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Exhibit 1
$27,500,000
_____% Convertible Subordinated Notes due 2006
TRANS-LUX CORPORATION
UNDERWRITING AGREEMENT
New York, New York
___________, 1996
Southcoast Capital Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
The undersigned, Trans-Lux Corporation (the "Company"), a
Delaware corporation, hereby confirms its agreement with Southcoast Capital
Corporation.
Section 1. Underwriter. The term "Underwriter," as used
herein, will mean and refer to Southcoast Capital Corporation.
Section 2. Securities Offered. Subject to the
terms and conditions hereof, the Company proposes to issue and sell to the
Underwriter and the Underwriter proposes to purchase from the Company,
$27,500,000 aggregate principal amount of _____% Convertible Subordinated Notes
due 2006 of the Company ("Notes") pursuant to an indenture (the "Indenture") to
be dated on or about December __, 1996 between the Company and Continental
Stock Transfer & Trust Company as trustee (the "Trustee"). The $27,500,000
aggregate principal amount of Notes to be sold by the Company are herein
referred to as the "Firm Securities." In addition, the Company proposes to
grant to the Underwriter the option to purchase from the Company up to an
additional $4,125,000 aggregate principal amount of Notes (the "Option
Securities") solely for the purpose of covering over-allotments, if any, in
connection with the sale of the Firm Securities. The Firm Securities and the
Option Securities are referred to herein collectively as the "Securities."
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Section 3. Representations and Warranties. The Company
represents and warrants to the Underwriter that:
(i) A registration statement (File No. 333-15481) on
Form S-2, relating to the Securities and the shares of the
Company's common stock, $1.00 par value per share (the "Common
Stock") into which the Securities are convertible (the
"Conversion Shares), including a preliminary prospectus, has
been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and has been filed by
the Company with the Commission and the Company is entitled
under the Rules and Regulations to file such registration
statement on Form S-2 and has made all required electronic
filings under Regulation S-T, including all financial data
schedules required to be filed pursuant to Item 601(c) of
Regulation S-K. One or more amendments to such registration
statement, including in each case a revised preliminary
prospectus, have been so prepared and filed. If such
registration statement has not become effective as of the
execution and delivery of this Agreement, and the filing of a
further amendment (the "Final Amendment") to such registration
statement is necessary to permit such registration statement
to become effective, such amendment will promptly be filed by
the Company with the Commission. If such registration
statement has become effective and any post-effective
amendment has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent such
amendment has been declared effective by the Commission. If
such registration statement has become effective, a final
prospectus (the "Rule 430A Prospectus") containing information
permitted to be omitted at the time of effectiveness by Rule
430A of the Rules and Regulations will promptly be filed by
the Company pursuant to Rule 424(b) of the Rules and
Regulations. The term "preliminary prospectus" as used herein
means any preliminary prospectus (as referred to in Rule 430
of the Rules and Regulations) with respect to the Securities
included at any time as part of such registration statement or
filed with the Commission pursuant to Rule 424(a) of the Rules
and Regulations; such registration statement as amended at the
time that it becomes or became effective, or, if applicable,
as amended at the time the most recent post-effective
amendment to such registration statement filed with the
Commission prior to the execution and delivery of this
Agreement became effective, including financial statements and
all exhibits (whether filed or incorporated by reference) and
information deemed to be a part thereof at such time pursuant
to Rule 430A of the Rules and Regulations is herein called the
"Registration Statement;" the term "Prospectus" shall mean (x)
if the Company relies on Rule 434 under the Act, the Term
Sheet (as defined below) relating to the Shares that is first
filed pursuant to Rule
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424(b)(7) under the Act, together with the preliminary
prospectus identified therein that the Term Sheet supplements,
or (y) if the Company does not rely on Rule 434 under the Act,
the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Act, or, if no prospectus is required to
be filed pursuant to Rule 424(b) under the Act, the prospectus
included in the Registration Statement at the time it becomes
effective. "Term Sheet" shall mean any term sheet that
satisfies the requirements of Rule 434 under the Act. The
date on which the Registration Statement becomes effective is
hereinafter called the "Effective Date." Any reference herein
to any Preliminary Prospectus or the Prospectus or the
Registration Statement shall be deemed to include any
information incorporated by reference therein pursuant to Item
12 of Form S-2 under the Act, as of the date of such
Preliminary Prospectus, the Prospectus or the Registration
Statement, as the case may be.
(ii) When the Registration Statement becomes
effective, and at all subsequent times to and including the
Closing Time (hereinafter defined), and at the Option Exercise
Time (hereinafter defined), or for such longer period as the
Prospectus may be required to be delivered in connection with
sales of the Notes by the Underwriter or a dealer, the
Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto;
provided, that no amendment or supplement to the Registration
Statement or the Prospectus shall be made without prior
consultation with you, and to which you shall reasonably
object), will comply with the requirements of the Act and the
Rules and Regulations in all material respects, will not
contain an untrue statement of a material fact and will not
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided however, that the representations and
warranties in this subsection (ii) do not apply to statements
or omissions in the Registration Statement or the Prospectus
based upon and made in conformity with written information
furnished to the Company by the Underwriter specifically for
inclusion therein.
(iii) The documents incorporated by reference in the
Preliminary Prospectus and the Prospectus pursuant to Item 12
of Form S-2 under the Act, when they were filed with the
Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations of
the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
since January 1, 1996, the Company has timely filed all
documents with the
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Commission which were required to be filed under the Exchange
Act and the rules and regulations of the Commission thereunder
on or prior to the date hereof.
(iv) The Commission has not issued an order
preventing or suspending the use of any preliminary prospectus
with respect to the Securities and has not instituted or, to
the Company's knowledge, threatened to institute any
proceedings with respect to such an order. Each preliminary
prospectus, when filed with the Commission, conformed in all
material respects with the requirements of the Act and the
Rules and Regulations and, as of its date, did not include any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; provided however, that the representations and
warranties in this sentence do not apply to statements or
omissions in each such preliminary prospectus based upon and
made in conformity with written information furnished to the
Company by the Underwriter specifically for inclusion therein.
(v) The Company is, and at the Closing Time, and at
the Option Exercise Time will be, a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Company's
subsidiaries (collectively, the "Subsidiaries" and
individually, a "Subsidiary") is listed in Exhibit 21 to the
Company's Report on Form 10-K for the year ended December 31,
1995 and, at the Closing Time and at each Option Exercise
Time, each Subsidiary, including each Significant Subsidiary
(as defined in Rule 1-02(w) under Regulation S-X), is and will
be, a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation. The Company owns, free and clear of all
mortgages, pledges, liens, security interests, conditional
sale agreements, charges, encumbrances and restrictions of
every nature, the outstanding shares of the capital stock of
each Subsidiary, with the exception of Trans-Lux Pty Ltd., as
to which the Company owns 75% of that Company's outstanding
common stock, and all of such shares have been duly and
validly authorized and issued and are fully paid and
non-assessable. Each of the Company and the Subsidiaries has,
and at the Closing Time and at each Option Exercise Time will
have, the corporate power and authority and all necessary
approvals, orders, licenses, certificates, permits and other
governmental authorizations to conduct all of the activities
conducted by it, to own or lease all of the assets owned or
leased by it and to conduct its business as described in the
Registration Statement and the Prospectus except where the
failure to have any such approval, order, license,
certificate, permit or governmental authorization will not
have a material adverse effect on the condition (financial or
otherwise), business, business prospects, assets or results of
operations of the Company and its Subsidiaries, taken as a
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whole (a "Material Adverse Effect"); and is, and at the
Closing Time and at the Option Exercise Time will be, duly
licensed or qualified to do business and in good standing as a
foreign corporation in all jurisdictions in which the nature
of the activities conducted by it and/or the character of the
assets owned and leased by it makes such license or
qualification necessary, except where the failure to be so
licensed or qualified will not have a Material Adverse Effect.
Except for the shares of the stock of each Subsidiary owned by
the Company and except for the Company's 50% ownership
interests in each of MetroLux Theatres and Mossgood
Theatre-Xxxxxxxx Realty, both joint ventures, neither the
Company nor any Subsidiary owns, and at the Closing Time and
at the Option Exercise Time neither the Company nor any
Subsidiary will own, any shares of stock or any other
securities of any corporation or have any equity interest in
any firm, partnership, association or other entity. A
complete and correct copy of the Certificate of Incorporation
and by-laws of the Company, the charter documents of each
Subsidiary, and the by-laws of each Subsidiary, as currently
in effect, have been delivered to you and no changes therein
will be made subsequent to the date hereof and prior to the
Closing Time or the Option Exercise Time. A complete and
correct copy of all joint venture and or partnership
agreements to which the Company or any Subsidiary is party
have been delivered to you and no changes therein will be made
subsequent to the date hereof and prior to the Closing Time or
Option Exercise Time.
(vi) The Company is, and at the Closing Time and at
the Option Exercise Time will be, authorized to issue only
5,500,000 shares of Common Stock, 1,000,000 shares of the
Company's Class B Common Stock, $1.00 par value per share (the
"Class B Common Stock"), 4,000,000 shares of the Company's
Class A Common Stock, $1.00 par value per share (the "Class A
Common Stock") and 500,000 shares of the Company's Preferred
Stock, $1.00 par value per share (the "Preferred Stock"). All
of the Company's issued and outstanding shares of capital
stock have been duly authorized, validly issued and are fully
paid and nonassessable, and the Common Stock and the
capitalization of the Company conform to the descriptions
thereof and the statements made with respect thereto in the
Registration Statement and the Prospectus as of the date set
forth therein. There are no outstanding securities
convertible into or exchangeable for, and no outstanding
options, warrants or other rights to purchase, any shares of
the capital stock of the Company, nor any agreements or
commitments to issue any of the same, except as described in
the Registration Statement and the Prospectus, and there are
no preemptive or other rights to subscribe for or to purchase,
and no restrictions upon the voting or transfer of, any shares
of outstanding capital stock of the Company pursuant to the
Company's Certificate of Incorporation or by-laws or any
agreement or other instrument to which the Company is a party.
All offers and sales of the Company's capital
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stock by the Company during the 36-month period prior to the
date hereof were at all relevant times duly registered or
exempt from the registration requirements of the Act, and were
duly registered or the subject of an available exemption from
the registration requirements of the applicable state
securities or blue sky laws.
(vii) The financial statements of the Company
(including the footnotes thereto) filed with and as part of
the Registration Statement and the Prospectus present fairly
the financial position of the Company as of the respective
dates thereof and the statements of income, statement of
shareholders' equity and statements of cash flow of the
Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles
applied on a basis consistent with prior periods. Deloitte &
Touche LLP (the "Company's accountants"), who have reported on
such financial statements, are independent accountants with
respect to the Company as required by the Act and the Rules
and Regulations. Other than as presented in the Registration
Statement and the Prospectus, no other financial statements
are required to be included in the Registration Statement and
the Prospectus.
(viii) To the extent such items contain financial data
from the Company's financial statements, the financial
information and data set forth in the Prospectus under
"Prospectus Summary, "Risk Factors," "Use of Proceeds," "Price
Range of Common Stock and Dividend Policy," "Capitalization,"
"Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Business," "Management," "Executive Compensation and
Transactions with Management," "Description of Notes" and
"Description of Capital Stock" are fairly presented and
prepared on a basis consistent with the financial statements
of the Company.
(ix) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and prior to the Closing Time and to each Option
Exercise Time, except as set forth in the Registration
Statement and the Prospectus, (A) neither the Company nor any
Subsidiary has incurred or will have incurred any material
liabilities or obligations, direct or contingent, or entered
into any material transactions not in the ordinary course of
business; (B) there has been no adverse change with respect to
the inventory or rental equipment owned by the Company or any
Subsidiary which will have a Material Adverse Effect; (C) the
Company has not paid or declared nor will pay or declare any
dividends or other distributions on its capital stock other
than the Company's regular quarterly dividend as set forth in
the Prospectus under the heading "Price Range of Common Stock
and Dividend Policy"; and (D) except as contemplated by
Section 3(vi) hereof, there has not been and will not have
been any change in the capitalization of the Company or any
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Significant Subsidiary or any Material Adverse Effect in the
business, business prospects, financial condition, assets or
results of operations of the Company and its Subsidiaries,
taken as a whole, arising for any reason whatsoever.
(x) Except as set forth in the Registration
Statement, there are no actions, suits or proceedings at law
or in equity pending, or to the knowledge of the Company,
threatened, against the Company or any Subsidiary, any of
their respective assets or any of their respective officers or
directors, before or by any federal, state, county or local
commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, not covered by
insurance wherein an unfavorable ruling, decision or finding
is reasonably likely to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary is involved in any
labor dispute nor, to the knowledge of the Company, is any
such dispute threatened, which dispute would have a Material
Adverse Effect.
(xi) Each of the Company and the Significant
Subsidiaries has, and at the Closing Time and at each Option
Exercise Time will have, complied in all material respects
with all laws, regulations and orders applicable to it or its
business, the violation of which would have a Material Adverse
Effect. Each of the Company and the Significant Subsidiaries
has, and at the Closing Time and at each Option Exercise Time
will have, in all material respects performed all of the
obligations required to be performed by it, and is not, and at
the Closing Time and at each Option Exercise Time will not be,
in default under (there being no existing state of facts which
with notice or lapse of time or both would constitute a
default under) any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, letter of credit agreement,
bond, debenture, note agreement or other evidence of
indebtedness, contract or other agreement to which it is a
party or by which it is bound, except defaults which would not
have a Material Adverse Effect, and, to the knowledge of the
Company, no other party under any such material agreement or
instrument to which the Company or any Subsidiary is a party
is in default in any material respect thereunder.
(xii) The Company (i) keeps books, records and
accounts that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
Company and its Subsidiaries and (ii) maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles in the United States and to maintain
accountability for assets, and (C) the recorded accountability
for assets is compared with the existing assets at
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reasonable intervals and appropriate action is taken with
respect to any differences.
(xiii) Neither the Company nor any Significant
Subsidiary is in violation of its respective Certificate of
Incorporation, Memorandum and Articles of Association or its
charter, or its by-laws, as the case may be.
(xiv) The Securities to be issued and sold by the
Company to the Underwriter hereunder have been duly and
validly authorized and, when issued and delivered against
payment therefor as provided herein, will constitute legal,
valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except as
such enforceability may be limited by the laws of bankruptcy,
insolvency, reorganization, moratorium or creditors' rights,
generally, or by general principles of equity; the Securities
will be entitled to the benefits of the Indenture; the
Indenture has been duly authorized and, when duly executed and
delivered by the Company and the Trustee, will constitute a
legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms;
and the Securities have been approved for listing, subject to
official notice of issuance, on the American Stock Exchange
(the "AMEX"); the Securities and the Indenture conform, and
when the Registration Statement becomes effective and at the
Closing Time and at each Option Exercise Time will conform, to
all statements with regard thereto contained in the
Registration Statement and the Prospectus.
(xv) The Conversion Shares have been duly and validly
authorized and reserved for issuance, and such shares, when
issued and delivered in accordance with the provisions of the
Securities and the Indenture, will be duly and validly issued,
fully paid and non-assessable, and, if issued on the date
hereof, would conform to the description of the Common Stock
contained in the Prospectus; and the Conversion Shares have
been approved for listing, subject to official notice of
issuance, on the AMEX.
(xvi) This Agreement and the Indenture have been duly
authorized, executed and delivered by the Company and each
constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms except as such
enforceability may be limited by the laws of bankruptcy,
insolvency, reorganization, moratorium or creditors' rights,
generally, or by general principles of equity and except as
enforceability of those provisions of this Agreement relating
to indemnity and contribution may be limited by the federal
securities laws and principles of public policy; the
performance of, and compliance with all the terms of, this
Agreement and the Indenture and the consummation of the
transactions contemplated herein and therein will not conflict
with or result in a material breach or violation of any of the
terms and provisions
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of, or constitute a material default under (there being no
existing state of events to the knowledge of the Company which
with notice or lapse of time or both would constitute a
default) or result (or with the giving of notice or lapse of
time or both would result) in the creation or imposition of
any lien, charge, or encumbrance upon the assets or properties
of the Company or any Subsidiary, pursuant to any indenture,
mortgage, deed of trust, voting trust agreement, loan
agreement, letter of credit agreement, bond, debenture, note
agreement or other evidence of indebtedness, contract or other
agreement to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary, or under the
certificate of incorporation or by-laws of the Company or any
Subsidiary or under any statute or under any order, rule or
regulation applicable to the Company or any Subsidiary or
their respective businesses or properties or of any court or
other governmental body except where such breach or violation
would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole; and no consent, approval,
authorization or order of any court or governmental agency or
body is required for the consummation by the Company of the
transactions on its part contemplated in this Agreement or the
Indenture, except such as may be required under the Act, the
rules and regulations of the NASD, the AMEX or under state
securities or blue sky laws.
(xvii) Each of the Company and the Subsidiaries has
good and marketable title to or valid leasehold interests in
all material properties and assets owned by it ("good and
marketable" title shall mean fee simple title with respect to
real property not the subject of a leasehold interest), free
and clear of all liens, charges, encumbrances or restrictions,
except such as are described in or referred to in the
Prospectus or do not materially interfere with or impair the
business of the Company and its Subsidiaries, taken as a
whole. Each of the Company and the Subsidiaries has valid,
subsisting and enforceable leases for the properties described
in the Prospectus as leased by it, with such exceptions as are
not material and do not interfere with the use made, and
proposed to be made, of such properties by it.
(xviii) There is no document or contract of a character
required to be described in the Prospectus or to be filed as
an exhibit to the Registration Statement which is not
described or filed as required; and no statement,
representation, warranty or covenant made by the Company in
this Agreement or in any certificate or document required by
this Agreement to be delivered to you contains, when made, or
as of the Closing Time or any Option Exercise Time will
contain any untrue statement of a material fact, or omitted to
state a material fact required to be stated therein or
necessary to make any statement therein, in light of the
circumstances when made, not misleading.
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(xix) Each of the Company and the Subsidiaries has
sufficient trademarks, trade names, registered service marks,
patents, patent applications, patent rights, licenses,
permits, copyright protection and governmental or other
authorizations of a similar nature currently required for the
conduct of its business (collectively, "Rights"), except where
the failure to have or obtain a Right would not result in a
Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole, and each of the Company and the Subsidiaries
is in all material respects complying therewith, and the
products and services, and the marks associated therewith,
used by the Company and each Subsidiary do not, to the best of
its knowledge, violate or infringe any trademarks, trade
names, registered service marks, patents, patent rights,
licenses, permits or copyrights held or owned by any other
party except as otherwise disclosed in the Prospectus.
Neither the Company nor any Subsidiary has received any notice
of violation or infringement of or conflict with asserted
rights of others with respect to any Rights owned or used by
the Company or any Subsidiary except for a claim by
Daktronics, Inc. that it is not violating the Company's
Rights. Other than as disclosed in the Prospectus, the
expiration of any such Right would not result in a Material
Adverse Effect.
(xx) The Company intends to apply its proceeds from the
sale of the Shares for the purposes set forth in the
Prospectus under "Use of Proceeds."
(xxi) The Company is not conducting, and does not
presently intend to conduct its business in a manner in which
it would become, an "investment company" as defined in Section
3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(xxii) No holder of any securities of the Company has
the right to require registration of the Common Stock or other
securities of the Company because of the filing or
effectiveness of the Registration Statement.
(xxiii) Neither the Company nor any of its officers or
directors or affiliates (as defined in the Rules and
Regulations) has taken or will take, directly or indirectly,
any unlawful action designed to stabilize or manipulate the
price of any security of the Company, or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of
the Company, to facilitate the sale or resale of any of the
Company's Securities.
(xxiv) The Company has not, and at the Closing Time and
at each Option Exercise Time will not have, incurred any
liability for finder's or brokerage fees or agent's
commissions in connection with the offer and
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sale of the Securities, this Agreement or the transactions
hereby contemplated, except for the Underwriter's discounts
and commissions provided for in this Agreement.
(xxv) The Company and each Significant Subsidiary have
filed all foreign, U.S., state and local income and franchise
tax returns required to be filed through the date hereof and
have paid all taxes due thereon (except where the failure to
do so could not have a Material Adverse Effect), and no tax
deficiency has been, nor does the Company have any knowledge
of any tax deficiency which might be, asserted against the
Company or any Subsidiary which could have a Material Adverse
Effect.
Section 4. (a) Purchase, Sale and Delivery of the Firm
Securities; Closing Time. (i) On the basis of the representations, warranties
and covenants contained in this Agreement, and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Underwriter an aggregate of $27,500,000 principal amount of Firm Securities,
and the Underwriter agrees to purchase from the Company, at a purchase price of
____% of the principal amount thereof, plus accrued interest, if any, from the
date of issuance to the Closing Time, the principal amount of Firm Securities.
(ii) Delivery of the Firm Securities shall be made to the
Underwriter at its offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or such
other location in the New York metropolitan area as you shall advise the
Company by at least two full business days' notice in writing, against payment
by you of the purchase price therefor to the Company by wire transfer in
immediately available funds to the Company of the amount of such purchase
price, at 10:00 A.M., New York City Time, on December __, 1996, or on such other
time and business day (Saturdays, Sundays and legal holidays in the City or
State of New York not being considered business days for the purposes of this
Agreement), as shall be agreed to by the Company and you but not later than the
seventh calendar day (or the business day next following such seventh calendar
day if such seventh calendar day shall not be a business day) following the date
of this Agreement as you shall determine and advise the Company by at least two
full business days' notice in writing, which time and date are herein called the
"Closing Time." Delivery of the Firm Securities shall be made in registered form
in such name or names and in such denominations as you shall request by at least
two full business days' notice in writing. The cost of original issue tax
stamps and transfer stamps, if any, in connection with the issuance and delivery
or sale of the Firm Securities by the Company to the Underwriter shall be borne
by the Company. The Company will pay and save the Underwriter or its nominees,
and any subsequent holder of the Firm Securities, harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
federal or state stamp and other transfer taxes, if any, which may be payable or
determined to be payable in connection with the sale by the Company to the
Underwriter of the Firm Securities or any portion thereof.
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(b) Purchase, Sale and Delivery of the Option Securities.
(i) The Company hereby grants to the Underwriter an option (the "Option") to
purchase from the Company up to $4,125,000 aggregate principal amount of Option
Securities at the same purchase price as the Firm Securities are being sold by
the Company as stated in paragraph (a) of this Section 4; plus accrued
interest, if any, from the date of issuance to the Option Exercise Time (as
hereinafter defined); provided however, that the Option may be exercised only
for the purpose of covering any over-allotments which may be made by the
Underwriter in connection with the distribution and sale of the Firm
Securities.
(ii) The Option is exercisable by you in whole or in part at
any time or times on or before 12:00 noon, New York City time, on the day prior
to the Closing Time, and at any time or times thereafter during the period
ending 30 days after the date of the Prospectus (or if such 30th day shall be a
Saturday, Sunday or holiday, on the next business day thereafter when the New
York Stock Exchange is open for trading), in each case by giving notice to the
Company in the manner provided in Section 11 hereof, setting forth the number
of Option Securities as to which the Option is being exercised, the name or
names in which the certificates for the Option Securities are to be registered,
the denominations of such certificates and the date of delivery of such Option
Securities, which date shall not be less than two nor more than seven business
days after such notice.
(iii) Upon each exercise of the Option, the Company shall
sell to the Underwriter the aggregate number of Option Securities specified in
the notice exercising the Option and the Underwriter, on the basis of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
you, but subject to the terms and conditions of this Agreement, shall purchase
from the Company the aggregate number of Option Securities specified in such
notice.
(iv) Delivery of the Option Securities with respect to which
the Option shall have been exercised shall be made to the Underwriter at its
offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or such other location in the
New York metropolitan area as you shall determine and advise the Company,
against payment by you, of the purchase price therefor to the Company by wire
transfer in immediately available funds to the Company in the amount of such
purchase price, at 10:00 A.M., New York City Time, on the date designated in the
notice given by you as above provided for, unless some other place, time and
date is mutually agreed upon (such time and date being herein called an "Option
Exercise Time"). The cost of original issue tax stamps or transfer stamps, if
any, in connection with each issuance and delivery of the Option Securities by
the Company to the Underwriter shall be borne by the Company. The Company will
pay and save the Underwriter or its nominees, and any subsequent holder of
Option Securities, harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying federal and state stamp taxes, if
any, which may be payable or determined to
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be payable as a result of the sale by the Company to the Underwriter of the
Option Securities or any portion thereof.
(v) The Company will make the certificates for the Option
Securities to be purchased at each Option Exercise Time available to you for
examination at your offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or such
other place as you shall request, not later than 2:00 P.M., New York City Time,
on the business day next preceding each Option Exercise Time.
(vi) The obligation of the Underwriter to purchase and pay
for Option Securities at each Option Exercise Time shall be subject to
compliance as of such date with all the conditions specified in Section 8
hereof and the delivery to you of opinions, certificates and letters, each
dated the respective Option Exercise Time, substantially similar in scope to
those specified in Section 8 hereof, and to the absence of any occurrence
referred to in Section 10 hereof.
Section 5. Registration Statement and Prospectus. (a) The
Company will deliver to you, without charge, four fully signed copies of the
Registration Statement and of each amendment thereto, including all financial
statements and exhibits, and the number of conformed copies of the Registration
Statement and of each amendment thereto, including all financial statements,
but excluding exhibits, as you may reasonably request.
(b) The Company has delivered to you, and each of the
Selected Dealers (as hereinafter defined), without charge, as many copies as
you have reasonably requested of each preliminary prospectus heretofore filed
with the Commission and will deliver to you and to each Selected Dealer,
without charge, on the Effective Date, and thereafter from time to time during
the period in which the Prospectus is required by law to be delivered in
connection with sales of Securities, as many copies of the Prospectus (and, in
the event of any amendment of or supplement to the Prospectus, of such amended
or supplemented Prospectus) as you may reasonably request.
(c) The Company has authorized you to use, and make available
for use by prospective dealers, the Preliminary Prospectuses, and authorizes
you, all dealers (the "Selected Dealers") selected by you in connection with
the distribution of the Shares and all dealers to whom any of such Securities
may be sold by you or by any Selected Dealer, to use the Prospectus, as from
time to time amended or supplemented, in connection with the sale of the
Securities in accordance with the applicable provisions of the Act, the
applicable Rules and Regulations and applicable state law until completion of
the public offering of the Securities and for such longer period as you may
request if the Prospectus is required to be delivered in connection with sales
of the Securities by you or a dealer.
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Section 6. Covenants. The Company covenants and agrees with
the Underwriter that:
(i) After the execution and delivery of this Agreement,
the Company will not, at any time, whether before or after the
Effective Date, file any amendment of or supplement to the
Registration Statement or the Prospectus of which you shall
not previously have been advised and furnished with a copy, or
to which you or Fulbright & Xxxxxxxx L.L.P. ("counsel for the
Underwriter") shall not have reasonably approved, or which is
not in compliance with the Act or the Rules and Regulations.
(ii) If the Registration Statement has not become
effective, the Company will promptly file the Final Amendment
with the Commission and will use its best efforts to cause the
Registration Statement to become effective as promptly as
possible. If the Registration Statement has become effective,
the Company will file the Rule 430A Prospectus or other
Prospectus with the Commission as promptly as practicable, but
in no event later than that permitted by Rule 424(b). The
Company will promptly advise you (A) when the Registration
Statement, or any post effective amendment thereto, shall have
become effective, or any amendments or supplements to the
Prospectus shall have been filed with the Commission, (B) of
any request by the Commission or any state or other regulatory
body for any amendment or supplement of the Registration
Statement or the Prospectus or for additional information and
the nature and substance thereof, (C) 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
prohibiting the offer or sale of any of the Securities or of
the initiation of any proceedings for such purpose, (D) of any
receipt by the Company of any notification with respect to the
suspension of qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (E) of the happening of any
event during the period in which the Prospectus is to be used
in conjunction with the offer or sale of Securities which
makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which
requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements
therein not misleading in light of the circumstances when
made. The Company will use its best efforts (in the case of
orders by the Commission) or its reasonable best efforts (in
the case of orders by any state or other regulatory body) to
prevent the issuance of any stop order or any order preventing
or suspending the use of the Registration Statement or
Prospectus and, if such order is issued, to obtain the
withdrawal thereof as promptly as possible.
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(iii) The Company will prepare and file with the
Commission, upon your request, any such amendments of or
supplements to the Registration Statement or the Prospectus,
in form and substance reasonably satisfactory to Xxxxxxx
Celler Spett & Xxxxxx, P.C. ("counsel for the Company"), as in
the opinion of counsel for the Underwriter may be necessary or
advisable in connection with the distribution of the
Securities which, or the terms upon which, the Securities may
be offered by you, and will use its best efforts to cause the
same to become effective as promptly as possible.
(iv) The Company will comply with the Act and the Rules
and Regulations, and the Exchange Act and the rules and
regulations thereunder, so as to permit the continuance of
sales of the Securities by you or any selected dealer under
the Act and the Exchange Act for so long as a Prospectus is
required to be delivered under the Act. If at any time when a
prospectus is required to be delivered under the Act an event
shall have occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading or to make the
Prospectus comply with the Act, the Company will notify you
promptly thereof and will, subject to the provisions of
Section 6(a)(i) hereof, furnish to you an amendment or
supplement which will correct such statement in accordance
with the requirements of Section 9 of the Act.
(v) The Company will comply with all of the provisions of
any undertakings contained in the Registration Statement.
(vi) The Company will use its reasonable best efforts to
qualify or register the Shares for sale under the blue sky
laws of such jurisdictions as you shall request, to make such
applications, file such documents and furnish such information
as may be required for such purpose and to comply with such
laws so as to continue such qualification in effect so long as
required for the purposes of the distribution of the
Securities; provided however, that the Company shall not be
required to qualify as a foreign corporation in any
jurisdiction, subject itself to general taxation or to file a
consent to service of process in any jurisdiction in any
action other than one arising out of the offering or sale of
the Securities.
(vii) The Company will make generally available to its
security holders and to the Underwriter as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 95
days, if such 12-month period coincides with the Company's
fiscal year), an earnings statement of the Company, which will
be in reasonable detail, but need not be audited, and will
cover a period of twelve months commencing after the Effective
Date. Such earnings statement shall
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comply with the requirements of Section 11(a) of the Act or
Rule 158 of the Rules and Regulations. During the period of
five years commencing on the Effective Date, the Company will
furnish to its shareholders a copy of its annual report. The
Company will make available to its shareholders upon their
request copies of the Company's Form 10-K.
(viii) Prior to the later to occur of the termination
of the Option and the Option Exercise Time, except as required
by law, the Company will not issue, directly or indirectly,
without your prior consent not to be unreasonably or untimely
withheld and that of your counsel, any press release or other
communication or hold any press conference with respect to the
Company or its activities or the offering of the Securities.
(ix) During the 90 days following the date hereof,
the Company will not, without the prior written consent of
Southcoast Capital Corporation, sell, contract to sell or
otherwise dispose of any securities except (i) as contemplated
in the Prospectus and (ii) except for the Securities and (iii)
except pursuant to options granted under the Company's Stock
Option Plans or exercises of such options and the Company has
caused each of its executive officers and directors to deliver
to you on or before the date of this Agreement an agreement,
satisfactory in form and substance to you and counsel for the
Underwriter, whereby each agrees, for a period of 90 days
after the date of this Agreement, not to publicly offer,
pledge, sell or contract to sell, transfer or otherwise
dispose of any securities of the Company, directly or
indirectly, without your prior written consent.
Section 7. Expenses. The Company will pay and bear all
costs, fees, taxes and expenses incident to the performance of the obligations
of the Company under this Agreement, including, but not limited to: (a) the
costs incident to the issuance, sale and delivery to the Underwriter of the
Securities; (b) the costs incident to the preparation, printing and filing
under the Act of each Preliminary Prospectus, the Prospectus, the Registration
Statement (including the costs of the Form T-1) and any amendments or
supplements thereof and exhibits thereto; (c) the costs of distributing the
Registration Statement and any post-effective amendments thereto; (d) the costs
of printing and distributing to the Underwriter and any Selected Dealer copies
of any Preliminary Prospectus, the Prospectus, the Registration Statement and
any amendment or supplement to the Prospectus or Registration Statement
required by this Agreement or the Act; (e) the costs of preparation, printing,
mailing, delivery, filing and distribution of preliminary and final blue sky
memoranda, Underwriters' Questionnaires and Powers of Attorney, letters to
prospective Underwriters, the Agreement Among Underwriters, the Selling
Agreement, if any, this Agreement and all documents related thereto; (f) the
filing fees of the Commission; (g) the costs of qualification or registration
of the Securities in the jurisdictions referred to in subsection (vi) of
Section 6 hereof, including the reasonable legal fees and expenses of counsel
for the Underwriter in connection therewith, and all filing fees in connection
therewith; (h) the cost of preparation, including the reasonable legal fees and
actual
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out-of-pocket expenses of counsel for the Underwriter in connection therewith,
of all filings with the NASD and all filing fees in connection therewith; (i)
fees and expenses of counsel for the Company, the Company's accountants and the
Company's consultants; (j) fees in connection with the listing of the
Securities and Conversion Shares on the AMEX; and (k) all other costs and
expenses incurred or to be incurred by the Company in connection with the
transactions contemplated by this Agreement, including trustee's fees and
applicable transfer taxes, and the retention of Deloitte & Touche LLP.
Section 8. Conditions of the Underwriter's Obligations. The
Underwriter's obligations hereunder to purchase and pay for the Securities are
subject (as of the date hereof, the Closing Time and each Option Exercise Time)
to the accuracy of and compliance with the representations and warranties of
the Company herein (in all material respects to the extent not otherwise
qualified by materiality) and in each certificate and document contemplated
under this Agreement to be delivered, to the accuracy of the statements of the
Company, and of the officers of the Company made pursuant to the provisions
hereof (in all material respects to the extent not otherwise qualified by
materiality), to the performance, in all material respects, by the Company of
its covenants and agreements hereunder and under each such certificate and
document, and to the following additional conditions:
(a) (i) The Registration Statement shall have
become effective not later than 5:00 P.M., New York City Time, on the date of
this Agreement, or at such later time or on such later date as you may agree to
in writing; (ii) if required, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b)(1) or (4) of the Rules and Regulations
within the applicable time period prescribed for such filing thereunder and in
accordance with the provisions of Section 6(ii) hereof; (iii) at or prior to
the Closing Time, no stop order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Securities
under the blue sky laws of any jurisdiction (whether or not a jurisdiction
which you shall have specified) shall have been issued and no proceeding for
that purpose shall have been initiated or shall be threatened or contemplated
by the Commission or the authorities of any such jurisdiction; (iv) any request
for additional information on the part of the Commission or any such
authorities shall have been complied with to the satisfaction of the Commission
or such authorities; (v) the NASD, upon review of the terms of the public
offering of Shares, shall not have objected to such offering, such terms, or
the Underwriter's participation in the same; and (vi) after the date hereof, no
amendment or supplement to the Registration Statement or the Prospectus shall
have been filed without your prior consent.
(b) You shall not have advised the Company that the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto contains an untrue statement of a material fact, or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(c) Between the time of the execution and delivery
of this Agreement and the Closing Time, there shall be no actions, suits or
proceedings at law or in equity pending, or to the knowledge of the Company,
threatened against the Company or any Subsidiary, any of their respective
assets or any of their respective officers or directors before or by any
federal, state, county or local commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, wherein an unfavorable
ruling, decision or finding would have a Material Adverse Effect.
(d) Each of the representations and warranties of
the Company contained herein and in each certificate and document contemplated
under this Agreement to be delivered shall be true and correct in all material
respects at the Closing Time as if made at the Closing Time, and all covenants
and agreements contained herein, and in each such certificate and document, to
be performed on the part of the Company and all conditions contained herein and
in each such certificate and document to be fulfilled or complied with by the
Company or prior to the Closing Time shall have been duly performed, fulfilled
or complied with in all material respects.
(e) At the Closing Xxxxxxx Celler Xxxxx & Xxxxxx,
P.C., counsel for the Company, shall furnish to you an opinion, in form and
substance satisfactory to you, dated as of the date of its delivery, to the
effect that:
(i) Each of the Company and the Significant
Subsidiaries is a duly incorporated and validly existing corporation in
good standing under the laws of its jurisdiction of incorporation with
full power and authority (corporate and other) to own or lease its
properties and to conduct its business as described in the Prospectus,
and is duly qualified to do business as a foreign corporation and is in
good standing in the jurisdictions listed in Schedule A to this Opinion
except as listed on Schedule A. To the best knowledge of such counsel,
there are no pending or threatened proceedings by any governmental
authority alleging that the conduct of the Company's or any Significant
Subsidiary's business requires such qualification (except for those
jurisdictions in which the failure to so qualify can be cured without
having a Material Adverse Effect). To the knowledge of such counsel,
no proceeding has been instituted by any governmental authority for the
dissolution of the Company or any Significant Subsidiary;
(ii) The Company has authorized capital stock as
set forth in the Prospectus; the securities of the Company conform in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock and Class B Common
Stock have been duly authorized and validly issued by the Company, are
fully paid and nonassessable, and are free of any preemptive or other
rights to subscribe for any of the Securities or Conversion Shares;
(iii) The Securities to be issued and sold by the
Company to the Underwriter hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein,
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will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of creditors'
rights and the availability of remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law); the
Securities will be entitled to the benefits of the Indenture; the
Securities and the Indenture conform in all material respects to the
descriptions thereof in the Prospectus; and the Securities and
Conversion Shares have been approved for listing, subject to official
notice of issuance, on the AMEX;
(iv) The Conversion Shares have been duly and
validly authorized and reserved for issuance, and such shares, when
issued and delivered in accordance with the provisions of the
Securities and the Indenture, will be duly and validly issued, fully
paid and non-assessable, and, if issued on the date hereof, would
conform to the description of the Common Stock contained in the
Prospectus;
(v) To the best knowledge of such counsel, there
is not pending or threatened against the Company any action, suit,
proceeding or investigation before or by any court or governmental
body required to be disclosed in the Prospectus which is not
disclosed;
(vi) The Company has full legal right, power and
authority to enter into this Agreement and the Indenture and to
consummate the transactions provided for herein and this Agreement and
the Indenture have been duly authorized, executed and delivered by the
Company, and each of this Agreement and the Indenture, assuming due
authorization, execution and delivery by each other party hereto, is a
legal, valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as (A) such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
relating to or affecting the enforcement of creditors' rights and the
availability of remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (B) rights to
indemnity and contribution may be limited by federal or state
securities laws and the public policy underlying such laws. None of
the Company's execution or delivery of this Agreement or the
Indenture, its performance thereof or its consummation of the
transactions contemplated therein conflicts or will conflict with or
results or will result in any breach or violation of any of the terms
or provisions of, or constitute a default 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 the
terms of their respective Certificate of Incorporation, by-laws or
other governing document except as would not
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have a Material Adverse Effect, the terms of any indenture, mortgage,
deed of trust, voting trust agreement, shareholder's agreement, note
agreement or other agreement known to such counsel to which the
Company or any Subsidiary is a party or by which any of them is or may
be bound except as would not have a Material Adverse Effect; or any
judgment, decree or order, known to such counsel, of any government,
arbitrator, court, regulatory body or other governmental body except
as would not have a Material Adverse Effect; and no consent, approval,
authorization or order of any court, regulatory body or other
governmental body has been or is required for the Company's
performance of this Agreement or the Indenture, or the consummation of
the transactions contemplated therein in connection with the purchase
and distribution by the Underwriter of the Securities sold by the
Company, except such as have been obtained under the Act or may be
required under state securities or blue sky laws;
(vii) Issuances of Common Stock by the Company
during the 36-month period prior to the date of this Agreement were
either registered under the Act or exempt from registration under the
Act and complied in all respects with the provisions of all applicable
U.S. federal and state securities laws. No holder of any securities of
the Company has the right to require registration of the Common Stock
or other securities of the Company because of the filing or
effectiveness of the Registration Statement.
(viii) (A) The Registration Statement has been
declared effective under the Act; any required filing of the
Prospectus pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); (B) to the best
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any amendment thereto has been
issued, and no proceedings for that purpose have been instituted or
are pending or, are threatened under the Act; (C) the Registration
Statement (and the Form T-1 filed as an exhibit to the Registration
Statement) originally filed with respect to the Securities and each
amendment thereto and the Prospectus and, if any, each amendment and
supplement thereto (except for the financial statements, schedules and
other financial data included therein, as to which such counsel need
not express any opinion), complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations and the
Trust Indenture Act of 1939; the documents incorporated by reference
in the Prospectus (other than the financial statements and related
schedules and other financial or statistical data included therein or
omitted therefrom, as to which such counsel need express no opinion,
and except to the extent that any statement therein is modified or
superseded in the Prospectus), as of the dates they were filed with
the Commission, conform in all material respects to the
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requirements of the Exchange Act and the rules and regulations
thereunder; the Company is entitled under the Rules and Regulations to
file such registration statement on Form S-2 and to the best knowledge
of such counsel based upon the Company's representation to such
counsel to such effect, has made all required electronic filings under
Regulation S-T; the Indenture has been duly qualified under the Trust
Indenture Act;
(ix) Since January 1, 1996, the Company has timely
filed all documents with the Commission which were required to be
filed under the Exchange Act and the rules and regulations of the
Commission thereunder on or prior to the date hereof.
(x) To the knowledge of such counsel, there is no
action, suit, proceeding or investigation, governmental or otherwise,
pending or threatened to which the Company is a party, that seeks to
restrain, enjoin, prevent the consummation of or otherwise change the
issuance of the Securities or the execution and delivery of this
Agreement or any of the other transactions contemplated hereby, or
that questions the legality or validity of any of such transactions or
that seeks to recover damages or obtain other relief in connection
with any of such transactions, or that, if adversely determined, would
materially and adversely affect the ability of the Company to perform
its obligations under this Agreement;
(xi) The Company is not now, and upon consummation
of the offering of the Securities, the Company will not be an
"investment company" required to register under the Investment Company
Act of 1940, as amended;
(xii) The Indenture has been qualified under the
Trust Indenture Act of 1939;
(xiii) The statements set forth in the Registration
Statement and the Prospectus under the captions "Prospectus Summary,"
"Risk Factors," "Capitalization," "Business," "Management," "Executive
Compensation and Transactions with Management" "Executive Compensation
and Transactions with Management," "Description of Notes" and
"Description of Capital Stock," insofar as such statements summarize
or describe agreements of the Company or its subsidiaries, the
Indenture, the Notes and the capital stock of the Company, as the case
may be, fairly present the information required with respect to such
items; and
(xiv) To the knowledge of such counsel, there are
no contracts or documents which are required by the Act to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement which are not
described in the Registration
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Statement or the Prospectus or filed as exhibits to the Registration
Statement as required by the Act and the Rules and Regulations.
In addition, such counsel shall state that in the course of
the preparation of the Registration Statement and the Prospectus, such counsel
has participated in conferences with officers and representatives of the
Company and with the Company's independent public accountants, at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Registration Statement and the
Prospectus and nothing has come to such counsel's attention that causes such
counsel to believe that either the Registration Statement as of the date it is
declared effective and as of the Closing Time or the Prospectus as of the date
thereof and as of the Closing Time contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading (it
being understood that such counsel need not express any opinion with respect to
the financial statements, schedules and other financial data included in the
Registration Statement or the Prospectus). In rendering any such opinion, such
counsel may rely, as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Company and public
officials.
References to the Registration Statement and the Prospectus in
this paragraph (e) shall include any amendment or supplement thereto at the
date of such opinion.
(f) Xxxxxxxxx & Xxxxxxxx L.L.P., counsel to the
Underwriter, shall have furnished to you their written opinion or opinions,
dated the Closing Time, in form and substance satisfactory to you, with respect
to the incorporation of the Company, the validity of the Securities, the
Registration Statement, the prospectus and other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
(g) Concurrently with the execution and delivery of
this Agreement and at the Closing Time, the Company's accountants shall have
furnished to you a letter, dated as of the date of its delivery, addressed to
you and in form and substance satisfactory to you, to the effect that:
(i) Such accountants are independent certified
public accountants with respect to the Company as required by the Act
and the Rules and Regulations.
(ii) Insofar as reported on by them, in their
opinion, the financial statements of the Company included in the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the published rules and regulations thereunder.
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(iii) On the basis of procedures and inquiries (not
constituting an examination in accordance with generally accepted
auditing standards) for a review of interim financial statements as
specified by the American Institute of Certified Public Accountants
and described in SAS No. 71. with respect to the unaudited interim
financial statements of the Company, if any, appearing in the
Registration Statement and the Prospectus and the latest available
unaudited interim financial statements of the Company, if more recent
than that appearing in the Registration Statement and Prospectus,
inquiries of officers of the Company responsible for financial and
accounting matters as to the transactions and events subsequent to the
date of the latest audited financial statements of the Company, and a
reading of the minutes of meetings of the shareholders, the Board of
Directors of the Company and any committees of the Board of Directors,
as set forth in the minute books of the Company, nothing has come
their attention which, in their judgment, would indicate that (A)
during the period from the date of the latest financial statements of
the Company appearing in the Registration Statement and Prospectus to
a specified date not more than three business days prior to the date
of such letter, there have been any decreases in net current assets or
net assets as compared with amounts shown in such financial statements
or decreases in net sales or decreases [increases] in total or per
share net income compared with the corresponding period in the
preceding year or any change in the capitalization or long-term debt
of the Company, except in all cases as set forth in or contemplated by
the Registration Statement and the Prospectus, and (B) the unaudited
interim financial statements of the Company, if any, appearing in the
Registration Statement and the Prospectus, do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Regulations or are not fairly presented in conformity
with generally accepted accounting principles and practices on a basis
substantially consistent with the audited financial statements
included in the Registration Statement or the Prospectus.
(iv) They have compared specific dollar amounts,
numbers of shares, numerical data, percentages of revenues and
earnings, and other financial information pertaining to the Company
set forth in the Prospectus (with respect to all dollar amounts,
numbers of shares, percentages and other financial information
contained in the Prospectus, to the extent that such amounts, numbers,
percentages and information may be derived from the general accounting
records of the Company, and excluding any questions requiring an
interpretation by legal counsel) with the results obtained from the
application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in
the letter, and found them to be in agreement.
(v) in addition to the examination referred to in
their reports included in the Registration Statement and the
Prospectus and the limited procedures referred to in clause (iii)
above, they have carried out certain
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specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information specified by
the Underwriter, which are derived from the general accounting records
of the Company and its subsidiaries which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, (a) the Registration
Statement, (b) the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 (including the information from the Company's
1996 Proxy Statement incorporated by reference therein), and (c) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995, June 30, 1996 and September 30, 1996, and have compared such
amounts and financial information with the accounting records of the
Company and its subsidiaries, and have found them to be in agreement
and have proved the mathematical accuracy of certain specified
percentages.
(h) At the Closing Time, there shall be furnished to
you, on behalf of the Company, an accurate certificate, dated the date of its
delivery, signed by each of the chief executive officer and the chief financial
officer of the Company, in form and substance reasonably satisfactory to you,
to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, neither the Registration Statement nor
the Prospectus contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (B) in the
case of a certificate delivered after the date of this Agreement,
since the Effective Date, no event has occurred of which he or she has
knowledge and which was required by the Act or the Rules and
Regulations to be set forth in a supplement to or amendment of the
Prospectus but which has not been so set forth; and (C) since the
dates as of which and the periods for which information is given in
the Registration Statement and the Prospectus, there has not been to
his or her knowledge any Material Adverse Effect (financial or
otherwise), in the condition or business prospects of the Company from
that set forth in the Registration Statement and the Prospectus, other
than changes which the Registration Statement and the Prospectus
specifically disclose have occurred or may occur subsequent to the
Effective Date.
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for
such purpose have been commenced or are, to the knowledge of each
signer of such certificate, threatened by the Commission.
(iii) No stop order suspending the qualification or
registration of any of the Securities under the blue sky laws of any
jurisdiction (whether or not a jurisdiction you shall have specified)
has been issued, and no proceedings for such purpose have been
commenced
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or are, to the knowledge of each signer of such certificate,
threatened by any jurisdiction.
(iv) The conditions, separately set forth in such
certificate, contained in subsections (a), (c) and (k) of this Section
8 have been complied with.
(v) There has been no breach of any of the terms
or provisions of the agreements referred to in Section 6(ix) hereof.
(vi) Each of the representations and warranties of
the Company contained in this Agreement and in each certificate and
document contemplated under this Agreement to be delivered to you was,
when originally made and is, at the time such certificate is dated,
true and correct in all material respects.
(vii) Each of the covenants required herein to be
performed by the Company on or prior to the date of such certificate
has been duly performed in all material respects and each condition
herein required to be complied with by the Company on or prior to the
date of such certificate has been duly, timely and fully complied with
by the Company.
(i) The Company shall have furnished to you such
certificates, in addition to those specifically mentioned herein, as you may
have reasonably requested in a timely manner as to the fulfillment of the
conditions concurrent and precedent to your obligations hereunder.
(j) Except as contemplated by the Registration
Statement and the Prospectus, since the date hereof, there shall not have been
any change in the capitalization of the Company or any change constituting a
Material Adverse Effect in the business, business prospects, financial
condition or results of operations of the Company or in the value of the assets
of the Company, or any material change, without your consent, in the conduct of
the business of the Company, arising for any reason whatsoever which makes it
impracticable or inadvisable to proceed with the Offering.
(k) Each of the agreements referred to in Section
6(ix) hereof shall have been delivered to you and there shall have been no
breach of any such agreement.
(l) All corporate proceedings and other legal
matters relating to the sale and transfer of the Shares, this Agreement, the
Registration Statement, the Prospectus and other related matters shall be
reasonably satisfactory in all material respects to counsel for the Underwriter
who shall have furnished to you at the Closing Time such opinion, in form and
substance reasonably satisfactory to you, with respect to the sufficiency of
the aforementioned corporate proceedings and other legal matters as you may
reasonably require; and the Company shall have furnished to such counsel
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such records and documents as such counsel may have reasonably requested in a
timely manner for the purpose of enabling them to pass upon such matters.
(m) The Securities and the Conversion Shares
shall be authorized for listing on the AMEX.
All of the opinions, letters, evidence and certificates
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel for the Underwriter. You reserve the right
to waive any condition hereinabove set forth. Each opinion, certificate,
letter or other document required to be delivered at the Closing Time shall
also be required to be delivered at each Option Exercise Time.
Section 9. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless the Underwriter and each person who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and each and all of them, from and against any and all losses,
claims, damages, liabilities or actions, joint or several (including any
investigation, legal or other expense incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which the Underwriter or any of them may become subject under the
Act, the Exchange Act or otherwise but only insofar as such losses, claims,
damages, liabilities or actions arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement made by the Company in Section 3 of this
Agreement, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto or in any application or
other document executed by the Company based upon written information furnished
by or on behalf of the Company filed in any jurisdiction in order to register
or qualify the Securities under the securities laws thereof or filed with the
Commission, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
or provided however, that (i) the indemnity agreement contained in this
subsection (a) shall not extend to the Underwriter in respect of any such
losses, claims, damages, liabilities or actions arising out of, or based upon,
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by the Underwriter specifically
for use in connection with the preparation of the Registration Statement, any
preliminary prospectus or the Prospectus or any such amendment or supplement
thereto, or any application or other document filed in any jurisdiction in
order to register or qualify the Securities. Notwithstanding the foregoing,
the Company shall not be obligated to indemnify the Underwriter and its
controlling persons in respect of any such statement or omission contained in
any preliminary prospectus which was corrected in the Prospectus to the extent
that the Underwriter failed to deliver such Prospectus.
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(b) The Underwriter agrees to indemnify and hold harmless the
Company, its directors, the officers of the Company who shall have signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Company to the
Underwriter, but in each case to the extent, and only to the extent, that any
statement in or omission from or alleged omission from the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement thereto was made in reliance upon information furnished in writing
to the Company by the Underwriter specifically for use in connection with the
preparation of the Registration Statement, any preliminary prospectus or the
Prospectus or any such amendment or supplement thereto.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing subsections (a) or (b) (an
"indemnified party") in respect of which indemnity may be sought against a
person granting indemnification (an "indemnifying party") pursuant to such
subsections, such indemnified party shall promptly notify such indemnifying
party in writing of the commencement thereof; but the omission to so notify the
indemnifying party of any such action shall not release the indemnifying party
from any liability it may have to such indemnified party otherwise than on
account of the indemnity agreement contained in subsection (a) or (b) of this
Section 9 except to the extent that such failure results in the forfeiture of
substantial rights or defenses. In case any such action is brought against an
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party against which a claim is to be made will be
entitled to participate therein at its own expense and, to the extent that it
may wish, to assume at its own expense the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided however, that (i)
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based upon advice of counsel 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, the indemnified party shall have the
right to select separate counsel to assume such legal defenses and otherwise to
participate in the defense of such action on behalf of such indemnified party
or parties; and (ii) in any event, the indemnified party shall be entitled to
have counsel chosen by such indemnified party, at such indemnified party's
expense, participate in, but not conduct, the defense. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 9 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with proviso (i) of the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel); (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action; or (iii) the
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indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. An indemnifying party shall
not be liable for any settlement of any action or proceeding effected without
its prior written consent.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in subsection
(a) or (b) of this Section 9 is unavailable in accordance with its terms, the
Company, and, subject to the limitations set forth below, the Underwriter shall
contribute to the aggregate losses, claims, damages and liabilities, of the
nature contemplated by said indemnity agreement, incurred by the Company and
the Underwriter, in such proportions as are applicable to reflect the relative
benefits received by the Company on the one hand, and the Underwriter, on the
other hand, from the offering of the Securities; provided however, that if such
allocation is not permitted by applicable law or if the indemnified party
failed to give the notice required under subsection (c) of this Section 9, then
the relative fault of the Company, on the one hand, and the Underwriter, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities and other relevant equitable
considerations will be considered together with such relative benefits. The
relative benefits received by the Company, on the one hand, and the
Underwriter, on the other hand, shall be deemed to be in such proportion as the
total proceeds from the offering of the Securities (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company bear to the total underwriting discount received by the Underwriter, in
each case as set forth in the table on the cover page of the Prospectus and in
the notes thereto. The relative fault of the Company, on the one hand, and of
the Underwriter, on the other, shall be determined by reference to, among other
things, whether in the case of an untrue statement or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
fact, such statement or omission relates to information supplied by the
Company, on the one hand, or by the Underwriter, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro-rata allocation or by
any other method of allocation that does not take account of the equitable
considerations referred to in this subsection (d). The amount paid or payable
by the indemnified party as a result of the losses, claims, damages or
liabilities referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending against or appearing as a
third-party witness in any such action or claim. Notwithstanding the provisions
of this subsection (d), (i) the Underwriter shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Securities purchased by it were offered to the public exceeds the amount of any
damages which the Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission; and
(ii) no person guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the Act shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. For purposes of this
subsection (d), each person, if any, who
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controls the Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act shall have the same rights to contribution as the
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 Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company.
(e) The respective indemnity and contribution agreements by
the Underwriter and the Company contained in subsections (a), (b), (c) and (d)
of this Section 9, and the respective covenants, representations and warranties
of the Company set forth in Sections 2, 3, 4, 5, 6, and 7 hereof, shall remain
operative and in full force and effect regardless of (i) any investigation made
by the Underwriter, on its behalf or by or on behalf of any person who controls
the Underwriter, the Company or any controlling person of the Company, or any
director or officer of the Company; or (ii) acceptance of any of the
Securities; and shall survive the delivery of the Securities, and any successor
of the Underwriter or the Company, or of any person who controls the
Underwriter or the Company, as the case may be, shall be entitled to the
benefit of such respective indemnity and contribution agreements. The
respective indemnity and contribution agreements by the Underwriter and the
Company contained in subsections (a), (b), (c) and (d) of this Section 9 shall
be in addition to any liability which the Underwriter and the Company may
otherwise have.
Section 10. Termination. This Agreement (except for the
provisions of Sections 6(i) and 9 hereof) may be terminated by you by notifying
the Company at any time:
(a) at or prior to the Closing Time if any of the
conditions specified in Section 8 hereof shall not have been fulfilled when and
as required by this Agreement to be fulfilled or if any of the covenants,
representations or warranties contained herein or in any certificate or
document contemplated under this Agreement to be delivered to you shall not
have been satisfied or fulfilled, in all material respects, within the
respective times herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by you in
writing; or
(b) at or prior to the Closing Time if any one or
more of the following shall have occurred or have been established between the
time of your execution of this Agreement and the Closing Time and in your
judgment the same has made or makes it inadvisable or impracticable for you
generally to proceed with the offering, sale, delivery, or collection of
payment for, the Securities pursuant to the public offering contemplated by
this Agreement: (i) a general suspension of, or a general limitation on prices
for, trading in securities on the New York Stock Exchange, the AMEX or the
Nasdaq National Market; (iii) a material adverse change in general market or
domestic economic conditions, from such conditions on the date hereof having an
effect on U.S. financial markets that in the judgment of the Underwriter makes
it impracticable or inadvisable to proceed with the Offering; (iv) a
declaration
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of a banking moratorium by Federal or New York State authorities; (v) any
outbreak of major hostilities or declaration by the United States of any
national or international calamity; or (vi) there is a Material Adverse Effect
as a result of any material adverse change or any material adverse development
involving a prospective change not contemplated in the Registration Statement
or affecting particularly the business or properties of the Company and the
Subsidiaries taken as a whole.
Section 11. Notices. Except as otherwise expressly provided
in this Agreement, whenever advice or a notice, objection, designation, request
or report is given or is required by the provisions of this Agreement to be
given, such advice, notice, objection, designation, request or report shall be
in writing and shall be delivered by first-class mail, postage prepaid,
nationally recognized courier or by telecopy, (a) if to the Company, addressed
to it and delivered to 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000,
Attention: Xxxxxx Xxxx, President, with a copy to Xxxxxxx Xxxxxx Xxxxx &
Xxxxxx, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxx, Esq.; and (b) if to the Underwriter, addressed to Southcoast Capital
Corporation, and delivered at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx Xxxxx, with a copy to Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx, Esq.; or at such
other address or telecopier number as a party hereto may give notice in
accordance herewith.
Section 12. Miscellaneous. (a) This Agreement is made
solely for the benefit of the Underwriter and the Company, the Company's
directors, the Company's officers who shall have signed the Registration
Statement and any controlling person referred to in Section 9 hereof, and their
respective successors and assigns, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue
of this Agreement. The term "successor" or the term "successors and assigns" as
used in this Agreement shall not include any buyer, as such, of any of the
Securities from the Underwriter.
(b) The information in the Prospectus under the section
"Underwriting" with respect to the amounts of the selling concession and
reallowance, and the last paragraph of the outside front cover page of the
Prospectus shall constitute the only information furnished in writing by or on
behalf of the Underwriter for use in connection with the preparation of the
Registration Statement as originally filed or in any amendment thereto, any
preliminary prospectus or the Prospectus as the case may be.
(c) This Agreement shall supersede any agreement or
understanding, oral or in writing, express or implied, between the Company and
you relating to the sale of any of the Securities.
(d) No change, amendment or supplement to, or waiver of, this
Agreement or any term, provision or condition contained herein, shall be valid
or of any effect unless in writing and signed by the party against whom such is
asserted.
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(e) This Agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to contracts made
and to be performed therein without giving effect to the principles of
conflicts of law thereof. If any action or proceeding shall be brought by the
Underwriter or the Company in order to enforce any right or remedy under this
Agreement, the Company and the Underwriter each hereby consent to and submit
to, the jurisdiction of the courts of the State of New York and of any federal
court sitting in the Borough of Manhattan, City of New York. The Company and
the Underwriter each agree that process in any such action or proceeding may be
served in the manner provided by New York law for service on foreign persons,
as appropriate.
(f) This Agreement may be signed in two counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Agreement.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
TRANS-LUX CORPORATION
By:
---------------------------
Name:
Title:
Accepted as of the date
first above written
SOUTHCOAST CAPITAL CORPORATION
By:
--------------------------
Name:
Title:
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