Execution Copy
2,500,000 Shares
UNIVERSAL DISPLAY CORPORATION
Shares of Common Stock
($.01 par value)
underwriting agreement
March 17, 2004
SG COWEN SECURITIES CORPORATION
NEEDHAM & COMPANY, INC.
HARRIS NESBITT CORP.
As Representatives of the several Underwriters
c/o SG Cowen Securities Corporation
1221 Avenue of the Americas
New York, New York 10020
Dear Sirs:
1. Introductory. UNIVERSAL DISPLAY CORPORATION, a Pennsylvania corporation (the
"Company") proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of 2,500,000 shares of Common Stock, $.01 par
value (the "Common Stock"), of the Company. The aggregate of 2,500,000 shares so
proposed to be sold is hereinafter referred to as the "Firm Stock." The Company
also proposes to sell to the Underwriters, upon the terms and conditions set
forth in Section 3 hereof, up to an additional 375,000 shares of Common Stock
(the "Optional Stock"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "Stock." SG Cowen Securities Corporation ("SG
Cowen"), Needham & Company, Inc. and Harris Nesbitt Corp. are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives." Certain terms used herein are defined in
Section 14 hereof.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS SUBSIDIARY. The Company
and its subsidiary represent and warrant to, and agree with, the several
Underwriters that:
(a) The Company has prepared and filed, in accordance with the
provisions of the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations promulgated thereunder (the "Rules
and Regulations"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-88950)
under the Securities Act (the "First Registration Statement") in
respect of $50,000,000 of Common Stock, preferred stock, warrants and
depositary shares, including the Stock. The First Registration
Statement has been declared by the Commission to be effective under the
Securities Act. The Company has also prepared and filed with the
Commission, in accordance with the provisions of the Securities Act, a
registration statement on Form S-3 (File No. 333-112077) under the
Securities Act (the "Second Registration Statement") in respect of
$50,000,000 of Common Stock, preferred stock, warrants and depositary
shares, including the Stock. Amendments to the Second Registration
Statement have been similarly prepared and filed with the Commission.
The Second Registration Statement, as so amended, has been declared by
the Commission to be effective under the Securities Act. Pursuant to
Rule 429 under the Securities Act, the Second Registration Statement
constitutes a post-effective amendment to the First Registration
Statement and includes a combined prospectus relating to any offering
of securities of the Company under both the First Registration
Statement and the Second Registration Statement. The First Registration
Statement, at the time it became effective and as supplemented or
amended, or deemed to have been amended pursuant to Rule 429 under the
Securities Act prior to the execution of this Agreement, and the Second
Registration Statement, at the time it became effective and as
supplemented or amended prior to the execution of this Agreement, in
each case including (i) all financial schedules and exhibits thereto
and (ii) all documents incorporated by reference or deemed to be
incorporated by reference therein, are hereinafter referred to
individually as a "Registration Statement" and collectively as the
"Registration Statements." Except for documents incorporated by
reference therein, the Preliminary Supplement (as defined below) and
the Final Supplement (as defined below), no other document relating to
the Second Registration Statement or document incorporated by reference
therein has been filed with the Commission since effectiveness. No stop
order suspending the effectiveness of any Registration Statement or any
post-effective amendment thereto, if any, has been issued and no
proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission. The term "Base Prospectus" as
used in this Agreement means the information contained in the
prospectus contained in the Second Registration Statement at the time
such part of the Second Registration Statement became effective. The
term "Preliminary Supplement" as used in this Agreement means the
preliminary prospectus supplement to the Base Prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. The
term "Final Supplement" as used in this Agreement means the final
prospectus supplement to the Base Prospectus relating to the sale of
the Stock, in the form filed pursuant to Rule 424(b) under the
Securities Act. The Final Supplement together with the Base Prospectus,
is hereinafter collectively referred to as the "Prospectus". Any
reference herein to any Preliminary Supplement or the Prospectus shall
be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of such Preliminary Supplement or Prospectus, as
the case may be. Any reference to any amendment or supplement to any
Preliminary Supplement or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Supplement or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
by reference in such Preliminary Supplement or Prospectus, as the case
may be; and any reference to any amendment to any Registration
Statement shall be deemed to refer to and include any annual report of
the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
Act after the effective date of such Registration Statement that is
incorporated by reference in such Registration Statement. No document
has been or will be prepared or distributed in reliance on Rule 434
under the Securities Act. No order preventing or suspending the use of
any Preliminary Supplement has been issued by the Commission.
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(b) Each Registration Statement conforms (and the Prospectus and any
amendments or supplements to the Registration Statements or the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform) in all material respects
to the requirements of the Securities Act and the Rules and Regulations
and do not and will not, as of the applicable effective date (as to the
Registration Statements and any amendments thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading; provided, however, that the foregoing representations
and warranties shall not apply to information contained in or omitted
from any Registration Statement or the Prospectus or any such amendment
or supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 16).
(c) The documents incorporated by reference in the Registration
Statements and the Prospectus, at the time they became effective or
were filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents when they were filed
with the Commission contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents
so filed and incorporated by reference in the Prospectus, at the time
such documents are filed with Commission, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the applicable rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Company and its subsidiary have been duly organized and are
validly existing as corporations or other legal entities in good
standing (or the equivalent thereof, if any) under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing (or the equivalent thereof, if any)
as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the
failure to be so qualified and in good standing or have such power or
authority would not have, singularly or in the aggregate, a "Material
Adverse Effect." Material Adverse Effect means an event or condition
which would have a material adverse effect on the condition (financial
or otherwise), results of operations, business, properties or prospects
of the Company and its subsidiary taken as a whole. The Company owns or
controls, directly or indirectly, only the following corporations,
partnerships, limited liability partnerships, limited liability
companies, associations or other entities: UDC, Inc.
(e) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
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delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable and free of any
preemptive or similar rights (except those that have been waived by the
holder thereof) and will conform to the description thereof contained
in the Prospectus.
(f) The Company has an authorized capitalization as set forth in the
Prospectus, all of the issued and outstanding shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable, have been issued in compliance with
Federal and state securities laws and conform to the description
thereof contained in the Prospectus. None of the outstanding shares of
Common Stock was issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase
securities of the Company (except those that have been waived by the
holder thereof). There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable
or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those set forth in the Prospectus. The
description of the Company's stock option, stock bonus and other stock
plans or arrangements, and the options or other rights granted
thereunder, as described in the Prospectus accurately and fairly
presents the information required to be shown with respect to such
plans, arrangements, options and rights.
(g) All the outstanding shares of capital stock of the subsidiary of
the Company have been duly authorized and validly issued, are fully
paid and non-assessable and, except to the extent set forth in the
Prospectus, are owned directly by the Company, free and clear of any
claim, lien, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party.
(h) The Company has the full right, power and authority to enter into
this Agreement and to perform and to discharge its obligations
hereunder and this Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms,
except as enforceability may be limited to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles, and except to the extent that the
indemnification and contribution provisions of Section 7 hereof may be
limited by federal or state securities laws and public policy
considerations in respect thereof.
(i) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or its subsidiary is a party or by
which the Company or its subsidiary is bound or to which any of the
property or assets of the Company or its subsidiary is subject, except
for such breach, violation or default which would not reasonably be
likely to have a Material Adverse Effect, nor will such actions result
in any violation of the provisions of the charter or by-laws of the
Company or its subsidiary or any material violation of any statute,
law, rule or regulation or any judgment, order or decree of any court
or governmental agency or body having jurisdiction over the Company or
its subsidiary or any of their properties or assets.
(j) There is no franchise, lease, contract, or agreement or other
document of a character required by the Securities Act or the Rules and
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Regulations to be described in the Prospectus, or to be filed as an
exhibit to any Registration Statement, which is not described or filed
as required; and all statements summarizing any such franchises,
contracts, leases, instruments or other documents or legal matters
contained in the Registration Statements are accurate and complete in
all material respects. Other than as described in the Prospectus, no
such franchise, lease, contract or agreement has been suspended or
terminated for convenience or default by the Company or any of the
other parties thereto, and the Company has not received notice or any
other knowledge of any such pending or threatened suspension or
termination, except for such pending or threatened suspensions or
terminations that would not reasonably be expected to, singularly or in
the aggregate, have a Material Adverse Effect.
(k) All existing minute books of the Company and its subsidiary,
including all existing records of all meetings and actions of the board
of directors (including, Audit and Compensation Committees) and
stockholders of the Company through the date of the latest meeting and
action (collectively, the "Corporate Records") have been made available
to the Underwriters and counsel for the Underwriters. All such
Corporate Records are complete and accurately reflect, in all material
respects, all transactions referred to in such Corporate Records. There
are no material transactions, agreements or other actions that have
been consummated by the Company that are not properly approved and/or
recorded in the Corporate Records.
(l) No consent, approval, authorization, filing with or order of or
registration with, any court or governmental agency or body is required
in connection with the transactions contemplated herein, except such as
have been obtained or made under the Securities Act or the Exchange
Act, the rules of the Nasdaq National Market (the "Nasdaq"), the rules
of the Philadelphia Stock Exchange, and by the Corporate Financing
Department of the National Association of Securities Dealers, Inc. (the
"NASD"), and such as may be required under the securities, or blue sky,
laws of any jurisdiction in connection with the purchase and
distribution of the Stock by the Underwriters in the manner
contemplated herein and in the Prospectus.
(m) Except as described in the Prospectus, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of any
Registration Statement or otherwise, except for persons and entities
who have expressly waived such right or who have been given timely and
proper notice and have failed to exercise such right within the time or
times required under the terms and conditions of such right, and except
as described in the Prospectus and pursuant to the terms of warrants to
purchase Common Stock issued to SG Cowen in connection with its acting
as placement agent in the Company's August 2003 registered direct
offering, the Company is not required under the terms and conditions of
any existing agreement to which the Company is a party or otherwise
bound to file any registration statement for the registration of any
securities of any person or register any such securities pursuant to
any other registration statement filed by the Company under the
Securities Act for a period of at least 180 days after the date hereof.
Each director and executive officer of the Company and each stockholder
of the Company listed on Schedule B hereto has delivered to the
Representatives an enforceable written lock-up agreement in the form
attached to this Agreement as Exhibit I.
(n) The consolidated financial statements with the related notes and
schedules thereto, included or incorporated by reference in the
Registration Statements and Prospectus present fairly the financial
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condition, results of operations and cash flows of the Company as of
the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Securities Act and have been
prepared in conformity with accounting principles generally accepted in
the United States of America, consistently applied throughout the
periods involved. The summary and selected financial data included in
the Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial
statements set forth in the Prospectus and other financial information
except for the absence of footnotes and normal year-end adjustments for
unaudited consolidated financial statements. The consolidated financial
statements, together with the related notes and schedules, included or
incorporated by reference in the Prospectus comply in all material
respects with the Securities Act and the Rules and Regulations
thereunder. No other financial statements or supporting schedules or
exhibits are required by the Securities Act or the Rules and
Regulations thereunder to be included or incorporated by reference in
the Prospectus.
(o) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or its subsidiary
is a party or of which any property or assets of the Company or its
subsidiary is the subject which is required to be described in any
Registration Statement or the Prospectus and is not described therein,
or which, singularly or in the aggregate, if determined adversely to
the Company or its subsidiary would be likely to have a Material
Adverse Effect or would prevent or adversely affect the ability of the
Company to perform its obligations under this Agreement; and to the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities and no such proceedings with a reasonable
probability of assertion have been or threatened by others.
(p) The Company and its subsidiary have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all
items of real or personal property which are material to the business
of the Company and its subsidiary taken as a whole, in each case, free
and clear of all liens, encumbrances, claims and defects that would be
likely to result in a Material Adverse Effect.
(q) Neither the Company nor its subsidiary is (i) in violation of any
provision of its charter or bylaws, (ii) is in default in any respect,
and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance
of any term, covenant, or condition contained in any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject, or (iii) is in violation in
any respect of any statute, law, rule, regulation, ordinance, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company, its subsidiary or any of its properties, as
applicable except, with respect to clauses (ii) and (iii), any
violations or defaults which, singularly or in the aggregate, would not
have a Material Adverse Effect or which are disclosed in the
Prospectus.
(r) Except as described in the Prospectus, the contracts described in
the Company's periodic reports on Form 10-K and 10-Q, and its current
reports on Form 8-K as filed by the Company with the Commission or
incorporated by reference therein that are material to the Company are
in full force and effect on the date hereof (except as to such
contracts that may have expired by their own terms), and neither the
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Company nor, to the Company's knowledge, any other party to such
contracts is in breach of or default under any of such contracts which
would have a Material Adverse Effect.
(s) No labor problem or dispute with the employees of the Company
exists or, to the Company's knowledge, is threatened or imminent, which
would be likely to have a Material Adverse Effect. The Company is not
aware that any key employee or significant group of employees of the
Company or any subsidiary plans to terminate employment with the
Company or any such subsidiary.
(t) Each of the Company and its subsidiary has fulfilled its
obligations, if any, under the minimum funding standards of Section 302
of the United States Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of
the Company and its subsidiary are eligible to participate and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. No "prohibited transaction" (as defined in Section 406
of ERISA, or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) has occurred with respect to
any employee benefit plan which would be likely to have a Material
Adverse Effect. Neither the Company nor its subsidiary has incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA. Each "pension plan" (as defined in ERISA)
for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could cause the loss of such qualification.
(u) The Company and its subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as the Company reasonably believes are prudent and
customary in the businesses in which they are engaged; all policies of
insurance and fidelity or surety bonds insuring the Company and its
subsidiary and their businesses, assets, employees, officers and
directors are in full force and effect; the Company and its subsidiary
are in compliance with the terms of such policies and instruments in
all material respects; and there are no claims by the Company or its
subsidiary under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation
of rights clause; neither the Company nor its subsidiary has been
refused any insurance coverage sought or applied for; and neither the
Company nor its 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 have
a Material Adverse Effect, except as set forth in the Prospectus.
(v) Each of the Company and its subsidiary has made all filings,
applications and submissions required by, and possesses all approvals,
licenses, certificates, certifications, notifications, orders, permits
and other authorizations required to be issued by, the appropriate
federal, state or foreign regulatory authorities in order for the
Company and its subsidiary to conduct their businesses (collectively,
"Permits"), except for such Permits which the failure to obtain would
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not have a Material Adverse Effect, and is in compliance in all
material respects with the terms and conditions of all such Permits;
all of such Permits held by the Company and its subsidiary are valid
and in full force and effect; there is no pending or, to the Company's
knowledge, threatened action, suit, claim or proceeding which may cause
any such Permit to be limited, revoked, cancelled, suspended, modified
or not renewed and neither the Company nor its subsidiary has received
any notice of proceedings relating to the limitation, revocation,
cancellation, suspension, modification or non-renewal of any such
Permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated by the Prospectus.
(w) KPMG LLP, who have audited certain consolidated financial
statements of the Company and delivered their report with respect to
the audited consolidated financial statements and schedules included in
the Prospectus or the Registration Statements or incorporated by
reference therein, are and during the periods covered by their reports,
were independent public accountants with respect to the Company within
the meaning of the Securities Act and the Rules and Regulations.
(x) The Company and its subsidiary have filed all foreign, federal,
state and local tax returns that are required to be filed or have
requested extensions thereof (except in any case in which the failure
so to file would not have a Material Adverse Effect, except as set
forth in the Prospectus) 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 would not have a Material Adverse Effect, except as
set forth in the Prospectus.
(y) The Company is in compliance in all material respects with all
applicable provisions of the Sarbanes-Oxley Act of 2002 and all rules
and regulations promulgated thereunder or implementing the provisions
thereof (the "Sarbanes-Oxley Act") that are then in effect and is
taking all reasonable actions required to ensure that it will be in
compliance, in all material respects, with other applicable provisions
of the Sarbanes-Oxley Act not currently in effect in accordance with
the time periods for compliance as provided therein.
(z) The Company and its subsidiary maintain a system of internal
accounting controls that the Company reasonably believes are sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with accounting principles generally
accepted in the United States of America and to maintain accountability
of assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(aa) Neither the Company nor its subsidiary nor any of their officers,
directors or, to the Company's knowledge, any of their affiliates (as
such term is defined in Rule 405 under the Securities Act) has taken,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or
resulted in, stabilization or manipulation of the price of any security
of the Company.
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(bb) Each of the Company and its subsidiary (i) is in compliance in all
material respects with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) has
received and is in compliance in all material respects with all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) has not received
notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances
or wastes, pollutants or contaminants, except where such non-compliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated by the Prospectus. The Company has not been named as a
"potentially responsible party" under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
(cc) To the extent appropriate in the ordinary course of its business,
the Company periodically reviews the effect of Environmental Laws on
the business, operations and properties of the Company and its
subsidiary, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws, or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated costs
and liabilities would not, singly or in the aggregate, have a Material
Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated by
the Prospectus.
(dd) The Company and its subsidiary own, possess, license or have other
rights to use all foreign and domestic patents, patent applications,
trade and service marks, trade and service mark registrations, trade
names, copyrights, licenses, inventions, trade secrets, technology,
Internet domain names, know-how and other intellectual property
(collectively, the "Intellectual Property") material to the conduct of
the Company's business as now conducted or as proposed in the
Prospectus to be conducted. Except as set forth in the Prospectus, (a)
there are no rights of third parties to any such Intellectual Property;
(b) to the Company's knowledge, there is no infringement by third
parties of any such Intellectual Property; (c) there is no pending
action, suit, proceeding or claim by others challenging the Company's
and its subsidiary's rights in or to any such Intellectual Property, to
the Company's knowledge, no such claims which, singularly or in the
aggregate, if determined adversely to the Company or its subsidiary
would be likely to have a Material Adverse Effect or would prevent or
adversely affect the ability of the Company to perform its obligations
under this Agreement, and which have a reasonable probability of
assertion, have been threatened by others, and the Company is unaware
of any facts which would form a reasonable basis for any such claim,
except, in the case of patents and trademarks, for such facts as have
been disclosed to the appropriate patent or trademark offices; (d)
there is no pending action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property
and, to the Company's knowledge, no such claims which, singularly or in
the aggregate, if determined adversely to the Company or its subsidiary
would be likely to have a Material Adverse Effect or would prevent or
adversely affect the ability of the Company to perform its obligations
under this Agreement, and which have a reasonable probability of
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assertion, have been threatened by others; (e) there is no pending or,
to the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company and/or its subsidiary infringe or
otherwise violate any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim; (f)
to the Company's knowledge, there is no third-party U.S. patent or
published U.S. patent application which contains claims for which an
Interference Proceeding could be commenced against any patent or patent
application described in the Prospectus as being owned by or licensed
to the Company which proceeding, if determined adversely to the Company
or its subsidiary, would be likely to have a Material Adverse Effect or
would prevent or adversely affect the ability of the Company to perform
its obligations under this Agreement; and (g) the Company and its
subsidiary have taken all steps reasonably determined by the Company to
be necessary to perfect its ownership of the Intellectual Property.
(ee) The Company has established and administers compliance practices
applicable to the Company, to assist the Company and the directors,
officers and employees of the Company in complying with applicable
regulatory guidelines (which, for the purposes of this Section 2(ee),
shall not be deemed to include the guidelines of the Commission).
(ff) Neither the Company nor its subsidiary has failed to file with the
applicable regulatory authorities any material required filing,
declaration, listing, registration, report or submission; all such
filings, declarations, listings, registrations, reports or submissions
were in compliance in all material respects with applicable laws when
filed and no deficiencies have been asserted by any applicable
regulatory authority (which, for the purposes of this Section 2(ff),
shall not be deemed to include the Commission) with respect to any such
filings, declarations, listings, registrations, reports or submissions.
(gg) No relationship, direct or indirect, exists between or among the
Company on the one hand and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand which is
required to be described in the Prospectus and which is not so
described.
(hh) Neither the Company nor its subsidiary is or, after giving effect
to the offering and sale of the Stock and the application of the
proceeds thereof as described in the Prospectus, will become an
"investment company" as defined in the Investment Company Act of 1940,
as amended and the rules and regulations of the Commission thereunder.
(ii) The Company meets the pre-1992 eligibility requirements for the
use of a Registration Statement on Form S-3 in connection with the
offering contemplated thereby and hereby (the pre-1992 eligibility
requirements for the use of the Registration Statement on Form S-3
include (i) having a non-affiliate, public common equity float of at
least $150 million or a non-affiliate, public common equity float of at
least $100 million and annual trading volume of at least three million
shares and (ii) having been subject to the Exchange Act reporting
requirements for a period of 36 months).
(jj) Neither the Company nor its subsidiary is a party to any contract,
agreement or understanding with any person (other than this Agreement)
that would give rise to a valid claim against the Company or the
Underwriters for a brokerage commission, finder's fee or like payment
in connection with the offering and sale of the Stock.
10
(kk) Neither the Company nor its subsidiary has sustained, since the
date of the latest audited consolidated financial statements included
in the Prospectus, or the Registration Statements, or incorporated by
reference therein, any material loss or interference with its business
from fire, explosion, flood, terrorist act or other calamity, whether
or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth in or
contemplated by the Prospectus; and, since such date, there has not
been any change in the capital stock or long-term debt of the Company
or any Material Adverse Effect, or any development involving a
prospective Material Adverse Effect, otherwise than as set forth or
contemplated by the Prospectus.
(ll) The Stock is duly listed, and admitted and authorized for trading,
subject to official notice of issuance and evidence of satisfactory
distribution, on Nasdaq.
(mm) Neither the Company nor its subsidiary nor, to the best of the
Company's knowledge, any employee or agent of the Company or its
subsidiary, has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation
of any law or of the character required to be disclosed in the
Prospectus.
(nn) Each of the Company, and to the Company's knowledge, its directors
and officers has not distributed and will not distribute prior to the
later of (i) the First Closing Date, or the final Option Closing Date,
and (ii) completion of the distribution of the Stock, any offering
material in connection with the offering and sale of the Stock other
than any Preliminary Supplement, the Registration Statements, the
Prospectus and other materials, if any, permitted by the Securities
Act.
(oo) The Company has taken all necessary actions to ensure that, upon
and at all times after Nasdaq shall have approved the Stock for
inclusion, it will be in compliance in all material respects with all
applicable corporate governance requirements set forth in the Nasdaq
Marketplace Rules that are then in effect and is taking all reasonable
actions required to ensure that it will be in compliance, in all
material respects, with other applicable corporate governance
requirements set forth in the Nasdaq Marketplace Rules not currently in
effect in accordance with the time periods for compliance as provided
therein.
(pp) There are no outstanding loans, advances (except normal advances
for business expense in the ordinary course of business) or guarantees
or indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company, except as disclosed in the
Prospectus.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Stock shall be deemed a representation and warranty by the
Company and its subsidiary, as to the matters covered thereby, to each
Underwriter.
3. PURCHASE, SALE AND DELIVERY OF OFFERED STOCK. On the basis of the
representations, warranties and agreements contained herein, but subject to the
terms and conditions herein set forth, the Company agrees, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company that number of shares of Firm Stock (rounded up or down, as
determined by SG Cowen in its discretion, in order to avoid fractions) set forth
opposite the name of such Underwriter in Schedule A hereto.
11
The purchase price per share to be paid by the Underwriters to the
Company for the Stock will be $11.28 per share (the "Purchase Price").
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in uncertificated form or in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company given at or prior to 12:00 Noon, New York time, on the second full
Business Day preceding the First Closing Date (as defined below)) against
payment of the aggregate Purchase Price therefor by wire transfer to an account
at a bank designated by the Company, payable to the order of the Company. Time
shall be of the essence for the obligations of all parties, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of each Underwriter hereunder. The time and date of the delivery
and closing shall be at 10:00 A.M., New York time, on March 23, 2004, in
accordance with Rule 15c6-1 of the Exchange Act. The time and date of such
payment and delivery are herein referred to as the "First Closing Date." The
First Closing Date and the location of delivery of, and the form of payment for,
the Firm Stock may be varied by agreement among the Company and SG Cowen.
The Company shall make the certificates for the Stock, if any,
available to the Representatives for examination on behalf of the Underwriters
in New York, New York at least twenty four (24) hours prior to the First Closing
Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase all or less than all of the Optional Stock. The price
per share to be paid for the Optional Stock shall be the Purchase Price. The
Company agrees to sell to the Underwriters the number of shares of Optional
Stock specified in the written notice by SG Cowen described below and the
Underwriters agree, severally and not jointly to purchase such shares of
Optional Stock. Such shares of Optional Stock shall be purchased from the
Company for the account of each Underwriter in the same proportion as the number
of shares of Firm Stock set forth opposite such Underwriter's name bears to the
total number of shares of Firm Stock (subject to adjustment by SG Cowen to
eliminate fractions). The option granted hereby may be exercised as to all or
any part of the Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered to and purchased by the Underwriters in
accordance with this Agreement. The right to purchase the Optional Stock or any
portion thereof may be surrendered and terminated at any time upon notice by SG
Cowen to the Company.
The option granted hereby may be exercised by written notice being
given to the Company by SG Cowen setting forth the number of shares of the
Optional Stock to be purchased by the Underwriters and the date and time for
delivery of and payment for the Optional Stock. Each date and time for delivery
of and payment for the Optional Stock (which may be the First Closing Date, but
not earlier) is herein called the "Option Closing Date" and shall in no event be
earlier than two (2) Business Days nor later than five (5) Business Days after
written notice is given (each Option Closing Date and the First Closing Date are
herein called the "Closing Dates").
The Company will deliver the Optional Stock to the Underwriters (in
uncertificated form or in the form of definitive certificates, issued in such
names and in such denominations as the Representatives may direct by notice in
12
writing to the Company given at or prior to 12:00 Noon, New York time, on the
second full Business Day preceding each Option Closing Date) against payment of
the aggregate Purchase Price therefor in federal (same day) funds by certified
or official bank check or checks or wire transfer to an account at a bank
designated by the Company payable to the order of the Company. Time shall be of
the essence for the obligations of all parties, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligations of each Underwriter hereunder. Each Option Closing Date and the
location of delivery of, and the form of payment for, the Optional Stock may be
varied by agreement between the Company and SG Cowen.
The several Underwriters propose to offer the Stock for sale upon the
terms and conditions set forth in the Prospectus.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE UNDERWRITERS. The Company and the
several Underwriters agree that:
(a) The Company will (i) prepare the Prospectus in a form approved by
the Representatives and file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the second Business Day
following the execution and delivery of this Agreement; (ii) make no
further amendment or supplement prior to the Closing Date to any
Registration Statement or to the Prospectus to which the
Representatives shall reasonably object by notice to the Company after
a reasonable period of time; (iii) for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Stock, advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to any Registration Statement
has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed and furnish the
Representatives with copies thereof; (iv) use its best commercially
practicable efforts to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Final Supplement and for
so long as the delivery of a prospectus is required in connection with
the offering or sale of the Stock; (v) for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Stock, advise the Representatives, promptly after it receives notice
thereof, (1) of any request by the Commission to amend any Registration
Statement or to amend or supplement the Prospectus or for additional
information relating thereto, (2) of the issuance by the Commission of
any stop order suspending the effectiveness of any Registration
Statement or any post-effective amendment thereto or any order directed
at any document incorporated by reference or any amendment or
supplement thereto or any order preventing or suspending the use of the
Prospectus or any amendment or supplement thereto, (3) of the
suspension of the qualification of the Stock for offering or sale in
any jurisdiction, (4) of the institution or threatening of any
proceeding for any such purpose, or (5) of any request by the
Commission for the amending or supplementing of any Registration
Statement or the Prospectus or for additional information relating
thereto; and, (vi) in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Preliminary
Supplement or the Prospectus or suspending any such qualification,
promptly to use its best commercially practicable efforts to obtain the
withdrawal of such order.
(b) If at any time prior to the expiration of nine months after the
effective date of the Second Registration Statement when a prospectus
relating to the Stock is required to be delivered, any event occurs as
a result of which the Prospectus as then amended or supplemented would
13
include any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time when a prospectus relating to the Stock is
required to be delivered, to amend the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus
to comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Representatives thereof and upon their reasonable
request will prepare an amended or supplemented Prospectus or make an
appropriate filing pursuant to Section 13 or 14 of the Exchange Act
which will correct such statement or omission or effect such
compliance. The Company will furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives
may from time to time reasonably request of such amended or
supplemented Prospectus; and in case any Underwriter is required to
deliver a prospectus relating to the Stock nine months or more after
the effective date of any Registration Statement, the Company upon the
request of the Representatives and at the expense of such Underwriter
will prepare promptly an amended or supplemented Prospectus as may be
necessary to permit compliance with the requirements of Section
10(a)(3) of the Securities Act.
(c) The Company will make available promptly upon request to each of
the Representatives and to counsel for the Underwriters one signed copy
of each of the Registration Statements as originally filed with the
Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
(d) The Company will deliver promptly to the Representatives in New
York City such number of the following documents as the Representatives
shall reasonably request: (i) conformed copies of the Registration
Statements, each as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) each
Preliminary Supplement, (iii) the Prospectus (not later than 10:00
A.M., New York time, on the second Business Day following the execution
and delivery of this Agreement) and any amended or supplemented
Prospectus (not later than 10:00 A.M., New York City time, on the
Business Day following the date of such amendment or supplement) and
(iv) any document incorporated by reference in the Prospectus
(excluding exhibits thereto). Except as contemplated by Section 4(b),
the Company will pay the expenses of printing or other production of
all documents relating to the offering.
(e) To make generally available to its stockholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of a Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company (which
need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including at the option of the Company,
Rule 158).
(f) The Company will promptly take from time to time such actions as
the Representatives may reasonably request to qualify the Stock for
offering and sale under the securities, or blue sky, laws of such
jurisdictions as the Representatives may designate and to continue such
qualifications in effect for so long as required for the distribution
of the Stock and will pay the fee, if any, of the NASD in connection
with its review of the offering; provided that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in
which it is not so qualified, submit to taxation in any such
jurisdiction or file a general consent to service of process in any
such jurisdiction.
14
(g) During the period of two years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the
other Underwriters, (i) as soon as they are available, copies of all
reports or other communications furnished to stockholders and (ii) as
soon as they are available, copies of any reports and financial
statements furnished or filed by the Company with the Commission
pursuant to the Exchange Act or any national securities exchange or
automatic quotation system on which the Stock is listed or quoted;
provided that such reports, communications or financial statements are
not available to the Representatives on the website of the Commission.
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares
of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock for a period of 90 days from the date of
the Final Supplement without the prior written consent of SG Cowen,
other than the Company's sale of the Stock hereunder and the issuance
of shares pursuant to qualified stock option plans and currently
outstanding options, warrants or rights, provided, however, that if (i)
the Company issues an earnings release or material news or a material
event relating to the Company occurs during the last 17 days of such 90
day period, or (ii) prior to the expiration of such 90 day period, the
Company announces that it will release earnings results during the
16-day period beginning on the last day of such 90 day period, the
restrictions imposed by this Agreement shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event. The Company will cause each of its executive officers and
directors and those stockholders listed in Schedule B hereto to furnish
to the Representatives, prior to the First Closing Date, a letter,
substantially in the form of Exhibit I hereto, pursuant to which each
such person shall agree not to directly or indirectly offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of any
shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock for a period of 90 days from the date of
the Final Supplement, without the prior written consent of SG Cowen.
(i) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(j) Prior to each of the Closing Dates, the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for
any periods subsequent to the periods covered by the consolidated
financial statements appearing or incorporated by reference in the
Registration Statements or the Prospectus.
(k) Prior to the First Closing Date, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial
or otherwise, or earnings, business affairs or business prospects
(except for routine marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Representatives are notified), without the prior written
consent of the Representatives, unless in the judgment of the Company
and its counsel, and after notification to the Representatives, such
press release or communication is required by law or any rule or
regulation of the Commission or Nasdaq.
15
(l) In connection with the offering of the Stock, until SG Cowen shall
have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as
defined in Regulation M under the Exchange Act) not to, either alone or
with one or more other persons, bid for or purchase, for any account in
which it or any of its affiliated purchasers has a beneficial interest,
any Stock, or attempt to induce any person to purchase any Stock; and
not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Stock.
(m) Unless required by applicable law or any rule or regulation of the
Commission or Nasdaq, the Company will not take any action prior to the
First Closing Date which would require the Prospectus to be amended or
supplemented pursuant to Section 4(b).
(n) The Company will apply the net proceeds from the sale of the Stock
as set forth in the Prospectus under the heading "Use of Proceeds."
(o) Until such time as a prospectus relating to the Stock is no longer
required to be delivered, the Company shall comply in all material
respects with all applicable provisions of the Sarbanes-Oxley Act, in
effect from time to time.
(p) The Company will engage and maintain, at its expense, a registrar
and transfer agent for the Stock.
5. PAYMENT OF EXPENSES. The Company agrees with the Underwriters to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statements,
Preliminary Supplement and Prospectus and any amendments and exhibits thereto or
any document incorporated by reference therein, the costs of printing,
reproducing and distributing, the "Agreement Among Underwriters" between the
Representatives and the Underwriters, the Master Selected Dealers' Agreement,
the Underwriters' Questionnaire and this Agreement by mail, telex or other means
of communication; (d) the fees and expenses (including related reasonable fees
and actual out-of-pocket expenses of counsel for the Underwriters) incurred in
connection with filings, if any, made with the NASD; (e) any applicable listing
or other fees; (f) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 4(f) and of
preparing, printing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including related reasonable fees and actual out-of-pocket expenses of
counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Stock; and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company's counsel
and the Company's independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 9, the Underwriters shall pay their
own costs and expenses, including the fees and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The respective obligations
of the several Underwriters hereunder are subject to the accuracy, when made and
on each of the Closing Dates, of the representations and warranties of the
Company and its subsidiary contained herein, to the accuracy of the statements
of the Company and its subsidiary made in any certificates pursuant to the
16
provisions hereof, to the performance by the Company and its subsidiary in all
material respects to the extent not otherwise qualified by materiality, and in
all respects to the extent qualified by materiality, of their obligations
hereunder, and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of any Registration
Statement shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the Commission, and any
request for additional information on the part of the Commission (to be
included in any Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the
Representatives. The Prospectus shall have been timely filed with the
Commission in accordance with Section 4(a).
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that any Registration Statement
or the Prospectus or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Underwriters, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Stock,
the Registration Statements and the Prospectus and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters and the Company shall have furnished to
such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Morgan, Lewis & Bockius LLP shall have furnished to the
Representatives, such counsel's written opinion, as counsel for the
Company, addressed to the Underwriters and dated such Closing Date in
form and substance reasonably satisfactory to the Representatives, to
the effect that:
(i) the Company and its subsidiary are validly
existing as corporations in good standing or subsisting, as
the case may be, under the laws of their respective
jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in
the respective jurisdictions listed on Schedule C hereto, and
have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which
they are engaged as described in the Prospectus, except where
the failure to so qualify or have such power or authority
would not have, singularly or in the aggregate, a Material
Adverse Effect;
(ii) the Company has the authorized capitalization as
set forth in the Prospectus, and the Stock when issued and
delivered to and paid for by the Underwriters as contemplated
by this Agreement, will be duly and validly authorized and
issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus;
17
(iii) to the knowledge of such counsel, all the
outstanding shares of capital stock of the subsidiary of the
Company are, except to the extent set forth in the Prospectus,
owned directly by the Company, free and clear of any claim,
lien, encumbrance, security interest, restriction upon voting
or transfer or any other claim of any third party;
(iv) other than such rights as have been waived by
the holders thereof, there are no preemptive or other rights
to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(v) this Agreement has been duly authorized, executed
and delivered by the Company;
(vi) the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby will not conflict in
any material respect with or result in a material breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit
to any Registration Statement or to any of the documents
incorporated by reference therein to which the Company or its
subsidiary is a party or by which the Company or its
subsidiary is bound or to which any of the property or assets
of the Company or its subsidiary is subject, nor will such
actions result in any violation of the provisions of the
charter or by-laws of the Company or its subsidiary or any
statute, law, rule or regulation or, to the knowledge of such
counsel, any judgment, order or decree of any court or
governmental agency or body having jurisdiction over the
Company or its subsidiary or any of their properties or
assets;
(vii) each Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Final Supplement was filed with
the Commission pursuant to the subparagraph of Rule 424(b) of
the Rules and Regulations specified in such opinion on the
date specified therein and no stop order suspending the
effectiveness of any Registration Statement has been issued
and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(viii) except for the registration of the Stock under
the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and
the consummation by the Company of the transactions
contemplated hereby;
(ix) to such counsel's knowledge no person or entity
has the right to require registration of shares of Common
Stock or other securities of the Company because of the filing
or effectiveness of any Registration Statement, the completion
of the offering or otherwise, except for persons and entities
who have expressly waived such right or who have been given
18
proper notice and have failed to exercise such right within
the time or times required under the terms and conditions of
such right;
(x) the statements in the Prospectus (other than the
financial statements and related schedules and other financial
and statistical data contained or incorporated by reference
therein, as to which such counsel need express no opinion)
under the headings "Our Company," "Risk Factors," "Securities
Offered by this Prospectus" and "Plan of Distribution,
Description of Preferred Stock and Description of Warranties,"
Item 15 of Part II of each of the Registration Statements, and
in the Company's Annual Report on Form 10-K for the year ended
December 31, 2003 under Item 1, "Business," to the extent that
they constitute summaries of matters of law or regulation or
legal conclusions, have been reviewed by such counsel and
fairly present the matters described therein in all material
respects;
(xi) to such counsel's knowledge and other than as
set forth in the Prospectus or as otherwise disclosed to the
Representatives, there are no legal or governmental
proceedings pending to which the Company or its subsidiary is
a party or of which any property or asset of the Company or
its subsidiary is the subject which, singularly or in the
aggregate, if determined adversely to the Company or its
subsidiary, would prevent or adversely affect the ability of
the Company to perform its obligations under this Agreement;
and, to such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(xii) The descriptions of the following contracts of
the Company (other than the financial statements and related
schedules and other financial and statistical data contained
therein, as to which such counsel need express no opinion)
contained in the Prospectus or the Registration Statements or
in the documents incorporated by reference therein are
accurate in all material respects and fairly present the
information shown: (i) the 1997 Sponsored Research Agreement
between the Company and Princeton University, as amended, (ii)
the 1997 Amended License Agreement between the Company,
Princeton University and the University of Southern
California, as amended, (iii) the License Agreement between
the Company and Motorola, Inc., dated as of September 29,
2000, (iv) the Development and License Agreement, dated as of
October 1, 2000, by and between PPG Industries, Inc. and the
Company, as amended, and the related Supply Agreement between
PPG Industries, Inc. and the Company, also dated October 1,
2000 (v) the Development and License Agreement, dated as of
July 19, 2000, between Aixtron AG and the Company, (vi) the
Securities Purchase Agreement, dated as of August 22, 2001,
among the Company, Pine Ridge Financial Inc. and Strong River
Investments, Inc., as amended and (vii) the Voting Agreement,
dated as of August 22, 2002, among the Company, Pine Ridge
Financial Inc. and Strong River Investments, Inc., as amended.
(xiii) each of the Registration Statements, as of its
effective date, the Base Prospectus, as of its date and the
Final Supplement, as of its date, and any further amendments
or supplements thereto, as of their respective dates, made by
the Company prior to the First Closing Date (other than the
19
financial statements and related schedules and other financial
and statistical data contained or incorporated by reference
therein, as to which such counsel need express no opinion)
complied as to form in all material respects with the
requirements of the Securities Act and the Rules and
Regulations, and the documents incorporated by reference in
the Prospectus and any further amendment or supplement to any
such incorporated document made by the Company prior to the
First Closing Date (other than the financial statements and
related schedules and other financial and statistical data
contained or incorporated by reference therein, as to which
such counsel need express no opinion), 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; and
(xiv) neither the Company nor its subsidiary is, or
after giving effect to the offering and sale of the Stock and
the application of the proceeds thereof as described in the
Prospectus, will be, an "investment company" as defined in the
Investment Company Act of 1940, as amended.
Such counsel shall also have furnished to the Representatives
a written statement, addressed to the Underwriters and dated such
Closing Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that (x) such counsel has acted as
counsel to the Company in connection with the preparation of the
Registration Statements and the Prospectus, (y) such counsel
participated in conferences with officers and other representatives of
the Company and the auditors of the Company in connection with the
preparation of the Registration Statements and the Prospectus, and
conferences with the Representatives and their counsel, and the
auditors, officers and other representatives of the Company, in
connection with the preparation of the Prospectus and (z) although such
counsel need not pass upon or assume any responsibility for the
accuracy, completeness or fairness of the statements included in the
Registration Statements or the Prospectus (and such counsel may rely as
to materiality to a large extent upon discussions with and
representations and opinions of the officers and other representatives
of the Company) no facts have come to the attention of such counsel to
cause such counsel to believe that the Registration Statements, as of
their respective effective dates, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus as of the date of the Final
Supplement and the date of such written statement, contained or contain
any untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements and
related schedules, or other financial or statistical data derived
therefrom contained or incorporated by reference in the Registration
Statements or the Prospectus.
(e) The Representatives shall have received from Kenyon & Kenyon,
patent counsel for the Company such counsel's written opinion,
addressed to the Underwriters and dated as of the First Closing Date,
in form and substance attached hereto as Schedule E.
(f) The Representatives shall have received from Brown Raysman
Millstein Felder & Steiner LLP, counsel for the Underwriters, such
20
opinion or opinions, dated such Closing Date and addressed to the
Representatives, with respect to such matters as the Underwriters may
reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for enabling them to
pass upon such matters.
(g) The Company shall have furnished to the Representatives a
certificate, dated such Closing Date, executed by (1) its Chairman of
the Board, its President or an Executive Vice President and (2) its
Chief Financial Officer stating that (i) such officers have carefully
examined the Registration Statements and the Prospectus and, in their
opinion, each Registration Statement as of its effective date and the
Prospectus, as of the date of the Final Supplement, did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances in which such statements were made) not misleading, (ii)
since the effective date of the First Registration Statement no event
has occurred which should have been set forth in a supplement or
amendment to a Registration Statement or the Prospectus which has not
been so set forth or incorporated by reference in a Registration
Statement, (iii) to their knowledge after reasonable investigation, as
of the Closing Date, the representations and warranties of the Company
and its subsidiary in this Agreement are true and correct and the
Company and its subsidiary have complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and (iv) subsequent to the
date of the most recent financial statements included or incorporated
by reference in the Prospectus, there has been no material adverse
change in the financial position or results of operation of the Company
and its subsidiary, or any change, or any development including a
prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the Company
and its subsidiary taken as a whole, except as set forth in the
Prospectus.
(h) At the time of the execution of this Agreement, the Representatives
shall have received from KPMG LLP a letter, addressed to the
Underwriters and dated such date, in form and substance reasonably
satisfactory to the Representatives (i) confirming that they are
independent certified public accountants with respect to the Company
within the meaning of the Securities Act and the Rules and Regulations
and (ii) stating the conclusions and findings of such firm with respect
to the consolidated financial statements and certain financial
information contained or incorporated by reference in the Prospectus.
(i) On the Closing Date, the Representatives shall have received a
letter (the "bring-down letter") from KPMG LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus as of a date not more than three
Business Days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial
information and other matters covered by its letter delivered to the
Representatives concurrently with the execution of this Agreement
pursuant to Section 6(h).
(j) (i) Neither the Company nor its subsidiary shall have sustained
since the date of the latest audited consolidated financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood, terrorist
act or other calamity, whether or not covered by insurance, or from any
21
labor dispute or court or governmental action, order or decree,
otherwise than as set forth in or contemplated by the Prospectus, and
(ii) since such date there shall not have been any change in the
capital stock (except any changes relating to the granting or exercise
of stock options or equity awards pursuant to the Company's 1995 Stock
Option Plan as amended) or long-term debt of the Company or its
subsidiary or any change, or any development involving a prospective
change, in or affecting the business, general affairs, management,
financial position, stockholders' equity, results of operations or
prospects of the Company and its subsidiary, otherwise than as set
forth in or contemplated by the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Stock on the
terms and in the manner contemplated by the Prospectus.
(k) The Stock shall have been listed and admitted and authorized for
trading on Nasdaq, and satisfactory evidence of such actions shall have
been provided to the Representatives.
(l) The Company shall have furnished to the Representatives a letter
substantially in the form of Exhibit I hereto from each executive
officer and director of the Company and each stockholder listed on
Schedule B hereto.
(m) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, Nasdaq, the American Stock
Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum or maximum prices or
maximum ranges for prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction,
(ii) a banking moratorium shall have been declared by Federal or state
authorities or a material disruption has occurred in commercial banking
or securities settlement or clearance services in the United States,
(iii) the United States shall have become engaged in hostilities in
which it is not currently engaged, or the subject of an act of
terrorism, or there shall have been an escalation in existing
hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to proceed with the sale
or delivery of the Stock on the terms and in the manner contemplated by
the Prospectus.
(n) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Stock or be likely to result in a Material
Adverse Effect; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance or sale of the Stock or be likely to result in a Material
Adverse Effect.
(o) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates of public
officials and documents as the Representatives may reasonably request.
22
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers, employees, representatives and agents and each person, if
any, who controls any Underwriter within the meaning of the Securities
Act (collectively the "Underwriter Indemnified Parties" and each an
"Underwriter Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which
that Underwriter Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Preliminary Supplement, any Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state in any Preliminary Supplement,
any Registration Statement or the Prospectus or in any amendment or
supplement thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading and shall
reimburse each Underwriter Indemnified Party promptly upon demand for
any legal or other expenses reasonably incurred by that Underwriter
Indemnified Party in connection with investigating or preparing to
defend or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged
omission from the Preliminary Supplement, any Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically for
use therein, which information the parties hereto agree is limited to
the Underwriter's Information (as defined in Section 16). This
indemnity agreement is not exclusive and will be in addition to any
liability, which the Company might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company its officers, employees, representatives and
agents, each of its directors and each person, if any, who controls the
Company within the meaning of the Securities Act (collectively the
"Company Indemnified Parties" and each a "Company Indemnified Party")
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company Indemnified Parties may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Supplement, any Registration Statement or
the Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but with respect to each of clause (i) and clause (ii) only
to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
23
conformity with written information furnished to the Company through
the Representatives by or on behalf of that Underwriter specifically
for use therein, and shall reimburse the Company Indemnified Parties
promptly upon demand for any legal or other expenses reasonably
incurred by such parties in connection with investigating or preparing
to defend or defending against or appearing as third party witness in
connection with any such loss, claim, damage, liability or action as
such expenses are incurred; provided that the parties hereto hereby
agree that such written information provided by the Underwriters
consists solely of the Underwriter's Information. This indemnity
agreement is not exclusive and will be in addition to any liability,
which the Underwriters might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity
to the Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 7 except to the extent it has been materially prejudiced
by such failure; and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 7. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that any indemnified party shall have
the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to
employ separate counsel or (iii) the indemnifying party has failed to
assume the defense of such action in a reasonably prompt manner and
employ counsel reasonably satisfactory to the indemnified party, in
which case, if such indemnified party notifies the indemnifying party
in writing that it elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall
not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such indemnified parties, which firm
shall be designated in writing by SG Cowen if the indemnified parties
under this Section 7 consist of any Underwriter Indemnified Party, or
by the Company if the indemnified parties under this Section 7 consist
of any Company Indemnified Parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 7(a) and
7(b) shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. Subject
to the provisions of Section 7(d) below, no indemnifying party shall be
24
liable for any settlement, compromise or the consent to the entry of
judgment in connection with any such action effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with its written consent or if there be a final judgment for
the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for reasonable fees
and actual out-of-pocket expenses of counsel to which the indemnified
party is entitled to be reimbursed pursuant to Section 7(c) above, such
indemnifying party agrees that it shall be liable for any settlement of
the nature contemplated by this Section 7 effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the request for reimbursement,
(ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request for reimbursement for
fees and expenses of counsel prior to the date of such settlement.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other, from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriters on the other, with
respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the
other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock
purchased under this Agreement (before deducting expenses) received by
the Company bears to the total underwriting discounts and commissions
received by the Underwriters with respect to the Stock purchased under
this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on
the one hand or the Underwriters on the other, as the case may be, the
intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement
or omission; provided that the parties hereto agree that the written
information furnished to the Company through the Representatives by or
on behalf of the Underwriters for use in any Preliminary Supplement,
any Registration Statement or the Prospectus consists solely of the
Underwriter's Information. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this
Section 7(e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or payable
by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this
Section 7(e) shall be deemed to include, for purposes of this Section
7(e), any legal or other expenses reasonably incurred by such
25
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
7(e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public were offered to the
public less the amount of any damages which such Underwriter has
otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. 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 as provided in Sections
7(e) are several in proportion to their respective underwriting obligations and
not joint.
8. TERMINATION. The obligations of the Underwriters hereunder may be terminated
by SG Cowen, in its absolute discretion by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 6(j) or 6(m) have occurred or if
the Underwriters shall decline to purchase the Stock for any reason permitted
under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8 or 10, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason not permitted
under this Agreement, or (c) the Underwriters shall decline to purchase the
Stock for any reason permitted under this Agreement, then the Company shall
reimburse the Underwriters for the reasonable fees and expenses of their counsel
and for such other out-of-pocket expenses as shall have been reasonably incurred
by them in connection with this Agreement and the proposed purchase of the Stock
and, upon demand, the Company shall pay the full amount thereof to SG Cowen. If
this Agreement is terminated pursuant to Section 10 by reason of the default of
one or more Underwriters and the subsequent failure to make arrangements for the
purchase of the shares as to which such default has occurred, the Company shall
not be obligated to reimburse any defaulting Underwriter on account of those
expenses described in this Section 9.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full Business Days in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statements or the
26
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statements or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid
pursuant to Section 5 and except the provisions of Section 7 shall not terminate
and shall remain in effect.
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters and the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence 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 the representations, warranties,
covenants, agreements and indemnities of the Company and its subsidiary
contained in this Agreement shall also be for the benefit of the Underwriter
Indemnified Parties, and the indemnities of the several Underwriters shall also
be for the benefit of the Company Indemnified Parties. It is understood that the
Underwriter's responsibility to the Company is solely contractual in nature and
the Underwriters do not owe the Company, or any other party, any fiduciary duty
as a result of this Agreement.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company, its subsidiary and the several Underwriters, as set
forth in this Agreement or made by them respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, the Company or any person
controlling any of them and shall survive delivery of and payment for the Stock.
13. NOTICES. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to SG Cowen Securities Corporation, 1221
Avenue of the Americas, New York, New York 10020, Attention: Veronica
Iuliano, Esq. (Fax: 212-278-7995), with a copy to: Brown Raysman
Millstein Felder & Steiner LLP, 900 Third Avenue, New York, New York
10022, Attention: Stuart Bressman, Esq. (Fax: 212-895-2900).
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Universal Display Corporation, 375 Phillips
Boulevard., Ewing, New Jersey 08618, Attention: Scott Bovino (Fax:
609-671-0995), with a copy to: Morgan, Lewis & Bockius LLP, 1701 Market
Street, Philadelphia, Pennsylvania 19103, Attention: Richard A. Silfen,
Esq. (Fax: 215-963-5001).
14. DEFINITIONS OF CERTAIN TERMS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
27
"Business Day" shall mean any day other than a Saturday, a
Sunday, a legal holiday, a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City
or any day on which the New York Stock Exchange, Inc. is not open for
trading.
"Interference Proceeding" shall have the meaning set forth
in 35 U.S.C.ss.135.
"Rule 424" and "Rule 430A" refer to such rules under the
Securities Act.
"To the Company's knowledge" shall mean that which the
officers listed on Schedule D attached hereto or directors of the
Company know or should have known using the exercise of reasonable due
diligence in the course of performing their duties on behalf of the
Company.
For purposes of Section 2(d) of this Agreement, the term "prospects"
shall mean the prospects of the Company described in the Registration Statements
or the Prospectus.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. UNDERWRITERS' INFORMATION. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) last paragraph on the
front cover page concerning the terms of the offering by the Underwriters; and
(ii) the statements concerning the Underwriters contained in the third, ninth,
tenth and eleventh paragraphs (relating to stabilization) under the heading
"Underwriting".
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, the
Representatives will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by the Representatives, will be binding on all
the Underwriters .
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
20. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
28
If the foregoing is in accordance with your understanding of the
agreement between and among the Company and the several Underwriters, kindly
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
UNIVERSAL DISPLAY CORPORATION
By: /s/ Sidney D. Rosenblatt
------------------------------------------
Name: Sidney D. Rosenblatt
Title: Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
Accepted as of
the date first above written:
SG COWEN SECURITIES CORPORATION
NEEDHAM & COMPANY, INC.
HARRIS NESBITT CORP.
Acting on their own behalf
and as Representatives of
several Underwriters
referred to in the
foregoing Agreement.
By: SG COWEN SECURITIES CORPORATION
/s/ Graham A. Powis
By: ----------------------------------
Name: Graham A. Powis
Title: Managing Director
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Purchased Purchased
SG Cowen Securities Corporation 1,500,000 225,000
--------- -------
Needham & Company, Inc. 875,000 131,250
--------- -------
Harris Nesbitt Corp. 125,000 18,750
--------- -------
Total 2,500,000 375,000
========= =======
SCHEDULE B
Shareholders Subject to Lock-up Agreements
Lori Rubenstein (1)
Scott Seligsohn (1)
Clifford D. Schlesinger (2)
PPG Industries, Inc.
- --------------
(1) In their individual capacities and in their capacities as trustees of
certain trusts
(2) Solely in his capacity as trustee of certain trusts
SCHEDULE C
Jurisdictions
Universal Display Corporation
- -----------------------------
Domicile: Pennsylvania
Foreign Qualification: New Jersey
UDC, Inc.
- ---------
Domicile: New Jersey
Foreign Qualification: Idaho, Pennsylvania
SCHEDULE D
Officers
Name Title
- ---- -----
Sherwin I. Seligsohn Chairman of the Board and Chief Executive Officer
Steven V. Abramson President and Chief Operating Officer
Sidney D. Rosenblatt Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Julie J. Brown Vice President and Chief Technical Officer
Scott C. Bovino Vice President and General Counsel
Ronald J. Campbell Vice President, Intellectual Property
Michael Hack Vice President, Strategic Product Development
Janice K. Mahon Vice President, Technology Commercialization
SCHEDULE E
Form of IP Opinion
EXHIBIT I
Lock-Up Agreement
____________, 2004
SG Cowen Securities Corporation
Needham & Company, Inc.
Harris Nesbitt Corp.
As Representatives of the
several Underwriters
c/o SG Cowen Securities Corporation
1221 Avenue of the Americas
New York, New York 10020
Re: Universal Display Corporation - Public Offering of Common Stock
Dear Sirs:
In order to induce SG Cowen Securities Corporation ("SG Cowen"),
Needham & Company, Inc. and Harris Nesbitt Corp. (together with SG Cowen, the
"Represenatatives") to enter in to a certain underwriting agreement (the
"Underwriting Agreement") with Universal Display Corporation, a Pennsylvania
corporation (the "Company"), with respect to the public offering of shares (the
"Offering") of the Company's Common Stock, par value $.01 per share ("Common
Stock"), the undersigned hereby agrees that for a period of 90 days following
the date of the final prospectus (the "Final Prospectus") filed by the Company
with the Securities and Exchange Commission in connection with such public
offering, the undersigned will not, without the prior written consent of SG
Cowen, directly or indirectly, (i) offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933 (the "Securities Act")
and the Securities Exchange Act of 1934, as the same may be amended or
supplemented from time to time (such shares, the "Beneficially Owned Shares"))
or securities convertible into or exercisable or exchangeable for Common Stock,
(ii) enter into any swap, hedge or similar agreement or arrangement that
transfers in whole or in part, the economic risk of ownership of the
Beneficially Owned Shares or securities convertible into or exercisable or
exchangeable in Common Stock or (iii) engage in any short selling of the Common
Stock. Notwithstanding the foregoing, nothing contained herein will be deemed to
restrict or prohibit the transfer of shares of Common Stock, Beneficially Owned
Shares or securities convertible into or exercisable or exchangable for shares
of Common Stock (i) as a bona fide gift, provided the recipient thereof agrees
in writing to be bound by the terms thereof or (ii) as a distribution to
partners, retired partners or the estates of such partners or retired partners
or shareholders of the undersigned, provided that the distributees thereof agree
in writing to be bound by the terms hereof.
If (i) the Company issues an earnings release or material news or a
material event relating to the Company occurs during the last 17 days of the
lock-up period, or (ii) prior to the expiration of the lock-up period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the lock-up period, the restrictions imposed by
this Agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event.
Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned from and after the date hereof shall be bound by the terms of
this Agreement.
In addition, the undersigned hereby waives, from the date hereof until
the expiration of the 90 day period following the date of the Final Prospectus,
any and all rights, if any, to request or demand registration pursuant to the
Securities Act of any shares of Common Stock that are registered in the name of
the undersigned or that are Beneficially Owned Shares. In order to enable the
aforesaid covenants to be enforced, the undersigned hereby consents to the
placing of legends and/or stop-transfer orders with the transfer agent of the
Common Stock with respect to any shares of Common Stock or Beneficially Owned
Shares.
SIGNATURE BLOCK FOR A NATURAL PERSON
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Name:
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Please Print
Date:
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SIGNATURE BLOCK FOR A CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY
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Name of corporation, partnership, trust or other entity, including type of
entity and jurisdiction of organization:
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Please Print
By:
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Name:
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Please Print
Title:
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Please Print
Date:
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[Signature Page to Lock-Up Agreement]