the case of any condition
to
the purchase of Option Securities, on a Date of Delivery which is after the
Closing Time, the obligations of the several Underwriters to purchase the
relevant Option Securities, may be terminated by the Representative by notice
to
the Company at any time at or prior to the Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without liability
of
any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION
6. Indemnification.
(a) Indemnification
of Underwriters.
(1) The
Company agrees to indemnify and hold harmless each Underwriter, its affiliates,
as such term is defined in Rule 501(b) under the 1933 Act (each, an
“Affiliate”), its selling agents and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of
the 1934 Act as follows:
(i) against
any and all loss, liability, claim and damage whatsoever (including reasonable
expenses), as incurred, arising out of (A) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or
any amendment thereto), including the Rule 430B Information, or the omission
or
alleged omission therefrom of a material fact required to be stated therein
or
necessary to make the statements therein not misleading, (B) any untrue
statement or alleged untrue statement of a material fact included in any
Preliminary Prospectus, any Issuer-Represented Free Writing Prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or (C) any untrue statement or alleged untrue statement of a
material fact included in any materials or information provided to investors
by,
or with the written approval of, the Company in connection with the marketing
of
the offering of the Securities, including any road show or investor
presentations made to the investors by the Company (whether in person or
electronically), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against
any and all loss, liability, claim and damage (including reasonable expenses),
as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against
any and all expense whatsoever, as incurred (including the reasonable fees
and
disbursements of counsel chosen by Citigroup Global Markets Inc.), reasonably
incurred in investigating, preparing or defending against any litigation, or
any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
-22-
provided,
however,
that
this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
Citigroup Global Markets Inc. expressly for use in the Registration Statement
(or any amendment thereto), including the Rule 430B Information, or any
Preliminary Prospectus, any Issuer-Represented Free Writing Prospectus or the
Prospectus (or any amendment or supplement thereto).
(2) Without
limitation of and in addition to its obligations under the other paragraphs
of
this Section 6, the Company also agrees to indemnify and hold harmless the
Independent Underwriter, its Affiliates and selling agents and each person,
if
any, who controls the Independent Underwriter within the meaning of Section
15
of the 1933 Act or Section 20 of the 1934 Act, from and against any and all
losses, claims, damages or liabilities, joint or several, to which they or
any
of them may become subject, insofar as such losses, claims, damages or
liabilities (or action in respect thereof) arise out of or are based upon
Independent Underwriter’s acting as a “qualified independent underwriter”
(within the meaning of Rule 2720 of the Conduct Rules of the NASD) in
connection with the offering contemplated by this Agreement, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any
such
loss, claim, damage or liability results from the gross negligence or willful
misconduct of the Independent Underwriter.
(b) Indemnification
of Company, Directors and Officers.
Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and
each
person, if any, who controls the Company within the meaning of Section 15 of
the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a)(1) of this Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430B
Information, or any Preliminary Prospectus, or any Issuer-Represented Free
Writing Prospectus or the Prospectus (or any amendment or supplement thereto)
in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Citigroup Global Markets Inc. expressly
for
use therein.
(c) Actions
against Parties; Notification.
Each
indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder
to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. The indemnifying party shall be entitled
to
appoint counsel of the indemnifying party’s choice at the indemnifying party’s
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided,
however,
that
such counsel shall be satisfactory to the indemnified party. In the case of
parties indemnified pursuant to Section 6(a)(1) above, counsel to the
indemnified parties shall be satisfactory to Citigroup Global Markets Inc.,
and,
in the case of parties indemnified pursuant to Section 6(b) above, counsel
to
the indemnified parties shall be satisfactory to the Company. Notwithstanding
the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right
to
employ separate counsel (including local counsel), and the indemnifying party
shall bear the reasonable fees, costs and expenses of such separate counsel
if
(i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it
and/or other indemnified parties which are different from or additional to
those
available to the indemnifying party, (iii) the indemnifying party shall not
have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution
of
such action or (iv) the indemnifying party shall authorize the indemnified
party
to employ separate counsel at the expense of the indemnifying party. In no
event
shall the indemnifying parties be liable for fees and expenses of more than
one
counsel (in addition to any local counsel) separate from their own counsel
for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances; provided,
that,
if
indemnity is sought pursuant to Section 6(a)(2), then, in addition to the fees
and expenses of such counsel for the indemnified parties, the indemnifying
party
shall be liable for the reasonable fees and expenses of not more than one
counsel (in addition to any local counsel) separate from its own counsel and
that of the other indemnified parties for the Independent Underwriter in its
capacity as a “qualified independent underwriter” and all persons, if any, who
control the Independent Underwriter within the meaning of Section 15 of the
1933
Act or Section 20 of 1934 Act in connection with any one action or separate
but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances if, in the reasonable judgment of the
Independent Underwriter, there may exist a conflict of interest between the
Independent Underwriter and the other indemnified parties. Any such separate
counsel for the Independent Underwriter and such control persons of the
Independent Underwriter shall be designated in writing by the Independent
Underwriter. No indemnifying party shall, without the prior written consent
of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise
or
consent (i) includes an unconditional release of each indemnified party from
all
liability arising out of such litigation, investigation, proceeding 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.
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(d) Settlement
without Consent if Failure to Reimburse.
If at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(1)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION
7. Contribution.
If the
indemnification provided for in Section 6 hereof is for any reason unavailable
to or insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages or expenses referred to therein, then
each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party,
as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on
the
other hand, from the offering of the Securities pursuant to this Agreement
or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, on the one hand, and of the Underwriters, on the other hand, in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The
relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received
by
the Company and the total underwriting discount received by the Underwriters,
in
each case as set forth on the cover of the Prospectus bear to the aggregate
initial public offering price of the Securities as set forth on the cover of
the
Prospectus.
The
relative fault of the Company, on the one hand, and the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether
any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
the
Company or by the Underwriters and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or
omission.
Benefits
received by Citigroup Global Markets Inc. in its capacity as the Independent
Underwriter shall be deemed to be equal to the compensation received by the
Independent Underwriter for acting in such capacity.
The
Company and the Underwriters agree that it would not be just and equitable
if
contribution pursuant to this Section 7 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 Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding
the provisions of this Section 7, (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities 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 any such untrue or alleged untrue
statement or omission or alleged omission and (ii) Citigroup Global Markets
Inc., in its capacity as the Independent Underwriter, shall not be responsible
for any amount in excess of the compensation received by the Independent
Underwriter for acting in such capacity.
No
person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
For
purposes of this Section 7, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act
and each Underwriter’s Affiliates and selling agents shall have the same rights
to contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution
as
the Company. The Underwriters’ respective obligations to contribute pursuant to
this Section 7 are several in proportion to the principal amount of Initial
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
-24-
SECTION
8. Representations,
Warranties and Agreements to Survive.
All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company and (ii) delivery
of
and payment for the Securities.
SECTION
9. Termination
of Agreement.
(a) Termination;
General.
The
Representative may terminate this Agreement, by notice to the Company, at any
time at or prior to the Closing Time (i) if there has been, since the time
of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus or the General Disclosure Package, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representative, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in
any securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required,
by
any of said exchanges or by such system or by order of the Commission, the
NASD
or any other governmental authority, or (iv) a material disruption has
occurred in commercial banking or securities settlement or clearance services
in
the United States, or (v) if a banking moratorium has been declared by either
Federal or New York authorities.
(b) Liabilities.
If this
Agreement is terminated pursuant to this Section, such termination shall be
without liability of any party to any other party except as provided in Section
4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such
termination and remain in full force and effect.
SECTION
10. Default
by One or More of the Underwriters.
If one
or more of the Underwriters shall fail at the Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under
this
Agreement (the “Defaulted Securities”), the Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not
less than all, of the Defaulted Securities in such amounts as may be agreed
upon
and upon the terms herein set forth; if, however, the Representative shall
not
have completed such arrangements within such 24-hour period, then:
(i) if
the
aggregate principal amount of Defaulted Securities does not exceed 10% of the
aggregate principal amount of Securities to be purchased on such date, each
of
the non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full aggregate principal amount thereof in the proportions
that
their respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
-25-
(ii) if
the
aggregate principal amount of Defaulted Securities exceeds 10% of the aggregate
principal amount of Securities to be purchased on such date, this Agreement
or,
with respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting Underwriter.
No
action
taken pursuant to this Section shall relieve any defaulting Underwriter from
liability in respect of its default.
In
the
event of any such default which does not result in a termination of this
Agreement or, in the case of a Date of Delivery which is after the Closing
Time,
which does not result in a termination of the obligation of the Underwriters
to
purchase and the Company to sell the relevant Option Securities, as the case
may
be, either the Representative or the Company shall have the right to postpone
the Closing Time or the relevant Date of Delivery, as the case may be, for
a
period not exceeding seven days in order to effect any required changes in
the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term “Underwriter” includes any person substituted for an
Underwriter under this Section 10.
SECTION
11. Tax
Disclosure.
Notwithstanding any other provision of this Agreement, from the commencement
of
discussions with respect to the transactions contemplated hereby, the Company
(and each employee, representative or other agent of the Company) may disclose
to any and all persons, without limitation of any kind, the tax treatment and
tax structure (as such terms are used in Sections 6011, 6111 and 6112 of the
U.S. Code and the Treasury Regulations promulgated thereunder) of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided relating to such
tax treatment and tax structure.
SECTION
12. Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form
of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at Citigroup Global Markets Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇), attention of General Counsel,
with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇.,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇); and notices
to the Company shall be directed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇), attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇)
▇▇▇-▇▇▇▇).
SECTION
13. Parties.
This
Agreement shall each inure to the benefit of and be binding upon the
Underwriters and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters and the Company and
their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement
and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or
corporation. No purchaser of Securities from any Underwriter shall be deemed
to
be a successor by reason merely of such purchase.
-26-
SECTION
14. GOVERNING
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK.
SECTION
15. TIME.
TIME
SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION
16. Counterparts.
This
Agreement may be executed 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 Agreement.
SECTION
17. Effect
of Headings.
The
Section headings herein are for convenience only and shall not affect the
construction hereof.
-27-
If
the
foregoing is in accordance with your understanding of our agreement, please
sign
and return to the Company a counterpart hereof, whereupon this instrument,
along
with all counterparts, will become a binding agreement between the Underwriters
and the Company in accordance with its terms.
Very
truly yours,
CERADYNE,
INC.
By:
Name:
Title:
CONFIRMED
AND ACCEPTED,
as
of the
date first above written:
By:
CITIGROUP GLOBAL MARKETS INC.
By:
Authorized
Signatory
For
itself and as Representative of the other Underwriters named in Schedule A
hereto.
SCHEDULE
A
|
Name
of Underwriter
|
Principal
Amount of
Initial
Securities
|
|||
|
Citigroup
Global Markets Inc.
|
$
|
77,000,000
|
||
|
Wachovia
Capital Markets, LLC.
|
22,000,000
|
|||
|
▇▇▇▇▇▇▇
& Company, LLC.
|
11,000,000
|
|||
|
Total
|
110,000,000
|
|||
Sch
A-1
SCHEDULE
B
CERADYNE,
INC.
$110,000,000
2.875%
Senior Subordinated Convertible Notes due 2035
1. The
initial public offering price of the Securities shall be 100% of the principal
amount thereof plus accrued interest, if any, from the date of
issuance.
2. The
purchase price to be paid by the several Underwriters for the Securities shall
be 97% of the principal amount thereof.
3. The
interest rate on the Securities shall be 2.875% per annum.
4. The
notes
are convertible, at the option of the holder, at any time on or prior to
maturity into shares of Common Stock at a conversion rate of 17.1032 shares
per
$1,000 principal amount of Securities (equivalent to a conversion price of
approximately $58.47 per share) subject to adjustment.
Sch
B-1
SCHEDULE
C
Ceradyne
ESK, LLC
ESK
Ceramics Gesch’ftsführungs GmbH
ESK
Ceramics GmbH and Co. KG
ESK
Ceramics France S.A.S.U.
Sch
C-1
SCHEDULE
D
▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇.
▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇▇▇
▇.
▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇.
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇
Lokhart
▇▇▇▇
▇▇▇▇▇▇
▇▇.
▇▇▇▇▇
▇▇▇▇
Sch
D-1
SCHEDULE
E
Final
Term Sheet, dated December 13, 2005
Sch
E-1
Exhibit
A
FORM
OF
OPINION OF COMPANY’S COUNSEL
TO
BE
DELIVERED PURSUANT TO
SECTION
5(b)
(i) The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the State of Delaware.
(ii) The
Company has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Preliminary
Prospectus and the Prospectus and to enter into and perform its obligations
under the Purchase Agreement.
(iii) The
Company is duly qualified as a foreign corporation to transact business and
is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would
not result in a Material Adverse Effect.
(iv) The
authorized capital stock of the Company consists of 40,000,000 shares of common
stock, par value $0.01 per share; the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; and none of the outstanding shares of capital stock
of
the Company was issued in violation of the preemptive or other similar rights
of
any securityholder of the Company.
(v) Each
Subsidiary (other than ESK) has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate
its
properties and to conduct its business as described in the Preliminary
Prospectus and the Prospectus and is duly qualified as a foreign corporation
to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or
to be in good standing would not result in a Material Adverse Effect; except
as
otherwise disclosed in the Registration Statement, the Preliminary Prospectus
and the Prospectus, all of the issued and outstanding capital stock of each
Subsidiary (other than ESK) has been duly authorized and validly issued, is
fully paid and non-assessable and, to the best of our knowledge, is owned by
the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary (other than ESK) was
issued in violation of the preemptive or similar rights of any securityholder
of
such Subsidiary.
(vi) The
Purchase Agreement has been duly authorized, executed and delivered by the
Company.
(vii) The
Indenture has been duly authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery thereof by the Trustee)
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the enforcement thereof
may
be limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors’ rights generally, or by
general principles of equity (regardless of whether enforcement is considered
in
a proceeding in equity or at law). The Indenture has been duly qualified under
the 1939 Act.
A-1
(viii) The
Securities are in a form contemplated by the Indenture, have been duly
authorized by the Company and, when executed by the Company and authenticated
by
the Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and
issued and delivered against payment of the purchase price thereof will
constitute valid and binding obligations of the Company, enforceable against
the
Company in accordance with their terms, except as the enforcement thereof may
be
limited by bankruptcy, insolvency, reorganization, moratorium (including,
without limitation, all laws relating to fraudulent transfers), or other similar
laws relating to or affecting enforcement of creditor’s rights generally, or by
general principles of equity (regardless of whether enforcement is considered
in
a proceeding in equity or at law), and will be entitled to the benefits of
the
Indenture.
(ix) The
issuance of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(x) Upon
issuance and delivery of the Securities in accordance with the Purchase
Agreement and the Indenture, the Securities shall be convertible at the option
of the holder thereof for shares of Common Stock in accordance with the terms
of
the Securities and the Indenture.
(xi) The
shares of Common Stock initially issuable upon conversion of the Securities
have
been duly authorized and reserved for issuance and are free of any preemptive
rights that will entitle any person to acquire any Securities upon issuance
thereof by the Company, and, if and when issued upon due conversion of the
Securities in accordance with the terms of the Indenture and the Securities,
will be validly issued and fully paid and non-assessable.
(xii) The
Securities and the Indenture conform in all material respects to the description
thereof contained in the Preliminary Prospectus and the Prospectus.
(xiii) The
Registration Statement, including any Rule 462(b) Registration Statement, has
been declared effective under the 1933 Act; any required filing of each
prospectus relating to the Securities (including the Prospectus) pursuant to
Rule 424(b) has been made in the manner and within the time period required
by
Rule 424(b) (without reference to Rule 424(b)(8)); any required filing of each
Issuer Represented Free Writing Prospectus pursuant to Rule 433 has been made
in
the manner and within the time period required by Rule 433(d); and, to the
best
of our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or threatened by the Commission.
(xiv) The
Registration Statement, including without limitation, any Rule 462(b)
Registration Statement, the Rule 430B Information, the Preliminary Prospectus,
the Prospectus, excluding the documents incorporated by reference therein,
and
each amendment or supplement to the Registration Statement and the Prospectus,
excluding the documents incorporated by reference therein, as of their
respective effective or issue dates (including without limitation each deemed
effective date with respect to the Underwriters pursuant to Rule 430B(f)(2)
of
the 1933 Act Regulations), other than the financial statements and supporting
schedules included therein or omitted therefrom, as to which we need express
no
opinion, complied as to form in all material respects with the requirements
of
the 1933 Act and the 1933 Act Regulations.
A-2
(xv) The
documents incorporated by reference in the Preliminary Prospectus and the
Prospectus (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we need express no opinion),
when they were filed with the Commission complied as to form in all material
respects with the requirements of the 1934 Act and the rules and regulations
of
the Commission thereunder.
(xvi) There
is
not pending, or to the best of our knowledge threatened, any action, suit,
proceeding, inquiry or investigation, to which the Company or any subsidiary
is
a party, or to which the property of the Company or any subsidiary is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which would reasonably be expected to result in a Material Adverse
Effect, or which would reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company of
its
obligations thereunder.
(xvii) The
information in the Preliminary Prospectus and the Prospectus under “Description
of Capital Stock -- Common Stock,” “Description of Notes,” “Business--Property”,
“Business--Litigation”, “U.S. Federal Income Tax Considerations” and
“Indemnification of Directors and Officers” in the Registration Statement under
Item 15, to the extent that it constitutes matters of law, summaries of legal
matters, the Company’s charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material
respects.
(xviii) All
descriptions in the Registration Statement, the Preliminary Prospectus and
the
Prospectus of contracts and other documents to which the Company or its
subsidiaries are a party are accurate in all material respects; to the best
of
our knowledge, there are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described or
referred to in the Registration Statement, the Preliminary Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement or to the
documents incorporated by reference to the Registration Statement, the
Preliminary Prospectus and the Prospectus other than those described or referred
to therein or filed or incorporated by reference as exhibits
thereto.
(xix) No
filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
domestic or foreign (other than under the 1933 Act and the 1933 Act Regulations,
which have been obtained, or as may be required under the securities or blue
sky
laws of the various states, as to which we need express no opinion) is necessary
or required in connection with the due authorization, execution and delivery
of
the Purchase Agreement or the due execution, delivery or performance of the
Indenture by the Company or for the offering, issuance, sale or delivery of
the
Securities.
(xx) The
execution, delivery and performance of the Purchase Agreement, the DTC
Agreement, the Indenture and the Securities and the consummation of the
transactions contemplated in the Purchase Agreement and in the Registration
Statement, the Preliminary Prospectus and the Prospectus (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Preliminary Prospectus and the Prospectus under
the caption “Use Of Proceeds” and the issuance of shares of Common Stock
issuable upon conversion of the Securities) and compliance by the Company with
its obligations under the Purchase Agreement, the Indenture and the Securities
do not and will not, whether with or without the giving of notice or lapse
of
time or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined in Section 1(a)(xv) of the Purchase Agreement) under or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
any
other agreement or instrument, known to us, to which the Company or any
subsidiary is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any subsidiary is subject
(except for such conflicts, breaches, defaults or Repayment Events or liens,
charges or encumbrances that would not have a Material Adverse Effect), nor
will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any subsidiary or any of their respective properties, assets
or operations.
A-3
(xxi) To
the
best of our knowledge, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the ▇▇▇▇
▇▇▇.
(xxii) The
Company is not required, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom as
described in the Preliminary Prospectus or the Prospectus will not be required,
to register as an “investment company” under the 1940 Act.
Nothing
has come to our attention that would lead us to believe that the Registration
Statement or any amendment thereto, (except for financial statements and
schedules and other financial data included or incorporated by reference therein
or omitted therefrom, as to which we need make no statement), at the time such
Registration Statement or any such amendment became effective, 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;
that
the
Registration Statement, including the Rule 430B Information (except for
financial statements and schedules and other financial data
included
or incorporated by reference therein or omitted therefrom and the Form T-1,
as
to which we need make no statement), at each deemed effective date with respect
to the Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations,
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;
or that
the Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included or incorporated
by
reference therein or omitted therefrom, as to which we need make no statement),
at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. In
addition, nothing has come to our attention that would lead us to believe that
the documents included in the General Disclosure Package, other than the
financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which we need
make
no statement, as of the Applicable Time,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light
of
circumstances under which they were made, not misleading. With respect to
statements contained in the General Disclosure Package, any statement contained
in any of the constituent documents shall be deemed to be modified or superseded
to the extent that any information contained in subsequent constituent documents
modifies or replaces such statement.
In
rendering such opinion, such counsel may rely, as to matters of fact (but not
as
to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section
of
Business Law (1991).
A-4
Exhibit
B
FORM
OF
OPINION OF COMPANY’S FOREIGN COUNSEL
TO
BE
DELIVERED PURSUANT TO
SECTION
5(c)
(i) ESK
has
been duly organized and is validly existing and in good standing under the
laws
of the jurisdiction of its organization, has power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
partnership interests of ESK have been duly authorized and validly issued,
are
fully paid and non-assessable and, to the best of our knowledge, are owned
by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding partnership interests of ESK were issued in violation of the
preemptive or similar rights of any securityholder of ESK.
In
rendering such opinion, such counsel may rely, as to matters of fact (but not
as
to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section
of
Business Law (1991).
B-1
Exhibit
C
October
__, 2005
Citigroup
Global Markets Inc.
as
Representative of the several
Underwriters
to be named in the
within-mentioned
Purchase Agreement
c/o Citigroup
Global Markets Inc.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
Re:
|
Proposed
Public Offering of Senior Subordinated Convertible Notes due 2035
by
Ceradyne, Inc.
|
Dear
Sirs:
The
undersigned, a stockholder and/or officer and/or director of Ceradyne, Inc.,
a
Delaware corporation (the “Company”), understands that Citigroup Global Markets
Inc. (“Citigroup”), ▇▇▇▇▇▇▇ & Company, LLC and Wachovia Capital Markets, LLC
(collectively, the “Underwriters”) propose to enter into a Purchase Agreement
(the “Purchase Agreement”) with the Company providing for the public offering of
Senior Subordinated Convertible Notes due 2035 (the “Notes”). In recognition of
the benefit that such an offering will confer upon the undersigned as a
stockholder and/or an officer and/or director of the Company, and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period of 90 days from the date of the
Purchase Agreement (such period, including any extension thereof as described
below, referred to as the “Lock-Up Period”), the undersigned will not, without
the prior written consent of Citigroup, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
for
the sale of, or otherwise dispose of or transfer any shares of the Company’s
common stock, par value $0.01 per share (the “Common Stock”) or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file, or
cause to be filed, any registration statement or prospectus under the Securities
Act of 1933, as amended, with respect to any of the foregoing (collectively,
the
“Lock-Up Securities”) or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Lock-Up Securities, whether any such
swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise; [provided,
however,
that
the restrictions set forth in this sentence shall not apply to, and the
definition of Lock-Up Securities shall exclude, the sale or other transfer
by
the undersigned of up to an aggregate of 5,000 shares of Common Stock][For
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ replace brackets with the following: provided,
however,
that
undersigned shall be permitted to adopt, at any time on or after the fourth
trading day after the date of the Purchase Agreement, a written trading plan
under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (such
plan,
the “Plan”), and shall be permitted to sell, only pursuant to the Plan, up to
20,000 shares of Common Stock during each calendar month for a period of 10
months beginning in March 2006.]
C-1
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer
the Lock-Up Securities without the prior written consent of
Citigroup:
| (i) |
as
a bona
fide
gift or gifts; or
|
|
(ii)
|
by
will or intestate succession to the undersigned’s immediate family or to a
trust, the beneficiaries of which are exclusively the undersigned
or
members of the undersigned’s immediate family (for purposes of this
lock-up agreement, “immediate family” shall mean any relationship by
blood, marriage or adoption, not more remote than first
cousin),
|
provided
that, in each case (1) Citigroup receives a signed lock-up agreement for the
balance of the Lock-Up Period from each donee, trustee or transferee, as the
case may be, (2) any such transfer shall not involve a disposition for value,
(3)
such
transfers are not required to be reported in any public report or filing with
the Securities and Exchange Commission (other than on a Form 5 filed pursuant
to
Rule 16a-3(f) of the rules and regulations under the Securities Exchange Act
of
1934, as amended), or otherwise and (4) the undersigned does not otherwise
voluntarily effect any public filing or report regarding such
transfers.
Notwithstanding
the foregoing, if:
|
(1)
during the last 17 days of the Lock-Up
Period
(including any extension hereunder), the Company issues an earnings
release or material news or a material event relating to the Company
occurs; or
|
|
(2)
prior to the expiration of the Lock-Up Period (including any extension
hereunder), the Company announces that it will release earnings results
or
becomes aware that material news or a material event will occur during
the
16-day period beginning on the last day of the Lock-Up
Period,
|
the
restrictions imposed by this lock-up agreement shall continue to apply until
the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event,
as
applicable, unless Citigroup waives, in writing, such extension.
The
undersigned hereby acknowledges and agrees that written notice of any extension
of the Lock-Up
Period pursuant
to the previous paragraph will be delivered by Citigroup to the Company and
that
any such notice properly delivered will be deemed to have been given to, and
received by, the undersigned. The undersigned further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the
terms of this lock-up agreement during the period from the date of this lock-up
agreement to and including the 34th
day
following the expiration of the Lock-Up
Period,
it will
give notice thereof to the Company and will not consummate such transaction
or
take any such action unless it has received written confirmation from the
Company that the Lock-Up
Period
(as may
have been extended pursuant to the previous paragraph) has not commenced or
has
expired.
The
undersigned agrees that it will not, without the prior written consent of
Citigroup, during the Lock-Up Period, including any extension thereof, make
any
demand for, or exercise any right with respect to, the registration of any
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock. The undersigned further agrees and consents to the entry
of
stop transfer instructions with the Company’s transfer agent and registrar
against the transfer of the Lock-Up Securities except in compliance with the
foregoing restrictions.
The
undersigned understands that the Company and the Underwriters will proceed
with
the public offering in reliance on this lock-up
agreement.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this lock-up agreement and that, upon request,
the
undersigned will execute any additional documents necessary or desirable in
connection with the enforcement hereof. Any obligations of the undersigned
shall
be binding upon the successors and assigns of the undersigned.
C-2
This
lock-up agreement shall automatically terminate upon the earliest to occur,
if
any, of: (a) either Citigroup, on the one hand, or the Company, on the other
hand, advising the other in writing, prior to the execution of the Purchase
Agreement, that it has determined not to proceed with the public offering or
(b)
termination of the Purchase Agreement entered into between the Company and
the
Underwriters before the sale of the Notes.
Very
truly yours,
___________________________
(Print
name of entity, if
applicable)
Signature:____________________
Print
name:___________________
Title:________________________
(if
applicable)
Address:______________________
______________________
______________________
C-3
Exhibit
D
Pricing
Information Annex
None.
|
D-1
|
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