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EXHIBIT 1
_________ SHARES*
THREE-FIVE SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
, 1999
▇▇▇▇▇▇▇ & Company, Inc.
ING Barings
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Three-Five Systems, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell ________ shares (the "Company Firm Shares") of the
Company's Common Stock, $0.01 par value per share (the "Common Stock"), and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Selling Stockholder") proposes to sell ___________ shares
of Common Stock (the "Selling Stockholder Shares" and, with the Company Firm
Shares, the "Firm Shares"), in each case to you and to the several other
Underwriters named in Schedule I hereto (collectively, the "Underwriters"), for
whom you are acting as representatives (the "Representatives"). The Company has
also agreed to grant to you and the other Underwriters an option (the "Option")
to purchase up to an additional ______ shares of Common Stock, on the terms and
for the purposes set forth in
* Plus an option to purchase up to an additional ____ shares to cover
over-allotments.
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Section 1(b) (the "Option Shares"). The Firm Shares and the Option Shares are
referred to collectively herein as the "Shares."
The Company and the Selling Stockholder confirm as follows their
respective agreements with the Representatives and the several other
Underwriters.
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1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements
of the Company and the Selling Stockholder herein contained and subject to all
the terms and conditions of this Agreement, (i) the Company agrees to issue and
sell the Company Firm Shares to the several Underwriters, (ii) the Selling
Stockholder agrees to sell the Selling Stockholder Shares to the several
Underwriters, and (iii) each of the Underwriters, severally and not jointly,
agrees to purchase from the Company and the Selling Stockholder the aggregate
number of Firm Shares set forth opposite the respective Underwriter's name in
Schedule I hereto, at the purchase price of $____ for each Firm Share. The
percentage of Firm Shares each Underwriter shall purchase from the Company and
the Selling Stockholder shall equal, as nearly as is practicable, the percentage
that such Underwriter is purchasing of all Firm Shares to be sold hereunder.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally and
not jointly, up to ________ Option Shares at the same price per share as the
Underwriters shall pay for the Firm Shares. The Option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this Agreement upon written or telegraphic
notice (the "Option Shares Notice") by the Representatives to the Company no
later than 12:00 noon, New York City time, at least two and no more than five
business days before the date specified for closing in the Option Shares Notice
(the "Option Closing Date"), setting forth the aggregate number of Option Shares
to be purchased and the time and date for such purchase. On the Option Closing
Date, the Company will issue and sell to the Underwriters the number of Option
Shares set forth in the Option Shares Notice, and each Underwriter will purchase
such percentage of the Option Shares as is equal to the percentage of Firm
Shares that such Underwriter is purchasing, as adjusted by the Representatives
in such manner as they deem advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
the Representatives for the accounts of the Underwriters against payment of the
purchase price by certified or official bank checks or by wire transfer payable
in same-day funds to the order of the Company at the office of ▇▇▇▇▇▇▇ &
Company, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New
York City time, on the third (or, if the purchase price set forth in Section
1(b) hereof is determined after 4:30 p.m., Washington D.C. time, the fourth)
business day following the commencement of the offering contemplated by this
Agreement, or at such time on such other date, not later than seven business
days after the date of this Agreement, as may be agreed upon by the Company and
the Representatives (such date is hereinafter referred to as the "Closing
Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
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Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The Company will pay and
save each Underwriter and any subsequent holder of the Shares harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying Federal and state stamp and other transfer taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to such Underwriter of the Shares.
3. Representations and Warranties.
(a) The Company represents, warrants and covenants to each
Underwriter that:
(i) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333- ) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus, including the documents incorporated by reference therein, as
contemplated by Rule 430 or Rule 430A of the Rules and Regulations included at
any time as part of the registration statement. Copies of such registration
statement and amendments and of each related preliminary prospectus have been
delivered to the Representatives. If such registration statement has not become
effective, a further amendment to such registration statement, including a form
of final prospectus, necessary to permit such registration statement to become
effective will be filed promptly by the Company with the Commission. If such
registration statement has become effective, a final prospectus containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Rules and Regulations will be filed promptly by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including all documents
incorporated by reference therein, financial statements and all exhibits and any
information deemed to be included by Rule 430A and includes any registration
statement relating to the offering contemplated by this Agreement and filed
pursuant to Rule 462(b) of the Rules and Regulations. The term "Prospectus"
means the prospectus, including the documents incorporated by reference therein,
as first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus,
including the documents incorporated by reference
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therein, included in the Registration Statement at the Effective Date.
Any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") after
the Effective Date, the date of any preliminary prospectus or the date of the
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
(ii) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission. On the Effective Date, the date
the Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), at all times subsequent to and including the Closing Date and, if
later, the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did and will comply with all applicable
provisions of the Act, the Exchange Act, the rules and regulations under the
Exchange Act (the "Exchange Act Rules and Regulations"), and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act, the Exchange Act, the Exchange Act Rules and
Regulations, and the Rules and Regulations. On the Effective Date and when any
post-effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement, the Prospectus or any such amendment or
supplement did or will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(a)(ii) do not apply
to any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company acknowledges that
the statements set forth under the heading "Underwriting" in the Prospectus
constitute the only information relating to any Underwriter furnished in writing
to the Company by the Representatives specifically for inclusion in the
Registration Statement.
(iii) The documents that are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they became or become effective or were or are
filed with the Commission, as the case may be, complied or will comply in all
material respects with the requirements of the Act or the Exchange Act, as
applicable, and the Rules and Regulations or the Exchange Act Rules and
Regulations, as applicable; and any documents so filed and incorporated by
reference subsequent to the Effective Date shall, when they are filed with the
Commission, comply in all material respects with the requirements of the Act or
the Exchange Act, as applicable, and the Rules and Regulations or the Exchange
Act Rules and Regulations, as applicable.
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(iv) The Company does not own, and at the Closing Date and, if
later, the Option Closing Date, will not own, directly or indirectly, any shares
of stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any corporation, firm, partnership, joint venture,
association or other entity, other than the subsidiaries listed in Exhibit 21 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 (the "Subsidiaries"). The Company and each of its Subsidiaries is, and at
the Closing Date and, if later, the Option Closing Date, will be, a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (except where the failure of any Subsidiary to be
in good standing has not had and will not have a material adverse effect on the
Company or any of its Subsidiaries). The Company and each of its Subsidiaries
has, and at the Closing Date and, if later, the Option Closing Date, will have,
full power and authority to conduct all the activities conducted by it, to own
or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company and each
of its Subsidiaries is, and at the Closing Date and, if later, the Option
Closing Date, will be, duly licensed or qualified to do business and in good
standing as a foreign corporation in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such license or qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not materially and
adversely affect the Company or its business, properties, business prospects,
condition (financial or other) or results of operations. All of the outstanding
shares of capital stock of each Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable, and owned by the Company free and
clear of all claims, liens, charges and encumbrances; there are no securities
outstanding that are convertible into or exercisable or exchangeable for capital
stock of any Subsidiary. The Company is not, and at the Closing Date and, if
later, the Option Closing Date, will not be, engaged in any discussions or a
party to any agreement or understanding, written or oral, regarding the
acquisition of an interest in any corporation, firm, partnership, joint venture,
association or other entity where such discussions, agreements or understandings
would require amendment to the Registration Statement pursuant to applicable
securities laws. Complete and correct copies of the certificate of incorporation
and of the by-laws of the Company and the charter documents of each of its
Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(v) All of the outstanding shares of capital stock of the
Company, including the shares to be sold by the Selling Stockholder, have been
duly authorized, validly issued and are fully paid and nonassessable and were
issued in compliance with all applicable state and federal securities laws; the
Shares to be sold by the Company have been duly authorized and when issued and
paid for as contemplated herein will be validly issued, fully paid and
nonassessable; no preemptive or similar rights exist with respect to any of the
Shares or the issue and sale thereof . The description of the capital stock of
the Company in the Registration Statement and the Prospectus is, and at the
Closing Date and, if later, the Option Closing Date, will be, complete and
accurate in all respects. Except as set forth in the Prospectus, the Company
does not have outstanding, and at the Closing Date and, if later, the Option
Closing Date, will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible into,
or any contracts or commitments to issue or
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sell, any shares of capital stock, or any such warrants, convertible securities
or obligations. No further approval or authority of stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Shares as contemplated herein.
(vi) The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the financial condition of the Company and its consolidated
Subsidiaries as of the respective dates thereof and the results of operations
and cash flows of the Company and its consolidated Subsidiaries for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed in the Prospectus. No other financial
statements or schedules of the Company are required by the Act, the Exchange
Act, the Exchange Act Rules and Regulations or the Rules and Regulations to be
included in the Registration Statement or the Prospectus. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
(the "Accountants"), who have reported on such financial statements and
schedules, are independent accountants with respect to the Company as required
by the Act and the Rules and Regulations. The summary consolidated financial and
statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
financial statements presented therein.
(vii) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Date and, if later, the Option Closing Date, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (A) there has not
been and will not have been any change in the capitalization of the Company
(other than in connection with the exercise of options to purchase the Company's
Common Stock granted pursuant to the Company's stock option plans from the
shares reserved therefor as described in the Registration Statement), or any
material adverse change in the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company or
any of its Subsidiaries, singly or taken as a whole, arising for any reason
whatsoever, (B) neither the Company nor any of its Subsidiaries, singly or taken
as a whole, has incurred nor will any of them incur, except in the ordinary
course of business as described in the Prospectus, any material liabilities or
obligations, direct or contingent, nor has the Company or any of its
Subsidiaries entered into nor will it enter into, except in the ordinary course
of business as described in the Prospectus, any material transactions other than
pursuant to this Agreement and the transactions referred to herein and (C) the
Company has not and will not have paid or declared any dividends or other
distributions of any kind on any class of its capital stock.
(viii) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its business in
a manner that would cause it to become, an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(ix) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or its
Subsidiaries or any of their officers
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in their capacity as such, nor any basis therefor, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding might materially and adversely affect the Company and any of its
Subsidiaries, singly or taken as a whole, or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and any of its Subsidiaries, singly or taken as a whole.
(x) The Company and each Subsidiary has, and at the Closing Date
and, if later, the Option Closing Date, will have, performed all the obligations
required to be performed by it, and is not, and at the Closing Date, and, if
later, the Option Closing Date, will not be, in default, under any contract or
other instrument to which it is a party or by which its property is bound or
affected, which default might materially and adversely affect the Company and
any of its Subsidiaries, singly or taken as a whole, or the business,
properties, business prospects, condition (financial or other) or results of
operations of the Company and any of its Subsidiaries, singly or taken as a
whole. To the best knowledge of the Company, no other party under any contract
or other instrument to which it and any of its Subsidiaries is a party is in
default in any respect thereunder, which default might materially and adversely
affect the Company and any of its Subsidiaries, singly or taken as a whole, or
the business, properties, business prospects, condition (financial or other) or
results of operations of the Company and any of its Subsidiaries, singly or
taken as a whole. Neither the Company nor any of its Subsidiaries is, and at the
Closing Date and, if later, the Option Closing Date, will be, in violation of
any provision of their respective certificates or articles of organization or
by-laws or other organizational documents.
(xi) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
for the consummation by the Company of the transactions on its part contemplated
herein, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares.
(xii) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with the terms hereof
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, or other laws affecting creditors' rights generally or by general
principles of equity and except as rights to indemnity or contribution may be
limited by federal or state securities laws and the public policy underlying
such laws). The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate or articles of
incorporation or by-laws or other organizational documents of the Company or any
of its Subsidiaries, any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement,
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bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their properties is bound or affected, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the business or properties of
the Company or any of its Subsidiaries.
(xiii) The Company or one of its Subsidiaries has good and
marketable title to all properties and assets described in the Prospectus as
owned by them, free and clear of all liens (except for liens for taxes not yet
due and payable as to which appropriate reserves have been established and
reflected on the Company's financial statements), charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not material
to the business of the Company or its Subsidiaries. The Company or its
Subsidiaries have valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by them. The Company or one of its
Subsidiaries owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted, except where the
failure to so own or lease would not materially and adversely affect the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, singly or taken as a
whole.
(xiv) There is no document or contract 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. All such contracts to which the Company or any of its Subsidiaries is
a party have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against and by the Company or such Subsidiary in
accordance with the terms thereof (except as such enforceability may be limited
by applicable bankruptcy, insolvency, or other laws affecting creditors' rights
generally or by general principles of equity and except as rights to indemnity
or contribution may be limited by federal or state securities laws and the
public policy underlying such laws).
(xv) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document required by
Section 4 of this Agreement to be delivered to the Representatives was or will
be, when made, inaccurate, untrue or incorrect.
(xvi) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(xvii) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement, which rights have not been waived by the holder thereof
as of the date hereof.
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(xviii) The Company has filed an application to list the Shares
on the New York Stock Exchange ("NYSE"), and has received notification that the
listing has been approved, subject to notice of issuance of the Shares.
(xix) Except as disclosed in or specifically contemplated by the
Prospectus (A) the Company and its Subsidiaries have sufficient trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as now conducted, (B)
the Company has no knowledge of any infringement by it or any of its
Subsidiaries of trademarks, trade name rights, patent rights, mask work rights,
copyrights, licenses, trade secrets or other similar rights of others, where
such infringement could have a material and adverse effect on the Company, any
of its Subsidiaries or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and any of its
Subsidiaries, singly or taken as a whole, and (C) there is no claim being made
against the Company or any of its Subsidiaries, or to the best of the Company's
knowledge, any employee of the Company or any of its Subsidiaries, regarding
trademark, trade name, patent, mask work, copyright, license, trade secret or
other infringement which could have a material and adverse effect on the
Company, any of its Subsidiaries or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and any of its Subsidiaries, singly or taken as a whole.
(xx) The Company and each of its Subsidiaries have filed all
federal, state, local and foreign income tax returns which have been required to
be filed and has paid all taxes and assessments received by it to the extent
that such taxes or assessments have become due. Neither the Company nor any of
its Subsidiaries have any tax deficiency which has been or, to the best
knowledge of the Company, might be asserted or threatened against it which could
have a material and adverse effect on the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, singly or taken as a whole.
(xxi) The Company or its Subsidiaries owns or possesses all
authorizations, approvals, orders, licenses, registrations, other certificates
and permits of and from all governmental regulatory officials and bodies,
necessary to conduct their respective businesses as contemplated in the
Prospectus, except where the failure to own or possess such authorizations,
approvals, orders, licenses, registrations, other certificates and permits would
not materially and adversely affect the Company, any of its Subsidiaries or the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and any of its Subsidiaries, singly or
taken as a whole. There is no proceeding pending or threatened (or any basis
therefor known to the Company) which may cause any such authorization, approval,
order, license, registration, certificate or permit to be revoked, withdrawn,
cancelled, suspended or not renewed; and the Company and each of its
Subsidiaries is conducting its business in compliance with all laws, rules and
regulations applicable thereto (including, without limitation, all applicable
federal, state and local environmental laws and regulations) except where such
noncompliance would not materially and adversely affect the Company, any of its
Subsidiaries or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and any of its
Subsidiaries, singly or taken as a whole.
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(xxii) The Company and each of its Subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
(xxiii) Neither the Company nor any of its Subsidiaries nor, to
the best of the Company's knowledge, any of its or their respective employees or
agents at any time during the last five years have (A) made any unlawful
contribution to any candidate for foreign office, or failed to disclose fully
any contribution in violation of law, or (B) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(xxiv) The Company and each of its Subsidiaries is in compliance
in all respects with all applicable Environmental Laws except to the extent that
any noncompliance would not materially and adversely affect the Company, any of
its Subsidiaries or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and any of its
Subsidiaries, singly or taken as a whole. Except as set forth in the
Registration Statement and Prospectus, neither the Company nor any of its
Subsidiaries have received any notice or other communication (in writing or
otherwise) that alleges that the Company or any of its Subsidiaries is not in
compliance with any Environmental Law where such noncompliance is required to be
disclosed in the Registration Statement and the Prospectus, and there are no
circumstances that may prevent or interfere with the Company's or any of its
Subsidiaries' compliance with any Environmental Law in the future. For purposes
of this Section 3(a)(xxiv), "Environmental Law" means any federal, state, local
or foreign legal requirement relating to pollution or protection of human health
or the environment.
(b) The Selling Stockholder represents, warrants and covenants to
each Underwriter that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by the Selling Stockholder of this Agreement and
the Power-of-Attorney and Custody Agreement (hereinafter referred to as a
"Custody Agreement") hereinafter referred to, and for the sale and delivery of
the Selling Stockholder Shares to be sold by the Selling Stockholder hereunder,
have been obtained; and the Selling Stockholder has full right, power and
authority to enter into this Agreement and the Custody Agreement, to make the
representations, warranties and agreements hereunder and thereunder, and to
sell, assign, transfer and deliver the Shares to be sold by the Selling
Stockholder hereunder.
(ii) Certificates in negotiable form representing all of the
Selling Stockholder Shares to be sold by the Selling Stockholder have been
placed in custody under the Custody Agreement, in the form heretofore furnished
to you, duly executed and delivered by the Selling Stockholder to the Custodian,
and the Selling Stockholder has duly executed and delivered a power-of-attorney,
in the form heretofore furnished to you and included in the Custody Agreement
(the "Power-of-Attorney"), appointing ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇▇, and each of them, as the Selling Stockholder's attorney-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement on
behalf of the Selling Stockholder, to determine (subject to the provisions of
the Custody Agreement) the purchase price to be paid by the Underwriters to the
Selling Stockholder as provided in Section 2 hereof, to authorize the delivery
of the Selling Stockholder Shares to be sold by the Selling Stockholder
hereunder and otherwise to act on behalf of the Selling Stockholder in
connection with the transactions contemplated by this Agreement and the Custody
Agreement.
(iii) The Selling Stockholder specifically agrees that the
Selling Stockholder Shares represented by the certificates held in custody for
the Selling Stockholder under the Custody Agreement are for the benefit of and
coupled with and subject to the interests of the Underwriters, the Custodian,
the Attorneys-in-Fact and the Company, that the arrangements made by the Selling
Stockholder for such custody, and the appointment by the Selling Stockholder of
the Attorneys-in-Fact by the Power-of-Attorney, are to that extent irrevocable,
and that the obligations of the Selling Stockholder hereunder shall not be
terminated by operation of law, whether by the death, disability, incapacity,
liquidation or dissolution of any Selling Stockholder or by the occurrence of
any other event. If the Selling Stockholder or any executor or trustee for the
Selling Stockholder should die or become incapacitated (or if any Selling
Stockholder that is an estate or trust should be terminated, or if a Selling
Stockholder that is a partnership or corporation should be dissolved or if any
other such event should occur) before the delivery of the Selling Stockholder
Shares hereunder, certificates representing the Selling Stockholder Shares shall
be delivered by or on behalf of the Selling Stockholder in accordance with the
terms and conditions of this Agreement and of the Custody Agreement, and actions
taken by the Attorneys-in-Fact pursuant to the Powers-of-Attorney shall be as
valid as if such death or incapacity (or termination, dissolution or other
event) had not occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such death,
incapacity, termination, dissolution or other event.
(iv) This Agreement and the Custody Agreement have each been
duly authorized, executed and delivered by the Selling Stockholder and each such
document constitutes a valid and binding obligation of the Selling Stockholder,
enforceable in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, or other laws affecting creditors'
rights generally or by general principles of equity and except as rights to
indemnity or contribution may be limited by federal or state securities laws and
the public policy underlying such laws).
(v) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the sale of the Selling Stockholder Shares by the Selling
Stockholder or the consummation by the Selling Stockholder of the transactions
on his part contemplated by this Agreement and the Custody Agreement, except
such as have been obtained under the Act or the Rules and Regulations and such
as may be required under state securities or Blue Sky laws or the by-laws and
rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Selling Stockholder Shares.
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(vi) The sale of the Selling Stockholder Shares and the
performance by the Selling Stockholder of this Agreement and the Custody
Agreement and the consummation of the transactions contemplated hereby and
thereby will not result in the creation or imposition of any lien, charge or
encumbrance upon any of the Shares pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any voting trust agreement, contract or other
agreement or instrument, relating directly or indirectly to any of the Shares,
to which the Selling Stockholder is a party, or violate or conflict with any
judgment , ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the Selling Stockholder (or, if
the Selling Stockholder is a corporation, partnership or other entity, the
organizational documents of the Selling Stockholder).
(vii) The Selling Stockholder has, and at the Closing Date will
have, good and marketable title to the Selling Stockholder Shares to be sold by
the Selling Stockholder hereunder, free and clear of all liens, encumbrances,
equities or claims whatsoever; and, upon delivery of the Selling Stockholder
Shares and payment therefor pursuant hereto, good and valid title to the Selling
Stockholder Shares, free and clear of all liens, encumbrances, equities or
claims whatsoever, will be delivered to the Underwriters.
(viii) On the Closing Date all stock transfer or other taxes
(other than income taxes) that are required to be paid in connection with the
sale and transfer of the Selling Stockholder Shares to the several Underwriters
hereunder will have been fully paid or provided for by the Selling Stockholder
and all laws imposing such taxes will have been fully complied with.
(ix) Other than as permitted by the Act and the Rules and
Regulations, the Selling Stockholder has not distributed and will not distribute
any preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares. The Selling Stockholder has
not taken and will not at any time take, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result in, or which
will constitute, stabilization of the price of shares of Common Stock to
facilitate the sale or resale of any of the Shares.
(x) All information with respect to the Selling Stockholder
contained in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto complied or will comply in all
material respects with all applicable requirements of the Act and the Rules and
Regulations and does not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(xi) The Selling Stockholder has no knowledge of any material
fact or condition not set forth in the Registration Statement or the Prospectus
that has adversely affected, or may adversely affect, the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company or any of its Subsidiaries, and the sale of the Selling
Stockholder Shares is not prompted by any such knowledge.
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(xii) The Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 3(a) hereof
are not true and correct.
(xiii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein contemplated,
the Selling Stockholder agrees to deliver to you prior to or at the Closing Date
a properly completed and executed United States Treasury Department Form W 9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
4. Agreements of the Company and the Selling Stockholder.
Each of the Company and the Selling Stockholder respectively covenants
and agrees with the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Representatives promptly, and
will confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening of any event
during the period mentioned in the second sentence of Section 4(e) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any representative or attorney
of the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations, the
Company will comply with the provisions of and make all requisite filings with
the Commission pursuant to said Rule 430A and notify the Representatives
promptly of all such filings.
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(c) The Company will furnish to each Representative, without charge,
one signed copy of each of the Registration Statement and of any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto and will furnish to the Representatives, without charge, for
transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies of such
supplement or amendment to the Prospectus as the Representatives may reasonably
request. The Company will not file any document under the Exchange Act or the
Exchange Act Rules and Regulations before the termination of the offering of the
Shares by the Underwriters, if such document would be deemed to be incorporated
by reference into the Prospectus, that is not approved by the Representatives
after reasonable notice thereof.
(f) Prior to any public offering of the Shares, the Company will
cooperate with the Representatives and counsel to the Underwriters in connection
with the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Representatives may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject.
(g) The Company will, so long as required under the Rules and
Regulations, furnish to its stockholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flow of the Company and its consolidated
Subsidiaries, if any, certified by independent public accountants) and, as soon
as practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of the
Company and its Subsidiaries, if any, for such quarter in reasonable detail.
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(h) During the period of five years commencing on the Effective
Date, the Company will furnish to the Representatives and each other Underwriter
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(i) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(j) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay or
reimburse (if paid by the Representatives) all costs and expenses incident to
the performance of the obligations of the Company under this Agreement and in
connection with the transactions contemplated hereby, including but not limited
to costs and expenses of or relating to (i) the preparation, printing and filing
of the Registration Statement and exhibits to it, each preliminary prospectus,
Prospectus and any amendment or supplement to the Registration Statement or
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement Among Underwriters,
any Selected Dealer Agreements, any Underwriters' Questionnaires, any
Underwriters' Powers of Attorney, and any invitation letters to prospective
Underwriters, (iv) furnishing (including costs of shipping and mailing) such
copies of the Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold, (v) the listing of the Shares on the
NYSE, (vi) any filings required to be made by the Underwriters with the NASD,
and the fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (vii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (viii) fees, disbursements and other charges of counsel to the
Company (but not those of counsel for the Underwriters, except as otherwise
provided herein) and (ix) the transfer agent for the Shares. The Underwriters
may deem the Company to be the primary obligor with respect to all costs, fees
and expenses to be paid by the Company and by the Selling Stockholder. The
Selling Stockholder will pay (directly or by reimbursement) all fees and
expenses incident to the performance of such Selling Stockholder's obligations
under this Agreement that are not otherwise specifically provided for herein,
including but not limited to any fees and expenses of counsel for such Selling
Stockholder, any fees and expenses of the Attorneys-in-Fact and the Custodian,
and all expenses and taxes incident to the sale and delivery of the Shares to be
sold by such Selling Stockholder to the Underwriters hereunder.
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(k) The Company will not at any time, directly or indirectly, take
any action designed or which might reasonably be expected to cause or result in,
or which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
(m) During the period beginning from the date hereof and continuing
to and including the date 90 days after the date of the Prospectus, without the
prior written consent of ▇▇▇▇▇▇▇ & Company, Inc., the Company will not offer,
sell, contract to sell, grant options to purchase or otherwise dispose of any
Common Stock or other equity securities of the Company or any other securities
convertible into or exchangeable with its Common Stock or other equity
securities (other than pursuant to employee stock option plans or the conversion
of convertible securities or the exercise of warrants outstanding on the date of
this Agreement).
(n) During the period of 90 days after the date of the Prospectus,
the Company will not file with the Commission or cause to become effective any
registration statement relating to any securities of the Company without the
prior written consent of ▇▇▇▇▇▇▇ & Company, Inc.
(o) The Selling Stockholder will, and the Company will cause each of
its executive officers and directors to, enter into lock-up agreements with the
Representatives to the effect that they will not, without the prior written
consent of ▇▇▇▇▇▇▇ & Company, Inc., sell, contract to sell or otherwise dispose
of any shares of Common Stock or rights to acquire such shares, according to the
form of Lock-up Agreement set forth in Schedule II hereto.
5. Conditions of the Obligations of the Underwriters. The obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings required
by Rule 424 and Rule 430A of the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration
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Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to the Representatives and the Representatives do not object
thereto in good faith, and the Representatives shall have received certificates,
dated the Closing Date and, if later, the Option Closing Date and signed by the
Chief Executive Officer and the Chief Financial Officer of the Company (who may,
as to proceedings threatened, rely upon the best of their information and
belief), to the effect of clauses (i), (ii) and (iii) of this paragraph.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company and any of its Subsidiaries, singly or taken as a
whole, whether or not arising from transactions in the ordinary course of
business, in each case other than as described in or contemplated by the
Registration Statement and the Prospectus, and (ii) the Company shall not have
sustained any material loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not described in the Registration Statement
and the Prospectus, if in the judgment of the Representatives any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares by the Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company, any of its
Subsidiaries, or any of their officers or directors in their capacities as such,
before or by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would, in
the judgment of the Representatives, materially and adversely affect the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, singly or taken as a
whole.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Shares, at the Option Closing Date,
and all covenants and agreements contained herein to be performed on the part of
the Company and all conditions contained herein to be fulfilled or complied with
by the Company at or prior to the Closing Date and, with respect to the Option
Shares, at or prior to the Option Closing Date, shall have been duly performed,
fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and to counsel for the
Underwriters from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A., counsel to the Company, with respect
to the following matters:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation; has
full corporate power and
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authority to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and Prospectus; and is duly licensed or qualified to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such license or qualification necessary and
where the failure to be licensed or qualified would have a material and adverse
effect on the business or financial condition of the Company or such Subsidiary.
(ii) All of the outstanding shares of capital stock of the
Company (including the Selling Stockholder Shares) have been duly authorized,
validly issued and are fully paid and nonassessable, to such counsel's
knowledge, were issued pursuant to the registration and qualification
requirements of federal and applicable state securities laws or exemptions
therefrom, and were not issued in violation of or subject to any preemptive or,
to such counsel's knowledge, similar rights;
(iii) The specimen certificate evidencing the Common Stock filed
as an exhibit to the Registration Statement is in due and proper form under
Delaware law, the Shares have been duly authorized and, when issued and paid for
as contemplated by this Agreement, will be validly issued, fully paid and
nonassessable; and no preemptive or similar rights exist with respect to any of
the Shares or the issue and sale thereof.
(iv) To such counsel's knowledge, all of the outstanding shares
of capital stock of each Subsidiary are owned by the Company free and clear of
all claims, liens, charges and encumbrances and there are no securities
outstanding that are convertible into or exercisable or exchangeable for capital
stock of any Subsidiary.
(v) The authorized and outstanding capital stock of the Company
is as set forth in the Registration Statement and the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement or pursuant to reservations,
agreements, employee benefit plans or the exercise of convertible securities,
options or warrants referred to in the Prospectus). To such counsel's knowledge,
except as disclosed in or specifically contemplated by the Prospectus, there are
no outstanding options, warrants of other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital stock
of the Company or any security convertible into or exchangeable or exercisable
for capital stock of the Company. The description of the capital stock of the
Company in the Registration Statement and the Prospectus conforms in all
material respects to the terms thereof.
(vi) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company or any of
its Subsidiaries is a party or to which any of their respective properties is
subject that are required to be described in the Registration Statement or the
Prospectus but are not so described.
(vii) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
for the consummation by
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the Company of the transactions on its part contemplated under this Agreement,
except such as have been obtained or made under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares.
(viii) The Company has the corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The execution and delivery of this Agreement, the compliance
by the Company with all of the terms hereof and the consummation of the
transactions contemplated hereby does not contravene any provision of applicable
law or the Certificate of Incorporation or By-Laws of the Company or the charter
documents of any of its Subsidiaries, and to the best of such counsel's
knowledge will not result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company or any of its Subsidiaries
pursuant to the terms and provisions of, result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or give any party
a right to terminate any of its obligations under, or result in the acceleration
of any obligation under, any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to such
counsel to which the Company or any of its Subsidiaries is a party or by which
the Company, any of its Subsidiaries, or any of their respective properties is
bound or affected, or violate or conflict with (A) any judgment, ruling, decree
or order known to such counsel or (B) any statute, rule or regulation of any
court or other governmental agency or body, applicable to the business or
properties of the Company or any of its Subsidiaries.
(x) To such counsel's knowledge, there is no document or contract
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 or incorporated by reference as required, and each
description of such contracts and documents that is contained in the
Registration Statement and Prospectus fairly presents in all material respects
the information required under the Act and the Rules and Regulations.
(xi) The statements (A) in the Prospectus under the captions
"Risk Factors -- Sales of large numbers of shares could adversely affect the
price of our common stock", "Risk Factors -- Change in control provisions may
adversely affect existing stockholders" and "Business -- Intellectual Property";
(B) in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1998 under the captions "Special Considerations -- Rights to
Acquire Shares", "Special Considerations -- Change in Control Provisions",
"Special Considerations -- Repurchases of Common Stock" and "Special
Considerations -- Shares Eligible for Future Sale; Potential Depressive Effect
on Stock Price"; (C) in the definitive proxy statement on Schedule 14A filed
March 19, 1999 under the captions "Executive Compensation -- Employment
Agreements" and "Executive Compensation -- Stock Option Plans and Directors'
Stock Plan"; and (D) in the Form 8-A (Registration No. 1-4373) declared
effective by the SEC on December 28, 1994 under the caption "Description of
Registrant's Securities to be Registered", insofar as the statements constitute
a summary of documents referred to therein or
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matters of law, are accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to such documents and
matters (provided, however, that such counsel may rely on representations of the
Company with respect to the factual matters contained in such statements, and
provided further that such counsel shall state that nothing has come to the
attention of such counsel which leads them to believe that such representations
are not true and correct in all material respects).
(xii) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(xiii) The Shares have been duly authorized for listing on the
NYSE subject to notice of issuance.
(xiv) To such counsel's knowledge, no holder of securities of the
Company has rights, which have not been waived or satisfied, to require the
Company to register with the Commission shares of Common Stock or other
securities, as part of the offering contemplated hereby.
(xv) The Registration Statement has become effective under the
Act, and to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or is pending, threatened or contemplated.
(xvi) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirement of the Act and the Rules and
Regulations (other than the financial statements, schedules and other financial
data contained or incorporated by reference in the Registration Statement or the
Prospectus, as to which such counsel need express no opinion).
(xvii) The documents incorporated by reference in the Prospectus
(other than the financial statements, schedules and other financial data
contained therein, as to which such counsel need express no opinion), when they
were filed with the Commission, complied as to form in all material respects
with the requirements of the Exchange Act and the Exchange Act Rules and
Regulations.
(xviii) This Agreement and the Custody Agreement have each been
duly executed and delivered by or on behalf of the Selling Stockholder; the
Custody Agreement constitutes a valid and binding agreement of the Selling
Stockholder enforceable in accordance with its terms, except as enforceability
may be limited by the application of bankruptcy, insolvency or other laws
affecting creditors' rights generally or by general principles of equity; the
Attorneys-in-Fact and the Custodian have been duly authorized by the Selling
Stockholder to deliver the Selling Stockholder Shares on behalf of the Selling
Stockholder in accordance with the terms of this Agreement; and the sale of the
Selling Stockholder Shares, the performance by the Selling Stockholder of this
Agreement and the Custody Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in a breach or violation of any
of
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the terms or provisions of, or constitute a default under, or give any party a
right to terminate any of its obligations under, or result in the acceleration
of any obligation under any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to such
counsel to which the Selling Stockholder is a party or by which the Selling
Stockholder or any of his properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the Selling
Stockholder.
(xix) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
for the consummation by the Selling Stockholder of the transactions on his part
contemplated by this Agreement, except such as have been obtained or made under
the Act or the Rules and Regulations and such as may be required under state
securities or Blue Sky laws or the by-laws and rules of the NASD in connection
with the purchase and distribution by the Underwriters of the Shares.
(xx) The Selling Stockholder has full legal right, power and
authority to enter into this Agreement and the Custody Agreement and to sell,
assign, transfer and deliver the Selling Stockholder Shares hereunder and, upon
payment for the Selling Stockholder Shares and assuming that the Underwriters
are purchasing such Shares in good faith and without notice of any other adverse
claim within the meaning of the Uniform Commercial Code, the Underwriters will
have acquired all rights of the Selling Stockholder in the Selling Stockholder
Shares free of any adverse claim, any lien in favor of the Company and any
restrictions on transfer imposed by the Company.
In rendering such opinion, such counsel may rely as to matters of local
law on opinions of counsel satisfactory in form and substance to the
Representatives and to counsel for the Underwriters, provided that the opinion
of counsel to the Company shall state that such counsel are doing so, that they
have no reason to believe that they and the Underwriters are not entitled to
rely on such opinions and that copies of such opinions are to be attached to the
opinion.
In rendering the opinions in subparagraphs (xvii) through (xix) above,
such counsel may rely upon opinions of other counsel retained by the Selling
Stockholder reasonably acceptable to the Representatives and as to matters of
fact on certificates of the Selling Stockholder, officers of the Company and
governmental officials and the representations and warranties of the Company and
the Selling Stockholder contained in this Agreement and the Custody Agreement,
provided that the opinion of counsel to the Company and Selling Stockholder
shall state that such counsel are doing so, that they have no reason to believe
that they and the Underwriters are not entitled to rely on such opinions or
certificates and that copies of such opinions or certificates are to be attached
to the opinion.
Such counsel shall also state that such counsel has participated in the
preparation of the Registration Statement and Prospectus and, without
independent check or verification, such counsel has no knowledge of any facts
that would cause them to believe that, as of the Effective Date the Registration
Statement, or any amendment or supplement thereto, (other than the financial
statements, schedules and other financial data contained or incorporated by
reference
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therein, as to which such counsel need express no opinion) 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 the Prospectus, or any amendment or supplement thereto, as of its date and
the Closing Date and, if later, the Option Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than the financial statements,
schedules and other financial data contained or incorporated by reference
therein, as to which such counsel need express no opinion).
(g) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and to counsel for the
Underwriters from Wragge & Co, counsel to Three-Five Systems Limited, that
Three-Five Systems Limited is a private company limited by shares duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation; has full corporate power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Registration Statement and
Prospectus; and is duly licensed or qualified to do business and is in good
standing as a foreign company in all jurisdictions in which the nature of the
activities conducted by it or the character of the assets owned or leased by it
makes such license or qualification necessary and where the failure to be
licensed or qualified would have a material and adverse effect on the business
or financial condition of the Company and its Subsidiaries, taken as a whole;
and that all of the outstanding shares of capital stock of Three-Five Systems
Limited have been duly authorized and validly issued and are fully paid and
nonassessable.
(h) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and to counsel for the
Underwriters from SyCip ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to Three-Five
Systems Pacific, Inc., that Three-Five Systems Pacific, Inc. is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of formation; has full corporate power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Registration Statement and
Prospectus; and is duly licensed or qualified to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such license or qualification necessary and where the failure to be
licensed or qualified would have a material and adverse effect on the business
or financial condition of the Company and its Subsidiaries, taken as a whole;
and that all of the outstanding shares of capital stock of Three-Five Systems
Pacific, Inc. have been duly authorized and validly issued and are fully paid
and nonassessable.
(i) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and to counsel for the
Underwriters from ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to Three-Five Systems
(Beijing), Ltd., that Three-Five Systems (Beijing), Ltd. is a limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of formation; has full corporate power and authority to conduct
all the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and Prospectus; and is duly licensed or qualified to do business and
is in good standing as a foreign company in all jurisdictions in which the
nature of the activities conducted by it or the character of the assets owned or
leased by it makes such license or qualification necessary and where the failure
to be licensed or qualified would have a material and adverse effect on the
business or financial condition of the Company and its Subsidiaries, taken as a
whole; and that all of the outstanding shares of capital stock of Three-Five
Systems (Beijing), Ltd. have been duly authorized and validly issued and are
fully paid and nonassessable.
(j) The Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP,
counsel to the Underwriters, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to the Representatives.
(k) Concurrently with the execution and delivery of this Agreement, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company and its Subsidiaries as required by the
Act, the Exchange Act and the Rules and Regulations and with respect to certain
financial and other statistical and numerical information contained or
incorporated by reference in the Registration Statement. At the Closing Date
and, as to the Option Shares, the Option Closing Date, the Accountants shall
have furnished to the Representatives a letter, dated the date of its delivery,
which shall confirm, on the basis of a review in accordance with the procedures
set forth in the letter from the Accountants, that nothing has come to their
attention during the period from the date of the letter referred to in the prior
sentence to a date (specified in the letter) not more than five days prior to
the Closing Date and the Option Closing Date, as the case may be, which would
require any change in their letter dated the date hereof if it were required to
be dated and delivered at the Closing Date and the Option Closing Date.
(l) Concurrently with the execution and delivery of this Agreement and
at the Closing Date and, as to the Option Shares, the Option Closing Date, there
shall be furnished to the Representatives a certificate, dated the date of its
delivery, signed by each of the Chief Executive Officer and the Chief Financial
Officer of the Company, in form and substance satisfactory to the
Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents filed under
the Exchange Act and deemed to be incorporated by reference into the Prospectus)
and (A) as of the date of such certificate, such documents are true and correct
in all material respects and do not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not untrue
or misleading and (B) in the case of the certificate delivered at the Closing
Date and the Option Closing Date, since the Effective Date no event has occurred
as a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein not untrue or misleading.
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(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the time
such certificate is delivered, true and correct.
(iii) Each of the covenants required to be performed by the Company
herein on or prior to the date of such certificate has been duly, timely and
fully performed and each condition herein required to be satisfied or fulfilled
on or prior to the date of such certificate has been duly, timely and fully
satisfied or fulfilled.
(m) Concurrently with the execution and delivery of this Agreement and
at the Closing Date and, as to the Option Shares, the Option Closing Date, there
shall be furnished to the Representatives a certificate, dated the date of its
delivery, signed by the Selling Stockholder (or the Attorneys-in-Fact on his
behalf), in form and substance satisfactory to the Representatives, to the
effect that the representations and warranties of the Selling Stockholder
contained herein are true and correct in all material respects on and as of the
date of such certificate as if made on and as of the date of such certificate,
and each of the covenants and conditions required herein to be performed or
complied with by the Selling Stockholder on or prior to the date of such
certificate has been duly, timely and fully performed or complied with.
(n) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 4(o).
(o) The Shares shall be qualified for sale in such jurisdictions as the
Representatives may reasonably request and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
or the Option Closing Date.
(p) Prior to the Closing Date, the Shares shall have been duly
authorized for listing on the NYSE upon official notice of issuance.
(q) The Company and the Selling Stockholder shall have furnished to the
Representatives such certificates, in addition to those specifically mentioned
herein, as the Representatives may have reasonably requested as to the accuracy
and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company herein, as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Representatives.
6. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, liabilities, expenses and damages (including any and all investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Act, the Exchange Act
or other
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Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out of or
are based in whole or in part on (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus, (ii) the omission or alleged omission
to state in such document a material fact required to be stated in it or
necessary to make the statements in it not misleading in the light of the
circumstances in which they were made, or (iii) any inaccuracy in the
representations and warranties of the Company contained herein or any failure of
the Company to perform its obligations hereunder or under law in connection with
the transactions contemplated hereby; provided, however, that (x) the Company
will not be liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Shares in the public offering to any person
by an Underwriter and is based on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives, on behalf of any Underwriter, expressly for inclusion in
the Registration Statement, the preliminary prospectus or the Prospectus and (y)
the Company will not be liable to any Underwriter, the directors, officers,
employees or agents of such Underwriter or any person controlling such
Underwriter with respect to any loss, claim, liability, expense, or damage
arising out of or based on any untrue statement or omission or alleged untrue
statement or omission or alleged omission to state a material fact in the
preliminary prospectus which is corrected in the Prospectus if the person
asserting any such loss, claim, liability, charge or damage purchased Shares
from such Underwriter but was not sent or given a copy of the Prospectus at or
prior to the written confirmation of the sale of such Shares to such person. The
Company acknowledges that the statements set forth under the heading
"Underwriting" in the preliminary prospectus and the Prospectus constitute the
only information relating to any Underwriter furnished in writing to the Company
by the Representatives on behalf of the Underwriters expressly for inclusion in
the Registration Statement, the preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.
(b) The Selling Stockholder will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based in whole or in part on (i) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, (ii)
the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading in the light of the circumstances in which they were made, or (iii)
any inaccuracy in the representations and warranties of the Selling Stockholder
contained herein or any failure of the Selling Stockholder to perform his
obligations hereunder or under law in connection with the transactions
contemplated hereby; provided, however, that (x) the Selling
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Stockholder will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the public offering to
any person by an Underwriter and is based on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives, on behalf of any Underwriter, expressly for inclusion in
the Registration Statement, the preliminary prospectus or the Prospectus; (y)
the Selling Stockholder will not be liable to any Underwriter, the directors,
officers, employees or agents of such Underwriter or any person controlling such
Underwriter with respect to any loss, claim, liability, expense, or damage
arising out of or based on any untrue statement or omission or alleged untrue
statement or omission or alleged omission to state a material fact in the
preliminary prospectus which is corrected in the Prospectus if the person
asserting any such loss, claim, liability, charge or damage purchased Shares
from such Underwriter but was not sent or given a copy of the Prospectus at or
prior to the written confirmation of the sale of such Shares to such person; and
(z) the liability of the Selling Stockholder under this Section 6(b) shall not
exceed the product of the purchase price for each Share set forth in Section
1(a) hereof multiplied by the number of Selling Stockholder Shares sold
hereunder (less (1) the amount of the underwriting commissions paid thereon to
the Underwriters by the Selling Stockholder and (2) any costs or expenses paid
by the Selling Stockholder incident to the performance of the obligations of the
Company or the Selling Stockholder under this Agreement and in connection with
the transactions contemplated hereby including, but not limited to, those costs
and expenses of the type described in Section 4(j)). The Selling Stockholder
acknowledges that the statements set forth under the heading "Underwriting" in
the preliminary prospectus and the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of the Underwriters expressly for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Selling
Stockholder might otherwise have.
(c) Each Underwriter will indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the Selling
Stockholder to the same extent as the foregoing indemnity from the Company to
each Underwriter, as set forth in Section 6(a), but only insofar as losses,
claims, liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives, on behalf of such Underwriter,
expressly for use in the Registration Statement, the preliminary prospectus or
the Prospectus. The Company and the Selling Stockholder acknowledge that the
statements set forth under the heading "Underwriting" in the preliminary
prospectus and the Prospectus constitute the only information relating to any
Underwriter furnished in writing to the Company by the Representatives on behalf
of the Underwriters expressly for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have.
(d) Any party that proposes to assert the right to be indemnified under
this Section 6 shall, promptly after receipt of notice of commencement of any
action against such
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party in respect of which a claim is to be made against an indemnifying party or
parties under this Section 6, notify each such indemnifying party in writing of
the commencement of such action, enclosing with such notice a copy of all papers
served, but the omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified party under the
foregoing provisions of this Section 6 unless, and only to the extent that, such
omission results in the loss of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense, the indemnifying party will not be liable to the indemnified
party for any legal or other expenses except as provided below and except for
the reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will have the right
to employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(i) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (iv) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. Any indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld).
(e) If the indemnification provided for in this Section 6 is applicable
in accordance with its terms but for any reason is held to be unavailable to or
insufficient to hold harmless an indemnified party under paragraphs (a), (b) and
(c) of this Section 6 in respect of any losses, claims, liabilities, expenses
and damages referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company or the Selling Stockholder from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) by such
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indemnified party as a result of such losses, claims, liabilities, expenses and
damages in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Selling Stockholder, on the one hand,
and the Underwriters, on the other hand. The relative benefits received by the
Company and the Selling Stockholder, on the one hand, and the Underwriters, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Stockholder bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company and the Selling Stockholder, on the one hand, and
the Underwriters, on the other hand, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, the Selling Stockholder or the Representatives on behalf of the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 6(e) were to
be determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 6(e) shall be deemed to include, for purposes of this Section 6(e),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts
received by it and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 6(e) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 6(e), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 6(e), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(e). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(f) The indemnity and contribution agreements contained in this Section
6 and the representations and warranties of the Company and the Selling
Stockholder contained in
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this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Underwriters, (ii) acceptance
of any of the Shares and payment therefor or (iii) any termination of this
Agreement.
7. Reimbursement of Certain Expenses. In addition to its other
obligations under Section 6(a) of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon,
in whole or in part, any statement or omission or alleged statement or omission,
or any inaccuracy in the representations and warranties of the Company or the
Selling Stockholder contained herein or failure of the Company or the Selling
Stockholder to perform its or their respective obligations hereunder or under
law, all as described in Section 6(a), notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 7 and the possibility that such payment might later be held to be
improper; provided, however, that, to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund
them.
8. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company from the Representatives, without liability on the part of
any Underwriter to the Company if, prior to delivery and payment for the Firm
Shares or Option Shares, as the case may be, in the sole judgment of the
Representatives, (i) trading in any of the equity securities of the Company
shall have been suspended by the Commission, (ii) trading in securities
generally on the NYSE shall have been suspended or limited or minimum or maximum
prices shall have been generally established on such exchange, or additional
material governmental restrictions, not in force on the date of this Agreement,
shall have been imposed upon trading in securities generally by such exchange,
by order of the Commission or any court or other governmental authority, or by
the NYSE, (iii) a general banking moratorium shall have been declared by Federal
or New York State authorities or (iv) any material adverse change in the
financial or securities markets in the United States or in political, financial
or economic conditions in the United States or any outbreak or material
escalation of hostilities or other calamity or crisis shall have occurred, the
effect of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to proceed with completion of the
public offering or the delivery of and payment for the Shares.
If this Agreement is terminated pursuant to Section 9 hereof, neither
the Company nor any Selling Stockholder shall be under any liability to any
Underwriter except as provided in Sections 4(j), 6 and 7 hereof; but, if for any
other reason the purchase of the Shares by the Underwriters is not consummated
or if for any reason the Company shall be unable to perform its obligations
hereunder, the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including the fees, disbursements and other charges of
counsel to the Underwriters) incurred by them in connection with the offering of
the Shares.
9. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares which it or they have
agreed to purchase hereunder,
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and the aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of Firm Shares, the other Underwriters shall be
obligated, severally, to purchase the Firm Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase, in the
proportions which the number of Firm Shares which they have respectively agreed
to purchase pursuant to Section 1 bears to the aggregate number of Firm Shares
which all such non-defaulting Underwriters have so agreed to purchase, or in
such other proportions as the Representatives may specify; provided that in no
event shall the maximum number of Firm Shares which any Underwriter has become
obligated to purchase pursuant to Section 1 be increased pursuant to this
Section 9 by more than one-ninth of such number of Firm Shares without the prior
written consent of such Underwriter. If any Underwriter or Underwriters shall
fail or refuse to purchase any Firm Shares and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase exceeds one-tenth of the aggregate number of the Firm Shares
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Company for the purchase or sale of any
Shares under this Agreement. In any such case either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 9 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with
a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) if to the Selling Stockholder, to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ c/o the Company or (c) if to the Underwriters, to the
Representatives at the offices of ▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Department, with a copy to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. Any such notice shall be effective only upon
receipt. Any notice hereunder may be made by telecopier or telephone, but if so
made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, the Selling Stockholder, and the controlling
persons, directors and officers referred to in Section 6, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as used
in this Agreement shall not include a purchaser, as such purchaser, of Shares
from any of the several Underwriters.
Any action required or permitted to be made by the Representatives
under this Agreement may be taken by them jointly or by ▇▇▇▇▇▇▇ & Company, Inc.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby waive any right they may
have to a trial by jury in respect of any claim based upon or arising out of
this Agreement or the transactions contemplated hereby, provided, however, that
none of the Company or the Underwriters shall be deemed to have waived any right
they may have to a trial by jury in respect of any claim by a third party
against any such party.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
THREE-FIVE SYSTEMS, INC.
By:
---------------------------------
Title:
Selling Stockholder
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Confirmed as of the date first
above mentioned:
▇▇▇▇▇▇▇ & COMPANY, INC.
ING Barings
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereto.
By: ▇▇▇▇▇▇▇ & COMPANY, INC.
By:
------------------------------------
Title:
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33
SCHEDULE I
UNDERWRITERS
Number of Firm
Shares to be
Underwriters Purchased
----------------------
▇▇▇▇▇▇▇ & Company, Inc.................................................
ING Barings............................................................
▇.▇. ▇▇▇▇▇▇▇▇ & Co.....................................................
----------------------
Total................................................
======================
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SCHEDULE II
FORM OF LOCK-UP AGREEMENT
July __, 1999
▇▇▇▇▇▇▇ & COMPANY, INC.
ING Barings
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned is a holder of securities of Three-Five Systems, Inc.,
a Delaware corporation (the "Company") and wishes to facilitate the public
offering of shares of the Common Stock (the "Common Stock") of the Company (the
"Offering"). The undersigned recognizes that such Offering will be of benefit to
the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby agrees that
he, she or it will not, without the prior written approval of ▇▇▇▇▇▇▇ & Company,
Inc., acting on its own behalf and/or on behalf of other representatives of the
underwriters, directly or indirectly, sell, contract to sell, make any short
sale, pledge, or otherwise dispose of, any shares of Common Stock, options to
acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock of the Company which he, she or it may own,
exclusive of any shares of Common Stock purchased in connection with the
Company's public offering or purchased in the public trading market, for a
period commencing as of the day on which the registration statement to be filed
on behalf of the Company in connection with the Offering (the "Registration
Statement") shall become effective by order of the Securities and Exchange
Commission (the "Effective Date") and ending on the date which is Ninety (90)
days after the Effective Date. The undersigned confirms that he, she or it
understands that the underwriters and the Company will rely upon the
representations set forth in this Agreement in proceeding with the Offering. The
undersigned further confirms that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns. The undersigned agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of securities held by the undersigned except in compliance
with this Agreement.
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This Agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns upon the
effectiveness of the Registration Statement.
Very truly yours,
-------------------------
Print Name of Stockholder
-------------------------
Signature
The Company requests that this Lock-Up Agreement be completed and delivered to
the Company's counsel, ▇'▇▇▇▇▇▇, Cavanagh, Anderson, ▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
36
ATTACHMENT TO SCHEDULE II
DIRECTORS, OFFICERS AND STOCKHOLDERS
OF THE COMPANY WHO SHALL SIGN LOCK-UP AGREEMENT