EXHIBIT 1.1
Dated January ___, 1998
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KOPIN CORPORATION
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UNDERWRITING AGREEMENT
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KOPIN CORPORATION
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Common Stock
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UNDERWRITING AGREEMENT
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January ___, 1998
To:
DEUTSCHE MORGAN GRENFELL INC.
and the other Representatives
named in Schedule I hereto
of the several Underwriters
named in Schedule II hereto
c/o Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
Dear Sirs:
Kopin Corporation, a Delaware corporation (the "Company"), Telecom
Holding Co., Ltd. ("Telecom") and the other persons listed in Schedule III
hereto (the "Individual Selling Stockholders," and together with Telecom, the
"Selling Stockholders") hereby confirm their agreement with the several
underwriters named in Schedule II hereto (the "Underwriters"), for whom you have
been duly authorized to act as representatives (the one or more firms acting in
such capacities, the "Representatives"), as set forth below. If you are the
only Underwriters, all references herein to the Representatives shall be deemed
to be references to the Underwriters.
Section 1. Underwriting. Subject to the terms and conditions contained herein:
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(a) The Company proposes to issue and sell 1,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company (the
"Company Firm Shares") and Telecom proposes to sell 1,000,000 shares of Common
Stock (the "Telecom Shares") (the Company Firm Shares and the Telecom Shares are
sometimes collectively referred to herein as the "Firm Shares") to the several
Underwriters. The Company also proposes to issue and sell to the several
Underwriters not more than 250,000 additional shares (the "Company Option
Shares", and together with the Company Firm Shares, the "Company Shares") and
the Individual Selling Stockholders propose to sell to the several Underwriters
not more than 50,000 additional shares of Common Stock (the "Individual Selling
Stockholder Shares", and together
with the Company Option Shares, the "Option Shares"), if requested by the
Representatives as provided in Section 2(b) hereof. The Firm Shares and the
Option Shares are sometimes collectively referred to herein as the "Shares".
(b) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to make a public offering (the "Offering") of the Firm
Shares upon the terms set forth in the Prospectus (as defined below) as soon
after the Registration Statement (as defined below) and this Agreement have
become effective as in the Representatives' sole judgment is advisable. As used
in this Agreement, the term "Effective Date" shall mean each date that the
registration statement and any post-effective amendment or amendments thereto
became or become effective; the term "Original Registration Statement" means the
registration statement referred to in Section 5(a)(i) below, as amended at the
time when it was or is declared effective, including incorporated documents,
financial schedules and exhibits thereto, including any Rule 430A Information
(as defined below) deemed to be included therein at the Effective Date as
provided by Rule 430A and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as defined below), also means such
registration statement as so amended; the term "Rule 430A Information" means
information permitted to be omitted from the Original Registration Statement
when it becomes effective pursuant to Rule 430A; the term "Rule 462(b)
Registration Statement" means any registration statement filed with the
Commission pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Securities Act") (including the Registration Statement and any Preliminary
Prospectus (as defined below) or Prospectus incorporated therein at the time
such Registration Statement becomes effective); the term "Registration
Statement" includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Basic Prospectus" shall mean the prospectus
referred to in Section 5(a)(i) below contained in the Registration Statement at
the Effective Date including, in the case of a Rule 430A Offering (as defined
below), any Preliminary Prospectus; the term "Preliminary Prospectus" means the
preliminary prospectus supplement to the Basic Prospectus used prior to the
filing of the Prospectus; the term "Prospectus" means:
(i) if the Company relies on Rule 434 under the Securities
Act, the Term Sheet (as defined below) relating to the Shares
that is first filed pursuant to Rule 424(b) under the Securities
Act, together with the Preliminary Prospectus identified therein
that such Term Sheet supplements;
(ii) the prospectus supplement to the Basic Prospectus first
filed with the Commission pursuant to Rule 424(b) under the
Securities Act, together with the Basic Prospectus;
(iii) if, in the case of a Rule 430A Offering, no prospectus
supplement is required to be filed pursuant to Rule 424(b) under
the Securities Act, the form of final prospectus supplement to
the Basic Prospectus, including the Basic Prospectus, included
in the Registration Statement at the Effective Date; or
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(iv) for purposes of the representations and warranties in
Section 5 hereof, if the prospectus is not in existence, the
Basic Prospectus and the most recent Preliminary Prospectus, if
any.
"Rule 415", "Rule 424" and "Rule 430A" refer to such rules or regulations
under the Securities Act, and the term "Term Sheet" means any term sheet
that satisfies the requirements of Rule 434 under the Securities Act. Any
reference herein to the Registration Statement, the Basic Prospectus, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Prospectus or the Prospectus, as the case may
be, deemed to be incorporated therein by reference. A "Rule 430A Offering"
means an offering of securities which is intended to commence promptly
after the effective date of a registration statement, with the result that,
pursuant to Rules 415 and 430A, all information (other than Rule 430A
Information) with respect to the securities so offered must be included in
such registration statement at the effective date thereof. A "Rule 415
Offering" means an offering of securities pursuant to Rule 415 which does
not commence promptly after the effective date of a registration statement,
with the result that only information required pursuant to Rule 415 need be
included in such registration statement at the effective date thereof with
respect to the securities so offered. Whether the offering of the Shares
is a Rule 430A Offering or a Rule 415 Offering shall be set forth in
Schedule I hereto.
(c) For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus, the Prospectus, the Term
Sheet or the Basic Prospectus, or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
Section 2. Purchase and Closing.
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(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell, and Telecom agrees to sell, to each
of the Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase from the Company and Telecom, at the purchase price per Share
set forth in Schedule I hereto (the "Purchase Price"), the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule II hereto. Firm
Shares shall be registered by Boston Equiserve, L.P. in the name of the nominee
of the Depository Trust Company ("DTC"), Cede & Co. ("Cede & Co."), and credited
to the accounts of such of its participants as the Representatives shall
request, upon notice to the Company and Telecom at
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least 48 hours prior to the First Closing Date (as defined below), with any
transfer taxes payable in connection with the transfer of the Firm Shares to the
Underwriters duly paid, against payment by or on behalf of the Underwriters to
the account of the Company and to a separate account of Telecom of the aggregate
Purchase Price therefor by wire transfer in immediately available funds.
Delivery or registry of and payment for the Firm Shares shall be made at the
office of, on the date and at the time specified in Schedule I hereto, or at
such other place, time or date as the Representatives, the Company and Telecom
may agree upon. Such time and date of delivery against payment are herein
referred to as the "First Closing Date", and the implementation of all the
actions described in this Section 2(a) is herein referred to as the "First
Closing".
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Shares as contemplated by the
Prospectus, the Company and the Individual Selling Stockholders hereby grant to
the several Underwriters an option to purchase, severally and not jointly, the
Option Shares. The purchase price to be paid for any Option Shares shall be the
same as the Purchase Price for the Firm Shares set forth above in paragraph (a)
of this Section 2. The option granted hereby may be exercised as to all or any
part of the Option Shares from time to time within thirty days after the date of
the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange and the
Nasdaq Stock Market's National Market (the "Nasdaq National Market") are open
for trading). The Underwriters shall not be under any obligation to purchase any
of the Option Shares prior to the exercise of such option. The Representatives
may from time to time exercise the option granted hereby by giving notice in
writing or by telephone (confirmed in writing) to the Company and the Individual
Selling Stockholders setting forth the aggregate number of Option Shares as to
which the several Underwriters are then exercising the option and the date and
time for delivery or registry of and payment for such Option Shares. Any such
date of delivery or registry shall be determined by the Representatives but
shall not be earlier than two business days or later than five business days
after such exercise of the option unless otherwise agreed to by the Company and
the Representatives and, in any event, shall not be earlier than the First
Closing Date. The time and date set forth in such notice, or such other time or
date as the Representatives, the Company and the Individual Selling Stockholders
may agree upon or as the Representatives may determine pursuant to Section 2(a)
hereof, is herein called an "Option Closing Date" with respect to such Option
Shares, and the implementation of all the actions described in this Section 2(b)
is herein referred to as the "Option Closing". As used in this Agreement, the
term "Closing Date" means either the First Closing Date or any Option Closing
Date, as applicable, and the term "Closing" means either the First Closing or
any Option Closing, as applicable. If the option is exercised as to all or any
portion of the Option Shares, then either one or more certificates in definitive
form for such Option Shares shall be delivered or, if such Option Shares are to
be held through DTC, such Option Shares shall be registered and credited, on the
related Option Closing Date in the same manner, and upon the same terms and
conditions, set forth in paragraph (a) of this Section 2, except that reference
therein to the Firm Shares and the First Closing Date shall be deemed, for
purposes of this paragraph (b), to refer to such Option Shares and Option
Closing Date, respectively. Upon exercise of the option as provided herein, the
Company and the Individual Selling Stockholders shall become obligated to sell
to each of the several Underwriters, and, on the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
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and conditions herein set forth, each of the Underwriters (severally and not
jointly) shall become obligated to purchase from the Company and each Individual
Selling Stockholder, that number of Option Shares being offered by the Company
or such Individual Selling Stockholder, as the case may be, which is in the same
proportion to the number of Option Shares set forth opposite the name of the
Company or such Individual Selling Stockholder in Schedule III hereto as to
which the several Underwriters are then exercising the option, as the number of
Firm Shares such Underwriter is obligated to purchase is to the aggregate number
of Firm Shares, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
(c) The Company and the Selling Stockholders hereby acknowledge that
the payment of monies pursuant to Section 2(a) hereof (a "Payment") by or on
behalf of the Underwriters of the aggregate Purchase Price for any Shares does
not constitute closing of a purchase and sale of the Shares. Only execution and
delivery, by facsimile or otherwise, of a receipt for Shares by the Underwriters
indicates completion of the closing of a purchase of the Shares from the Company
and the Selling Stockholders. Furthermore, in the event that the Underwriters
make a Payment to the Company and the Selling Stockholders prior to the
completion of the closing of a purchase of Shares, the Company and the Selling
Stockholders hereby acknowledge that until the Underwriters execute and deliver
such receipt for the Shares, the Company and the Selling Stockholders will not
be entitled to the Payment and shall return the Payment to the Underwriters as
soon as practicable (by wire transfer of same-day funds) upon demand. In the
event that the closing of a purchase of Shares is not completed and the Payment
is not returned by the Company and the Selling Stockholders to the Underwriters
on the same day the Payment was received by the Company and the Selling
Stockholders, each of the Company and the Selling Stockholders (severally and
not jointly) agree to pay to the Underwriters in respect of each day the Payment
is not returned by any one of them, in same-day funds, interest on the amount of
such Payment not returned by such party in an amount representing the
Underwriters' cost of financing as reasonably determined by the Representatives.
(d) It is understood that any of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make Payment on behalf
of any Underwriter or Underwriters for any of the Shares to be purchased by such
Underwriter or Underwriters. No such Payment shall relieve such Underwriter or
Underwriters from any of its or their obligations hereunder.
Section 3. Covenants.
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(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will:
(A) use its best efforts to cause the Registration
Statement, if not effective at the time of execution
of this Agreement, and any amendments thereto, to
become effective as promptly as possible. If
required, the Company will file the Prospectus or any
Term Sheet that constitutes a part thereof and any
amendment or supplement thereto with the
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Commission in the manner and within the time period
required by Rule 424(b) under the Securities Act.
During any time when a prospectus relating to the
Shares is required to be delivered under the
Securities Act, the Company will (x) comply with all
requirements imposed upon it by the Securities Act
and the rules and regulations of the Commission
thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Shares in
accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (y)
not, prior to the earlier of the date upon which the
over-allotment option is fully exercised or the date
thirty (30) days after the date of Prospectus, file
with the Commission the Basic Prospectus, Term Sheet
or any amendment or supplement to such Basic
Prospectus (including the Prospectus or any
Preliminary Prospectus), any amendment or supplement
to such Term Sheet, any amendment to the Registration
Statement (including the amendment referred to in the
second sentence of Section 5(a)(i)) or any Rule
462(b) Registration Statement unless the
Representatives previously have been advised of, and
furnished with a copy within a reasonable period of
time prior to, the proposed filing and the
Representatives shall have given their consent to
such filing which consent shall not be unreasonably
withheld. The Company will prepare and file with the
Commission, in accordance with the rules and
regulations of the Commission, promptly upon request
by the Representatives or counsel for the
Underwriters, any amendments to the Registration
Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in
connection with the distribution of the Shares by the
several Underwriters. The Company will advise the
Representatives, promptly after receiving notice
thereof, of the time when the Registration Statement
or any amendment thereto has been filed or declared
effective or the Prospectus or Term Sheet or any
amendment or supplement thereto has been filed and
will provide evidence satisfactory to the
Representatives of each such filing or effectiveness.
(B) without charge, provide (x) to the Representatives
and to counsel for the Underwriters, an executed and
a conformed copy of the Original Registration
Statement and each amendment thereto or any Rule
462(b) Registration Statement (in each case including
exhibits
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thereto), (y) to each other Underwriter, a conformed
copy of the Original Registration Statement and each
amendment thereto or any Rule 462(b) Registration
Statement (in each case without exhibits thereto),
and (z) so long as a prospectus relating to the
Shares is required to be delivered under the
Securities Act, as many copies of each Preliminary
Prospectus or the Prospectus or any amendment or
supplement thereto as the Representatives may
reasonably request. Without limiting the application
of clause (z) of the preceding sentence, the Company,
not later than (I) 9:00 A.M., New York City time, on
the business day following the date of determination
of the public offering price, if such determination
occurred at or prior to 12:00 noon, New York City
time, on such date or (II) 6:00 P.M., New York City
time, on the business day following the date of
determination of the public offering price, if such
determination occurred after 12:00 noon, New York
City time, on such date, will deliver to the
Underwriters, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as
the Representatives may reasonably request for
purposes of confirming orders that are expected to
settle on the First Closing Date. The copies of each
Original Registration Statement, 462(b) Registration
Statement, Preliminary Prospectus, Term Sheet and
Prospectus, and any amendments to the foregoing
documents, shall be identical to the electronically
transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(C) advise the Representatives, promptly after receiving
notice or obtaining knowledge thereof, of (w) the
issuance by the Commission of any stop order
suspending the effectiveness of the Original
Registration Statement or any amendment thereto or
any Rule 462(b) Registration Statement or any order
preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or
supplement thereto, (x) the suspension of the
qualification of the Shares for offering or sale in
any jurisdiction, (y) the institution, threatening or
contemplation of any proceeding for any purpose
identified in the preceding clause (w) or (x), or (z)
any request made by the Commission for amending the
Original Registration Statement or any Rule 462(b)
Registration Statement, for amending or supplementing
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the Prospectus or for additional information. The
Company will use its best efforts to prevent the
issuance of any such stop order and, if any such stop
order is issued, to obtain the withdrawal thereof as
promptly as possible.
(ii) The Company will endeavor in good faith, in cooperation
with the Representatives, to arrange for the qualification of
the Shares for offering and sale in each jurisdiction as the
Representatives shall designate including, but not limited to,
pursuant to applicable state securities ("Blue Sky") laws of
certain states of the United States of America or other U.S.
jurisdictions, and the Company shall use its best reasonable
efforts to maintain such qualifications in effect for so long as
may be necessary in order to complete the placement of the
Shares; provided, however, that the Company shall not be obliged
to file any general consent to service of process or to qualify
as a foreign corporation or as a securities dealer in any
jurisdiction or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise
so subject.
(iii) If, at any time prior to the final date when a prospectus
relating to the Shares is required to be delivered under the
Securities Act, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made,
not misleading, or if for any other reason it shall be necessary
at any time to amend the Registration Statement or amend or
supplement the Prospectus to comply with the Securities Act or
the rules or regulations of the Commission thereunder or
applicable law, the Company will promptly notify the
Representatives thereof and will promptly, at its own expense:
(x) prepare and file with the Commission an amendment to the
Registration Statement or amendment or supplement to the
Prospectus which will correct such statement or omission or
effect such compliance; and (y) supply any amended Registration
Statement or amended or supplemented Prospectus to the
Underwriters in such quantities as the Underwriters may
reasonably request.
(iv) The Company will make generally available to the
Company's securityholders and to the Representatives as soon as
practicable an earnings statement that satisfies the provisions
of Section 11(a) of the Securities Act, including Rule 158
thereunder.
(v) The Company will apply the net proceeds from the sale of
the Shares as set forth under "Use of Proceeds" in the
Prospectus.
(vi) The Company will not, and will not allow any majority-
owned subsidiary (each a "Subsidiary" and collectively, the
"Subsidiaries") to,
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publicly announce any intention to, and will not itself, and
will not allow any Subsidiary to, without the prior written
consent of Deutsche Morgan Grenfell Inc., on behalf of the
Underwriters, (i) offer, pledge, sell, offer to sell, contract
to sell, sell any option or contract to purchase, purchase any
option to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into, or
exercisable or exchangeable for, Common Stock, or (ii) enter
into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the
shares of Common Stock or securities convertible into, or
exercisable or exchangeable for, shares of Common Stock (whether
any such transaction described in clause (i) or (ii) above is to
be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise), for a period beginning from
the date hereof and continuing to and including the date which
is the number of days after the date hereof specified in
Schedule I hereto, except pursuant to this Agreement and other
than with respect to shares of Common Stock (or any securities
convertible into or exchangeable for shares of Common Stock)
issued pursuant to any employee benefit plans, qualified stock
option plans or other employee compensation plans which are
disclosed in the Prospectus.
(vii) Neither the Company nor any of its affiliates, nor any
person acting on behalf of any of them will, directly or
indirectly, (i) take any action designed to cause or to result
in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Shares or (ii) (x) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of, the Shares
or (y) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the
Company.
(viii) The Company will obtain the agreements described in
Section 7(j) hereof prior to the First Closing Date.
(ix) If at any time during the 25-day period after the
Registration Statement becomes effective or during the period
prior to any Closing Date, any rumor, publication or event
relating to or affecting the Company shall occur as a result of
which in the Representatives' reasonable judgment the market
price of the Shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus),
the Company will, after notice from the Representatives advising
the Company to the effect set forth above, forthwith prepare,
consult with the Representatives concerning the substance of,
and disseminate a press release responding to or commenting on
such rumor, publication or event
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or other public statement, that is reasonably satisfactory to
the Representatives.
(x) If the Company elects to rely on Rule 462(b), the Company
shall both file the Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable
fees in accordance with Rule 111 promulgated under the
Securities Act by the earlier of (i) 10:00 P.M. New York City
time on the date of this Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b)(2)
under the Securities Act.
(xi) The Company will use its best efforts to cause the Shares
to be duly included for quotation on the Nasdaq National Market
prior to the First Closing Date. The Company will ensure that
the Shares remain included for quotation on the Nasdaq National
Market, or are included for quotation on the New York Stock
Exchange or the American Stock Exchange, following the First
Closing Date.
(b) Each Individual Selling Stockholder covenants and agrees with
the several Underwriters that:
(i) For 120 days from the date hereof, such Selling
Stockholder will not, and no person acting on behalf of such
Selling Stockholder will, directly or indirectly, (x) take any
action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares or
(y) sell, bid for, purchase, or pay anyone any compensation for
soliciting purchase of, the Shares or (z) pay or agree to pay to
any person any compensation for soliciting another to purchase
any other securities of the Company (except for the sale of
Shares by the Selling Stockholders under this Agreement).
(ii) Each Individual Selling Stockholder will not, and will
not cause any Subsidiary or affiliate to, publicly announce any
intention to, and will not itself, and will not allow any
Subsidiary or affiliate to, without the prior written consent of
the Representatives on behalf of the Underwriters, (x) offer,
pledge, sell, offer to sell, contract to sell, sell any option
or contract to purchase, purchase any option to sell, grant any
option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any of the shares of Common
Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock, or (y) enter into any swap or
other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the shares of Common Stock
or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock (whether any such
transaction described in clause (x) or (y) above is to be
settled by delivery of shares of Common
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Stock or such other securities, in cash or otherwise), in each
case, beneficially owned (within the meaning of Rule 13d-3 under
the Exchange Act) or otherwise controlled by such person on the
date hereof or hereafter acquired, for a period beginning from
the date hereof and continuing to and including the date 120
days after the date hereof; provided, however, that such Selling
Stockholder may, without the prior written consent of the
Representatives on behalf of the Underwriters, transfer shares
of Common Stock or such other securities to members of such
Individual Selling Stockholder's immediate family or to trusts
for the benefit of members of such Individual Selling
Stockholder's immediate family or in connection with bona fide
gifts; provided that any transferee agrees to the transfer
restrictions described above.
(c) Telecom covenants and agrees with the several Underwriters that:
(i) For 90 days from the effective date of the Registration
Statement, such Selling Stockholder will not, and no person
acting on behalf of such Selling Stockholder will, directly or
indirectly, (x) take any action designed to cause or to result
in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Shares or (y) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchase of, the Shares
or (z) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the
Company (except for the sale of Shares by the Selling
Stockholders under this Agreement).
(ii) Such Selling Stockholder will not, and will not cause any
Subsidiary or affiliate to, publicly announce any intention to,
and will not itself, and will not allow any Subsidiary or
affiliate to, without the prior written consent of the
Representatives on behalf of the Underwriters, (x) offer,
pledge, sell, offer to sell, contract to sell, sell any option
or contract to purchase, purchase any option to sell, grant any
option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any of the shares of Common
Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock, or (y) enter into any swap or
other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the shares of Common Stock
or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock (whether any such
transaction described in clause (x) or (y) above is to be
settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially
owned (within the meaning of Rule 13d-3 under the Exchange Act)
or otherwise controlled by such person on the date hereof or
hereafter acquired, for a period beginning for a period
beginning from the date hereof and continuing to and including
the date 90 days after the date hereof;
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provided, however, that such Selling Stockholder may, without
the prior written consent of the Representatives on behalf of
the Underwriters, transfer shares of Common Stock or such other
securities to an affiliate of Telecom; provided that any
transferee agrees to the transfer restrictions described above.
Section 4. Expenses.
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(a) The Company shall bear and pay all costs and expenses incurred
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 9 hereof, including: (i) fees and expenses of
preparation, issuance and delivery of this Agreement to the Underwriters; (ii)
the fees and expenses of its counsel, accountants and any other experts or
advisors retained by the Company; (iii) fees and expenses incurred in connection
with the registration of the Shares under the Securities Act and the preparation
and filing of the Registration Statement, the Prospectus and all amendments and
supplements thereto; (iv) the printing and distribution of the Prospectus and
any Preliminary Prospectus and the printing and production of all other
documents connected with the Offering (including this Agreement and any other
related agreements); (v) expenses related to the qualification of the Shares
under the state securities or Blue Sky laws, including filing fees and the fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of any Blue Sky memoranda; (vi) the filing fees
and expenses, if any, incurred with respect to any filing with the National
Association of Securities Dealers, Inc. (the "NASD"), including the fees and
disbursements of counsel for the Underwriters in connection therewith; (vii) all
expenses arising from the quoting of the Shares on the Nasdaq National Market;
(viii) all arrangements relating to the preparation, issuance and delivery to
the Underwriters of any certificates evidencing the Shares, including transfer
agent's and registrar's fees; and (ix) the Company's costs and expenses
associated with the "roadshow" and any other meetings with prospective investors
in the Shares (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters).
(b) The Selling Stockholders shall bear and pay all costs and
expenses incurred incident to the performance of their respective obligations
under this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 9 hereof,
including: (i) any stamp duties, capital duties and stock transfer taxes, if
any, payable upon the sale of the Shares of such Selling Stockholders to the
Underwriters and (ii) the fees and disbursements of their respective counsel,
accountants and other advisors.
Section 5. Representations And Warranties.
------------------------------
(a) As a condition of the obligation of the Underwriters to
underwrite and pay for the Shares, the Company represents and warrants to, and
agrees with, each of the several Underwriters as follows:
12
Registration Statement and Prospectus
(i) If the Offering is a Rule 415 Offering (as specified in
Schedule I hereto), paragraph (x) below is applicable and, if the
Offering is a Rule 430A Offering (as so specified), paragraph (y)
below is applicable.
(x) The Company meets the requirements for use of
Form S-3 under the Securities Act and has filed with the
Commission the Original Registration Statement (the file
number of which is set forth in Schedule I hereto) on
such Form, including a Basic Prospectus, for registration
under the Act of the offering and sale of the Shares, one
or more amendments to such Registration Statement may
have been so filed, and the Company may have used a
Preliminary Prospectus. Such Registration Statement, as
so amended, has become effective. The Offering is a Rule
415 Offering and, although the Basic Prospectus may not
include all the information with respect to the Shares
and the offering thereof required by the Securities Act
and the rules thereunder to be included in the
Prospectus, the Basic Prospectus includes all such
information required by the Securities Act and the rules
thereunder to be included therein as of the Effective
Date. After the execution of this Agreement, the Company
will file with the Commission pursuant to Rules 415 and
424(b)(2) or (5) a final supplement to the form of
prospectus included in such Registration Statement
relating to the Shares and the offering thereof, with
such information as is required or permitted by the
Securities Act and as has been provided to and approved
by the Representatives prior to the date hereof or, to
the extent not completed at the date hereof, containing
only such specific additional information and other
changes (beyond that contained in the Basic Prospectus
and any Preliminary Prospectus) as the Company has
advised you, prior to the date hereof, will be included
or made therein. The Company may also file a Rule 462(b)
Registration Statement with the Commission for the
purpose of registering certain additional Shares, which
registration shall be effective upon filing with the
Commission.
(y) The Company meets the requirements for the use of
Form S-3 under the Securities Act and has filed with the
Commission the Original Registration Statement (the file
number of which is set forth in Schedule I hereto) on
such Form, including a Basic Prospectus, for registration
under the Securities Act of the offering and sale of the
Shares, and one or more amendments to such Registration
Statement, including a Preliminary Prospectus, may have
been so filed. After the execution of this Agreement, the
Company will file with the Commission either (I) if such
13
Registration Statement, as it may have been amended, has
been declared by the Commission to be effective under the
Securities Act, either (A) if the Company relies on Rule
434 under the Securities Act, a Term Sheet relating to
the Shares that shall identify the Preliminary Prospectus
that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under
the Securities Act or (B) if the Company does not rely on
Rule 434 under the Securities Act, a prospectus in the
form most recently included in an amendment to such
Registration Statement (or, if no such amendment shall
have been filed, in such Registration Statement), with
such changes or insertions as are required by Rule 430A
under the Securities Act or permitted by Rule 424(b)
under the Securities Act, and in the case of either
clause (A) or (B) of this sentence, as have been provided
to and approved by the Representatives prior to the
execution of this Agreement, or (II) if such Registration
Statement, as it may have been amended, has not been
declared by the Commission to be effective under the
Securities Act, an amendment to such Registration
Statement, including the form of final prospectus
supplement to the Basic Prospectus, a copy of which
amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement
or, to the extent not completed at the date hereof,
containing only such specific additional information and
other changes (beyond that contained in the Basic
Prospectus and any Preliminary Prospectus) as the Company
has advised you, prior to the date hereof, will be
included or made therein. The Company may also file a
Rule 462(b) Registration Statement with the Commission
for the purpose of registering certain additional Shares,
which registration shall be effective upon filing with
the Commission.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any
Preliminary Prospectus was filed with the Commission, it (x)
contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements
of, the Securities Act and the rules and regulations of the
Commission thereunder and (y) did not include any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, it (I) contained or will contain all statements required
to be stated therein in accordance with, and complied or will comply
in all material respects with the requirements of, the Securities
Act and the rules and regulations of the Commission thereunder and
(II) did not or will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
14
therein or necessary to make the statements therein in the light of
the circumstances under which they were made not misleading. When
the Prospectus or any Term Sheet or any amendment or supplement to
the Prospectus is filed with the Commission pursuant to Rule 424(b)
(or, if the Prospectus or such amendment or supplement is not
required to be so filed, when the Registration Statement or the
amendment thereto containing the Prospectus or such amendment or
supplement to the Prospectus was or is declared effective) and on
the Closing Date, the Prospectus, as amended or supplemented at any
such time, (A) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Securities Act
and the rules and regulations of the Commission thereunder and (B)
did not or will not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The foregoing provisions of this
paragraph (ii) do not apply to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives
specifically for use therein.
(iii) If the Company has elected to rely on Rule 462(b) and the
Rule 462(b) Registration Statement is not effective, (x) the Company
will file a Rule 462(b) Registration Statement in compliance with,
and that is effective upon filing pursuant to, Rule 462(b) and (y)
the Company has given irrevocable instructions for transmission of
the applicable filing fee in connection with the filing of the Rule
462(b) Registration Statement, in compliance with Rule 111 under the
Securities Act, or the Commission has received payment of such
filing fee.
(iv) The Company has not distributed and, prior to the later
of (x) any Closing Date and (y) the completion of the distribution
of the Shares, will not distribute any offering material in
connection with the Offering other than the Registration Statement
or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto.
(v) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus (x) the Company and its Subsidiaries, taken as a whole,
have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the
ordinary course of business; (y) the Company has not purchased any
of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock;
and (z) there has not been any material change in the capital stock,
short-term or long-term debt of the Company and its Subsidiaries,
taken as a whole, except in each case as described in or
contemplated by the Prospectus.
15
The Shares
(vi) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the date set
forth therein. All of the issued shares of capital stock of the
Company (including the Telecom Shares and the Option Shares being
offered by the Individual Selling Stockholders), have been duly
authorized and validly issued and are fully paid and nonassessable,
have been issued in compliance with all applicable federal and state
securities laws and were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
such securities. The Company Shares have been duly authorized by all
necessary corporate action of the Company and, after payment
therefor in accordance herewith, will be validly issued, fully paid
and nonassessable at the Closing Date. No holders of outstanding
shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Shares, and
no holder of securities of the Company has any right which has not
been fully exercised or waived to require the Company to register
the offer or sale of any securities owned by such holder under the
Securities Act in the Offering contemplated by this Agreement.
(vii) Except as disclosed in the Prospectus, there are no
outstanding (x) securities or obligations of the Company or any of
its Subsidiaries convertible into or exchangeable for any capital
stock of the Company or any such Subsidiary, (y) warrants, rights or
options to subscribe for or purchase from the Company or any such
Subsidiary any such capital stock or any such convertible or
exchangeable securities or obligations, or (z) obligations of the
Company or any such Subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or obligations, or
any such warrants, rights or options.
(viii) Except for the shares of capital stock of each of the
Subsidiaries owned by the Company and such Subsidiaries, neither the
Company nor any such Subsidiary owns any shares of stock or any
other equity securities of any corporation or has any equity
interest in any firm, partnership, association or other entity,
except as described in or contemplated by the Prospectus.
Listing
(ix) All of the Shares have been duly authorized and accepted
for quotation on the Nasdaq National Market, subject to official
notice of issuance.
Market manipulation
(x) Neither the Company nor any of its affiliates, nor any
person acting on behalf of any of them has, directly or indirectly,
(x) taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares, or (y) since
16
the filing of the Original Registration Statement (I) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases
of, the Shares or (II) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company.
Corporate power and authority
(xi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the law of its
jurisdiction of incorporation with full power and authority to own,
lease and operate its properties and assets and conduct its business
as described in the Prospectus, is duly qualified to transact
business and is in good standing in each jurisdiction in which its
ownership, leasing or operation of its properties or assets or the
conduct of its business requires such qualification, except where
the failure to be so qualified does not amount to a material
liability or disability to the Company and its Subsidiaries, taken
as a whole, and has full power and authority to execute and perform
its obligations under this Agreement; each Subsidiary of the Company
is a corporation duly incorporated and validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to transact business and is in
good standing in each jurisdiction in which its ownership, leasing
or operation of its properties or assets or the conduct of its
business requires such qualification, except where the failure to be
so qualified does not amount to a material liability or disability
to the Company and its Subsidiaries, taken as a whole, and each has
full power and authority to own, lease and operate its properties
and assets and conduct its business as described in the Registration
Statement and the Prospectus; all of the issued and outstanding
shares of capital stock of each of the Company's Subsidiaries have
been duly authorized and are fully paid and nonassessable and except
as otherwise set forth in the Prospectus, are owned beneficially by
the Company free and clear of any security interests, liens,
encumbrances, equities or claims.
(xii) The execution and delivery of this Agreement and the
issuance and sale of the Shares have been duly authorized by all
necessary corporate action of the Company, and this Agreement has
been duly executed and delivered by the Company and is the valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent the Agreement is
subject to, or affected by, applicable bankruptcy, insolvency,
federal or state fraudulent conveyance or transfer laws,
reorganization, moratorium or similar laws.
(xiii) The issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (x) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained or made or
such as may be required by the state
17
securities or Blue Sky laws of the various states of the United
States of America or other U.S. jurisdictions in connection with the
offer and sale of the Shares by the Underwriters, or (y) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the
Company or any of its Subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
Subsidiaries.
(xiv) The Company is not, and will conduct its operations in a
manner so that it continues not to be, an "investment company" and,
after giving effect to the Offering and the application of the
proceeds therefrom, will not be an "investment company", as such
term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act").
Title, licenses and consents
(xv) The Company and each of its Subsidiaries have good and
marketable title in fee simple to all items of real property and
marketable title to all personal property owned by each of them, in
each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects, except such as do
not materially and adversely affect the use of such property and do
not interfere with the use made or proposed to be made of such
property by the Company or such Subsidiary, and any real property
and buildings held under lease by the Company or any such Subsidiary
are held under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use
made or proposed to be made of such property and buildings by the
Company or such Subsidiary, in each case except as described in or
contemplated by the Prospectus.
(xvi) Except as disclosed in the Prospectus, the Company and
each of its Subsidiaries have the right to use or can acquire on
reasonable terms all trademarks, trade names, trade secrets,
servicemarks, inventions, patent rights, mask works, copyrights,
licenses, software code, audiovisual works, formats, algorithms and
underlying data, approvals and governmental authorizations now used
in, or which are necessary for fulfillment of their respective
obligations or the conduct of their respective businesses as now
conducted or proposed to be conducted as described in the
Prospectus; except as discussed in the Prospectus, the expiration of
any trademarks, trade names, trade secrets, servicemarks,
inventions, patent rights, mask works, copyrights or licenses would
not have a material adverse effect on the condition (financial or
otherwise), earnings, properties, business affairs or business
prospects, stockholders' equity, net worth or results of operations;
and neither the Company nor any of its Subsidiaries is infringing
any trademark, trade name rights, patent rights relating to patents
that
18
have issued, mask works, copyrights, licenses, trade secret,
servicemarks or other similar rights of others, and there is no
claim being made against the Company or any of its Subsidiaries
regarding trademark, trade name, patent, mask work, copyright,
license, trade secret or other infringement or assertion of
intellectual property rights which could have a material adverse
effect on the earnings, properties, business affairs or business
prospects, stockholders' equity, net worth or results of operations
of the Company. The Company has agreements in place with such
employees, consultants or other persons or parties engaged by the
Company or any Subsidiary sufficient to enable the Company and any
Subsidiary to fulfill their contractual obligations and to conduct
their respective businesses as now conducted as described in the
Prospectus and providing for the assignment to the Company of all
intellectual property rights in the work performed and the
protection of the trade secrets and confidential information of the
Company, each of its Subsidiaries and of third parties.
(xvii) The Company and its Subsidiaries possess all consents,
licenses, certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the
Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on or constitute a
materially adverse change in, or constitute a development involving
a prospective materially adverse effect on or change in, the
condition (financial or otherwise), earnings, properties, business
affairs or business prospects, net worth or results of operations of
the Company or any of its Subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
Financial statements
(xviii) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and its consolidated
Subsidiaries and delivered their report with respect to the audited
consolidated financial statements and schedules included in the
Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the applicable
rules and regulations thereunder.
(xix) The consolidated financial statements and schedules of
the Company and its consolidated Subsidiaries included or
incorporated in the Registration Statement and the Prospectus were
prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved
(except as otherwise noted therein) and they present fairly the
financial condition of the Company as at the dates at which they
were prepared and the results of operations of the Company in
respect of the periods for which they were prepared.
19
Internal Accounting Controls
(xx) The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (w) transactions are executed in
accordance with management's general or specific authorizations; (x)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability; (y) access to assets is permitted only in accordance
with management's general or specific authorization; and (z) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
Litigation
(xxi) No legal or governmental proceedings are pending or to the
Company's knowledge threatened to which the Company or any of its
Subsidiaries is a party or to which the property of the Company or any
of its Subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not described
therein; and no statutes, regulations, contracts or other documents
that are required to be described or incorporated in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement are not described or incorporated therein or
filed as required.
Dividends and Distributions
(xxii) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company,
making any other distribution on such Subsidiary's capital stock,
repaying to the Company any loans or advances to such Subsidiary from
the Company or transferring any of such Subsidiary's property or
assets to the Company or any other Subsidiary of the Company, and the
Company is not currently prohibited, directly or indirectly, from
paying any dividends or making any other distribution on its capital
stock, in each case except as described in or contemplated by the
Prospectus or prohibited by applicable law.
Taxes
(xxiii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a materially adverse effect on the Company and its
Subsidiaries, taken as a whole) and has paid all taxes required to be
paid by it and any other assessment, fine or penalty levied against
it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being
contested in good faith or as described in or contemplated by the
Prospectus.
20
Insurance
(xxiv) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, properties, business
affairs or business prospects, net worth or results of operations of
the Company or any of its Subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
Pension and Labor
(xxvi) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (x) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (y) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(xxvii) No labor dispute with the employees of the Company or
any of its Subsidiaries exists or is threatened or imminent that could
have a materially adverse effect on or constitute a materially adverse
change in, or constitute a development involving a prospective
materially adverse effect on or change in, the condition (financial or
otherwise), properties, management, earnings, business affairs or
business prospects, net worth or results of operations of the Company
or any of its Subsidiaries, taken as a whole, except as described in
or contemplated by the Prospectus.
Environmental
(xxviii) Neither the Company nor any of its Subsidiaries is in
violation of any federal or state law or regulation relating to
occupational safety and health or to the storage, handling or
transportation of hazardous or toxic
21
materials and the Company and its Subsidiaries have received all
permits, licenses or other approvals required of them under applicable
federal and state occupational safety and health and environmental
laws and regulations to conduct their respective businesses, and the
Company and each such Subsidiary is in compliance with all terms and
conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not,
singly or in the aggregate, have a materially adverse effect on or
constitute a materially adverse change in, or constitute a development
involving a prospective materially adverse effect on or change in, the
condition (financial or otherwise), earnings, properties, business
affairs or business prospects, net worth or results of operations of
the Company or any of its Subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
Other Agreements
(xxix) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries or any of their
respective properties is bound.
Absence of Materially Adverse Change
(xxx) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has been no materially adverse change
(including, without limitation, a change in management or control), or
development involving a prospective materially adverse change, in the
condition (financial or otherwise), management, earnings, property,
business affairs or business prospects, stockholders' equity, net
worth or results of operations of the Company or any of its
Subsidiaries, taken as a whole, other than as described in or
contemplated by the Prospectus (exclusive of any amendments or
supplements thereto).
(xxxi) Except as disclosed in the Prospectus, no receiver or
liquidator (or similar person) has been appointed in respect of the
Company or any Subsidiary of the Company or in respect of any part of
the assets of the Company or any Subsidiary of the Company; no
resolution, order of any court, regulatory body, governmental body or
otherwise, or petition or application for an order, has been passed,
made or to the Company's knowledge presented for the winding up of the
Company or any Subsidiary of the Company or for the protection of the
22
Company or any such Subsidiary from its creditors; and the Company has
not, and no Subsidiary of the Company has, stopped or suspended
payments of its debts, become unable to pay its debts or otherwise
become insolvent.
(b) As a further condition of the obligation of the Underwriters to
underwrite and pay for the Shares, each Individual Selling Stockholder severally
represents and warrants to, and agrees with, each of the several Underwriters
that:
(i) Such Selling Stockholder has full power to enter into this
Agreement and to sell, assign, transfer and deliver to the
Underwriters the Shares to be sold by such Selling Stockholder
hereunder in accordance with the terms of this Agreement; the
execution and delivery of this Agreement have been duly authorized by
all necessary action of such Selling Stockholder; and this Agreement
has been duly executed and delivered by such Selling Stockholder.
(ii) Such Selling Stockholder has duly executed and delivered a
power of attorney and custody agreement (with respect to such Selling
Stockholder, the "Power-of-Attorney" and the "Custody Agreement",
respectively) each in the form heretofore delivered to the
Representatives, appointing John C.C. Fan and Paul J. Mitchell as such
Selling Stockholder's attorney-in-fact (the "Attorney-in-Fact") with
authority to execute, deliver and perform this Agreement on behalf of
such Selling Stockholder and appointing the Company as custodian
thereunder (the "Custodian"). Certificates in negotiable form,
endorsed in blank or accompanied by blank stock powers duly executed,
with signatures appropriately guaranteed, representing the Shares to
be sold by such Selling Stockholder hereunder (other than Shares
issuable upon exercise of vested stock options) have been deposited
with the Custodian pursuant to the Custody Agreement for the purpose
of delivery pursuant to this Agreement. Such Selling Stockholder has
full power to enter into the Custody Agreement and the Power-of-
Attorney and to perform its obligations under the Custody Agreement.
The execution and delivery of the Custody Agreement and the Power-of-
Attorney have been duly authorized by all necessary action of such
Selling Stockholder; the Custody Agreement and the Power-of-Attorney
have been duly executed and delivered by such Selling Stockholder and,
assuming due authorization, execution and delivery by the Custodian,
are the legal, valid, binding and enforceable instruments of such
Selling Stockholder. Such Selling Stockholder agrees that each of the
Shares represented by the certificates on deposit with the Custodian
is subject to the interests of the Underwriters hereunder, that the
arrangements made for such custody, the appointment of the Attorney-
in-Fact and the right, power and authority of the Attorney-in-Fact to
execute and deliver this Agreement, to agree on the price at which the
Shares (including such Selling Stockholder's Shares) are to be sold to
the Underwriters, and to carry out the terms of this Agreement, are to
that extent irrevocable and that the obligations of such Selling
Stockholder hereunder shall not be terminated, except as provided in
this Agreement or the Custody Agreement, by any act of such Selling
Stockholder, by operation of law
23
or otherwise, whether by the death or incapacity of such Selling
Stockholder or by the occurrence of any other event. If any Individual
Selling Stockholder should die or if any other event should occur
before the delivery of such Shares hereunder, the certificates for
such Shares deposited with the Custodian shall be delivered by the
Custodian in accordance with the respective terms and conditions of
this Agreement as if such death or other event had not occurred,
regardless of whether or not the Custodian or the Attorney-in-Fact
shall have received notice thereof.
(iii) Such Selling Stockholder has good and valid title to the
Shares to be sold by the Selling Stockholder hereunder (except for
those Selling Stockholders who intend to sell Shares issuable pursuant
to vested stock options now held by each of them who will be the
lawful owner upon exercise of such options) and upon sale and delivery
of, and payment for, such Shares, as provided herein, each Selling
Stockholder (including those exercising vested stock options) will
convey good and valid title to such Shares, free and clear of any
security interests, liens, encumbrances, equities, claims or other
defects.
(iv) Neither such Selling Stockholder nor any person acting on
behalf of it has, directly or indirectly, (x) taken any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares or (y) since the filing of the
Original Registration Statement (I) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Shares or
(II) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company
(except for the sale of Shares by the Selling Stockholders under this
Agreement).
(v) Such Selling Stockholder has reviewed the Prospectus and the
Registration Statement, and the information regarding such Selling
Stockholder set forth therein under the caption "Selling Stockholders"
is complete and accurate.
(vi) To the knowledge of such Selling Stockholder without having
made or making any independent inquiry, the representations and
warranties of the Company contained in Section 5(a) hereof are true
and correct; such Individual Selling Stockholder has reviewed and is
familiar with the Registration Statement and the Prospectus and
neither the Prospectus nor any amendments or supplements thereto
includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; such Individual Selling Stockholder is not prompted to
sell its Shares to be sold by such Individual Selling Stockholder
hereunder by any information concerning the Company or any Subsidiary
of the Company which is not set forth in the Prospectus.
24
(vii) Neither such Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the
By-laws of the NASD), any member firm of the NASD.
(viii) The sale of the Shares to the Underwriters by such
Selling Stockholder pursuant to this Agreement, the compliance by such
Selling Stockholder with the other provisions of this Agreement, the
Custody Agreement and the consummation of the other transactions
herein contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may
be required under foreign or state securities or blue sky laws, such
as may be requested under the Securities Exchange Act of 1934, as
amended, and, if the registration statement filed with respect to the
Shares (as amended) is not effective under the Securities Act as of
the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Securities Act, or
(ii) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which such Selling Stockholder or is a party or by which such Selling
Stockholder or any of its properties are bound, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to such Selling
Stockholder.
(c) As a further condition of the obligation of the Underwriters to
underwrite and pay for the Shares, Telecom represents and warrants to, and
agrees with, each of the several Underwriters that:
(i) Such Selling Stockholder has full power (corporate and other)
to enter into this Agreement and to sell, assign, transfer and deliver
to the Underwriters the Shares to be sold by such Selling Stockholder
hereunder in accordance with the terms of this Agreement; the
execution and delivery of this Agreement have been duly authorized by
all necessary corporate action of such Selling Stockholder; and this
Agreement has been duly executed and delivered by such Selling
Stockholder.
(ii) Such Individual Selling Stockholder has duly executed and
delivered a Power-of-Attorney, in the form heretofore delivered to the
Representatives, appointing John C.C. Fan and Paul J. Mitchell as such
Selling Stockholder's the Attorney-in-Fact with authority to execute,
deliver and perform this Agreement on behalf of such Selling
Stockholder. Such Selling Stockholder has full power (corporate and
other) to enter into the Power-of-Attorney. The execution and
delivery of the Power-of-Attorney has been duly authorized by all
necessary corporate action of such Selling Stockholder; the Power-of-
Attorney has been duly executed and delivered by such Selling
Stockholder and, is the legal,
25
valid, binding and enforceable instrument of such Selling Stockholder.
Such Selling Stockholder agrees that the arrangements made for the
appointment of the Attorney-in-Fact and the right, power and authority
of the Attorney-in-Fact to execute and deliver this Agreement, to
agree on the price at which the Shares (including such Selling
Stockholder's Shares) within the limitations of such agreements are to
be sold to the Underwriters, and to carry out the terms of this
Agreement, are to that extent set forth therein irrevocable and that
the obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement, by any act of such
Selling Stockholder, by operation of law or otherwise, whether in the
case of a corporate or partnership Selling Stockholder by its
liquidation or dissolution or by the occurrence of any other event.
(iii) Such Selling Stockholder has good and valid title to the
Shares to be sold by the Selling Stockholder hereunder and upon sale
and delivery of, and payment for, such Shares, as provided herein,
such Selling Stockholder will convey good and valid title to such
Shares, free and clear of any security interests, liens, encumbrances,
equities, claims or other defects.
(iv) Neither such Selling Stockholder nor any person acting on
behalf of it has, directly or indirectly, (x) taken any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares or (y) since the filing of the
Original Registration Statement (I) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Shares or
(II) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company
(except for the sale of Shares by the Selling Stockholders under this
Agreement).
(v) Such Selling Stockholder has reviewed the Prospectus and the
Registration Statement, and the information regarding such Selling
Stockholder set forth therein under the caption "Selling Stockholders"
is complete and accurate.
(vi) Such Selling Stockholder has reviewed and is familiar with
the Registration Statement and the Prospectus and neither the
Prospectus nor any amendments or supplements thereto includes any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; such Selling
Stockholder is not prompted to sell its Shares to be sold by such
Selling Stockholder hereunder by any information concerning the
Company or any Subsidiary of the Company which is not set forth in the
Prospectus.
26
(vii) Neither such Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the
By-laws of the NASD), any member firm of the NASD.
(viii) The sale of the Shares to the Underwriters by such
Selling Stockholder pursuant to this Agreement, the compliance by such
Selling Stockholder with the other provisions of this Agreement and
the consummation of the other transactions herein contemplated do not
(i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained, such as may be required under foreign or state
securities or blue sky laws, such as may be required under the
Securities Exchange Act of 1934, as amended, and, if the registration
statement filed with respect to the Shares (as amended) is not
effective under the Securities Act as of the time of execution hereof,
such as may be required (and shall be obtained as provided in this
Agreement) under the Securities Act, or (ii) conflict with or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under any indenture, mortgage, deed of trust,
lease or other agreement or instrument to which such Selling
Stockholder or any of its Subsidiaries is a party or by which such
Selling Stockholder or any of its Subsidiaries or any of their
respective properties are bound, or the charter documents or by-laws
of such Selling Stockholder or any of its Subsidiaries or any statute
or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to such
Selling Stockholder or any of its Subsidiaries.
(d) The above representations and warranties with respect to the
Company shall be deemed to be repeated at each Closing and with respect to each
Selling Stockholder at each Closing where such Selling Stockholder is selling
Shares to the Underwriters, and all references therein to the Shares and the
Closing Date shall be deemed to refer to the Firm Shares or the Option Shares
and the First Closing Date or the applicable Option Closing Date, each as
applicable.
Section 6. Indemnity.
---------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 5 hereof,
27
(ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto, the Basic Prospectus, any Preliminary
Prospectus or the Prospectus or any amendment or supplement
thereto, or
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, the Basic
Prospectus, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto a material fact required to be
stated therein, in the light of the circumstances under which
they were made, or necessary to make the statements therein not
misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, the Basic Prospectus, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and provided further, that the Company will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Shares from
such Underwriter but was not sent or given a copy of the Prospectus (as amended
or supplemented) in any case where such delivery of the Prospectus (as amended
or supplemented) was required by the Securities Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 3 hereof. The indemnity provided for
in this Section 6 shall be in addition to any liability which the Company may
otherwise have. The Company will not, without the prior written consent of the
Representatives, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Representatives
or any person who controls any such Representatives is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(b) Telecom agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, against any and all
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
28
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto, the Basic Prospectus, any Preliminary
Prospectus or the Prospectus or any amendment or supplement
thereto, or
(ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, the Basic
Prospectus, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto a material fact required to be
stated therein, in the light of the circumstances under which
they were made, or necessary to make the statements therein not
misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that Telecom
will not be liable in any such case to the extent that any such loss, claim,
damage, action or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, the Basic Prospectus, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and provided further, that Telecom will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Shares from
such Underwriter but was not sent or given a copy of the Prospectus (as amended
or supplemented) in any case where such delivery of the Prospectus (as amended
or supplemented) was required by the Securities Act. The indemnity provided for
in this Section 6 shall be in addition to any liability which the Company may
otherwise have. Telecom will not, without the prior written consent of the
Representatives, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Representatives
or any person who controls any such Representatives is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding. The liability of Telecom under this Section 6 shall not exceed
the net proceeds from the Offering received by Telecom.
(c) The Individual Selling Stockholders severally agree to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any and all losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon
29
any untrue statement or alleged untrue statement made by any of the Individual
Selling Stockholders in Section 5 hereof, and will reimburse, as incurred, each
Underwriter and each such controlling person for any legal or other costs or
expenses reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action;
provided, however, that the Individual Selling Stockholders will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement or any
amendment thereto, the Basic Prospectus, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; and provided further,
that such Individual Selling Stockholder will not be liable to any Underwriter
or any person controlling such Underwriter with respect to any such untrue
statement or omission made in any Preliminary Prospectus that is corrected in
the Prospectus (or any amendment or supplement thereto) if the person asserting
any such loss, claim, damage or liability purchased Shares from such Underwriter
but was not sent or given a copy of the Prospectus (as amended or supplemented)
in any case where such delivery of the Prospectus (as amended or supplemented)
was required by the Securities Act, unless such failure to deliver the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 3 hereof. The indemnity provided for in this Section 6
shall be in addition to any liability which the Individual Selling Stockholders
may otherwise have. None of the Individual Selling Stockholders will, without
the prior written consent of the Representatives, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not any such Representatives or any person who controls any such
Representatives is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of all
of the Underwriters and such controlling persons from all liability arising out
of such claim, action, suit or proceeding. The liability of each Individual
Selling Stockholder under this Section 6 shall not exceed the net proceeds from
the Offering received by such Individual Selling Stockholder.
(d) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each Selling Stockholder and each person, if
any, who controls the Company or Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, Selling Stockholder or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, the Basic
Prospectus, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (ii) the omission or the alleged omission to state in the
Registration Statement or any amendment thereto, the Basic Prospectus any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
30
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer, Selling Stockholder or controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or any action in respect
thereof. The remedies provided for in this Section 6 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(e) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a), (b) or (c) of this Section 6, such person (for
purposes of paragraphs (d) and (e) of this Section 6, the "indemnified party")
shall, promptly after receipt by such party of notice of the commencement of
such action, notify the person against whom such indemnity may be sought (for
purposes of paragraphs (d) and (e) of this Section 6, the "indemnifying party"),
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 6. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that 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 the advice of its
counsel) that there may be one or more legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense of any such action and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 6 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances), or (ii) the indemnifying party does not promptly
retain counsel satisfactory to the indemnified party, or (iii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party. All
31
fees and expenses to be reimbursed pursuant to this paragraph (d) shall be
reimbursed as they are incurred. After such notice from the indemnifying party
to such indemnified party, the indemnifying party will not be liable for the
costs and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party.
(f) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 6 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and
the indemnified party on the other from the Offering or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the indemnifying
party or parties on the one hand and the indemnified party on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the Offering (before deducting expenses)
received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the Underwriters, the
parties' relative intents, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company, the Selling
Stockholders and the Underwriters agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (e). Notwithstanding any
other provision of this paragraph (e), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total public offering
price of the Shares purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
no Selling Stockholder shall be required to contribute any amount in excess of
the amount by which the proceeds (after deducting underwriting discounts or
commission) received by such Selling Stockholder exceed the amount of any
damages which such Selling Stockholder has otherwise been required to pay in
respect of the same or any substantially similar claim, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Deutsche Morgan Grenfell Inc. Master Agreement
Among Underwriters. For
32
purposes of this paragraph (e), each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, each Selling Stockholder and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company or such Selling Stockholder, as the case may be.
Section 7. Conditions Precedent. The obligations of the several Underwriters
--------------------
to purchase and pay for the Shares shall be subject, in the Representatives'
reasonable discretion, to (i) the accuracy of the representations and warranties
of the Company, Telecom and the Individual Selling Stockholders contained herein
as of the date hereof and as of each Closing Date on which the Company, Telecom
or the Individual Selling Stockholders, as the case may be, proposes to
sell Shares to the Underwriter, in each case, as if made on and as of each
Closing Date, (ii) the performance by the Company and Telecom and the Individual
Selling Stockholders of their respective covenants and agreements hereunder
required to be performed or satisfied at or prior to the Closing Date, and (iii)
the following additional conditions:
(a) (i) If the Original Registration Statement or any amendment
thereto filed prior to the First Closing Date has not been declared effective as
of the time of execution hereof, the Original Registration Statement or such
amendment shall have been declared effective not later than 6:00 P.M. New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 4:30 P.M. New York City time on such date,
or 12:00 Noon New York City time on the business day following the day on which
the public offering price was determined, if such determination occurred after
4:30 P.M. New York City time on such date, and (ii) if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have been
declared effective not later than the time confirmations are sent or given as
specified by Rule 462(b)(2), or such later time and date as shall have been
consented to by the Representatives; if required, the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement thereto
shall have been filed with the Commission in the manner and within the time
period required by Rule 424(b) under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall have received a legal opinion from
Bingham Dana LLP, counsel for the Company, dated the Closing Date, to the effect
that:
(i) the Registration Statement is effective under the Securities
Act; any required filing of the Prospectus, or any Term Sheet
that constitutes a part thereof, pursuant to Rules 434 and 424(b)
has been made in the manner and within the time period required
by Rules 434 and 424(b); and to the best of its knowledge no stop
order suspending the effectiveness of
33
the Registration Statement or any amendment thereto has been
issued and, to the best knowledge of such counsel, no proceedings
for that purpose are pending or threatened by the Commission;
(ii) the Original Registration Statement and each amendment
thereto, any Rule 462(b) Registration Statement and the
Prospectus (in each case, other than the financial statements and
other financial and statistical information contained therein, as
to which such counsel need express no opinion), excluding in each
case the documents incorporated by reference therein, comply as
to form in all material respects with the applicable requirements
of the Securities Act and the rules and regulations of the
Commission thereunder;
(iii) the documents incorporated by reference in the Prospectus
(other than the financial statements and other financial
information contained therein), when they became effective or
were filed with the Commission, as the case may be, complied as
to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder;
(iv) such counsel has participated in certain conferences with
officers and other representatives of the Company,
representatives of the independent certified public accountants
for the Company and representatives of the Underwriters, at which
conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any
responsibility for, nor has such counsel independently verified,
the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus, on the
basis of the foregoing, no facts have come to such counsel's
attention that have caused such counsel to believe that either
the Registration Statement, at the time such Registration
Statement became effective, or the Prospectus as of the date
hereof, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (except,
in the case of both the Registration Statement and the
Prospectus, for the financial statements, notes thereto and other
schedules, financial and accounting information and statistical
data contained therein, as to which such counsel expresses no
view).
(v) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the shares
of capital stock issued and outstanding prior to the issuance of
the Shares have been duly authorized and validly issued and,
assuming payment therefor in accordance with the resolutions
authorizing such issuances or in accordance with the terms of the
applicable option or warrant, as the case
34
may be, are fully paid and nonassessable; and none of such shares
of capital stock were issued in violation of any statutory
preemptive or, to the best of our knowledge, other similar
rights; the Company Shares have been duly authorized by all
necessary corporate action of the Company and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, and the certificates evidencing the Company Shares are
duly countersigned by or issued by the Company's transfer agent
and registrar, will be validly issued, fully paid and
nonassessable; to the best of such counsel's knowledge, no
holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe
for any of the Shares; and to the best of such counsel's
knowledge no holder of securities of the Company has any right
which has not been fully exercised or waived to require the
Company to register the offer or sale of any securities owned by
such holder under the Securities Act in the Offering contemplated
by this Agreement;
(vi) all of the Shares have been duly authorized and accepted for
quotation on the Nasdaq National Market, subject to official
notice of issuance;
(vii) the Company and each of its Subsidiaries have been duly
organized and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, based solely on certificates from public
officials, such counsel confirms the Company and each of its
Subsidiaries and are duly qualified to transact business in [list
jurisdictions]; to the best of such counsel's knowledge the
Company and each of its Subsidiaries have full power and
authority to own, lease and operate their respective properties
and assets and conduct their respective businesses as described
in the Registration Statement and the Prospectus, and the Company
has corporate power to enter into this Agreement and to carry out
all the terms and provisions hereof to be carried out by it; all
of the issued and outstanding shares of capital stock of each of
the Company's Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and, except as otherwise
set forth in the Prospectus, are owned beneficially by the
Company free and clear of any perfected security interests or, to
the best knowledge of such counsel, any other security interests,
liens, encumbrances, equities or claims;
(viii) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectus
that are not described as required;
(ix) all descriptions in the Registration Statement of documents
specifically referred to therein or matters of law, are accurate
summaries and fairly and correctly present in all material
respects the information called for with respect to such
documents and matters; to the best of our
35
knowledge, there are no franchises, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects;
(x) the statements set forth under the headings [DESCRIPTION OF
CAPITAL STOCK CONTAINED IN THE COMPANY'S REGISTRATION STATEMENT
ON FORM 8-A, DATED [DATE]] insofar as such statements purport to
summarize certain provisions of the capital stock of the Company,
provide a fair summary of such provisions; and the statements set
forth under the headings "Business-Manufacturing and Facilities"
and "Business-Legal Proceedings" in the Prospectus, and under
Item 15 in the Registration Statement, insofar as such statements
constitute a summary of the legal matters, documents or
proceedings referred to therein, have been reviewed by such
counsel and fairly present the information called for with
respect to such legal matters, documents and proceedings in all
material respects as required by the Securities Act and the
Exchange Act and the respective rules and regulations thereunder;
(xi) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and
this Agreement has been duly executed and delivered by the
Company;
(xii) the issuance, offering and sale of the Company Shares to
the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this
Agreement and the consummation of the other transactions
contemplated in this Agreement and the Registration Statement do
not (x) require the consent, approval, authorization,
registration or qualification of or with any governmental
authority, except such as have been obtained or made (and
specified in such opinion) or such as may be required by the
securities or Blue Sky laws of the United States of America, the
Commonwealth of Massachusetts and the State of Delaware, in
connection with the offer and sale of the Shares by the
Underwriters, or (y) to the best of such counsel's knowledge
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or
instrument, to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any
of their respective properties are bound, or the charter
documents or by-laws of the Company or any of its Subsidiaries,
or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator
known to such counsel and applicable to the Company or its
Subsidiaries;
36
(xiii) the Company is not an "investment company" and, after
giving effect to the Offering and the application of the proceeds
therefrom, will not be an "investment company", as such term is
defined in the 1940 Act; and
(xiv) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of
its Subsidiaries is a party or to which the property of the
Company or any of its Subsidiaries is subject that are required
to be described or incorporated in the Registration Statement or
the Prospectus and are not described or incorporated therein or
any statutes, regulations, contracts or other documents that are
required to be described or incorporated in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or incorporated
therein or filed as required.
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.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion. The opinions of issuer's counsel described herein shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.
(c) The Representatives shall have received a legal opinion from
Hamilton Brook Smith & Reynolds, PC, patent counsel for the Company, dated the
Closing Date, to the effect that:
(i) The statements in the Registration Statement and Prospectus
under the captions "Risk Factors - Uncertainty Relating to
Patents and Proprietary Rights" and "Business - Patents,
Proprietary Rights and Licenses" insofar as such statements
constitute summaries of matters of law, are accurate and complete
statements or summaries of the matters set forth therein.
(ii) To such counsel's knowledge, the Registration Statement and
the Prospectus do not contain any untrue statement of a material
fact with respect to the patent position of the Company, or omit
to state any material fact relating to the patent position of the
Company which is required to be stated in the Registration
Statement and the Prospectus or is necessary to make the
statements therein not misleading.
(iii) The Company has clear title to the United States patents
and patent applications mentioned in the Prospectus
(collectively, the "Patents"). Such counsel has no knowledge of
any facts that the Company lacks, or will be unable to obtain,
any rights or licenses to use all Intellectual
37
Property necessary to the conduct of its business as now or
proposed to be conducted by the Company as described in the
Prospectus. To such counsel's knowledge, there are no facts which
would form a basis for any of the Patents being held invalid or
non-enforceable.
(iv) The Company has obtained licenses from the Massachusetts
Institute of Technology under the United States Patents and
patent applications mentioned in the Prospectus (the "Licensed
Patents"). To such counsel's knowledge, there are no facts which
would form a basis for any of the patents within the Licensed
Patents being held invalid or non-enforceable.
(v) To such counsel's knowledge, the contractual obligations of
the Company described in the Registration Statement and the
Prospectus have not and will not adversely affect the proprietary
rights of the Company, except under circumstances of
misappropriation by third parties. To such counsel's knowledge,
except as disclosed in the Prospectus, the Company has obtained
all material licenses required for the conduct of its business,
and such licenses are in full force and effect and the Company in
all respects is complying therewith. Except as and to the extent
set forth in the Prospectus, neither the Company nor any of its
Subsidiaries is under any obligation to pay to any third party,
royalties or fees of any kind by the terms of contracts known to
us with respect to any patents, patent applications, patent
rights, inventions, trade secrets, know-how, trademarks,
trademark applications, service marks, service mark applications,
trade names, copyrights or other information (collectively,
"Intellectual Property").
(vi) There are no legal or governmental proceedings pending
(other than patent and trademark applications pending) relating
to Intellectual Property owned or used by the Company; and to
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or others. There are no
legal or governmental proceedings pending or, to such counsel's
knowledge, any accusation, threat or suggestion by a third party
of infringement by the Company of any Intellectual Property of
such third party. There are no pending or, to such knowledge,
threatened governmental proceedings, in the United States or any
other jurisdiction, including but not limited to reexaminations
and oppositions, which could affect the validity or
enforceability of any Intellectual Property of the Company.
(vii) We have paid all maintenance and other fees required to
maintain the enforceability of all U.S. patents and patent
applications licensed or sublicensed to any third party.
38
(d) The Representatives shall have received a non-infringement opinion
from Hamilton Brook Smith & Reynolds, PC, patent counsel for the Company, with
respect to certain United States patents.
(e) The Representatives shall have received a legal opinion from
Bingham Dana LLP, counsel for the Individual Selling Stockholders, dated each
Option Closing Date, with respect to the Individual Selling Stockholders, to the
effect that:
(i) To the best of such counsel's knowledge, such Selling
Stockholder has full power to enter into this Agreement, the
Custody Agreement and the Power-of-Attorney and to sell, assign,
transfer and deliver the Shares being sold by such Selling
Stockholder hereunder in the manner provided in this Agreement
and to perform its obligations under the Custody Agreement; the
execution and delivery of this Agreement, the Custody Agreement
and the Power-of-Attorney have been duly authorized by all
necessary action of such Selling Stockholder; this Agreement, the
Custody Agreement and the Power-of-Attorney have been duly
executed and delivered by such Selling Stockholder; assuming due
authorization, execution and delivery by the Custodian, the
Custody Agreement and the Power-of-Attorney are the legal, valid,
binding and enforceable instruments of such Selling Stockholder,
subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law);
(ii) upon delivery of certificates issued to the several
Underwriters by such Selling Stockholder for the Shares being
sold hereunder by such Selling Stockholder, each Underwriter that
is a "bona fide purchaser" (as defined in Section 8-302 of the
Massachusetts Uniform Commercial Code) will acquire all of the
rights of such Selling Stockholder in its respective shares of
such Common Stock, free of any adverse claim, any lien in favor
of the Company and any restrictions on transfer imposed by the
Company;
(iii) the sale of the Shares to the Underwriters by such Selling
Stockholder pursuant to this Agreement, the compliance by such
Selling Stockholder with the other provisions of this Agreement
and the Custody Agreement and the consummation of the other
transactions herein contemplated do not (x) require the consent,
approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and
such as may be required under state securities or blue sky laws,
or (y) conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder or any of its properties are
bound, or any statute or any judgment, decree, order, rule or
regulation of any court or other
39
governmental authority or any arbitrator applicable to such
Selling Stockholder.
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of such Selling Stockholder and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the date of
such opinion.
(f) The Representatives shall have received a legal opinion from Baker
& McKenzie, counsel for Telecom, dated the First Closing Date to the effect
that:
(i) To the best of such counsel's knowledge, such Selling
Stockholder has full corporate power to enter into this
Agreement and the Power-of-Attorney and to sell, assign, transfer
and deliver the Shares being sold by such Selling Stockholder
hereunder in the manner provided in this Agreement; the execution
and delivery of this Agreement and the Power-of-Attorney have
been duly authorized by all necessary corporate action of such
Selling Stockholder; this Agreement and the Power-of-Attorney
have been duly executed and delivered by such Selling
Stockholder; the Power-of-Attorney, except for Section III.2
thereof (as to which counsel need not express any opinion), is a
legal, valid, binding and enforceable instrument of such Selling
Stockholder, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at
law);
(ii) upon delivery by such Selling Stockholder to the several
Underwriters of certificates for the Shares being sold hereunder
by such Selling Stockholder against payment therefor as provided
herein, ownership of such Shares free and clear of all liens,
encumbrances, equities, claims will have been transferred to the
several Underwriters who have purchased such Shares in good faith
and without notice of any such lien, encumbrance, equity or claim
or any adverse claim within the meaning of the Uniform Commercial
Code;
(iii) the sale of the Shares to the Underwriters by such Selling
Stockholder pursuant to this Agreement, the compliance by such
Selling Stockholder with the other provisions of this Agreement
and the consummation of the other transactions herein
contemplated do not (x) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and
such as may be required under the Act, the Exchange Act, and/or
foreign and state securities or blue sky laws (as to which
counsel need not express any opinion);
40
or (y) conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under the
charter documents or by-laws of such Selling Stockholder or any
of its Subsidiaries.
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of such Selling Stockholder 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.
(g) The Representatives shall have received a legal opinion from
Testa, Hurwitz & Thibeault, LLP, counsel for the Underwriters, dated the Closing
Date, covering the issuance and sale of the Shares, the Registration Statement
and the Prospectus, and such other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters.
(h) The Representatives shall have received from Deloitte & Touche LLP
a letter or letters dated, respectively, the date hereof and the Closing Date,
in form and substance satisfactory to the Representatives, together with signed
or reproduced copies of such letter for each of the other Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (I) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (II) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof. References to the Registration Statement and the Prospectus in this
paragraph (f) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(i) The Company shall have furnished or caused to be furnished to the
Underwriters at the Closing a certificate of its Chairman of the Board,
President and Chief Executive Officer and its Chief Financial Officer
satisfactory to the Underwriters to the effect that:
41
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the
Closing Date; the Registration Statement, as amended as of the
Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended
or supplemented as of the Closing Date, does not include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) 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
threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus
(exclusive of any amendment or supplement thereto), neither the
Company nor any of its Subsidiaries has sustained any material
loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, and there has
not been any materially adverse change (including, without
limitation, a change in management or control), or development
involving a prospective materially adverse change, in the
condition (financial or otherwise), management, earnings,
properties, business affairs or business prospects, stockholders'
equity, net worth or results of operations of the Company or any
of its Subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).
(j) The Representatives shall have received from the Company and each
person who is a director or officer of the Company an agreement dated on or
before the date of this Agreement to the effect that such person will not ,
without the prior written consent of the Representatives during a period from
the date of this Agreement and continuing and including 120 days from the date
hereof, the undersigned will not, without the prior written consent of the
Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such securities, in
cash or otherwise; provided, however, that such person may, without
42
the prior written consent of the Representatives on behalf of the Underwriters,
transfer shares of Common Stock or such other securities to members of such
person's immediate family or to trusts for the benefit of members of such
person's immediate family or in connection with bona fide gifts, provided that
any transferee agrees to the transfer restrictions described above.
(k) The Representatives shall have received a certificate from Telecom
dated the First Closing Date and from each Individual Selling Stockholder dated
each Option Closing Date, signed by an Attorney-in-Fact on behalf of such
Selling Stockholder, to the effect that:
(i) the representations and warranties of such Selling
Stockholder in this Agreement are true and correct as if made on
and as of such Closing Date;
(ii) the Registration Statement, as amended as of such Closing
Date, does not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or
supplemented as of such Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and
(iii) such Selling Stockholder has performed all covenants and
agreements on its part to be performed or satisfied at or prior
to such Closing Date.
(l) Prior to the commencement of the Offering, the Company shall have
made an application for the quotation of the Shares on the Nasdaq National
Market and the Shares shall have been included for trading on the Nasdaq
National Market, subject to official notice of issuance.
(m) On or before the Closing Date, the Representatives and counsel for
the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company and the
Selling Stockholders.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company and the Selling Stockholders shall
furnish to the Representatives such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representatives
and counsel for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Shares shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Shares, except that all references therein
to the Shares and the Closing Date shall be deemed to
43
refer to the Firm Shares or the Option Shares and the First Closing Date or the
related Option Closing Date, each as applicable.
Section 8. Default of Underwriters. If, at the First Closing, any one or more
-----------------------
of the Underwriters shall fail or refuse to purchase Shares that it has or they
have agreed to purchase hereunder on such date, and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is ten percent or less of the aggregate number of the Shares
to be purchased on such date, the other Underwriters may make arrangements
satisfactory to the Representatives for the purchase of such Shares by other
persons (who may include one or more of the non-defaulting Underwriters,
including the Representatives), but if no such arrangements are made by the
First Closing Date, the other Underwriters shall be obligated severally in the
proportions that the number of Firm Shares set forth opposite their respective
names in Schedule II hereto bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as the Representatives may specify, to purchase the Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase on such date. If, at the First Closing, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than ten
per cent of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to the Representatives and the Company and the Selling
Stockholders for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter, the Company or the Selling Stockholders. In
any such case either the Representatives or the Company shall have the right to
postpone the Closing, but in no event for longer than seven days, in order that
the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, at any
Option Closing, any Underwriter or Underwriters shall fail or refuse to purchase
Option Shares, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Option Shares or (ii) purchase
not less than the number of Option Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 8. Any action taken under this Section 8 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
Section 9. Termination. This Agreement shall be subject to termination in the
-----------
sole discretion of the Representatives by notice to the Company and the Selling
Stockholders given prior to any Closing Date in the event that the Company shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to any Closing Date, (a) trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market shall
have been suspended or materially limited or minimum or maximum prices shall
have been established by or on, as the case may be, the Commission or the New
York Stock Exchange or the Nasdaq National Market; (b) trading of any securities
of the Company shall have been suspended on any exchange or in any over-the-
counter market; (c) a general moratorium on commercial banking activities shall
have been declared by either Federal or New York State authorities; (d) there
shall have occurred (i) an outbreak or escalation of hostilities between the
United States and any foreign power, (ii) an
44
outbreak or escalation of any other insurrection or armed conflict involving the
United States, or (iii) any other calamity or crisis or materially adverse
change in general economic, political or financial conditions having an effect
on the U.S. financial markets that, in the reasonable judgment of the
Representatives, in the case of clauses (d)(i), (d)(ii) and (d)(iii), makes it
impractical or inadvisable to proceed with the public offering or the delivery
of the Shares as contemplated by the Registration Statement, as amended as of
the date hereof; or (e) the Company or any of its Subsidiaries shall have, in
the reasonable judgment of the Representatives, sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, or there shall
have been any materially adverse change (including, without limitation, a change
in management or control), or constitute a development involving a prospective
materially adverse change, in the condition (financial or otherwise),
management, earnings, properties, business affairs or business prospects,
stockholders' equity, net worth or results of operations of the Company or any
of its Subsidiaries, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto). Termination of
this Agreement pursuant to this Section 9 shall be without liability of any
party to any other party except for the liability of the Company in relation to
expenses as provided in Sections 4 and 10 hereof, the liability of the Selling
Stockholders in relation to expenses as provided in Sections 4 and 10 hereof,
the indemnity provided in Section 6 hereof and any liability arising before or
in relation to such termination.
Section 10. Reimbursement of Expenses. If the sale of the Shares provided for
-------------------------
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 7 hereof is not satisfied or because of any
termination pursuant to Section 9 hereof (other than by reason of a default by
any of the Underwriters), the Company shall reimburse the Underwriters,
severally upon demand, for all out-of-pocket expenses (including fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Shares. If the Company is required
to make any payments to the Underwriters under this Section 10 because of any
Selling Stockholder's refusal, inability or failure to satisfy any condition to
the obligations of the Underwriters set forth in Section 7 hereof, such
defaulting Selling Stockholder, pro rata in proportion to the percentage of
--- ----
Shares to be sold by it, shall reimburse the Company on demand for amounts so
paid.
Section 11. Information Supplied by Underwriters. The statements set forth in
------------------------------------
the last paragraph on the front cover page and in the first four paragraphs
under the heading "Underwriting" in any Preliminary Prospectus or the Prospectus
(to the extent such statements relate to the Underwriters) constitute the only
information furnished by any Underwriter through the Representatives to the
Company for the purposes of Section 5(a)(ii) and Section 6 hereof. The
Underwriters confirm that such statements (to such extent) are correct.
Section 12. Notices. In all dealings hereunder, you shall act on behalf of
-------
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representatives. Any notice or notification in
any form to be given under this Agreement may be delivered in person or sent by
telex, facsimile or telephone (subject in the case of a communication by
telephone to confirmation by telex or facsimile) addressed to:
45
in the case of the Company:
Kopin Corporation
695 Myles Standish Boulevard
Taunton, Massachusetts 02780
Telephone: 508-824-6696
Facsimile: 508-824-6958
Attention: President
in the case of the Underwriters:
Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
Telephone: 212-469-5600
Facsimile: 212-469-5995
Attention: Equity Syndicate Desk
In the case of the Selling Stockholders, any such notice shall be addressed to
the Selling Stockholders at the addresses set forth in Schedule III hereto. Any
such notice shall take effect, in the case of delivery, at the time of delivery
and, in the case of telex or facsimile, at the time of dispatch.
Section 13. Miscellaneous.
-------------
(a) Time shall be of the essence of this Agreement.
(b) The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect, the meaning or interpretation
of this Agreement.
(c) For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange is open for trading, and (b) "subsidiary"
has the meaning set forth in Rule 405 under the Securities Act.
(d) This Agreement may be executed in any number of counterparts, all
of which, taken together, shall constitute one and the same Agreement and any
party may enter into this Agreement by executing a counterpart.
(e) This Agreement shall inure to the benefit of and shall be binding
upon the several Underwriters, the Company, the Selling Stockholders and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that (i)
the indemnities of the Company and
46
the Selling Stockholders contained in Section 6 hereof shall also be for the
benefit of any person or persons who control any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and (ii)
the indemnities of the Underwriters contained in Section 6 hereof shall also be
for the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement, each Selling Stockholder and any person
or persons who control the Company or such Selling Stockholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
No purchaser of Shares from any Underwriter shall be deemed a successor because
of such purchase.
(f) The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company, its officers, the Selling
Stockholders and the several Underwriters set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement shall remain in
full force and effect, regardless of (i) any investigation made by or on behalf
of the Company, any of its officers or directors, the Selling Stockholders, any
Underwriter or any controlling person referred to in Section 6 hereof and (ii)
delivery of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Sections 4, 6 and 10 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
Section 14. Severability. It is the desire and intent of the parties that the
------------
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
47
Section 15. Governing Law. The validity and interpretation of this Agreement,
-------------
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
If the foregoing is in accordance with your understanding, please sign
and return to us ten (10) counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in the Deutsche
Morgan Grenfell Inc. Master Agreement Among Underwriters, the form of which
shall be submitted to the Company and the Selling Stockholders for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
KOPIN CORPORATION
By
-------------------------------------
President and Chief Executive Officer
TELECOM HOLDING CO., LTD.
By
-------------------------------------
Attorney-in-Fact
[OTHER SELLING STOCKHOLDERS]
By
-------------------------------------
Attorney-in-Fact
48
The foregoing Agreement is hereby
confirmed and accepted as of the date
specified in Schedule I hereto.
DEUTSCHE MORGAN GRENFELL INC.
TUCKER ANTHONY INCORPORATED
By: DEUTSCHE MORGAN GRENFELL INC.
By
---------------------------------
Name:
Title:
By
---------------------------------
Name:
Title:
For themselves and on behalf of the
other several Underwriters, if any, named in
Schedule II to the foregoing Agreement.
49
SCHEDULE I
Underwriting Agreement dated: December ___, 1997
Other Representatives: Tucker Anthony Incorporated
Type of Offering: Rule 430A Offering
Purchase Price of Securities:
Purchase price per share:
Closing Date, Time and Location: December __, 1997,
Registration Statement No. 333-____
Number of days referred to in Section 3(a)(vi): 120
Number of days referred to in Section 7(h):
(a) in the case of the Individual Selling Stockholders: 120
(b) in the case of Telecom: 90
Modification of items to be covered by the letter from Deloitte & Touche LLP
delivered pursuant to Section 7(h) at the Closing Date:
I-1
SCHEDULE II
-----------
The Underwriters
Underwriter Underwriting commitment
- ----------- -----------------------
Deutsche Morgan Grenfell Inc. ................
Tucker Anthony Incorporated
-----------
Total......................................... 2,000,000
II-1
SCHEDULE III
------------
The Selling Stockholders
Number Of Shares Number of Option
Selling Stockholders To Be Sold Shares to be Sold
- -------------------- ---------------- -----------------
Telecom Holding Co., Ltd......... 1,000,000
[Individual Selling Stockholders]
---------------- -----------------
Total............................ 1,000,000 50,000
III-1