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Exhibit 1.1
CERION TECHNOLOGIES INC.
3,840,000 SHARES COMMON STOCK*
UNDERWRITING AGREEMENT
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May 23, 1996
WILLIAM BLAIR & COMPANY, L.L.C.
As Representative of the Several
Underwriters Named in Schedule A
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
SECTION 1. INTRODUCTION. Cerion Technologies Inc. (the "Company"), a
Delaware corporation, upon the closing of the transaction contemplated by this
Agreement will have an authorized capital stock consisting of 100,000 shares,
$.01 par value per share, of Preferred Stock, of which no shares will be
outstanding as of such date, and 20,000,000 shares, $.01 par value per share, of
Common Stock (the "Common Stock"), of which 7,016,540 shares will be outstanding
as of such date. The Company proposes, subject to the terms and conditions
stated herein, to issue and sell 1,615,000 shares of its authorized but unissued
Common Stock, and Cerion Holdings Inc., a Delaware corporation and the parent of
the Company (the "Selling Stockholder"), proposes to sell 2,225,000 shares of
the Company's issued and outstanding Common Stock owned by the Selling
Stockholder, to the several underwriters named in Schedule A as it may be
amended by the Pricing Agreement as hereinafter defined (the
"Underwriters"),which Underwriters are acting severally and not jointly. The
Selling Stockholder is a wholly owned subsidiary of Nashua Corporation, a
Delaware corporation ("Nashua Corporation," and together with the Selling
Stockholder, "Nashua"). Collectively, such total of 3,840,000 shares of Common
Stock proposed to be sold by the Company and Nashua is
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* Plus an option to acquire up to 576,000 additional shares to cover
overallotments.
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hereinafter referred to as the "Firm Shares." In addition, Nashua proposes to
grant to the Underwriters an option to purchase up to an aggregate of 576,000
additional shares of Common Stock (the "Option Shares") for the purpose of
covering any over-allotments in connection with the sale of the Firm Shares as
provided in Section 5 hereof. The Firm Shares and, to the extent such option is
exercised, the Option Shares are hereinafter collectively referred to as the
"Shares."
You have advised the Company and Nashua that the Underwriters propose to
make a public offering of their respective portions of the Shares as soon as you
deem advisable after the registration statement hereinafter referred to becomes
effective, if as of the date hereof it has not yet become effective, and the
Pricing Agreement as hereinafter defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, Nashua and the Representative, acting on behalf of
the several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company, Nashua and the Representative and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
Shares will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company and Nashua hereby confirm their respective agreements with the
Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND NASHUA. The
Company and Nashua, jointly and severally, represent and warrant to the several
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-2590) and a related
preliminary prospectus with respect to the Shares have been prepared and filed
with the Securities and Exchange Commission (the "Commission") by the Company in
conformity with the requirements of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the "1933
Act;" all references herein to specific rules are to rules promulgated under the
1933 Act); and the Company has so prepared and has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof. If the Company and the Underwriters have elected
not to rely upon Rule 430A, the Company has prepared and will promptly file an
amendment to the registration statement and an amended prospectus. If the
Company and the Underwriters have elected to rely upon Rule 430A, the Company
will prepare and file a prospectus pursuant to Rule 424(b) that discloses the
information previously omitted from the prospectus in reliance upon Rule 430A.
There have been or will promptly be delivered to you three signed copies of such
registration statement and all amendments, and three copies of each exhibit
filed therewith, and conformed
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copies of such registration statement and amendments (but without exhibits) and
of the related preliminary prospectus or prospectuses and final forms of
prospectus for each of the Underwriters.
The registration statement and prospectus, each as amended, on file with
the Commission at the time the registration statement became or becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A(b), if applicable,
are hereinafter called the "Registration Statement" and the "Prospectus,"
respectively, except that if the prospectus filed by the Company pursuant to
Rule 424(b) differs from the prospectus on file at the time the Registration
Statement became or becomes effective, the term "Prospectus" shall refer to the
Rule 424(b) prospectus from and after the time it is filed with the Commission
or transmitted to the Commission for filing. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."
(b) The Commission has not issued any order preventing or suspending the
use of any preliminary prospectus, and each preliminary prospectus, at the time
of filing thereof, has conformed in all material respects with the requirements
of the 1933 Act (except to the extent that, in conformity with the 1933 Act,
such preliminary prospectus is subject to completion), and, as of its date, has
not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and when the
Registration Statement and any amendment thereto became or becomes effective,
and at all times subsequent thereto, up to the First Closing Date or the Second
Closing Date, each as hereinafter defined, as the case may be, the Registration
Statement, or such amendment, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable, and the Prospectus and any amendments or supplements thereto,
contained or will contain all statements that are required to be stated therein
in accordance with the 1933 Act and in all material respects conformed or will
in all material respects conform to the requirements of the 1933 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 omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company and Nashua make no representation or warranty as to
information contained in or omitted from any preliminary prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representative regarding
the Underwriters specifically for use in the preparation thereof.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Prospectus; the Company is duly qualified to do
business as a foreign corporation under the corporation law of, and is in good
standing as such in, each jurisdiction in which it owns or leases substantial
properties, has an office, or in which substantial business is conducted and
such qualification is
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required, except in any such case where the failure to so qualify or be in good
standing would not have a material adverse effect on the Company's ability to
perform its obligations under this Agreement or on the condition (financial or
otherwise) or results of operations of the Company; and no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.
(d) The Company does not, directly or indirectly, own, of record or
beneficially, any outstanding voting securities or other equity interests in or
control any corporation, limited liability company, partnership, trust, joint
venture or other entity.
(e) The issued and outstanding shares of capital stock of the Company are
as set forth in the Prospectus and such shares have been duly authorized and
validly issued, are fully paid and nonassessable, and conform to the description
thereof contained in the Prospectus and, except as disclosed in the Prospectus,
there are no options, rights or warrants for the purchase of Common Stock, or
securities convertible or exchangeable into, or exercisable for, Common Stock,
and there are no agreements with respect thereto.
(f) The Shares to be sold by the Company have been duly authorized and when
issued, delivered and paid for pursuant to this Agreement will be validly
issued, fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus.
(g) The making and performance by the Company of this Agreement and the
Pricing Agreement have been duly authorized by all necessary corporate action
and (i) will not violate any provision of the Company's charter or bylaws and
(ii) will not result in the breach, or be in contravention, of any provision of
any agreement, franchise, license, indenture, mortgage, deed of trust or other
instrument to which the Company is a party or by which the Company or its
properties may be bound or affected, or any order, rule or regulation applicable
to the Company of any court or regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any of its properties,
or any order of any court or governmental agency or authority entered in any
proceeding to which the Company was or is now a party or by which it is bound.
No consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body or of any other person is
required for the execution and delivery of this Agreement or the Pricing
Agreement or the consummation of the transactions contemplated herein or
therein, except for compliance with the 1933 Act and blue sky laws applicable to
the public offering of the Shares by the several Underwriters and clearance of
such offering with the National Association of Securities Dealers, Inc.
("NASD"). This Agreement has been, and the Pricing Agreement has been or will
be, duly executed and delivered by the Company.
(h) The accountants who have expressed their opinions with respect to
certain of the financial statements and schedules included in the Registration
Statement are independent accountants as required by the 1933 Act.
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(i) The financial statements and schedules of the Company and its
predecessors included in the Registration Statement present fairly the financial
position of the Company and its predecessors as of the respective dates of such
financial statements, and the results of operations and cash flows of the
Company and its predecessors for the respective periods covered thereby, all in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved, and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. The financial information set forth in the Prospectus under "Selected
Financial Data" presents fairly on the basis stated in the Prospectus the
information set forth therein. The pro forma financial statements and other pro
forma information included in the Prospectus present fairly the information
shown therein, have been prepared in accordance with generally accepted
accounting principles and the Commission's rules and guidelines with respect to
pro forma financial statements and other pro forma information, have been
properly compiled on the pro forma basis described therein, and, in the opinion
of the Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate under the circumstances.
(j) Neither Nashua, its subsidiaries nor the Company is in violation of its
charter or is in violation of any material provision of its bylaws or is in
default under any consent decree or order of any court or administrative body or
in default with respect to any material provision of any lease, loan agreement,
franchise, license, permit or other contractual obligation to which it is a
party; and there does not exist any state of facts which constitutes an event of
default as defined in such documents or which, with notice or lapse of time or
both, would constitute such an event of default, in each case, except for
defaults which neither singly nor in the aggregate are material to the Company.
(k) There are no legal or governmental proceedings pending or, to Nashua's
or the Company's knowledge, threatened to which Nashua, its subsidiaries or the
Company is or may be a party in which the Company or material properties or
assets owned or leased by the Company is or may be the subject, or related to
environmental or discrimination matters involving the Company, which are not
disclosed in the Prospectus, or which question the validity of this Agreement or
the Pricing Agreement or any action taken or to be taken pursuant hereto or
thereto.
(l) There are no holders of securities of the Company having rights,
contractual or otherwise, to cause registration thereof or preemptive rights to
purchase Common Stock, except as disclosed in the Prospectus.
(m) The Company has good and marketable title to (i) all the properties and
assets historically used in Nashua Precision Technologies business and (ii) all
the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge, security interest or encumbrance of any kind except
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus) or such as are not material to the Company. The Company holds its
leased properties which are material to the Company under valid and binding
leases.
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(n) The Company has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(o) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as contemplated by the
Prospectus, the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions not
in the ordinary course of business and there has not been any material adverse
change in its condition (financial or otherwise), business, assets, results of
operations or prospects or any material change in its capital stock, short-term
debt or long-term debt.
(p) The Company has obtained agreements from its directors and officers
that, for a period of 180 days after this Agreement becomes effective, each of
such directors and officers will not, without the prior written consent of the
Representative, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of any Common Stock or securities convertible or exchangeable
into, or exercisable for, Common Stock or in any other manner transfer all or a
portion of the economic consequences associated with the ownership of any such
Common Stock, or execute any registration rights with respect to any such Common
Stock or securities.
(q) There is no material document of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as required.
(r) The Company owns and possesses all right, title and interest in and to,
or has duly licensed from third parties a valid and enforceable right to use,
all trademarks, copyrights, patents, trade secrets and other proprietary rights
("Trade Rights") presently employed by the Company in connection with its
business or historically used by the Nashua Precision Technologies business,
whether such Trade Rights are registered or unregistered. Neither Nashua, its
subsidiaries nor the Company has received any notice of infringement,
misappropriation or conflict from any third party as to such Trade Rights which
has not been resolved or disposed of and neither the Company nor the Nashua
Precision Technologies business has infringed, misappropriated or otherwise
conflicted with Trade Rights of any third parties, which infringement,
misappropriation or conflict would have a material adverse effect upon the
condition (financial or otherwise) or results of operations of the Company.
(s) The Company is (1) in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (2) has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (3) is in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance
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with Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company. In the ordinary course of its business, the
Company or Nashua conducts a periodic review of the effect of Environmental Laws
on the business, operations and properties of the Company, in the course of
which it identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review, the
Company and Nashua have reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a material adverse
effect on the Company.
(t) The conduct of the business of the Company is in compliance in all
respects with applicable federal, state, local and foreign laws and regulations,
except where the failure to be in compliance would not have a material adverse
effect upon the condition (financial or otherwise), business, assets, results of
operations or prospects of the Company.
(u) All offers and sales of the Company's and its predecessor's capital
stock prior to the date hereof were at all relevant times exempt from the
registration requirements of the 1933 Act and were duly registered with or the
subject of an available exemption from the registration of the applicable state
securities or blue sky laws.
(v) Nashua, the Company and its predecessors have filed all necessary
federal and state income and franchise tax returns and have paid all taxes shown
as due thereon, and there is no tax deficiency that has been, or to the
knowledge of the Company might be, asserted against the Company or its
properties or assets that would or could be expected to adversely affect the
financial condition, assets, operations or prospects of the Company.
(w) At the time the Registration Statement becomes or became effective, the
Shares will be or were registered under the Exchange Act. The Shares have been
authorized for trading over-the-counter on the Nasdaq Stock Market's National
Market subject to notice of issuance or sale, as the case may be.
(x) The Company is not, and does not intend to conduct its business in a
manner in which it would become, an "investment company" as defined in Section
3(a) of the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(y) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, AN ACT
RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the Company further
agrees that if it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectus, if any, concerning the
Company's business with Cuba or
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with any person or affiliate located in Cuba changes in any material way, the
Company will provide the Department with notice of such business or change, as
appropriate, in a form acceptable to the Department.
(z) No beneficial owner of the Company's unregistered securities,
regardless of the time acquired or the source from which derived, has any direct
or indirect affiliation or association with any member of the NASD. Nashua has
no direct or indirect affiliation or association with any member of the NASD.
SECTION 3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NASHUA.
(a) Nashua represents and warrants to, and agrees with, the Company and the
Underwriters that:
(i) Nashua will have on the First Closing Date and the Second Closing
Date (as hereinafter defined) valid marketable title to the Shares proposed
to be sold by Nashua hereunder on such date, and Nashua has full right,
power and authority to enter into this Agreement and the Pricing Agreement
and to sell, assign, transfer and deliver such Shares hereunder, free and
clear of all voting trust arrangements, liens, encumbrances, equities,
claims and rights of others; and upon delivery of and payment for such
Shares hereunder, the Underwriters will acquire valid marketable title
thereto, free and clear of all voting trust arrangements, liens,
encumbrances, equities, security interests, claims and rights of others.
The Selling Stockholder holds all of the outstanding capital stock of the
Company. Nashua Corporation holds all of the outstanding capital stock of
the Selling Stockholder.
(ii) The making and performance by Nashua of this Agreement and the
Pricing Agreement have been duly authorized by all necessary corporate
action and (A) will not violate any provision of Nashua's charter or
bylaws, and (B) will not result in the breach, or be in contravention, of
any provision of any agreement, franchise, license, indenture, mortgage,
deed of trust, or other instrument to which Nashua or any subsidiary
thereof is a party or by which Nashua, any subsidiary thereof or the
property of any of them may be bound or affected, or any order, rule or
regulation applicable to Nashua or any such subsidiary of any court or
regulatory body, administrative agency or other governmental body having
jurisdiction over Nashua or any such subsidiary or any of their respective
properties, or any order of any court or governmental agency or authority
entered in any proceeding to which Nashua or any such subsidiary was or is
now a party or by which it is bound. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
government body or of any other person is required for the execution and
delivery of this Agreement or the Pricing Agreement or the consummation of
the transactions contemplated herein or therein, except for compliance with
the 1933 Act and blue sky laws applicable to the public offering of the
Shares by the several Underwriters and clearance of such offering with the
NASD. This Agreement has
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been, and the Pricing Agreement has been or will be, duly executed and
delivered by Nashua.
(iii) Nashua has not taken and will not take, directly or indirectly,
any action designed to or which might be reasonably expected to cause or
result, under the Exchange Act or otherwise, in the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(b) Nashua agrees with the Company and the Underwriters that, for a period
of 180 days after this Agreement becomes effective, Nashua will not, without the
prior written consent of the Representative, offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of any Common Stock or
securities convertible or exchangeable into, or exercisable for, Common Stock or
in any other manner transfer all or a portion of the economic consequences
associated with the ownership of any such Common Stock, or cause the Company to
file with the Commission any registration statement related to any of the
foregoing. Notwithstanding the foregoing, Nashua shall be permitted to pledge
shares of Common Stock (including Shares until the sale thereof pursuant to this
Agreement) to an agent for its creditors so long as such agent agrees to be
bound by the terms of this paragraph with respect to the offer, sale or other
transfer of any such pledged Common Stock, and provided that such agent shall be
permitted to foreclose on and acquire ownership of such pledged Common Stock in
compliance with the terms of such pledge but shall not be permitted during the
180-day period referred to above to transfer any pledged Common Stock in a
manner prohibited by this paragraph to any person other than itself or its
nominee. Nashua represents and warrants to the Company and the Underwriters that
any pledge by it existing at the date hereof or entered into in the future of
any Common Stock complies and will comply with the requirements of the preceding
sentence.
(c) In order to document the Underwriter's compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, Nashua agrees to deliver
to you prior to or on the First Closing Date, as hereinafter defined, a properly
completed and executed United States Treasury Department Form W-8 or W-9 (or
other applicable form of statement specified by Treasury Department regulations
in lieu thereof).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representative, on behalf of the several Underwriters, represents and warrants
to the Company that the information set forth (a) in the last paragraph on the
cover page of the Prospectus, (b) in the stabilization paragraph on the bottom
of the inside front cover page of the Prospectus and (c) in the first and second
sentences of the second paragraph and the single sentence constituting the
seventh paragraph under the table of Underwriters under the caption
"Underwriting" in the Prospectus is correct and complete in all material
respects. The Company, Nashua and the Representative agree that the foregoing
items described in this Section 4 were the only information furnished to the
Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement and the Prospectus.
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SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and Nashua, severally and not
jointly, agree to sell to the Underwriters named in Schedule A hereto, and the
Underwriters agree, severally and not jointly, to purchase 1,615,000 Firm Shares
from the Company and 2,225,000 Firm Shares from Nashua at the price per share
set forth in the Pricing Agreement. The obligation of each Underwriter to the
Company shall be to purchase from the Company that number of full shares which
(as nearly as practicable, as determined by you) bears to the number of Firm
Shares to be sold by the Company the same proportion as the number of Shares set
forth opposite the name of such Underwriter in Schedule A hereto bears to the
total number of Firm Shares to be purchased by all Underwriters under this
Agreement. The obligation of each Underwriter to Nashua shall be to purchase
from Nashua that number of full shares which (as nearly as practicable, as
determined by you) bears to the number of Firm Shares to be sold by Nashua the
same proportion as the number of Shares set forth opposite the name of such
Underwriter in Schedule A hereto bears to the total number of Firm Shares to be
purchased by all Underwriters under this Agreement. The initial public offering
price and the purchase price shall be set forth in the Pricing Agreement.
At 10:00 A.M., Boston Time, on the third full business day after the first
effective trade date of the initial public offering, or at such other time not
later than nine full business days after the initial public offering, as you and
the Company may agree, the Company and Nashua will deliver to you at the offices
of Bingham, Dana & Gould, LLP, Boston, Massachusetts, counsel for the Company,
or through the facilities of The Depository Trust Company for the accounts of
the several Underwriters, certificates representing the Firm Shares to be sold
by the Company and Nashua against payment of the purchase price therefor by wire
transfer of immediately available funds to the Company and Nashua (or, in the
case of Nashua, to an account designated by Nashua) as their interests appear.
Such time of delivery and payment is herein referred to as the "First Closing
Date." The certificates for the Firm Shares so to be delivered will be in such
denominations and registered in such names as you request by notice to the
Company prior to 10:00 A.M., Boston Time, on the second full business day
preceding the First Closing Date, and will be made available at the Company's
expense for checking and packaging by the Representative at 10:00 A.M., Boston
Time, on the first full business day preceding the First Closing Date.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
Nashua hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 576,000 Option Shares, at the
same purchase price per share to be paid for the Firm Shares, for use solely in
covering any over allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
at any time (but not more than once) within 30 days after the date of the
initial public offering upon notice by you to the Company and Nashua setting
forth the aggregate number of Option Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of
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delivery (which may not be earlier than the First Closing Date), being herein
referred to as the "Second Closing Date," shall be determined by you, but if at
any time other than the First Closing Date, shall not be earlier than three nor
later than ten full business days after delivery of such notice of exercise. The
number of Option Shares to be purchased by each Underwriter shall be determined
by multiplying the number of Option Shares to be sold by Nashua pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Shares to be purchased by such Underwriter as set forth opposite its name in
Schedule A and the denominator of which is the total number of Firm Shares
(subject to such adjustments to eliminate any fractional share purchases as you
in your absolute discretion may make). Certificates for the Option Shares will
be made available at the Company's expense for checking and packaging at 10:00
A.M., Boston Time, on the first full business day preceding the Second Closing
Date. The manner of payment for and delivery of the Option Shares shall be the
same as for the Firm Shares as specified in the preceding paragraph, except that
payment shall be made to the order of Nashua.
You have advised the Company and Nashua that each Underwriter has
authorized you to accept delivery of its Shares, to make payment and to receipt
therefor. You, individually and not as the Representative of the Underwriters,
may make payment for any Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any obligation hereunder.
SECTION 6. COVENANTS OF THE COMPANY AND NASHUA. The Company and Nashua
covenant and agree that:
(a) The Company will advise you 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, or of any notification
of the suspension of qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceedings for that purpose, and will also
advise you promptly of any request of the Commission for an amendment or
supplement to the Registration Statement, to any preliminary prospectus or to
the Prospectus, or for additional information, and will not file any amendment
or supplement to the Registration Statement, any preliminary prospectus or the
Prospectus of which you have not been furnished with a copy prior to such filing
or to which you reasonably object.
(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the 1933 Act, any event occurs as a result of which the
Prospectus, including any amendments or supplements thereto, would include an
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments or
supplements thereto and including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Shares which differs from the prospectus on file with the Commission at the time
of effectiveness of the Registration Statement, whether or not such revised
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prospectus is required to be filed pursuant to Rule 424(b) to comply with the
1933 Act, the Company promptly will advise you thereof and will promptly prepare
and file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance; and, in
case any Underwriter is required to deliver a prospectus nine months or more
after the effective date of the Registration Statement, the Company upon request
will prepare promptly such prospectus or prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the 1933 Act.
(c) The Company will not, prior to the earlier of the Second Closing Date
or termination or expiration of the related option, incur any liability or
obligation, direct or contingent, or enter into any material transaction, other
than in the ordinary course of business, except as contemplated by the
Prospectus.
(d) The Company will not acquire any capital stock of the Company prior to
the earlier of the Second Closing Date or termination or expiration of the
related option, nor will the Company declare or pay any dividend or make any
other distribution upon the Common Stock payable to stockholders of record on a
date prior to the earlier of the Second Closing Date or termination or
expiration of the related option, except in either case as contemplated by the
Prospectus.
(e) As soon as practicable, but in any event not later than August 15,
1997, the Company will make generally available to its security holders an
earnings statement (which need not be audited) covering a period of at least 12
months beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the 1933
Act.
(f) During such period as a prospectus is required by law to be delivered
in connection with offers and sales of the Shares by an Underwriter or dealer,
the Company will furnish to you copies of the Registration Statement, the
Prospectus, each preliminary prospectus and all amendments and supplements to
any such documents, in each case as soon as available and in such quantities as
you may reasonably request, for the purposes contemplated by the 1933 Act.
(g) The Company and Nashua will cooperate with the Underwriters in
qualifying or registering the Shares for sale under the blue sky laws of such
jurisdictions as you designate and will continue such qualifications in effect
so long as reasonably required for the distribution of the Shares. The Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any such jurisdiction where it is not currently
qualified.
(h) During the period of five years hereafter, the Company will furnish you
and the other Underwriters with a copy (i) as soon as practicable after the
filing thereof, of each report filed by the Company with the Commission, any
securities exchange or the NASD; (ii) as soon as available, of each report or
communication of the Company mailed to stockholders; (iii) every
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material press release with respect to the Company; and (iv) any additional
information of a public nature concerning the Company or its business that you
may request.
(i) The Company will use the net proceeds received by it from the sale of
the Shares being sold by it in the manner specified in the Prospectus.
(j) If, at the time of effectiveness of the Registration Statement, any
information shall have been omitted therefrom in reliance upon Rule 430A, then
immediately following the execution and delivery of the Pricing Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus,
or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus), containing all
information so omitted.
(k) The Company will file with the Commission in a timely manner all
reports on Form SR required by Rule 463 and will furnish you copies of any such
reports as soon as practicable after the filing thereof.
(l) The Company will not, for a period of 180 days after this Agreement
becomes effective, without the prior written consent of the Representative,
offer, sell, contract to sell, grant any option to purchase or otherwise dispose
of any Common Stock or securities convertible or exchangeable into, or
exercisable for, Common Stock (except Common Stock issued pursuant to the
employee or director stock plans described in the Prospectus), or file any
registration statement with the Commission related to any of the foregoing
(except for registration statements on Form S-8 in respect of an employee
benefit plan of the Company).
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company and Nashua agree, jointly
and severally, to pay (i) all costs, fees and expenses (except legal fees and
disbursements of counsel for the Underwriters and the expenses incurred by the
Underwriters other than those contemplated by clause (ii) below) incurred in
connection with the performance of the Company's and Nashua's obligations
hereunder, including without limiting the generality of the foregoing, all fees
and expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement, each
preliminary prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Pricing Agreement and the blue sky memorandum, (ii) all costs,
fees and expenses (including all filing fees and the reasonable legal fees and
disbursements of counsel for the Underwriters relating to this clause (ii))
incurred by the Underwriters in connection with qualifying or registering all or
any part of the Shares for offer and sale under blue sky laws, including the
preparation of a blue sky memorandum relating to the Shares, and clearance of
such offering with the NASD; and (iii) all fees and expenses of the Company's
transfer agent, all fees and expenses in connection with the authorization and
listing of the Shares on the Nasdaq Stock
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Market, the costs of printing the certificates for the Shares and all transfer
taxes, if any, with respect to the sale and delivery of the Shares to the
several Underwriters.
SECTION 8. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company and Nashua herein set forth as of the date hereof and as of the
First Closing Date or the Second Closing Date, as the case may be, to the
accuracy of the statements of officers of the Company and Nashua made pursuant
to the provisions hereof, to the performance by the Company and Nashua of any of
its obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective either prior to
the execution of this Agreement or not later than 1:00 P.M., Chicago Time, on
the first full business day after the date of this Agreement, or such later time
as shall have been consented to by you but in no event later than 1:00 P.M.,
Chicago Time, on to the third full business day following the date hereof; and
prior to the First Closing Date or the Second Closing Date, as the case may be,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or, to the knowledge of the Company, Nashua or you, shall be
contemplated by the Commission, and there shall not have come to the attention
of the Representative any facts that would cause it to believe that the
Prospectus, at the time it was required to be delivered to purchasers of the
Shares, contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If the
Company and the Underwriters have elected to rely upon Rule 430A, the
information concerning the initial public offering price of the Shares and
price-related information shall have been properly transmitted to the Commission
for filing pursuant to Rule 424(b) within the prescribed period and the Company
will provide evidence satisfactory to the Representative of such timely filing
(or a post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rules 430A and
424(b)).
(b) The Shares shall have been qualified for sale under the blue sky laws
of such states as shall have been specified by the Representative.
(c) The legality and sufficiency of the authorization, issuance and sale or
transfer and sale of the Shares hereunder, the validity and form of the
certificates representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate proceedings and other
legal matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements) shall have been approved by counsel
for the Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company or Nashua that the Registration
Statement or the Prospectus or any amendment or supplement thereto contains an
untrue statement
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of fact, which, in the opinion of counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(e) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any change, or any development involving a prospective change,
in or affecting particularly the business or properties of the Company or its
subsidiaries, whether or not arising in the ordinary course of business, which,
in the judgment of the Representative, makes it impractical or inadvisable to
proceed with the public offering or purchase of the Shares as contemplated
hereby.
(f) There shall have been furnished to you, as the Representative of the
Underwriters, on the First Closing Date or the Second Closing Date, as the case
may be, except as otherwise expressly provided below:
(i) An opinion of Bingham, Dana & Gould LLP, counsel for the Company and
Nashua, addressed to the Underwriters and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus; and the Company has been duly
qualified to do business as a foreign corporation under the corporation law
of, and is in good standing as such in, every jurisdiction where the
ownership or leasing of real property requires such qualification, except
where the failure so to qualify would not have a material adverse effect
upon the condition (financial or otherwise), business, assets, results of
operations or prospects of the Company;
(2) the authorized capital stock of the Company, of which there is
outstanding the amount set forth in the Registration Statement and
Prospectus (except for subsequent issuances, if any, pursuant to stock
options described in the Prospectus), conforms as to legal matters in all
material respects to the description thereof in the Registration Statement
and Prospectus; and the forms of certificates used to evidence the Common
Stock and the Shares comply with all applicable statutory and Nasdaq
National Market requirements;
(3) the issued and outstanding capital stock of the Company has been
duly authorized and validly issued and is fully paid and nonassessable and
free of statutory or, to the knowledge of such counsel, contractual
preemptive rights;
(4) the certificates for the Shares to be delivered hereunder are in
due and proper form, and when duly countersigned by the Company's transfer
agent and delivered to you or upon your order against payment of the agreed
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consideration therefor in accordance with the provisions of this Agreement
and the Pricing Agreement, the Shares represented thereby will be duly
authorized and validly issued, fully paid and nonassessable and free of
preemptive rights and, to the knowledge of such counsel, will be free of
any pledge, lien, encumbrance, claim or preemptive rights of, or rights of
first refusal in favor of, stockholders with respect to any of the Shares
or the issuance or sale thereof, and, to such counsel's knowledge, there
are no contractual preemptive rights, rights of first refusal, rights of
co-sale or other similar rights which exist with respect to any of the
Shares or the issuance and sale thereof; and the Shares to be sold
hereunder have been registered under the Exchange Act and have been
authorized and qualified for inclusion on the Nasdaq Stock Market's
National Market, subject to notice of issuance;
(5) the Registration Statement has become effective under the 1933
Act, and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act, and the Registration Statement (including
the information deemed to be part of the Registration Statement at the time
of effectiveness pursuant to Rule 430A(b), if applicable), the Prospectus
and each amendment or supplement thereto (except for the financial
statements and notes thereto, the financial statement schedules and other
statistical or financial data included therein as to which such counsel
need express no opinion) comply as to form in all material respects with
the requirements of the 1933 Act;
(6) this Agreement and the Pricing Agreement and the performance of
the Company's and Nashua's obligations hereunder and thereunder have been
duly authorized by all necessary corporate action on the part of the
Company and Nashua, and this Agreement and the Pricing Agreement have been
duly executed and delivered by and on behalf of the Company and Nashua and,
assuming that the Company and Nashua have received the agreed to
consideration therefor and that such agreements are the binding obligation
of the Underwriters, are the legal, valid and binding agreements of the
Company and Nashua, except as enforceability of the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
marshalling or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' or guarantors' rights), and that the
enforcement of any of the Underwriters' rights may in all cases be subject
to an implied duty of good faith and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding at
law or in equity), and except as to those provisions relating to
indemnities or contribution for liabilities arising under the 1933 Act or
any other federal or state securities law as to which no opinion need be
expressed, it being understood that no opinion is given therein as to the
enforceability of any particular provision of the Agreement relating to
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remedies after default or as to the availability of any specific or
equitable relief of any kind;
(7) no approval, order, authorization or consent of any public board,
agency or instrumentality of the United States or, to the knowledge of such
counsel, of any state or other jurisdiction or of any other person is
necessary in connection with the sale of Shares by Nashua or the issue or
sale of the Shares by the Company pursuant to this Agreement and the
Pricing Agreement (other than under the 1933 Act, applicable blue sky laws
and the rules of the NASD) or the consummation by the Company or Nashua of
any other transactions contemplated hereby or thereby, except such as have
been obtained;
(8) the statements in the Registration Statement and the Prospectus
under the caption "Business--Intellectual Property and Proprietary Rights,"
to such counsel's knowledge, are accurate summaries in all material
respects of the matters set forth therein; and such counsel is not aware of
any legal, governmental or administrative agency proceedings pending
relating to any Trade Rights of the Company, and to such counsel's
knowledge, no such proceedings are threatened or contemplated by such
agencies or others;
(9) to such counsel's knowledge, no person has the right, contractual
or otherwise, to cause the Company to register pursuant to the 1933 Act any
shares of capital stock of the Company upon the issue and sale of the
Shares to be sold by the Company to the Underwriters pursuant to this
Agreement;
(10) the Company is not an "investment company" or a person
"controlled by" an "investment company" within the meaning of the
Investment Company Act;
(11) to such counsel's knowledge, all sales of the Company's capital
stock prior to the date hereof were at all relevant times exempt from the
registration requirements of the 1933 Act;
(12) Nashua has full corporate right, power and authority to enter
into this Agreement and the Pricing Agreement and to sell, transfer and
deliver the Shares to be sold on the First Closing Date or the Second
Closing Date, as the case may be, by Nashua hereunder; upon delivery of
certificates registered in the name of the Underwriters of such Shares to
be sold by Nashua, each Underwriter that is a "bona fide purchaser" (as
defined in Section 8-302 of the Massachusetts Uniform Commercial Code) will
acquire valid marketable title to such Shares, free of any adverse claim,
liens, encumbrances, security interests, rights of others or any
restriction on transfer imposed on such Shares by Nashua or the Company;
and
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(13) the execution and performance of this Agreement and the Pricing
Agreement, the issue and sale of the Shares, and the consummation by the
Company and Nashua of the transactions contemplated herein and therein,
will not contravene, conflict with any of the provisions of, or result in a
breach or default under, any of the terms or provisions of any agreement,
franchise, license, indenture, mortgage, deed of trust, note agreement or
other agreement or instrument of the Company, Nashua or its subsidiaries or
by which the property of any of them is bound known to such counsel; nor
will such actions violate any of the provisions of the charter or bylaws of
the Company, Nashua or its subsidiaries or, so far as is known to such
counsel, violate any statute, order, rule or regulation of any court or
regulatory or governmental body having jurisdiction over the Company,
Nashua or its subsidiaries.
In rendering such opinion, such counsel may rely upon the opinions of
other competent counsel and, as to factual matters, on certificates of
officers of the Company and Nashua and of state officials, in which case
their opinion is to state that they are so doing and copies of such
opinions or certificates are to be attached to the opinion.
In addition, such counsel shall state that such counsel have
participated in certain conferences with officers and other representatives
of the Company and Nashua, representatives of the Representative and
representatives of the independent accountants of the Company, at which
conferences the contents of the Registration Statement and Prospectus and
related matters were discussed and, although such counsel are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectus, on the basis of the foregoing, no facts have come to their
attention that have caused them to believe that the Registration Statement
(including the information deemed to be part of the Registration Statement
at the time of effectiveness pursuant to Rule 430A(b), if applicable) as
amended or supplemented (except for the financial statements and notes
thereto, the financial statement schedules and other statistical or
financial data included therein as to which such counsel need express no
belief), as of its effective date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that,
as of its date, the Prospectus or any amendment or supplement thereto,
(except for the financial statements and notes thereto, the financial
statement schedules and other statistical or financial data included
therein as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made or that, as of the First Closing
Date or the Second Closing Date, as the case may be, the Prospectus or any
further amendment or supplement thereto made by the Company prior to the
First Closing Date or the Second Closing Date, as the
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case may be, (except for the financial statements and notes thereto, the
financial statement schedules and other statistical or financial data
included therein to which such counsel need express no belief) contained an
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and such counsel do not know of
any legal or governmental proceedings pending or threatened required to be
described in the Prospectus which are not described as required, nor of any
contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required.
(ii) Such opinion or opinions of Sidley & Austin, counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, with respect to the incorporation of the Company, the validity of
the Shares to be sold by the Company, the form of the Registration Statement and
the Prospectus and other related matters as you may reasonably require, and the
Company shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they may request for the purpose of
enabling them to pass upon such matters.
(iii) A certificate of the chief executive officer and the chief financial
officer of the Company, dated the First Closing Date or the Second Closing Date,
as the case may be, to the effect that:
(1) the representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such Closing Date; and
(2) the Commission has not issued an order preventing or suspending
the use of the Prospectus or any preliminary prospectus filed as a part of
the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been issued;
and, to the best knowledge of the respective signers, no proceedings for
that purpose have been instituted or are pending or contemplated under the
1933 Act.
The delivery of the certificate provided for in this subparagraph shall be
and constitute a representation and warranty of the Company as to the facts
required in the immediately foregoing clauses (1) and (2) of this subparagraph
to be set forth in said certificate.
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(iv) A certificate of an executive officer of Nashua dated the First
Closing Date or the Second Closing Date, as the case may be, to the effect
that the representations and warranties of Nashua set forth in Sections 2
and 3 of this Agreement are true and correct as of such date and Nashua has
complied with all the agreements and satisfied all the conditions on the
part of Nashua to be performed or satisfied at or prior to such date. The
delivery of the certificate provided for in this subparagraph shall be and
constitute a representation and warranty of Nashua as to the facts required
in the immediately preceding sentence to be set forth in said certificate.
(v) Such further certificates and documents as you may reasonably
request.
(g) At the time the Pricing Agreement is executed and also on the First
Closing Date or the Second Closing Date, as the case may be, there shall be
delivered to you a letter addressed to you, as the Representative of the
Underwriters, from Price Waterhouse L.L.P., independent accountants, the first
one to be dated the date of the Pricing Agreement, the second one to be dated
the First Closing Date and the third one (in the event of a second closing) to
be dated the Second Closing Date, to the effect set forth in Schedule B. There
shall not have been any change or decrease specified in the letters referred to
in this subparagraph which makes it impractical or inadvisable in the judgment
of the Representative to proceed with the public offering or purchase of the
Shares as contemplated hereby.
(h) At the time the Pricing Agreement is executed, there shall be delivered
to you a letter from each of the Company's officers and directors, in which each
such person agrees for a period of 180 days after the date of the Prospectus,
without the prior written consent of the Representative, not to (1) offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
Common Stock, or any securities convertible or exchangeable into, or exercisable
for, any Common Stock, or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any such Common Stock
(except for bona fide gifts to donees who agree to be bound by the restrictions
of this paragraph (h)) or (2) announce an intent to offer or sell any such
Common Stock or securities, or exercise any registration rights with respect to
any such Common Stock or securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Sidley & Austin, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and Nashua without
liability on the part of any Underwriter or the Company or Nashua, except for
the expenses to be paid or reimbursed by the Company and Nashua pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11 hereof.
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SECTION 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company or
Nashua to perform any agreement herein or to comply with any provision hereof
(unless such failure to satisfy such condition or to comply with any provision
hereof is due to the default or omission of any Underwriter), the Company and
Nashua agree, jointly and severally, to reimburse you and the other Underwriters
upon demand for all out-of-pocket expenses (including the fees and expenses of
Sidley & Austin) that shall have been incurred by you and them in connection
with the proposed purchase and the sale of the Shares. Any such termination
shall be without liability of any party to any other party except that the
provisions of this Section, Section 7 and Section 11 shall at all times be
effective and shall continue to apply.
SECTION 10. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the Company and
Nashua will use your and their best efforts to cause the Registration Statement
to become effective, if it has not yet become effective, and to prevent the
issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 11. INDEMNIFICATION.
(a) The Company and Nashua, jointly and severally, agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the 1933 Act or the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the 1933 Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise (including in settlement of any litigation if such
settlement is effected with the written consent of the Company and/or Nashua, as
the case may be), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A, if applicable, any
preliminary prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse, as incurred, each
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that neither the Company nor Nashua will be liable in
any such case to the extent that (i) any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representatives regarding
the Underwriters and specifically for use therein or (ii) if such statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus and (1) any such loss,
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claim, damage or liability suffered or incurred by any Underwriter (or any
person who controls any Underwriter) resulted from an action, claim or suit by
any person who purchased Shares which are the subject thereof from such
Underwriter in the offering and (2) such Underwriter failed to deliver or
provide a copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Shares in any case where such delivery is required by the
1933 Act. In addition to their other obligations under this Section 11(a), the
Company and Nashua, jointly and severally, agree that, as an interim measure
during the pendency of any such 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 this Section 11(a), they will
reimburse the Underwriters on a monthly basis for all reasonable legal and 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 and Nashua's obligation to reimburse the Underwriters for such
expenses and the possibility that such payment might later be held to have been
improper by a court of competent jurisdiction. This indemnity agreement will be
in addition to any liability which the Company and Nashua may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, and Nashua and each person, if any, who controls the Company within
the meaning of the 1933 Act or the Exchange Act, against any losses, claims,
damages or liabilities to which the Company, or any such director, officer,
Nashua or controlling person may become subject under the 1933 Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement relates the information furnished to the Company by and on behalf of
the Underwriters for use in the Registration Statement as set forth in Section 4
of this Agreement; and will reimburse, as incurred, any legal or other expenses
reasonably incurred by the Company, or any such director, officer, Nashua or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. In addition to their other obligations under
this Section 11(b), the Underwriters agree that, as an interim measure during
the pendency of any such 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 this Section 11(b), they will
reimburse the Company and Nashua on a monthly basis for all reasonable legal and
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 Nashua for such
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expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, or the indemnified and indemnifying parties
may have conflicting interests which would make it inappropriate for the same
counsel to represent both of them, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defense and otherwise
to participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defense in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representative in the case of paragraph (a),
representing all indemnified parties not having different or additional defenses
or potential conflicting interest among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party (which consent shall
not be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability arising out of such proceeding. It is
agreed that any controversy arising out of the operation of the interim
reimbursement arrangements set forth in Section 11(a) or (b) hereof, including
the amount of any requested reimbursement payments, the method of determining
such amounts and the basis on which such amounts shall be apportioned among the
indemnifying parties, shall be settled by arbitration conducted pursuant to the
Code of Arbitration Procedure of the National Association
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of Securities Dealers, Inc. Any such arbitration must be commenced by service of
a written demand for arbitration or a written notice of intention, 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. Any such arbitration will be limited to the operation of the interim
reimbursement provisions contained in Section 11(a) or (b) hereof and will not
resolve the ultimate propriety or enforceability of the obligation to indemnify
for expenses that are created by the provisions of such Section 11(a) or (b)
hereof. No indemnifying party shall be liable for the expenses of any settlement
effected without its prior consent, which consent shall not be unreasonably
withheld.
(d) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraph (a) or (b) of this Section 11 in respect of
any losses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, Nashua
and the Underwriters from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, Nashua and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company, Nashua and the Underwriters shall be deemed to be in the same
proportion, in the case of the Company and Nashua, as the total price paid to
the Company and Nashua for the Shares by the Underwriters (net of underwriting
discount but before deducting expenses), and, in the case of the Underwriters,
as the underwriting discount received by them bears to the total of such amounts
paid to the Company and Nashua and received by the Underwriters as underwriting
discount, in each case as contemplated by the Prospectus. The relative fault of
the Company, Nashua and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or Nashua, on the one hand, or by the
Underwriters as set forth in Section 4 hereof, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company, Nashua and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section were determined by pro
rata allocation, even if the Underwriters were considered as one person, or by
any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Shares
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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. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section are several in
proportion to their respective underwriting commitments and not joint.
(e) The provisions of this Section shall survive any termination of this
Agreement.
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to the
agreement and obligation of the Company and Nashua to sell and deliver the
Shares hereunder, and of each Underwriter to purchase the Shares hereunder,
that, except as hereinafter in this paragraph provided, each of the Underwriters
shall purchase and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representative of all such Shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Shares hereunder on the First Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representative may make arrangements satisfactory to the Company and
Nashua for the purchase of such Shares by other persons, including any of the
Underwriters, but if no such arrangements are made by such date the
nondefaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Shares which such defaulting
Underwriters agreed but failed to purchase on such date. If any Underwriter or
Underwriters so default and the aggregate number of Shares with respect to which
such default or defaults occur is more than the above percentage and
arrangements satisfactory to the Representative, the Company and Nashua for the
purchase of such Shares by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter or the Company or Nashua, except for the expenses to
be paid by the Company and Nashua pursuant to Section 7 hereof and except to the
extent provided in Section 11 hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representative or the Company shall have the right to postpone the First Closing
Date for not more than seven business days in order that the necessary changes
in the Registration Statement, Prospectus and any other documents, as well as
any other arrangements, may be effected. As used in this Agreement, the term
"Underwriters" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
SECTION 13. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 14 and as to all other provisions at the
time at which the Pricing Agreement is executed and delivered, unless such a day
is a Saturday, Sunday or holiday
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(and in that event this Agreement shall become effective at such hour on the
business day next succeeding such Saturday, Sunday or holiday); but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company and Nashua or by release of any Shares for sale to the
public. For the purposes of this Section, the Shares shall be deemed to have
been so released upon the release for publication of any newspaper advertisement
relating to the Shares or upon the release by you of telegrams (i) advising
Underwriters that the Shares are released for public offering, or (ii) offering
the Shares for sale to securities dealers, whichever may occur first.
SECTION 14. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or by
you by notice to the Company and Nashua at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company or Nashua to
any Underwriter (except for the expenses to be paid or reimbursed pursuant to
Section 7 hereof and except to the extent provided in Section 11 hereof) or of
any Underwriter to the Company or Nashua.
(b) This Agreement may also be terminated by you prior to the First Closing
Date, and the option referred to in Section 5, if exercised, may be cancelled at
any time prior to the Second Closing Date, if (i) trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall have
been established on such exchange, or (ii) a banking moratorium shall have been
declared by Illinois, New York, or United States authorities, or (iii) there
shall have been an outbreak of major armed hostilities between the United States
and any foreign power which in the opinion of the Representative makes it
impractical or inadvisable to offer or sell the Shares. Any termination pursuant
to this paragraph (b) shall be without liability on the part of any Underwriter
to the Company or Nashua or on the part of the Company or Nashua to any
Underwriter (except for expenses to be paid or reimbursed pursuant to Section 7
hereof and except to the extent provided in Section 11 hereof).
SECTION 15. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of Nashua and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, officers or
directors or any controlling person, or Nashua, as the case may be, and will
survive delivery of and payment for the Shares sold hereunder.
SECTION 16. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o William Blair & Company L.L.C., 222 West Adams Street,
Chicago, Illinois 60606, with a copy to John J. Sabl, Sidley & Austin, One First
National Plaza, Chicago, Illinois 60603; if sent to the Company will be mailed,
delivered or telegraphed and confirmed to the Company at its corporate
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headquarters at 1401 Interstate Drive, Champaign, Illinois 61821-1090, with a
copy to Michael P. O'Brien, Bingham, Dana & Gould LLP, 150 Federal Street,
Boston, Massachusetts 02110; and if sent to Nashua will be mailed, delivered or
telegraphed and confirmed to Nashua at its corporate headquarters at 44 Franklin
Street, P.O. Box 2002, Nashua, New Hampshire 03061-2002.
SECTION 17. SUCCESSORS. This Agreement and the Pricing Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors, personal representatives and assigns, and to the benefit of the
officers and directors and controlling persons referred to in Section 11, and no
other person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 18. REPRESENTATION OF UNDERWRITERS. You will act as the
Representative for the several Underwriters in connection with this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
SECTION 19. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 20. APPLICABLE LAW. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois.
* * * * * *
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, Nashua and the several
Underwriters, including you, all in accordance with its terms.
Very truly yours,
CERION TECHNOLOGIES INC.
By: /s/ David A. Peterson
-------------------------
Chief Executive Officer
NASHUA CORPORATION
By: /s/ Gerald G. Garbacz
-------------------------
CERION HOLDINGS INC.
By: /s/ Gerald G. Garbacz
-------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WILLIAM BLAIR & COMPANY, L.L.C.
Acting as Representative of the
several Underwriters named in
Schedule A.
WILLIAM BLAIR & COMPANY, L.L.C.
By: /s/ Richard M. King
------------------------------
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EXHIBIT A
CERION TECHNOLOGIES INC.
3,840,000 SHARES COMMON STOCK*
PRICING AGREEMENT
-----------------
_______, 1996
WILLIAM BLAIR & COMPANY, L.L.C.
As Representative of the Several
Underwriters
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated , ________ 1996 (the
"Underwriting Agreement") relating to the sale by the Company and Cerion
Holdings Inc., a Delaware corporation and the parent of the Company (the
"Selling Stockholder"), and the purchase by the several Underwriters for whom
William Blair & Company, L.L.C. is acting as the representative (the
"Representative"), of the above Shares. All terms herein shall have the
definitions contained in the Underwriting Agreement except as otherwise defined
herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and Nashua
agree with the Representative as follows:
1. The initial public offering price per share for the Shares shall be
$______.
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $______, being an amount equal to the initial public
offering price set forth above less $_____ per share.
Schedule A is amended as follows:
[If Applicable]
_______________________________
* Plus an option to acquire up to 576,000 additional shares to cover over
allotments.
30
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, Nashua and the several
Underwriters, including you, all in accordance with its terms.
Very truly yours,
CERION TECHNOLOGIES INC.
By:
--------------------------
Chief Executive Officer
NASHUA CORPORATION
By:
--------------------------
CERION HOLDINGS INC.
By:
--------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WILLIAM BLAIR & COMPANY, L.L.C.
Acting as Representative of the
several Underwriters
WILLIAM BLAIR & COMPANY, L.L.C.
By:
------------------------------
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SCHEDULE A
Number of
Firm Shares
to be
Underwriter Purchased
- ----------- ---------
William Blair & Company, L.L.C. .............................. 1,700,000
Alex. Brown & Sons Incorporated .............................. 95,000
Dean Witter Reynolds Inc...................................... 95,000
Dillon, Read & Co. Inc........................................ 95,000
A.G. Edwards & Sons, Inc...................................... 95,000
Goldman, Sachs & Co........................................... 95,000
Hambrecht & Quist LLC......................................... 95,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ........... 95,000
Montgomery Securities......................................... 95,000
Morgan Stanley & Co. Incorporated ............................ 95,000
PaineWebber Incorporated...................................... 95,000
Prudential Securities Incorporated ........................... 95,000
Robertson, Stephens & Company LLC ............................ 95,000
Salomon Brothers Inc.......................................... 95,000
C.L. King & Associates, Inc. ................................. 95,000
George K. Baum & Company...................................... 45,000
Brean Murray, Foster Securities Inc. ......................... 45,000
The Chicago Corporation....................................... 45,000
Dain Bosworth Incorporated.................................... 45,000
First of Michigan Corporation ................................ 45,000
Gabelli & Company, Inc........................................ 45,000
J.J.B. Hilliard, W.L. Lyons, Inc. ............................ 45,000
Howe Barnes Investments, Inc. ................................ 45,000
EVEREN Securities, Inc........................................ 45,000
McDonald & Company Securities, Inc. .......................... 45,000
Mesirow Financial, Inc. ...................................... 45,000
Needham & Company, Inc. ...................................... 45,000
Piper Jaffray Inc............................................. 45,000
Principal Financial Securities, Inc........................... 45,000
Sutro & Co. Incorporated...................................... 45,000
Tucker Anthony Incorporated .................................. 45,000
Van Kasper & Company.......................................... 45,000
Wheat First Butcher Singer.................................... 45,000
---------
Total ............................................ 3,840,000
=========
32
SCHEDULE B
Comfort Letter of Price Waterhouse, L.L.P.
(1) They are independent public accountants with respect to the Company
within the meaning of the 1933 Act.
(2) In their opinion the financial statements and schedules of the Company
included in the Registration Statement and Prospectus and the financial
statements of the Company from which the information presented under the caption
"Selected Financial Data" has been derived which are stated therein to have been
examined by them comply with the applicable accounting requirements of the 1933
Act.
(3) Based upon limited procedures set forth in detail in such letter,
nothing has come to their attention which causes them to believe that (a) the
unaudited financial information of the Company included in the Registration
Statement and Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, or are not presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Registration Statement and Prospectus or (B) at the date of the latest
available balance sheet read by such accountants, or at a subsequent specified
date not more than five days prior to the date of this Agreement (in the case of
the first letter of such accountants), there was any increase in long-term or
short-term (other than normal payments) debt or any decrease in total assets,
net current assets, stockholders's equity or common stock, as compared with
amounts shown on the latest balance sheet included in the Registration Statement
and Prospectus, or (C) for the period from the closing date of the latest income
statement included in the Registration Statement and Prospectus to the closing
date of the latest available income statement read by such accountants there
were any decreases, as compared with the corresponding period of the previous
year and with the period of corresponding length ended the date of the latest
income statement included in the Registration Statement and Prospectus, in the
amounts of net sales, income before income taxes or in the total or per share
amounts of net income, except in all cases set forth in this Paragraph 3 for
changes, increases or decreases which the Registration Statement and Prospectus
disclose have occurred or may occur or which are described in such letter.
(4) Based upon the procedures set forth in Paragraph 3 above and Paragraph
5 below and a reading of the "Selected Financial Data," and the pro forma
financial information contained in the Prospectus and the information contained
under the caption "Management" included in the Registration Statement and
Prospectus, nothing has come to their attention that caused them to believe that
the "Selected Financial Data" and the pro forma financial information included
in the Registration Statement and Prospectus do not comply in all material
respects with the applicable requirements of Regulation S-K under the 1933 Act
and the Exchange Act (e.g. "Selected Financial Data" (Item 301) and
"Supplementary Financial Information" (Item 302)), or that the information set
forth therein is not fairly stated in relation to the financial statements from
33
which it was derived, and nothing has come to their attention that caused them
to believe that the information under the caption "Management" contained in the
Registration Statement and Prospectus does not comply in all material respects
with the applicable requirements of Item 402 ("Executive Compensation") of such
Regulation S-K.
(5) They are unable to and do not express any opinion on the pro forma
financial information contained in the Prospectus or on the pro forma
adjustments applied to the historical amounts included in such information;
however, for purposes of such letter they have: (A) read the pro forma financial
information contained in the Prospectus, (B) made inquiries of certain officials
of the Company who have responsibility for financial and accounting matters
about the basis for their determination of the pro forma adjustments and whether
the pro forma financial information contained in the Prospectus comply in form
in all material respects with the applicable accounting requirements of
Regulation S-X and (C) proved the arithmetic accuracy of the application of the
pro forma adjustments to the historical amounts in the pro forma financial
information contained in the Prospectus. Nothing has come to their attention as
a result of such procedures, however, that caused them to believe that such pro
forma financial information does not comply as to form in all material respects
with the applicable requirements of Article XI of Regulation S-X and that the
pro forma adjustments have not been properly applied to the historical amounts
in the compilation of the pro forma financial information.
(6) In addition to the examination referred to in their opinions and the
limited procedures referred to in Paragraph 3 above, they have carried out
certain specified procedures, not constituting an audit, with respect to certain
amounts, percentages, ratios and financial information that has been derived
from the accounting and financial records of the Company that are subject to
internal accounting controls which are included in the Registration Statement
and Prospectus and which are specified by the Representative, and have found
such amounts, percentages, ratios and financial information to be in agreement
with the relevant accounting and financial records of the Company identified in
such letter.
(7) In the case of the second or third letter of such accountants, they
reaffirm the statements made pursuant to Paragraphs 1 through 6 above, except
that the specified date referred to shall be a date not more than two days prior
to the date of such letter and, if the Company has elected to rely on Rule 430A
under the 1933 Act, to the further effect that they have carried out procedures
as specified in Paragraph 6 with respect to certain amounts, percentages and
financial information specified by the Representative and deemed to be a part of
the Registration Statement pursuant to Rule 430(A)(b) and have found such
amounts, percentages and financial information to be in agreement with the
records specified in Paragraph 6.
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