EXHIBIT 1.1
1,964,000 Shares
BALLANTYNE OF OMAHA, INC.
Common Stock
UNDERWRITING AGREEMENT
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June __, 1997
COWEN & COMPANY
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several Underwriters
c/o Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
1. Introductory. The selling shareholders named in Schedule B hereto
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(collectively, the "Selling Shareholders") propose 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 1,964,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), of
Ballantyne of Omaha, Inc., a Delaware corporation (the "Company"). The aggregate
of 1,964,000 shares so proposed to be sold is hereinafter referred to as the
"Firm Stock." The Selling Shareholders also propose to sell to the Underwriters,
upon the terms and conditions set forth in Section 4 hereof, up to an additional
294,600 shares of Common Stock (the "Optional Stock"). The Firm Stock and the
Optional Stock are hereinafter collectively referred to as the "Stock." Cowen &
Company ("Cowen") and Prudential Securities Incorporated ("Prudential") are
acting as representatives of the several Underwriters and in such capacity are
hereinafter referred to as the "Representatives."
2. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-
_____) in the form in which it became or becomes effective and also in
such form as it may be when any post-effective amendment thereto shall
become effective with respect to the Stock, including any preeffective
prospectuses included as part of the registration statement as
originally filed or as part of any amendment or supplement thereto, or
filed pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations (the
"Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder,
copies of which (including all documents incorporated by reference
therein) have heretofore been delivered to you, has been carefully
prepared by the Company in conformity with the requirements of the
Securities Act and has been filed with the Commission under the
Securities Act; one or more amendments to such registration statement,
including in each case an amended preeffective prospectus, copies of
which amendments (including all documents incorporated by reference
therein) have heretofore been delivered to you, have been so prepared
and filed. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the
offering of the Stock may commence, the term "Registration Statement"
as used in this Agreement means the registration statement as amended
by said post-effective amendment. The term "Registration Statement" as
used in this Agreement shall also include any registration statement
relating to the Stock that is filed and declared effective pursuant to
Rule 462(b) under the Securities Act. The term "Prospectus" as used in
this Agreement means the prospectus in the form included in the
Registration Statement, or (A) if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A
under the Securities Act and such information is included in a
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act, the term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in
the prospectus filed with the Commission pursuant to Rule 424(b) and
(B) if prospectuses that meet the requirements of Section 10(a) of the
Securities Act are delivered pursuant to Rule 434 under the Securities
Act, then (i) the term "Prospectus" as used in this Agreement means
the "prospectus subject to completion" (as such term is defined in
Rule 434(g) under the Securities Act) as supplemented by (a) the
addition of Rule 430A information or other information contained in
the form of prospectus delivered pursuant to Rule 434(c)(2) under the
Securities Act or (b) the information contained in the abbreviated
term sheets described in Rule 434(c)(3) under the Securities Act and
(ii) the date of such prospectuses shall be deemed to be the date of
the abbreviated term sheets. The term "Preeffective Prospectus" as
used in this Agreement means the prospectus subject to completion in
the form included in the Registration Statement at the time of the
initial filing of the Registration Statement with the Commission, and
as such prospectus shall have been
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amended from time to time prior to the date of the Prospectus. Any
reference herein to any Preeffective Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Form S-3 under the Securities Act, as of
the date of such Preeffective Prospectus or Prospectus, as the case
may be, and any reference to any amendment or supplement to any
Preeffective Prospectus or Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preeffective
Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and so incorporated by
reference.
(b) The Commission has not issued or threatened to
issue any order preventing or suspending the use of any
Preeffective Prospectus, and, at its date of issue, each
Preeffective Prospectus conformed in all material respects with
the requirements of the Securities Act and did not include any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and, when the Registration
Statement becomes effective and at all times subsequent thereto
up to and including the Closing Dates, the Registration Statement
and the Prospectus and any amendments or supplements thereto
contained and will contain all material statements and
information required to be included therein by the Securities Act
and conformed and will conform in all material respects to the
requirements of the Securities Act and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement
thereto, included or will include 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; provided, however, that the foregoing
representations, warranties and agreements shall not apply to
information contained in or omitted from any Preeffective
Prospectus or the 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 by
or on behalf of any Underwriter, directly or through you,
specifically for use in the preparation thereof; there is no
franchise, lease, contract, agreement or document required to be
described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed therein as
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required; and all descriptions of any such franchises, leases,
contracts, agreements or documents contained in the Registration
Statement are accurate and complete descriptions of such
documents in all material respects.
(c) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and except as set forth or contemplated in the
Prospectus, neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or
contingent, nor entered into any transactions not in the ordinary
course of business, and there has not been any material adverse
change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of
operations of the Company and its subsidiaries considered as a
whole, or, except for the exercise of outstanding options or
warrants described in the Prospectus, any change in the capital
stock, short-term or long-term debt of the Company and its
subsidiaries considered as a whole.
(d) The financial statements, together with the related
notes and schedules, set forth in the Prospectus and elsewhere in
the Registration Statement fairly present, on the basis stated in
the Registration Statement, the financial position and the
results of operations and changes in financial position of the
Company and its consolidated subsidiaries at the respective dates
or for the respective periods therein specified. Such statements
and related notes and schedules have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis except as may be set forth in the Prospectus.
The selected financial and statistical data set forth in the
Prospectus under the caption "Selected Consolidated Financial
Data" and in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 fairly present, on the basis
stated in the Registration Statement and such Annual Report, the
information set forth therein.
(e) KPMG Peat Marwick LLP, who have expressed their
opinion on the audited financial statements and related schedules
included in the Registration Statement and the Prospectus are
independent public accountants as required by the Securities Act
and the Rules and Regulations.
(f) The Company and each of its subsidiaries have been
duly organized and are validly existing and in good standing as
corporations under the laws of their respective jurisdictions of
organization, with
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power and authority (corporate and other) to own or lease their
properties and to conduct their businesses as described in the
Prospectus. The Company is and each of its subsidiaries are in
possession of and operating in compliance with all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business,
all of which are valid and in full force and effect; and the
Company is and each of such subsidiaries are duly qualified to do
business and in good standing as foreign corporations in all
other jurisdictions where their ownership or leasing of
properties or the conduct of their businesses requires such
qualification where the failure to so qualify would have a
material adverse effect on the Company or such subsidiary or
constitute a waiver of material rights of the Company or such
subsidiary. The Company has and each of its subsidiaries have all
requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications,
licenses and permits of and from all public regulatory or
governmental agencies and bodies to own, lease and operate its
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and
no such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome
restriction not adequately disclosed in the Registration
Statement and the Prospectus. The Company owns all of the issued
and outstanding capital stock of Strong International Inc.,
Flavor Crisp of America, Inc., Ballantyne Fabricators, Inc. and
Xenotech, Inc., and does not own or control, directly or
indirectly, any other corporations, partnerships, limited
liability companies, associations or other entities.
(g) The Company's authorized and outstanding capital
stock is on the date hereof, and will be on the Closing Dates, as
set forth under the heading "Capitalization" in the Prospectus;
the outstanding shares of common stock of the Company conform to
the description thereof in the Prospectus, have been duly
authorized and validly issued and are fully paid and
nonassessable, are duly listed on the American Stock Exchange and
have been issued in compliance with all federal and state
securities laws and were not issued in violation of or subject to
any preemptive rights or similar rights to subscribe for or
purchase securities. Except as disclosed in and or contemplated
by the Prospectus and the financial statements of the Company and
related notes thereto included in the Prospectus, the Company
does not have outstanding any options or warrants to purchase, or
any preemptive rights or other
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rights to subscribe for or to purchase any securities or
obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations, except for options
granted subsequent to the date of information provided in the
Prospectus pursuant to the Company's employee and non-employee
director stock option and employee stock purchase plans as
disclosed in the Prospectus. The description of the Company's
stock option, stock purchase and other stock plans or
arrangements, and the options or other rights granted or
exercised thereunder, as set forth in the Prospectus, accurately
and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights. All
outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, and are fully paid and
nonassessable and are owned directly by the Company or by another
wholly owned subsidiary of the Company free and clear of any
liens, encumbrances, equities or claims .
(h) Except as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or
any of its subsidiaries or affiliates is a party or of which any
property of the Company or any subsidiary or affiliate is
subject, which, if determined adversely to the Company or any
such subsidiary or affiliate, might individually or in the
aggregate (i) prevent or adversely affect the transactions
contemplated by this Agreement, (ii) suspend the effectiveness of
the Registration Statement, (iii) prevent or suspend the use of
the Preeffective Prospectus in any jurisdiction or (iv) result in
a material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its
subsidiaries considered as a whole; and to the best of the
Company's knowledge no such proceedings are threatened or
contemplated against the Company or any subsidiary or affiliate
by governmental authorities or others. Neither the Company nor
any of its subsidiaries is a party or subject to the provisions
of any material injunction, judgment, decree or order of any
court, regulatory body or other governmental agency or body. The
description of the Company's litigation under the heading "Legal
Proceedings" in the Prospectus is true, complete and correct and
complies with the Rules and Regulations.
(i) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a
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breach or violation of any of the terms or provisions of or
constitute a default under any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it,
any of its subsidiaries or any of its or their properties is or
may be bound, the Certificate or Articles of Incorporation, By-
laws or other organizational documents of the Company or any of
its subsidiaries, or any law, order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
will result in the creation of a lien.
(j) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by
this Agreement, except such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or under the
Securities Act or the securities or "Blue Sky" laws of any
jurisdiction in connection with the purchase and distribution of
the Stock by the Underwriters.
(k) The Company has the full corporate power and
authority to enter into this Agreement and to perform its
obligations hereunder, and this Agreement has been duly and
validly authorized, executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the
extent that rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or the public policy
underlying such laws.
(l) The Company and its subsidiaries are in all
material respects in compliance with, and conduct their
businesses in conformity with, all applicable federal, state,
local and foreign laws, rules and regulations or any court or
governmental agency or body; to the knowledge of the Company,
otherwise than as set forth in the Registration Statement and the
Prospectus, no prospective change in any of such federal or state
laws, rules or regulations has been adopted which, when made
effective, would have a material adverse effect on the operations
of the Company and its subsidiaries. In the ordinary course of
business, employees of the Company conduct periodic reviews of
the effect of Environmental Laws (as defined below) on the
business operations and properties of the Company and its
subsidiaries, in the ordinary course of which they seek to
identify and evaluate associated costs and liabilities. Except as
disclosed in the Registration Statement, the Company and its
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subsidiaries are in compliance with all applicable existing
federal, state, local and foreign laws and regulations relating
to the protection of human health or the environment or imposing
liability or requiring standards of conduct concerning any
Hazardous Materials ("Environmental Laws"), except for such
instances of noncompliance which, either singly or in the
aggregate, would not have a material adverse effect. The term
"Hazardous Material" means (i) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (ii) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act, as
amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other
Environmental Law.
(m) The Company and its subsidiaries have filed all
necessary federal, state, local and foreign income, payroll,
franchise and other tax returns and have paid all taxes shown as
due thereon or with respect to any of their properties, and there
is no tax deficiency that has been, or to the knowledge of the
Company is likely to be, asserted against the Company or any of
its subsidiaries or any of their respective properties or assets
that would adversely affect the financial position, business or
operations of the Company and its subsidiaries.
(n) 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 the
Registration Statement, except for persons and entities who have
expressly waived such right or who have been given proper notice
and have failed to exercise such right within the time or times
required under the terms and conditions of such right. 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.
(o) Neither the Company nor any of its officers,
directors or affiliates has taken or will take, 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, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of
the price of any security of the Company.
(p) The Company has provided you with all financial
statements since December 31, 1991 to the
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date hereof that are available to the officers of the Company,
including financial statements for the three months ended March
31, 1997 and the months of April and May 1997.
(q) The Company and its subsidiaries own or possess
rights to use all patents, trademarks (including "Strong,"
"Simplex," "Century," "Optimax," "Ballantyne," "Super Trouper,"
"Gladiator," "Roadie," "Flavor Crisp," "Flavor Pit",
"Britelights," "Xenotech" and "ISCO-Optic"), trademark
registrations, service marks, service mark registrations,
tradenames, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned by them or any
of them or necessary for the conduct of their respective
businesses, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of
the Company and its subsidiaries with respect to the foregoing.
The Company's business as now conducted and as proposed to be
conducted does not and will not infringe or conflict with in any
material respect patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses or other intellectual
property or franchise rights of any person. No claim has been
made against the Company alleging the infringement by the Company
of any patent, trademark, service mark, tradename, copyright,
trade secret, license in or other intellectual property right or
franchise right of any person.
(r) The Company and its subsidiaries have performed all
material obligations required to be performed by them under all
contracts required by Item 601(b)(10) of Regulation S-K under the
Securities Act to be filed as exhibits to the Registration
Statement, and neither the Company nor any of its subsidiaries
nor any other party to such contract is in default under or in
breach of any such obligations. Neither the Company nor any of
its subsidiaries has received any notice of such default or
breach.
(s) The Company is not involved in any labor dispute
nor is any such dispute threatened. The Company is not aware that
(A) any executive, key employee or significant group of employees
of the Company or any subsidiary plans to terminate employment
with the Company or any such subsidiary or (B) any such executive
or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that
would be violated by the present or proposed business activities
of the Company and its subsidiaries. Neither the Company nor any
subsidiary has or expects to have any liability for any
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prohibited transaction or funding deficiency or any complete or
partial withdrawal liability with respect to any pension, profit
sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the
Company or any subsidiary makes or ever has made a contribution
and in which any employee of the Company or any subsidiary is or
has ever been a participant. With respect to such plans, the
Company and each subsidiary are in compliance in all material
respects with all applicable provisions of ERISA.
(t) The Company has obtained the written agreement
described in Section 9(h)(vii) of this Agreement from each of its
officers, directors and holders of Common Stock or options to
purchase Common Stock listed on Schedule C hereto.
(u) The Company and its subsidiaries have, and the
Company and its subsidiaries as of the Closing Dates will have,
good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned or
proposed to be owned by them which is material to the business of
the Company or of its subsidiaries, in each case free and clear
of all liens, encumbrances and defects except such as are
described in the Prospectus or such as would not have a material
adverse effect on the Company and its subsidiaries considered as
a whole; and any real property and buildings held under lease by
the Company and its subsidiaries or proposed to be held after
giving effect to the transactions described in the Prospectus
are, or will be as of the Closing Dates, held by them under
valid, subsisting and enforceable leases with such exceptions as
would not have a material adverse effect on the Company and its
subsidiaries considered as a whole, in each case except as
described in or contemplated by the Prospectus.
(v) Except to the extent the Company and its affiliates
are self-insured as described in the Prospectus, the Company and
its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts
as are customary in the businesses in which they are engaged or
propose to engage after giving effect to the transactions
described in the Prospectus; and neither the Company nor any
subsidiary of the Company 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 their business at a cost
that would not materially and adversely affect the condition,
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financial or otherwise, or the earnings, business or operations
of the Company and its subsidiaries considered as a whole, except
as described in or contemplated by the Prospectus.
(w) Other than as contemplated by this Agreement, there
is no broker, finder or other party that is entitled to receive
from the Company any brokerage or finder's fee or other fee or
commission as a result of any of the transactions contemplated by
this Agreement.
(x) The Company has complied with all provisions of
Section 517.075 Florida Statutes (Chapter 92-198; Laws of
Florida).
(y) The Company and each of its subsidiaries maintains
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for 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 existing
assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(z) Neither the Company nor any of its subsidiaries nor
any employee or agent of the Company or any of its subsidiaries
has made any payment of funds of the Company or any of its
subsidiaries or received or retained any funds in violation of
any law, rule or regulation, which payment, receipt or retention
of funds is of a character required to be disclosed in the
Prospectus.
(aa) Neither the Company nor any of its subsidiaries is
an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
(bb) To the best of the Company's knowledge, the Company
and each of its subsidiaries has paid all tariff, custom, import,
export and other duties required to be paid by it (if any) in
connection with the exportation of products from the country of
manufacture, the importation of products into the United States,
the exportation of products from the
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United States and the importation of products into another
country and has provided all appropriate authorities with the
requisite information, all of which, to the best of the Company's
knowledge, is true and correct, necessary for the proper
determination of the foregoing.
(cc) Each certificate signed by any officer of the
Company and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty
by the Company as to the matters covered thereby.
3. Representations and Warranties and Agreements of the Selling
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Shareholders. Each Selling Shareholder represents and warrants to, and agrees
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with, the several Underwriters that such Selling Shareholder:
(a) Now has, and on the Closing Dates will have, valid
and marketable title to the Stock to be sold by such Selling
Shareholder, free and clear of any lien, claim, security interest
or other encumbrance, including, without limitation, any
restriction on transfer, and has full right, power and authority
to enter into this Agreement, the Power of Attorney and the
Custody Agreement (each as hereinafter defined), and, to the
extent such Selling Shareholder is a corporation, has been duly
organized and is validly existing and in good standing as a
corporation under the laws of its jurisdiction of organization.
(b) Now has, and on each of the Closing Dates will
have, upon delivery of and payment for each share of Stock
hereunder, full right, power and authority, any approval required
by law to sell, transfer, assign and deliver the Stock being sold
by such Selling Shareholder hereunder, and each of the several
Underwriters will acquire valid and marketable title to all of
the Stock being sold to the Underwriters by such Selling
Shareholder, free and clear of any liens, encumbrances, equities
claims, restrictions on transfer or other defects whatsoever.
(c) For a period of 90 days after the date of this
Agreement, without the consent of Cowen, such Selling Shareholder
will not offer to sell, sell, contract to sell or otherwise
dispose of any Stock or securities convertible into or
exchangeable for Stock, including, without limitation, Stock
which may be deemed to be beneficially owned by such Selling
Shareholder in accordance with the Rules and Regulations, except
for the Stock being sold hereunder.
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(d) Has duly executed and delivered a power of
attorney, in substantially the form heretofore delivered by the
Representatives (the "Power of Attorney"), appointing
___________, ___________ and ___________, and each of them, as
attorney-in-fact (the "Attorneys-in-fact") with authority to
execute and deliver this Agreement on behalf of such Selling
Shareholder, to authorize the delivery of the shares of Stock to
be sold by such Selling Shareholder hereunder and otherwise to
act on behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement.
(c) Has duly executed and delivered a custody
agreement, in substantially the form heretofore delivered by the
Representatives (the "Custody Agreement"), with ___________ as
custodian (the "Custodian"), pursuant to which certificates in
negotiable form for the shares of Stock to be sold by such
Selling Shareholder hereunder have been placed in custody for
delivery under this Agreement.
(f) Has, by execution and delivery of each of this
Agreement, the Power of Attorney and the Custody Agreement,
created valid and binding obligations of such Selling
Shareholder, enforceable against such Selling Shareholder in
accordance with its terms, except to the extent that rights to
indemnity hereunder may be limited by federal or state securities
laws or the public policy underlying such laws.
(g) The performance of this Agreement, the Custody
Agreement and the Power of Attorney, and the consummation of the
transactions contemplated hereby and thereby will not result in a
breach or violation by such Selling Shareholder of any of the
terms or provisions of, or constitute a default by such Selling
Shareholder under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder or
any of its properties is bound, or any judgment of any court or
governmental agency or body applicable to such Selling
Shareholder or any of its properties, or to such Selling
Shareholder's knowledge, any statute, decree, order, rule or
regulation of any court or governmental agency or body applicable
to such Selling Shareholder or any of its properties.
Each Selling Shareholder agrees that the shares of Stock represented by the
certificates held in custody under the Custody Agreement are for the benefit of
and coupled with and subject to the interests of the Underwriters, the other
Selling Shareholders
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and the Company hereunder, and that the arrangement for such custody and the
appointment of the Attorneys-in-fact are irrevocable; that the obligations of
such Selling Shareholder hereunder shall not be terminated by operation of law,
whether by the death or incapacity, liquidation or distribution of such Selling
Shareholder, or any other event, that if such Selling Shareholder should die or
become incapacitated or is liquidated or dissolved or any other event occurs,
before the delivery of the Stock hereunder, certificates for the Stock to be
sold by such Selling Shareholder shall be delivered on behalf of such Selling
Shareholder in accordance with the terms and conditions of this Agreement and
the Custody Agreement, and action taken by the Attorneys-in-fact or any of them
under the Power of Attorney shall be as valid as if such death, incapacity,
liquidation or dissolution or other event had not occurred, whether or not the
Custodian, the Attorneys-in-fact or any of them shall have notice of such death,
incapacity, liquidation or dissolution or other event.
4. Purchase by, and Sale and Delivery to, Underwriters--Closing
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Dates. The Selling Shareholders agree to sell to the Underwriters the Firm
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Stock, and on the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Underwriters agree, severally and not jointly, to purchase the Firm
Stock from the Selling Shareholders, the number of shares of Firm Stock to be
purchased by each Underwriter being set opposite its name in Schedule A, subject
to adjustment in accordance with Section 13 hereof. The number of shares of
Stock to be purchased by each Underwriter from each Selling Shareholder
hereunder shall bear the same proportion to the total number of shares of Stock
to be purchased by such Underwriter hereunder as the number of shares of Stock
being sold by each Selling Shareholder bears to the total number of shares of
Stock being sold by all Selling Shareholders, subject to adjustment by the
Representatives to eliminate fractions.
The purchase price per share to be paid by the Underwriters to the
Selling Shareholders will be $_____ per share (the "Purchase Price").
The Selling Shareholders will deliver the Firm Stock to the
Representatives for the respective accounts of the several Underwriters 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) or, if no such direction is received,
in the names of the respective Underwriters or in such other names as Cowen may
designate (solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate Purchase
Price therefor by certified or official bank check or checks in Clearing House
funds (next day funds), payable to the order of the
-14-
Company, all at the offices of Willkie Farr & Gallagher, One Citicorp Center,
153 East 53rd Street, New York, New York 10022. The time and date of the
delivery and closing shall be at 10:00 a.m., New York Time, on June __, 1997, in
accordance with Rule 15c6-1 under 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 between the Company and Cowen. The
First Closing Date may be postponed pursuant to the provisions of Section 13.
The Selling Shareholders shall make the certificates for the Stock
available to the Representatives for examination on behalf of the Underwriters
not later than 10:00 a.m., New York Time, on the business day preceding the
First Closing Date at the offices of Cowen & Company, Financial Square, New
York, New York 10005.
It is understood that Cowen or Prudential, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company on behalf of any Underwriter or Underwriters, for
the Stock to be purchased by such Underwriter or Underwriters. Any such payment
by Cowen or Prudential shall not relieve such Underwriter or Underwriters from
any of its or their other obligations hereunder.
The several Underwriters agree to make an initial public offering of the
Firm Stock at the initial public offering price as soon after the effectiveness
of the Registration Statement as in their judgment is advisable. The
Representatives shall promptly advise the Company and the Selling Shareholders
of the making of the initial public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, each
of the Selling Shareholders hereby grants to the Underwriters an option to
purchase, severally and not jointly, up to the aggregate number of shares of
Optional Stock set forth opposite each such Selling Shareholder's name on
Schedule B hereto, for an aggregate of up to 294,600 shares. The price per share
to be paid for the Optional Stock shall be the Purchase Price. 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 effective 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. The right to purchase the Optional Stock or any portion thereof
may be surrendered and terminated at any time upon notice by the Underwriters to
the Selling Shareholders.
The option granted hereby may be exercised by the Underwriters by giving
written notice from Cowen to the Selling Shareholders setting forth the number
of shares of the Optional
-15-
Stock to be purchased by them 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 ten (10) business
days after written notice is given. (The Option Closing Date and the First
Closing Date are herein called the "Closing Dates.") All purchases of Optional
Stock from the Selling Shareholders shall be made on a pro rata basis. Optional
Stock shall be purchased 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 in Schedule A hereto bears to the total number of shares of
Firm Stock (subject to adjustment by the Underwriters to eliminate odd lots).
Upon exercise of the option by the Underwriters, the Company agrees to sell to
the Underwriters the number of shares of Optional Stock set forth in the written
notice of exercise and the Underwriters agree, severally and not jointly and
subject to the terms and conditions herein set forth, to purchase the number of
such shares determined as aforesaid.
The Selling Shareholders will deliver the Optional Stock to the
Underwriters 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 Option Closing Date or, if no such direction is
received, in the names of the respective Underwriters or in such other names as
Cowen may designate (solely for the purpose of administrative convenience) and
in such denominations as Cowen may determine, against payment of the aggregate
Purchase Price therefor by certified or official bank check or checks in
Clearing House funds (next day funds), payable to the order of the Company all
at the offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, New York 10022. The Selling Shareholders shall make the
certificates for the Optional Stock available to the Underwriters for
examination not later than 10:00 a.m., New York Time, on the business day
preceding the Option Closing Date at the offices of Cowen & Company, Financial
Square, New York, New York 10005. The Option Closing Date and the location of
delivery of, and the form of payment for, the Option Stock may be varied by
agreement among the Company, the Selling Shareholders and Cowen. The Option
Closing Date may be postponed pursuant to the provisions of Section 13.
5. Covenants and Agreements of the Company. The Company covenants
---------------------------------------
and agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the
Representatives have determined not to proceed pursuant to Rule
430A, use its best efforts to cause the Registration Statement to
become effective, (ii) if the Company and the Representatives
have determined to proceed pursuant to Rule 430A, use its best
efforts to
-16-
comply with the provisions of and make all requisite
filings with the Commission pursuant to Rule 430A and Rule 424 of
the Rules and Regulations and (iii) if the Company and the
Representatives have determined to deliver Prospectuses pursuant
to Rule 434 of the Rules and Regulations, to use its best efforts
to comply with all the applicable provisions thereof. The Company
will advise the Representatives promptly as to the time at which
the Registration Statement becomes effective, will advise the
Representatives promptly of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that
purpose, and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible the lifting
thereof, if issued. The Company will advise the Representatives
promptly of the receipt of any comments of the Commission or any
request by the Commission for any amendment of or supplement to
the Registration Statement or the Prospectus or for additional
information and will not at any time file any amendment to the
Registration Statement or supplement to the Prospectus which
shall not previously have been submitted to the Representatives a
reasonable time prior to the proposed filing thereof or to which
the Representatives shall reasonably object in writing or which
is not in compliance with the Securities Act and the Rules and
Regulations.
(b) The Company will prepare and file with the
Commission, promptly upon the request of the Representatives, any
amendments or supplements to the Registration Statement or the
Prospectus which in the opinion of the Representatives may be
necessary to enable the several Underwriters to continue the
distribution of the Stock and will use its best efforts to cause
the same to become effective as promptly as possible. The Company
will promptly file all reports and any definitive proxy or
information statements required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the
offering or sale of the Stock.
(c) If at any time after the effective date of the
Registration Statement when a prospectus relating to the Stock is
required to be delivered under the Securities Act any event
relating to or affecting the Company or any of its subsidiaries
occurs as a result of which the Prospectus or any other
prospectus as then in effect would include an untrue statement of
a material fact, or omit to state any material fact necessary to
make the statements therein, in light of
-17-
the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend the Prospectus to comply
with the Securities Act, the Company will promptly notify the
Representatives thereof and will prepare an amended or
supplemented prospectus or make on appropriate filing pursuant to
Section 13 or 14 of the Exchange Act which will correct such
statement or omission; and in case any Underwriter is required to
deliver a prospectus relating to the Stock nine (9) months or
more after the effective date of the Registration Statement, the
Company upon the request of the Representatives and at the
expense of such Underwriter will prepare promptly such prospectus
or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act.
(d) The Company will deliver to the Representatives, at
or before the Closing Dates, signed copies of the Registration
Statement, as originally filed with the Commission, and all
amendments thereto and all documents theretofore incorporated by
reference therein, including all financial statements and
exhibits thereto and will deliver to the Representatives such
number of copies of the Registration Statement, including such
financial statements and all documents theretofore incorporated
by reference therein but without exhibits, and all amendments
thereto, as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the
Representatives, from time to time until the effective date of
the Registration Statement, as many copies of the Preeffective
Prospectus as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the
Representatives on the date of the initial public offering, and
thereafter from time to time during the period when delivery of a
prospectus relating to the Stock is required under the Securities
Act, as many copies of the Prospectus, in final form or as
thereafter amended or supplemented as the Representatives may
reasonably request; provided, however, that the expense of the
preparation and delivery of any prospectus required for use nine
(9) months or more after the effective date of the Registration
Statement shall be borne by the Underwriters required to deliver
such prospectus.
(e) The Company will make generally available to its
shareholders as soon as practicable, but not later than fifteen
(15) months after the effective date of the Registration
Statement, an earnings statement which will be in reasonable
detail (but which need not be audited) and which will comply
-18-
with Section 11(a) of the Securities Act, covering a period of at
least twelve (12) months beginning after the "effective date" (as
defined in Rule 158 under the Securities Act) of the Registration
Statement.
(f) The Company will cooperate with the Representatives
to enable the Stock to be registered or qualified for offering
and sale by the Underwriters and by dealers under the securities
laws of such jurisdictions as the Representatives may designate
and at the request of the Representatives will make such
applications and furnish such consents to service of process or
other documents as may be required of it as the issuer of the
Stock for that purpose; provided, however, that the Company shall
not be required to qualify to do business or to file a general
consent (other than that arising out of the offering or sale of
the Stock) to service of process in any such jurisdiction where
it is not now so subject. The Company will, from time to time,
prepare and file such statements and reports as are or may be
required of it as the issuer of the Stock to continue such
qualifications in effect for so long a period as the
Representatives may reasonably request for the distribution of
the Stock. The Company will advise the Representatives promptly
after the Company becomes aware of the suspension of the
qualifications or registration of (or any such exception relating
to) the Common Stock of the Company for offering, sale or trading
in any jurisdiction or of any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance
of any orders suspending such qualifications, registration or
exception, the Company will, with the cooperation of the
Representatives use its best efforts to obtain the withdrawal
thereof.
(g) The Company will furnish to its shareholders annual
reports containing financial statements certified by independent
public accountants and with quarterly summary financial
information in reasonable detail which may be unaudited. During
the period of five (5) years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of
the other Underwriters, as soon as they are available, copies of
each Annual Report of the Company (containing the balance sheet
of the Company as of the close of such fiscal year and statements
of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public
accountants) and each other report or communication furnished by
the Company to its shareholders and will deliver to the
Representatives, (i) as soon as they are available, copies of any
other reports (financial or other) which
-19-
the Company shall publish or otherwise make available to any of
its shareholders as such, (ii) as soon as they are available,
copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Report on Form 8-K or other report
or financial statements furnished to or filed with the
Commission, the NASD or securities exchange and (iii) from time
to time such other information concerning the Company as you may
reasonably request. So long as the Company has active
subsidiaries, such financial statements will be on a consolidated
basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its
shareholders generally. Separate financial statements shall be
furnished for all subsidiaries whose accounts are not
consolidated but which at the time are significant subsidiaries
as defined in the Rules and Regulations.
(h) The Company will use its best efforts to list the
Stock, subject to official notice of issuance, on the American
Stock Exchange concurrently with the effectiveness of the
Registration Statement.
(i) The Company will maintain a transfer agent and
registrar for its Common Stock.
(j) The Company will not offer, sell, assign, transfer,
encumber, contract to sell, grant an option to purchase or
otherwise dispose of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, Common Stock of the Company which
may be deemed to be beneficially owned by the undersigned in
accordance with the Rules and Regulations) during the ninety (90)
days following the date on which the price of the Common Stock to
be purchased by the Underwriters is set, other than (i) the
Company's issuance of Common Stock upon the exercise of warrants
and stock options which are presently outstanding and described
in the Prospectus and (ii) the Company's issuance of Common Stock
pursuant to its stock purchase plan as described in the
Prospectus.
(k) The Company will supply you 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.
(l) Prior to the Closing Dates the Company will furnish
to you, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the
Company and its subsidiaries for any periods subsequent to the
periods
-20-
covered by the financial statements appearing in the
Registration Statement and the Prospectus.
(m) Prior to the Closing Dates the Company will issue
no press release or other communications directly or indirectly
and hold no press conference with respect to the Company or any
of its subsidiaries, the financial condition, results of
operation, business, prospects, assets or liabilities of any of
them, or the offering of the Stock, without your prior written
consent. For a period of twelve (12) months following the Closing
Date, the Company will use its best efforts to provide to you
copies of each press release or other public communications with
respect to the financial condition, results of operations,
business, prospects, assets or liabilities of the Company
reasonably promptly after the public issuance thereof.
6. Payment of Expenses. (a) The Company will pay (directly or
by reimbursement), for itself or on behalf of the Selling Shareholders, all
costs, fees and expenses incurred in connection with expenses incident to the
performance of the obligations of the Company and of the Selling Shareholders
under this Agreement and in connection with the transactions contemplated
hereby, including but not limited to (i) all expenses and taxes incident to the
issuance and delivery of the Stock to the Representatives; (ii) all expenses
incident to the registration of the Stock under the Securities Act; (iii) the
costs of preparing stock certificates (including printing and engraving costs);
(iv) all fees and expenses of the registrar and transfer agent of the Stock; (v)
all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Stock to the Underwriters; (vi) fees and expenses of
the Company's counsel and the Company's independent accountants; (vii) all costs
and expenses incurred in connection with the preparation, printing filing,
shipping and distribution of the Registration Statement, each Preeffective
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, the Selling
Shareholders' Powers of Attorney, the Custody Agreement, the "Agreement Among
Underwriters" between the Representatives and the Underwriters, the Master
Selected Dealers' Agreement, the Underwriters' Questionnaire and the Blue Sky
memoranda and this Agreement; (viii) all filing fees, attorneys' fees and
expenses incurred by the Company or the Underwriters in connection with
exemptions from the qualifying or registering (or obtaining qualification or
registration of) all or any part of the Stock for offer and sale and
determination of its eligibility for investment under the Blue Sky or other
securities laws of such jurisdictions as the Representatives may designate; (ix)
all fees and expenses paid or incurred in connection with filings made with the
NASD; and (x) all other costs and expenses incident to the performance of their
-21-
obligations hereunder which are not otherwise specifically provided for in this
Section.
(b) Each Selling Shareholder will pay (directly or by
reimbursement) all fees and expenses incident to the performance of such Selling
Shareholder's obligations under this Agreement which are not otherwise
specifically provided for herein, including but not limited to any fees or
expenses of counsel for such Selling Shareholder, such Selling Shareholder's pro
rata share of fees and expenses of the Attorneys-in-fact and the Custodian and
all expenses and taxes incident to the sale and delivery of the Stock to be sold
by such Selling Shareholder to the Underwriters hereunder.
(c) In addition to their other obligations under
Sections 7(a) and 7(b) hereof, the Company, each Selling Shareholder and ARC
International Corporation, an Ontario corporation and the parent of Canrad of
Delaware Inc. (one of the Selling Shareholders) ("ARC"), jointly and severally
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon (i) any
statement or omission or any alleged statement or omission or (ii) any breach or
inaccuracy in the representations and warranties of the Company and the Selling
Shareholders, they will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's, each Selling Shareholder's and ARC's obligation
to reimburse each Underwriter for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, each Underwriter shall promptly return it to the
Company, each Selling Shareholder and ARC, as the case may be, together with
interest, compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to timed by Citibank, N.A., New York, New York (the "Prime Rate"). Any
such interim reimbursement payments which are not made to an Underwriter in a
timely manner as provided below shall bear interest at the Prime Rate from the
due date for such reimbursement. This expense reimbursement agreement will be in
addition to any other liability which the Company may otherwise have. The
request for reimbursement will be sent to the Company with a copy to each
Selling Shareholder. In the event the Company fails to make such reimbursement
payment within thirty (30) days of the reimbursement request, the
Representatives shall notify the Selling Shareholders of their obligation to
make such reimbursement payments within fifteen (15) days; provided, however,
that each Selling Shareholder shall be required to advance at such time only its
pro rata portion of the reimbursement payment. To the extent any Selling
Shareholder fails to pay its pro rata portion in timely
-22-
response to the Underwriters' request, the other Selling Shareholders shall be
jointly and severally liable for such reimbursement payment and each shall
render such payment to the Representatives within fifteen (15) days of written
demand therefor by the Representatives.
(d) In addition to its other obligations under Section
7(c) hereof, each Underwriter severally agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in Section 7(c) hereof which relates to
information furnished to the Company pursuant to Section 7(c) hereof, it will
reimburse the Company (and, to the extent applicable, each officer, director,
controlling person or Selling Shareholder) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director, controlling person or Selling
Shareholder) for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer, director,
controlling person or Selling Shareholder) shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made to
the Company within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in paragraph (c)
and/or (d) of this Section 6, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or pursuant
to the Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice of
intention to arbitrate, therein electing the arbitration tribunal. In the event
the party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said demand or
notice is authorized to do so. Such an arbitration would be limited to the
operation of the interim reimbursement provisions contained in paragraph (c)
and/or (d) of this Section 6 and would not resolve the ultimate propriety or
-23-
enforceability of the obligation to reimburse expenses which is created by the
provisions of Section 7.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of the Securities Act and the
respective officers, directors, partners, employees, representatives and agents
of each of such Underwriter (collectively, the "Underwriter Indemnified Parties"
and, each, an "Underwriter Indemnified Party"), against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which may be based upon the Securities
Act, or any other statute or at common law, on the ground or alleged ground that
any Preeffective Prospectus, the Registration Statement or the Prospectus (or
any Preeffective Prospectus, the Registration Statement or the Prospectus as
from time to time amended or supplemented) includes or allegedly includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon, and in conformity with,
written information furnished to the Company by any Underwriter, directly or
through the Representatives, specifically for use in the preparation thereof;
provided, that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any Preeffective Prospectus, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter Indemnified Party from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the shares of Stock concerned
to the extent that any such loss, claim, damage, liability or expense of such
Underwriter Indemnified Party results from the fact that a copy of the
Prospectus excluding documents incorporated by reference therein was not sent or
given to such person at or prior to the written confirmation of the sale of such
shares of Stock to such person as required by the Securities Act and if the
untrue statement or omission concerned has been corrected in the Prospectus,
unless such failure to deliver was the result of the breach by the Company of
Sections 5(c) or 5(d) hereof. The Company will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Company elects to assume
the defense, such defense shall be conducted by counsel chosen by it. In the
event the Company elects to assume the defense of any such suit and retain such
counsel, any Underwriter Indemnified Parties, defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) the Company shall have specifically authorized the retaining
of such counsel or (ii) the parties to such suit include any such Underwriter
Indemnified Parties, and the Company and such Underwriter Indemnified Parties at
law or in
-24-
equity have been advised by counsel to the Underwriters that one or more legal
defenses may be available to it or them which may not be available to the
Company, in which case the Company shall not be entitled to assume the defense
of such suit notwithstanding its obligation to bear the fees and expenses of
such counsel. 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 Selling Shareholder (which term for the purposes
of this Section 7(b) shall include ARC) agrees to indemnify and hold harmless
each Underwriter Indemnified Party against any losses, claims, damages,
liabilities or expenses (including, unless such Selling Shareholder elects to
assume the defense, the reasonable cost of investigating and defending against
any claims therefor and counsel fees incurred in connection therewith), joint or
several, which may be based upon the Securities Act, or any other statute or at
common law, on the ground or alleged ground that any Preeffective Prospectus,
the Registration Statement or the Prospectus (or any Preeffective Prospectus,
the Registration Statement or the Prospectus, as from time to time amended and
supplemented) includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof; provided, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any Preeffective
Prospectus, the indemnity agreement contained in this subsection (b) shall not
inure to the benefit of any Underwriter Indemnified Party from whom the person
asserting any such losses, claims, damages or liabilities purchased the shares
of Stock concerned to the extent that any such loss, claim, damage or liability
of such Underwriter Indemnified Party results from the fact that a copy of the
Prospectus excluding documents incorporated by reference therein was not sent or
given to such person at or prior to the written confirmation of the sale of such
shares of Stock to such person as required by the Securities Act and if the
untrue statement or omission concerned has been corrected in the Prospectus,
unless such failure to deliver was the result of the breach by the Company of
Sections 5(c) or 5(d) hereof. Such Selling Shareholder shall be entitled to
participate at its or his own expense in the defense, or, if such Selling
Shareholder so elects, to assume the defense of any suit brought to enforce any
such liability, but, if such Selling Shareholder elects to assume the defense,
such defense shall be conducted by counsel chosen by it or him. In the event
that any Selling Shareholder elects to assume the defense of any such suit and
retain such counsel, the Underwriter Indemnified Parties, defendant or
defendants in the suit, may retain additional counsel
-25-
but shall bear the fees and expenses of such counsel unless (i) such Selling
Shareholder shall have specifically authorized the retaining of such counsel or
(ii) the parties to such suit include such Underwriter Indemnified Parties and
such Selling Shareholder and such Underwriter Indemnified Parties have been
advised by counsel that one or more legal defenses may be available to it or
them which may not be available to such Selling Shareholder, in which case such
Selling Shareholder shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
This indemnity agreement is not exclusive and will be in addition to any
liability which such Selling Shareholder 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. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to their respective amounts of such
liability for which they each shall be responsible.
(c) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act (collectively, the
"Company Indemnified Parties") and each Selling Stockholder and each person, if
any, who controls a Selling Stockholder within the meaning of the Securities Act
(collectively, the "Shareholder Indemnified Parties") against any losses,
claims, damages, liabilities or expenses (including, unless the Underwriter or
Underwriters elect to assume the defense, the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other federal,
state, local or foreign statute or regulation, or at common law, on the ground
or alleged ground that any Preeffective Prospectus, the Registration Statement
or the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus, as from time to time amended and supplemented) includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, but only
insofar as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof; provided, however, that in no case is such Underwriter
to be liable with respect to any claims made against any Company Indemnified
Party or Shareholder Indemnified Party against whom the action is brought unless
such Company Indemnified Party or Shareholder Indemnified Party shall have
notified such Underwriter in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim shall
have been served upon the Company
-26-
Indemnified Party or Shareholder Indemnified Party, but failure to notify such
Underwriter of such claim shall not relieve it from any liability which it may
have to any Company Indemnified Party or Shareholder Indemnified Party otherwise
than on account of its indemnity agreement contained in this paragraph. Such
Underwriter shall be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, but, if such Underwriter elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event that any
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Company Indemnified Parties or Shareholder Indemnified Parties and
any other Underwriter or Underwriters or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, respectively. The Underwriter against whom
indemnity may be sought shall not be liable to indemnify any person for any
settlement of any such claim effected without such Underwriter's consent. This
indemnity agreement is not exclusive and will be in addition to any liability
which such Underwriter might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to any Company
Indemnified Party or Shareholder Indemnified Party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Shareholders (which term for the purposes of this Section 7(d) shall include
ARC) on the one hand and the Underwriters on the other from the offering of the
Stock. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Shareholders bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by
-27-
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Shareholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Shareholders and the Underwriters agree that it would not be just
and equitable if contribution were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, defending, settling or compromising any such claim.
Notwithstanding the provisions of this subsection (c), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the shares of the Stock underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Underwriters'
obligations to contribute are several in proportion to their respective
underwriting obligations and not joint. 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.
(e) Each party indemnified under the provisions of Sections
7(b) or 7(c) agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceedings against, it in respect of which indemnity may be sought on
account of any indemnity agreement contained in such paragraphs, it will
promptly give written notice (herein called the "Notice") of such service or
notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if the party to whom such
Notice was not given was unaware of the action, suit, investigation, inquiry or
proceedings to which the Notice would have related to the extent such
indemnifying party was materially prejudiced by the failure to give the Notice,
but the omission to notify such indemnifying party or parties of any such
service or notification shall not relieve such indemnifying party or parties
from any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of its indemnity agreement contained
in Sections 7(a), 7(b) or 7(c).
-28-
8. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Shareholders, ARC 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 Selling
Shareholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock.
9. Conditions of Underwriters' Obligations. The respective
obligations of the several Underwriters hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof and
at and as of the Closing Dates, of the representations and warranties made
herein by the Company and the Selling Shareholders, to compliance at and as of
the Closing Dates by the Company and the Selling Shareholders with their
covenants and agreements herein contained and other provisions hereof to be
satisfied at or prior to the Closing Dates, and to the following additional
conditions:
(a) The Registration Statement shall have become
effective and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall
have been initiated or, to the knowledge of the Company or the
Representatives, shall be threatened by the Commission, and any
request for additional information on the part of the Commission
(to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the reasonable
satisfaction of the Representatives. Any filings of the
Prospectus, or any supplement thereto, required pursuant to Rule
424(b) or Rule 434 of the Rules and Regulations, shall have been
made in the manner and within the time period required by Rule
424(b) and Rule 434 of the Rules and Regulations, as the case may
be.
(b) The Representatives shall have been satisfied that
there shall not have occurred any change prior to the Closing
Dates in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of
operations of the Company and its subsidiaries considered as a
whole, or any change in the capital stock, short-term or
long-term debt of the Company and its subsidiaries considered as
a whole, such that (i) the Registration Statement or the
Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact which, in the opinion of the
Representatives, is material, or omits to state a fact which, in
the opinion of the Representatives, is required to be stated
therein or is necessary to make the statements
-29-
therein not misleading, or (ii) it is unpracticable in the
reasonable judgment of the Representatives to proceed with the
public offering or purchase the Stock as contemplated hereby.
(c) The Representatives shall be satisfied that no
legal or governmental action, suit or proceeding affecting the
Company which is material and adverse to the Company or which
affects or may affect the Company's or the Selling Shareholders'
ability to perform their respective obligations under this
Agreement shall have been instituted or threatened and there
shall have occurred no material and adverse development in any
existing such action, suit or proceeding.
(d) At the time of execution of this Agreement, the
Representatives shall have received from KPMG Peat Marwick LLP,
independent certified public accountants, a letter, dated the
date hereof, in form and substance satisfactory to the
Underwriters.
(e) The Representatives shall have received from KPMG
Peat Marwick LLP, independent certified public accountants,
letters, dated the Closing Dates, to the effect that such
accountants reaffirm, as of the Closing Dates, and as though made
on the Closing Dates, the statements made in the letter furnished
by such accountants pursuant to paragraph (d) of this Section 9.
(f) The Representatives shall have received opinions,
dated the Closing Dates, which shall be in forms satisfactory to
counsel for the Underwriters, from (i) Gordon Altman Butowsky
Weitzen Shalov & Wein, counsel for the Company, the Selling
Shareholders and ARC, to the effect set forth in Exhibit I
hereto, and (ii) Foley and Lardner, special intellectual property
counsel for the Company, to the effect set forth in Exhibit II
hereto.
(g) The Representatives shall have received from
Willkie Farr & Gallagher, counsel for the Underwriters, their
opinion or opinions dated the Closing Dates with respect to the
incorporation of the Company, the validity of the Stock, the
Registration Statement and the Prospectus and such other related
matters as it may reasonably request, and the Company, the
Selling Shareholders and ARC shall have furnished to such counsel
such documents as they may request for the purpose of enabling
them to pass upon such matters.
(h) The Representatives shall have received a
certificate, dated the Closing Dates, of the chief
-30-
executive officer or the President and the chief financial or
accounting officer of the Company to the effect that:
(i) No stop order suspending the
effectiveness of the Registration Statement has been
issued, and, to the best of the knowledge of the signers,
no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act;
(ii) Neither any Preeffective Prospectus, as
of its date, nor the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, as of
the time when the Registration Statement became effective
and at all times subsequent thereto up to the delivery of
such certificate, included 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;
(iii) Subsequent to the respective dates as
of which information is given in the Registration
Statement and the Prospectus, and except as set forth or
contemplated in the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, nor
entered into any material transactions not in the ordinary
course of business and there has not been any material
adverse change in the condition (financial or otherwise),
properties, business, management, prospects, net worth or
results of operations of the Company and its subsidiaries
considered as a whole, or, except for the exercise of
outstanding options or warrants described in the
Prospectus in accordance with past practice, any change in
the capital stock, short-term or long-term debt of the
Company and its subsidiaries considered as a whole;
(iv) The representations and warranties of
the Company in this Agreement are true and correct at and
as of the Closing Dates, and the Company has complied with
all the agreements and performed or satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Dates; and
(v) Since the respective dates as of which
information is given in the Registration
-31-
Statement and the Prospectus, and except as disclosed in
or contemplated by the Prospectus, (i) there has not been
any material adverse change or a development involving a
material adverse change in the condition (financial or
otherwise), properties, business, management, prospects,
net worth or results of operations of the Company and its
subsidiaries considered as a whole; (ii) the business and
operations conducted by the Company and its subsidiaries
have not sustained a loss by strike, fire, flood, accident
or other calamity (whether or not insured) of such a
character as to interfere materially with the conduct of
the business and operations of the Company and its
subsidiaries considered as a whole; (iii) no legal or
governmental action, suit or proceeding is pending or
threatened against the Company which is material to the
Company, whether or not arising from transactions in the
ordinary course of business, or which may materially and
adversely affect the transactions contemplated by this
Agreement; and (iv) the Company has not declared or paid
any dividend, or made any other distribution, upon its
outstanding capital stock payable to stockholders of
record on a date prior to the Closing Date.
(i) The Representatives shall have received a
certificate or certificates, dated each of the Closing Dates, of
each of the Selling Shareholders to the effect that as of each of
the Closing Dates, its representations and warranties in this
Agreement are true and correct as if made on and as of each of
the Closing Dates, and that it has performed all its obligations
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Dates.
(j) The Company and each of the Selling Shareholders
shall have furnished to the Representatives such additional
certificates as the Representatives may have reasonably requested
as to the accuracy, at and as of the Closing Dates, of the
representations and warranties made herein by them and as to
compliance at and as of the Closing Dates by them with their
covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to the Closing Dates, and as
to satisfaction of the other conditions to the obligations of the
Underwriters hereunder.
(k) Cowen shall have received the written agreements,
substantially in the forms heretofore provided to the Company, of
the officers, directors and
-32-
holders of Common Stock or warrants or options to purchase Common
Stock listed in Schedule B that each will not offer, sell,
assign, transfer, encumber, contract to sell, grant an option to
purchase or otherwise dispose of (except for certain exceptions
provided therein upon the foreclosure of shares pledged to Merita
Bank, as described in the Prospectus) any shares of Common Stock
or warrants or options to purchase Common Stock (including,
without limitation, Common Stock of the Company which may be
deemed to be beneficially owned by the undersigned in accordance
with the Rules and Regulations) during the ninety (90) days
following the date of the final Prospectus except for the Stock
being sold hereunder by the Selling Shareholders.
The American Stock Exchange shall have approved the Stock for
listing, subject only to official notice of issuance.
All opinions, certificates, letters and other documents will be
in compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company will
furnish to the Representatives conformed copies of such opinions, certificates,
letters and other documents as the Representatives shall reasonably request. If
any of the conditions hereinabove provided for in this Section shall not have
been satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such termination
in writing or by telegram at or prior to the Closing Dates, but Cowen shall be
entitled to waive any of such conditions.
10. Effective Date. This Agreement shall become effective immediately
as to Sections 6, 7, 8, 10, 11, 12, 14, 15, 16, 17, 18, 19 and 20 and, as to all
other provisions, at 11:00 a.m. New York City time on the first full business
day following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Stock
for sale to the public. For the purposes of this Section 10, the Stock shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by you of
telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.
11. Termination. This Agreement (except for the provisions of Section
6) may be terminated by the Company at any time before it becomes effective in
accordance with Section 10 by notice to the Representatives and may be
terminated by the Representatives at any time before it becomes effective in
accordance with Section 10 by notice to the Company. In the event of any
termination of this Agreement under this or any other
-33-
provision of this Agreement, there shall be no liability of any party to this
Agreement to any other party, other than as provided in Sections 6, 7 and 12 and
other than as provided in Section 13 as to the liability of defaulting
Underwriters.
This Agreement may be terminated after it becomes effective by
the Representatives by notice to the Company (i) if at or prior to the First
Closing Date or the Option Closing Date trading in securities on any of the New
York Stock Exchange, American Stock Exchange, the NASDAQ National Market System,
Chicago Board of Options Exchange, Chicago Mercantile Exchange or Chicago Board
of Trade shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market, or a banking moratorium shall have
been declared by New York or United States authorities; (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) if at or prior to the First Closing Date or the
Option Closing Date there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power or of any other
insurrection or armed conflict involving the United States or (B) any change in
financial markets or any calamity or crisis which, in the reasonable judgment of
the Representatives, makes it impractical or inadvisable to offer or sell the
Firm Stock or Optional Stock, as applicable on the terms contemplated by the
Prospectus; (iv) if there shall have been any development or prospective
development involving particularly the business or properties or securities of
the Company or any of its subsidiaries or the transactions contemplated by this
Agreement, which, in the reasonable judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the Firm Stock or the Optional
Stock, as applicable on the terms contemplated by the Prospectus; (v) if there
shall be any litigation or proceeding, pending or threatened, which, in the
reasonable judgment of the Representatives, makes it impracticable or
inadvisable to offer or deliver the Firm Stock or Optional Stock, as applicable,
on the terms contemplated by the Prospectus; or (vi) if there shall have
occurred any of the events specified in the immediately preceding clauses (i) -
(v) together with any other such event that makes it, in the reasonable judgment
of the Representatives, impractical or inadvisable to offer or deliver the Firm
Stock or Optional Stock, as applicable on the terms contemplated by the
Prospectus.
12. Reimbursement of Underwriters. Notwithstanding any other
provisions hereof, if this Agreement shall not become effective by reason of any
election of the Company pursuant to the first paragraph of Section 11 or shall
be terminated by the Representatives under Section 9 or Section 11, the Company
and the Selling Shareholders will bear and pay the expenses specified in Section
6 hereof and, in addition to their obligations pursuant to Section 7 hereof, the
Company and the Selling Shareholders will reimburse the reasonable out-of-pocket
expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
-34-
Agreement and the proposed purchase of the Stock, and promptly upon demand the
Company and the Selling Shareholders will pay such amounts to you as
Representatives.
13. 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, the Company and the Selling
Shareholders 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 13, (i) the
Company and the Selling Shareholders 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 and the Selling Shareholders may effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement 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, the Selling Shareholders or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 13 shall be without liability on the part of
any non-defaulting Underwriter, the Selling Shareholders or the Company, except
for expenses to be paid or reimbursed pursuant to Section 6 and except for the
provisions of Section 7.
14. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriters shall be mailed, delivered or telegraphed and confirmed
to you, as their Representatives c/o Cowen & Company at Financial Square, New
York, New York 10005, with a copy to counsel to Willkie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022, Attention:
William N. Dye, except that notices given to an Underwriter pursuant to Section
6 hereof shall be sent
-35-
to such Underwriter at the address furnished by the Representatives, in each
case, with a copy as provided above, or, if sent to the Company, shall be
mailed, delivered or telegraphed and confirmed c/o Ballantyne of Omaha, Inc.,
4350 McKinley Street, Omaha, Nebraska 68112, Attention: Chief Executive Officer,
with a copy to Gordon Altman Butowsky Weitzen Shalov & Wein, 114 West 47th
Street, New York, New York 10036, Attention: Daniel A. Etna.
15. Successors. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company and the Selling Shareholders
and their respective successors and legal representatives. 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 the Selling
Shareholders contained in this Agreement shall also be for the benefit of the
person or persons, if any, who control any Underwriter or Underwriters within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the indemnities of the several Underwriters shall also be for the
benefit of each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company or any Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
16. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
principles of conflicts of laws.
17. Authority of the Representatives. In connection with this
Agreement, you will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by Cowen, as Representative, will be binding
on all the Underwriters; and any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Shareholders.
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,
-36-
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, the Selling Shareholders and the
Representatives.
20. Counterparts. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Any person executing and delivering this Agreement as
Attorney-in-fact for a Selling Shareholder represents by so doing that he or she
has been duly appointed as Attorney-in-fact by such Selling Shareholder pursuant
to a validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action.
-37-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
BALLANTYNE OF OMAHA, INC.
By: ____________________________
Name: John P. Wilmers
Title: President and Chief
Executive Officer
ARC INTERNATIONAL CORPORATION
By: ____________________________
Name: Arnold S. Tenney
Title: Chairman
SELLING SHAREHOLDERS LISTED IN
SCHEDULE B
By: ____________________________
Attorney-in-fact
Acting on his own
behalf and on behalf of the
Selling Shareholders listed
in Schedule B
Accepted and delivered in
New York, New York as of the
date first above written.
COWEN & COMPANY
PRUDENTIAL SECURITIES INCORPORATED
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the
foregoing Agreement.
By: Cowen Incorporated,
its general partner
By _________________________
Name: Jack P. Dunphy
Title: Managing Director
-38-
SCHEDULE A
Number of Number of
Shares of Shares of
Firm Stock Optional Stock
To Be To Be
Name Purchased Purchased
---- --------- --------------
Cowen & Company...........................
Prudential Securities
Incorporated...........................
--------- --------------
Total..................................
SCHEDULE B
Number of Number of
Shares of Shares of
Firm Stock Optional Stock
Name To Be Sold To Be Sold
---- ---------- --------------
ARC International Corporation 1,705,000 294,600
Merita Bank Ltd 108,000 __
Arnold S. Tenney 50,000 __
Geller & Friend Capital Partners, Inc. 46,714 __
Colin G. Campbell 12,000 __
Jeffrey D. Chelin 12,000 __
Marshall S. Geller 12,000 __
Anthony Mazzarella 10,000 __
Carl Frankson 3,503 __
Greg Presson 3,503 __
Steve Weinress 1,130 __
Kenneth Fader 75 __
Marge Goddard 75 __
---------- --------------
Total..................................... 1,964,000 294,600
SCHEDULE C
ARC International Corporation
ARC U.S.A., Inc.
Arnold S. Tenney
Arnmart Investments Limited
BNY Financial Corporation
BNY Financial Corporation - Canada
Ray F. Boegner
Canrad Inc.
Canrad Of Delaware Inc.
Colin G. Campbell
Jeffrey D. Chelin
Brad J. French
Marshall S. Geller
Geller & Friend Capital Partners, Inc.
Jaffoni & Collins Incorporated
Merita Bank Ltd.
Yale Richards
John P. Wilmers