3,000,000 Shares of Common Stock
STARMET CORPORATION
UNDERWRITING AGREEMENT
__________, 1998
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇ LLC
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Dear Sirs:
Starmet Corporation, a corporation organized and existing under the
laws of Massachusetts (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 2,250,000 shares of its
common stock, par value $.10 per share (the "Common Stock"), and the persons
named in Schedule II hereto (the "Selling Stockholders") propose, subject to the
terms and conditions stated herein, to sell to the Underwriters an aggregate of
750,000 shares of Common Stock, which aggregate of 3,000,000 shares of Common
Stock is herein referred to as the "Firm Shares". In addition, for the sole
purpose of covering over-allotments in connection with the sale of the Firm
Shares, the Company proposes, subject to the terms and conditions stated herein,
to issue and sell to the Underwriters, at the option of the Underwriters, up to
an additional 450,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares". The Shares are more fully described in the Regis tration
Statement referred to below. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ are
referred to herein as the "Executive Selling Stockholders", and the Selling
Stockholders
other than the Executive Selling Stockholders are referred to herein as the
"Non-Executive Selling Stockholders".
1. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees with, the
Underwriters that:
(i) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-49629), for the
registration of the Shares under the Securities Act of 1933, as amended
(the "Act"). Such registration statement, including the prospectus,
financial statements and schedules, exhibits and all other documents filed
as a part thereof, as amended at the time of effectiveness of the
registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule
430A or Rule 434 of the Rules and Regulations of the Commission under the
Act (the "Regulations") is herein called the "Registration Statement". Any
registration statement filed pursuant to Rule 462(b) of the Regulations is
herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement. The prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations or filed as
part of the Registration Statement at the time of effectiveness if no Rule
424(b) or Rule 434 filing is required, is herein called the "Prospectus".
The term "preliminary prospectus" as used herein means a preliminary
prospectus as described in Rule 430 of the Regulations.
(ii) At the time of the effectiveness of the Registration Statement,
any Rule 462(b) Registration Statement or any post-effective amendment to
the Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when
any supplement to or amendment of the Prospectus is filed with the
Commission and at the Closing Date and the Additional Closing Date, if
any, (as hereinafter respectively defined), the Registration Statement,
the Rule 462(b) Registration Statement, the Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material
respects with the applicable provisions of the Act and the Regulations and
do not or will not contain an untrue statement of a material fact and do
not or will not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein (a) in the
case of the Registration Statement,
2
not misleading and (b) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed
as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations)
and when any amendment thereof or supplement thereto was first filed with
the Commission, such preliminary prospectus and any amendments thereof and
supplements thereto complied in all material respects with the applicable
provisions of the Act and the Regulations and did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not
misleading. No representation and warranty is made in this subsection
(ii), however, with respect to any information contained in or omitted
from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter through you as herein
stated expressly for use in connection with the preparation thereof. If
Rule 434 is used, the Company will comply with the requirements of Rule
434.
(iii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified the financial
statements and supporting schedules included in the Registration
Statement, are independent public accountants as required by the Act and
the Regulations.
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set
forth in the Registration Statement and the Prospectus, there has been no
material adverse change or any development involving a prospective
material adverse change in the business, prospects, properties,
operations, condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business (a "Material Adverse
Effect"), and since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, neither the Company nor any of
its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and
its subsidiaries, taken as a whole, except for liabilities or obligations
which are reflected in the Registration Statement and the Prospectus.
(v) This Agreement and the transactions contemplated herein have been
duly and validly authorized by the Company and this Agreement has been
duly and validly executed and delivered by the Company.
3
(vi) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will
not (a) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
any agreement, instrument, franchise, license or permit to which the
Company or any of its subsidiaries is a party or by which any of such
corporations or their respective properties or assets may be bound or (b)
violate or conflict with any provision of the charter, by-laws or other
organizational instrument of the Company or any of its subsidiaries or any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective
properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets is required for the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the
Shares to be issued, sold and delivered by the Company and the Selling
Stockholders hereunder, except the registration under the Act of the
Shares and such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters.
(vii) All of the outstanding shares of Common Stock, including the
Shares to be purchased by the Underwriters from the Selling Stockholders,
are duly and validly authorized and issued, are fully paid and
nonassessable and were not issued and are not now in violation of or
subject to any preemptive rights. The Shares to be purchased by the
Underwriters from the Company have been duly and validly authorized and,
when issued and delivered by the Company in accordance with this
Agreement, will be duly and validly issued, fully paid and nonassessable
and will not have been issued in violation of or be subject to any
preemptive rights. The Company has an authorized and outstanding
capitalization as set forth in the Registration Statement and the
Prospectus. The Common Stock, the Firm Shares and the Additional
Shares conform to the descriptions thereof contained in the Registration
Statement and the Prospectus.
4
(viii) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation or a limited liability
company, as the case may be, in good standing under the laws of its
jurisdiction of incorporation or formation, as the case may be. Each of
the Company and its subsidiaries is duly qualified and in good standing as
a foreign corporation or a foreign limited liability company, as the case
may be, in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing that would not in the aggregate have a
Material Adverse Effect. All of the issued and outstanding capital stock
or the limited liability company interests, as the case may be, of each
subsidiary of the Company is owned directly by the Company, free and clear
of any lien, encumbrance, claim, security interest, restriction on
transfer, shareholders' agreement, voting trust or other defect of title
whatsoever. The only subsidiaries of the Company are the subsidiaries
listed on Exhibit 21 to the Registration Statement.
(ix) Each of the Company and its subsidiaries has all requisite power
and authority, and all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses and permits (collectively,
"Governmental Licenses") of and from the appropriate federal, state, local
or foreign regulatory or governmental agencies and bodies, to own, lease
and operate its properties and to conduct its business as now being
conducted and as described in the Registration Statement and the
Prospectus, and no such Governmental License contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. The Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, individually or
in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect; and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any Governmental License.
(x) Neither the Company nor any of its subsidiaries is in violation
of its charter, by-laws or other organizational instrument or in default
in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties or assets may be bound,
except as described in the Prospectus with respect to violations or
defaults that have been waived in writing by the Company's lenders.
5
(xi) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its subsidiaries
is a party or to which any property of the Company or any of its
subsidiaries is subject or which is pending or, to the knowledge of the
Company, contemplated against the Company or any of its subsidiaries which
might result in a Material Adverse Effect or which is required to be
disclosed in the Registration Statement and the Prospectus.
(xii) The Company and its subsidiaries have good and valid title
in fee simple to all real property and good title to all personal property
owned by them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Registration Statement and the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries. Any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its
subsidiaries. The Company and its subsidiaries are in compliance with all
applicable zoning laws and regulations, with such exceptions as do not
or would not have a Material Adverse Effect.
(xiii) Except as described in the Prospectus and except as would not,
in dividually or in the aggregate, result in a Material Adverse Effect,
(a) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (b) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable En
vironmental Laws and are each in compliance with their requirements, (c)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (d)
there are no events or circumstances
6
that might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the Company or
any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xiv) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary to
carry on the business now operated by them, and, except as described in
the Prospectus, neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein.
(xv) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the best knowledge of the Company, is imminent,
and the Company is not aware of any existing or imminent labor disturbance
by the employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors, that, in either case, would
result in a Material Adverse Effect.
(xvi) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against losses and risks and in
amounts as are prudent and customary in the businesses in which they are
engaged. The Company has no reason to believe that it will not be able to
renew its and its subsidiaries' existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its and its subsidiaries' businesses at a
cost that would not have a Material Adverse Effect.
(xvii) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which
constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock
to facilitate the sale or resale of the Shares.
(xviii) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the
Prospectus present fairly the financial position of the Company as of the
dates indicated and the results of its
7
operations for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules included in
the Registration Statement present fairly the information required to be
stated therein.
(xix) Except as described in the Prospectus, (i) no holder of
securities of the Company has any rights to the registration of securities
of the Company because of the filing of the Registration Statement or
otherwise in connection with the sale of the Shares contemplated hereby
and (ii) there are no outstanding options, warrants or 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 for capital stock of the Company.
(xx) The Company is not, and upon consummation of the transactions
con templated hereby will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940.
(b) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, the Underwriters that:
(i) Such Selling Stockholder is not prompted to sell the Shares to be
sold by such Selling Stockholder hereunder by any information concerning
the Company or any subsidiary of the Company which is not set forth in the
Prospectus.
(ii) Such Selling Stockholder has the full right, power and authority
to enter into this Agreement and a Power of Attorney and Custody Agreement
(the "Power of Attorney and Custody Agreement") and to sell, transfer and
deliver the Shares to be sold by such Selling Stockholder hereunder. The
execution and delivery of this Agreement and the Power of Attorney and
Custody Agreement and the sale and delivery of the Shares to be sold by
such Selling Stockholder and the consummation by such Selling Stockholder
of the transactions contemplated herein and compliance by such Selling
Stockholder with its obligations hereunder have been duly authorized by
each Selling Stockholder and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or a default under or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the Shares to be
sold by such Selling Stockholder or any property or assets of such Selling
Stockholder pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other agreement or
instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is bound, or to which any of the
8
property or assets of such Selling Stockholder is subject, nor will such
action result in any violation of the provisions of the charter, by-laws
or other organizational instrument of such Selling Stockholder, if
applicable, or any applicable law, rule, regulation, judgment, order or
decree of any government, government instrumentality or court having
jurisdiction over such Selling Stockholder or any of such Selling
Stockholder's properties.
(iii) Such Selling Stockholder has and will at the Closing Date have
good and valid title to the Shares to be sold by such Selling Stockholder
hereunder, free and clear of any security interest, pledge, lien, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Shares, assuming each such
Underwriter has no notice of any adverse claim, each of the Underwriters
will receive good and valid title to the Shares purchased by it from such
Selling Stockholder, free and clear of any security interest, pledge,
lien, charge, claim, equity or encumbrance of any kind.
(iv) Such Selling Stockholder has duly executed and delivered, in the
forms heretofore furnished to you, the Power of Attorney and Custody
Agreement with [specify attorneys-in-fact], or any of them, as
attorneys-in-fact (the "Attorneys-in-Fact") and Boston EquiServe LP, as
custodian (the "Custodian"); the Custodian is authorized to deliver the
Shares to be sold by such Selling Stockholder hereunder and to accept
payment therefor; and each Attorney-in-Fact is authorized to execute and
deliver this Agreement and the certificate referred to in Section 6(f) on
behalf of such Selling Stockholder, to sell, assign and transfer to the
Underwriters the Shares to be sold by such Selling Stockholder hereunder,
to determine the purchase price to be paid by the Underwriters to such
Selling Stockholder, as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Stockholder hereunder,
to accept payment therefor, and otherwise to act on behalf of such Selling
Stockholder in connection and in accordance with this Agreement.
(v) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(vi) No filing with, or consent, approval, authorization, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required by such Selling Stockholder
for the performance by such Selling Stockholder of its obligations
hereunder or in the Power of Attorney and Custody Agreement, or in
connection with the offer, sale or delivery of the Shares
9
by such Selling Stockholder hereunder, except such as may have previously
been made or obtained or as may be required under the Act or the
Regulations or state securities laws.
(vii) During the period of 180 days from the date of the Prospectus,
such Selling Stockholder will not, directly or indirectly, without the
prior written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc., offer, sell, offer or
agree to sell, grant any option to purchase or otherwise transfer or
dispose (or announce any offer, sale, grant of an option to purchase or
other transfer or disposition) of any shares of Common Stock (or any
securities convertible into, exercisable for or exchangeable for shares of
Common Stock).
(viii) Certificates for all of the Shares sold by such Selling
Stockholder pursuant to this Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank, or, in the case of uncertificated stock, duly
executed stock powers, in each case with signatures guaranteed, have been
placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Shares or stock powers to the Underwriters
pursuant to this Agreement.
(ix) Neither such Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the
By-laws of the National Association of Securities Dealers, Inc. (the
"NASD")), any member firm of the NASD.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and each Selling Stockholder, severally and not jointly,
agree to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase from the
10
Company and each Selling Stockholder, at a purchase price per share of $_______,
the number of Firm Shares determined by multiplying the aggregate number of Firm
Shares to be sold by the Company or such Selling Stockholder, as the case may
be, as set forth opposite their respective names in Schedule II hereto by a
fraction, the numerator of which is the aggregate number of Firm Shares to be
purchased by such Underwriter as set forth opposite the name of such Underwriter
in Schedule I hereto (or such number increased as set forth in Section 9 hereof)
and the denominator of which is the total number of Firm Shares being purchased
by all of the Underwriters from the Company and all of the Selling Stockholders
hereunder, subject, however, to such adjustments to eliminate any fractional
shares as you in your sole discretion shall make.
(b) Payment of the purchase price for, and delivery of, the Shares
shall be made at the office of Debevoise & ▇▇▇▇▇▇▇▇, 875 Third Avenue, New York,
New York, or at such other place as shall be agreed upon by you and the Company,
at 9:00 A.M. on the third or fourth business day (as permitted under Rule 15c6-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Regulations, the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
after the determination of the initial public offering price of the Shares), or
such other time not later than ten business days after such date as shall be
agreed upon by you and the Company (such time and date of payment and delivery
being herein called the "Closing Date"). Payment shall be made to the Company
and the Selling Stockholders by wire transfer in same day funds to bank accounts
designated by the Company and the Custodian pursuant to each Selling
Stockholder's Power of Attorney and Custody Agreement, as the case may be,
against delivery to you for the respective accounts of the Underwriters through
the facilities of The Depository Trust Company ("DTC") of the Shares to be
purchased by them. The Shares shall be registered in such name or names and in
such authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
and package for delivery certificates representing the Shares at least one full
business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 450,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at any
time, in whole or in part, on or before the thirtieth day following the date of
the Prospectus, by written notice by you to the Company. Such notice shall set
forth the aggregate number of Additional
11
Shares as to which the option is being exercised and the date and time, as
reasonably determined by you, when the Additional Shares are to be delivered
(such date and time being herein sometimes referred to as the "Additional
Closing Date"); provided, however, that the Additional Closing Date shall not be
earlier than the Closing Date or earlier than the second full business day after
the date on which the option shall have been exercised nor later than the eighth
full business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). The Additional Shares shall be registered in such name or
names and in such authorized denominations as you may request in writing at
least two full business days prior to the Additional Closing Date. The Company
will permit you to examine and package for delivery certificates representing
the Additional Shares at least one full business day prior to the Additional
Closing Date.
The number of Additional Shares to be sold to each Underwriter shall
be the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to the total number of Firm Shares being purchased
from the Company and the Selling Stockholders, subject, however, to such
adjustments to eliminate any fractional shares as you in your sole discretion
shall make.
Payment for the Additional Shares shall be made by wire transfer in
same day funds to the bank account designated by the Company, against delivery
to you for the respective accounts of the Underwriters through the facilities of
DTC of the Shares to be purchased by them.
3. Offering. Upon your authorization of the release of the Firm
Shares, the Underwriters propose to offer the Shares for sale to the public upon
the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
the Underwriters that:
(a) If the Registration Statement has not yet been declared effective
the Company will use its best efforts to cause the Registration Statement and
any amend ments thereto to become effective as promptly as possible, and if Rule
430A is used or the filing of the Prospectus is otherwise required under Rule
424(b) or Rule 434, the Company will file the Prospectus (properly completed if
Rule 430A has been used) pursuant to Rule 424(b) or Rule 434 within the
prescribed time period and will provide
12
evidence satisfactory to you of such timely filing. If the Company elects to
rely on Rule 434, the Company will prepare and file a term sheet that complies
with the requirements of Rule 434.
The Company will notify you immediately (and, if requested by you,
will confirm such notice in writing) (i) when the Registration Statement and any
amend ments thereto become effective, (ii) of any request by the Commission for
any amend ment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b)or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a
result of which the Pro spectus as then amended or supplemented would, in the
judgment of the Underwriters or the Company include an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement to comply with the Act or the Regulations, the Company will notify
you promptly and prepare and file with the Commission an appropriate
amendment or supplement (in form and substance satisfactory to you) which
will correct such statement or omission and will use its best efforts to have
any amendment to the Registration Statement declared effective as soon as
possible.
13
(c) The Company will promptly deliver to you two signed copies of the
Registration Statement, including exhibits and all amendments thereto, and the
Com pany will promptly deliver to each of the Underwriters such number of copies
of any preliminary prospectus, the Prospectus, the Registration Statement, and
all amendments of and supplements to such documents, if any, as you may
reasonably request.
(d) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus,
the Company will not, directly or indirectly, without the prior written consent
of Bear, ▇▇▇▇▇▇▇ & Co. Inc., issue, sell, offer or agree to sell, grant any
option to purchase or otherwise transfer or dispose (or announce any offer,
sale, grant of an option to purchase or other transfer or disposition) of any
shares of Common Stock (or any securities convertible into, exercisable for or
exchangeable for shares of Common Stock), and the Company will obtain the
undertaking of each of its officers and directors and such of its stockholders
as have been heretofore designated by you and listed on Schedule III attached
hereto not to engage in any of the aforementioned transactions on their own
behalf, other than the Company's sale of Shares hereunder and the Company's
issuance of Common Stock upon the exercise of presently out standing stock
options.
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or the
Nasdaq National Market.
14
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
approved for quotation on the Nasdaq National Market.
5. Payment of Expenses. Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
and the Selling Stockholders hereby agree to pay all costs and expenses incident
to the per formance of their obligations hereunder, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed and all amendments thereof
(including all exhibits thereto), any preliminary prospectus, the Prospectus and
any amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's and the Selling Stockholders' respective accountants
and counsel), the underwriting documents (including this Agreement, the
Agreement Among Underwriters and the Selling Agreement) and all other documents
related to the public offering of the Shares (including those supplied to the
Underwriters in quantities as hereinabove stated), (ii) the issuance, transfer
and delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws, including the costs of printing and mailing
a preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters and such counsel's disbursements in relation thereto, (iv)
quotation of the Shares on the Nasdaq National Market, (v) filing fees of the
Commission and the NASD, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent or registrar and
(viii) all costs and expenses, including the out-of-pocket expenses of the
representatives of the Underwriters, incurred in connection with presentations
to prospective purchasers of the Shares. It is understood, however, that,
except as provided in this Section 5, the Underwriters will pay all of their
own costs and expenses.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company and the Selling Stockholders herein contained, as of
the date hereof and as of the Closing Date (for purposes of this Section 6
"Closing Date" shall refer to the Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished
to you or to Debevoise & ▇▇▇▇▇▇▇▇ ("Underwriters' Counsel") pursuant to this
Section 6 of any misstatement or omission, to the performance by the Company and
the Selling Stockholders of its obligations hereunder, and to the following
additional conditions:
15
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective not later than 5:30 P.M.,
New York time, on the date of this Agreement, or at such later time and date as
shall have been consented to in writing by you; if the Company shall have
elected to rely upon Rule 430A or Rule 434 of the Regulations, the Prospectus
shall have been filed with the Commission in a timely fashion in accordance with
Section 4(a) hereof; and, at or prior to the Closing Date no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof shall have been issued and no proceedings therefor shall have
been initiated or threatened by the Commission.
(b) At the Closing Date, you shall have received the opinion of
Peabody & ▇▇▇▇▇▇, counsel for the Company, dated the Closing Date, addressed to
the Underwriters, and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation or a limited liability company,
as the case may be, in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be. Each of the Company and
its subsidiaries is duly qualified and in good standing as a foreign
corporation or a foreign limited liability company, as the case may be, in
each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business makes
such qualification necessary, except for those failures to be so qualified
or in good standing that would not in the aggregate have a Material
Adverse Effect. Each of the Company and its subsidiaries has all requisite
power and authority to own, lease and operate its properties and to
conduct its business as now being conducted and as described in the
Registration Statement and the Prospectus. All of the issued and
outstanding capital stock or the limited liability company interests, as
the case may be, of each subsidiary of the Company is owned directly by
the Company, free and clear of any lien, encumbrance, claim, security
interest, restriction on transfer, shareholders' agreement, voting trust
or other defect of title whatsoever.
(ii) The Company has an authorized capital stock as set forth in the
Registration Statement and the Prospectus. All of the outstanding shares
of Common Stock, including the Shares to be purchased by the Underwriters
from the Selling Stockholders, are duly and validly authorized and issued,
are fully paid and nonassessable and were not issued and are not now in
violation of or subject to any preemptive rights. The Shares to be
purchased by the Underwriters from the Company have been duly and validly
authorized and, when issued and delivered by
16
the Company in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive rights. The Common Stock, the
Firm Shares and the Additional Shares conform in all material respects
to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(iii) The Common Stock currently outstanding is quoted, and the
Shares to be sold under this Agreement to the Underwriters are duly
authorized for quotation, on the Nasdaq National Market.
(iv) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(v) To the best of such counsel's knowledge, there is no litigation
or governmental proceeding or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory or
governmental agency or body pending or threatened against, or involving
the properties or business of, the Company or any of its subsidiaries,
which is of a character required to be disclosed in the Registration
Statement and the Prospectus which has not been properly disclosed
therein.
(vi) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the Company do
not and will not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, any agreement, instrument, franchise, license or permit known
to such counsel to which the Company or any of its subsidiaries is a party
or by which any of such corporations or their respective properties or
assets may be bound or (B) violate or conflict with any provision of the
charter, by-laws or other organizational instrument of the Company or any
of its subsidiaries, or, to the best knowledge of such counsel, any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective
properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any public, governmental, or regulatory agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets is required for the execution, delivery
and performance of this Agreement or the
17
consummation of the transactions contemplated hereby, except for (1) such
as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters (as
to which such counsel need express no opinion) and (2) such as have been
made or obtained under the Act.
(vii) To the best of such counsel's knowledge, neither the Company
nor any of its subsidiaries is in violation of its charter, by-laws or
other organizational instrument or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound except (other than with respect to
any such charter, by-laws or other organizational document) for such
violations or defaults that would not (a) have a Material Adverse
Effect or (b) impair the Company's ability to perform its obligations
under this Agreement.
(viii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and other financial data included therein, as to
which no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and the Regulations.
(ix) The Registration Statement is effective under the Act, and, to
the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been
initiated or threatened by the Commission and all filings required by Rule
424(b) of the Regulations have been made.
(x) The Company is not, and upon consummation of the transactions con
templated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940.
In addition, such opinion shall also contain a statement that
although such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, in the course of the preparation of the
Registration Statement and the Prospectus such counsel has participated in
conferences with officers and representatives of the Company, representatives
of the independent public accountants for the Company and the Underwriters at
which the contents and the Prospectus and related matters were discussed and,
without any independent investigation, check or verification of facts for the
purpose of rendering such opinion, on the basis of such counsel's
participation in such conferences and examination of the Registration
Statement and the Prospectus, no facts have come to the attention of such
counsel which would lead such counsel to believe that either the Registration
Statement at the time it became effective (including the information deemed
to be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b) or Rule 434, if applicable), or any amendment
thereof made prior to the Closing Date as of the date of such amendment,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or
any amendment thereof or supplement thereto made prior
18
to the Closing Date as of the date of such amendment or supplement) and as of
the Closing Date contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief or opinion with respect to the financial statements and
schedules and other financial data included therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to Underwriters' counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and its subsidiaries, provided that copies of any
such statements or certificates shall be delivered to Underwriters' Counsel. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and, in their opinion, you
and they are justified in relying thereon. Such opinion may contain such
qualifications, exceptions and limitations that are reasonably satisfactory to
Underwriters' counsel.
(c) At the Closing Date, you shall have received the opinion of
Peabody & ▇▇▇▇▇▇, counsel for the Selling Stockholders, dated the Closing Date,
addressed to Underwriters, and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) No filing with, or consent, approval, authorization, order,
registration, qualification or decree of, any court or governmental
authority or agency (other than the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary understate
securities laws, as to which such counsel need express no opinion) is
necessary or required by any Selling Stockholder for the performance by
such Selling Stockholder of its obligations under this Agreement or in the
Power of Attorney and Custody Agreement, or in connection with the offer,
sale or delivery of the Shares by such Selling Stockholder under this
Agreement.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by each Selling Stockholder and constitutes the
legal, valid and
19
binding agreement of such Selling Stockholder. Each Attorney-in-Fact has
been duly authorized by the Selling Stockholders to deliver the Shares on
behalf of the Selling Stockholders in accordance with the terms of this
Agreement.
(iii) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder.
(iv) The execution and delivery of this Agreement and the Power of
Attorney and Custody Agreement and the sale and delivery of the Shares to
be sold by each Selling Stockholder and the consummation by such Selling
Stockholder of the transactions contemplated in this Agreement and
compliance by such Selling Stockholder with its obligations under this
Agreement have been duly authorized by such Selling Stockholder and, to
the best of such counsel's knowledge, do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default under or result in the
creation or imposition of any tax, lien, charge or encumbrance upon the
Shares to be sold by such Selling Stockholder or any property or assets
of such Selling Stockholder pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, license, lease
or other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder is bound, or to which any of
the property or assets of such Selling Stockholder is subject, nor will
such action result in any violation of the provisions of the charter,
by-laws or other organizational instrument of such Selling Stockholder,
if applicable, or, to the best of such counsel's knowledge, any
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court having jurisdiction
over any such Selling Stockholder or any of its properties.
(v) To the best of such counsel's knowledge, each Selling Stockholder
has good and valid title to the Shares to be sold by such Selling
Stockholder pursuant to this Agreement, free and clear of any security
interest, pledge, lien, charge, claim, equity or encumbrance of any kind,
and has the full right, power and authority to sell, transfer and deliver
such Shares pursuant to this Agreement. Upon delivery of such Shares, such
Selling Stockholder will transfer to the Underwriters who have purchased
such Shares pursuant to this Agreement (without notice of any adverse
claim) good and valid title to such Shares, free and clear of any security
interest, pledge, lien, charge, claim, equity or encumbrance of any kind.
Such opinion may contain such qualifications, exceptions and limitations
that are reasonably satisfactory to Underwriters' counsel.
(d) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to you and to Underwriters' Counsel, and the Underwriters
shall have received from said Underwriters' Counsel a favorable opinion, dated
as of the Closing Date with
20
respect to the issuance and sale of the Shares, the Registration Statement and
the Prospectus and such other related matters as you may reasonably require, and
the Company and the Selling Stockholders shall have furnished to Underwriters'
Counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(e) At the Closing Date, you shall have received a certificate of the
Chief Executive Officer and the Vice President, Finance and Administration of
the Company, dated the Closing Date, to the effect that (i) the condition set
forth in subsection (a) of this Section 6 has been satisfied, (ii) as of the
date hereof and as of the Closing Date the representations and warranties of the
Company set forth in Section 1 hereof are accurate, (iii) as of the Closing Date
the obligations of the Company to be performed hereunder on or prior thereto
have been duly performed and (iv) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or any development involving a material
adverse change, in the business prospects, properties, operations, condition
(financial or otherwise), or results of operations of the Company and its
subsidiaries taken as a whole, except in each case as described in or
contemplated by the Prospectus.
(f) At the Closing Date, you shall have received a certificate of an
Attorney-in-Fact on behalf of each Selling Stockholder, dated the Closing Date,
to the effect that (i) as of the date hereof and as of the Closing Date the
representations and warranties of each Selling Stockholder contained in Section
1 hereof are accurate and (ii) as of the Closing Date the obligations of each
Selling Stockholder to be performed hereunder on or prior thereto have been duly
performed.
(g) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the financial statements and schedules of the Company
included in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting
21
requirements of the Act and the applicable published rules and regulations of
the Commission thereunder; (iii) on the basis of procedures consisting of a
reading of the latest available unaudited interim consolidated financial
statements of the Company, and its subsidiaries, a reading of the minutes of
meetings and consents of the share holders and boards of directors of the
Company and its subsidiaries and the committees of such boards subsequent to
September 30, 1997, inquiries of officers and other employees of the Company and
its subsidiaries who have responsibility for financial and accounting matters of
the Company and its subsidiaries with respect to transactions and events
subsequent to September 30, 1997 and other specified procedures and inquiries to
a date not more than five days prior to the date of such letter, nothing has
come to their attention that would cause them to believe that: (A) the unaudited
consolidated financial statements and schedules of the Company presented in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and, if
applicable, the Exchange Act and the applicable published rules and regulations
of the Commission thereunder or that such unaudited consolidated financial
statements are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited consolidated financial statements included in the Registration
Statement and the Prospectus; (B) with respect to the period subsequent to
March 31, 1998 there were, as of the date of the most recent available
monthly consolidated financial statements of the Company and its subsidiaries,
if any, and as of a specified date not more than five days prior to the date of
such letter, any changes in the capital stock or long-term indebtedness of the
Company or any decrease in the net current assets or stockholders' equity of the
Company, in each case as compared with the amounts shown in the most recent
balance sheet presented in the Registration Statement and the Prospectus, except
for changes or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such letter; or
(C) that during the period from March 31, 1998 to the date of the most recent
available monthly consolidated financial statements of the Company and its
subsidiaries, if any, and to a specified date not more than five days prior to
the date of such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or total or
per share net income, except for decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set forth in
such letter; and (iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other financial
information pertaining to the Company and its subsidiaries set forth in the
Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company and its subsidiaries
22
or from schedules furnished by the Company, and excluding any questions
requiring an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
specified by you set forth in such letter, and found them to be in agreement.
(h) Prior to the Closing Date, the Company and the Selling
Stockholders shall have furnished to you such further information, certificates
and documents as you may reasonably request.
(i) You shall have received from each person who is a director or
officer of the Company and such stockholders as have been heretofore designated
by you and listed on Schedule III hereto an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
Bear, ▇▇▇▇▇▇▇ & Co. Inc., offer, sell, offer or agree to sell, grant any option
to purchase or otherwise transfer or dispose (or announce any offer, sale, grant
of an option to purchase or other transfer or disposition) of any shares of
Common Stock (or any securities convertible into, exercisable for or
exchangeable for shares of Common Stock) for a period of 180 days after the date
of the Prospectus.
(j) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
canceled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
canceled by you at, or at any time prior to, the Additional Closing Date. Notice
of such cancellation shall be given to the Company in writing, or by telephone,
telex or telecopy, confirmed in writing.
7. Indemnification.
(a) The Company and the Selling Stockholders, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys' fees and any and all
23
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several,
to which they or any of them may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
the registration statement for the registration of the Shares, as originally
filed or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company and
the Selling Stockholders will not be liable in any such case to the extent
but only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company by
or on behalf of any Underwriter through you expressly for use therein. The
obligations of the Company and each Selling Stockholder pursuant to this
Section 7(a) are joint and several; provided, however, that each Selling
Stockholder's aggregate liability under this Section 7(a) shall be limited to
an amount equal to the proceeds (net of underwriting discounts and
commissions but before deducting expenses) received by such Selling
Stockholder from the sale of Shares pursuant to this Agreement. This
indemnity agreement will be in addition to any liability which the Company or
any Selling Stockholder may otherwise have, including under this Agreement.
(b) Each of the Selling Stockholders, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including
but not limited to attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts
paid in settlement of any claim or litigation), joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any breach or
alleged breach by such Selling Stockholder of its representations and
warranties contained in Section 1 hereof; provided, however, that each
Selling Stockholder's aggregate liability under this Section 7(b) shall be
limited to an amount equal to the proceeds (net of underwriting discounts
24
and commissions but before deducting expenses) received by such Selling
Stockholder from the sale of Shares pursuant to this Agreement.
(c) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), jointly or several, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder. The Company and the Selling Stockholders
acknowledge that the statements set forth in the last paragraph of the cover
page and in the third, sixth and seventh paragraphs under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the
registration statement relating to the Shares as originally filed or in any
amendment thereof, any related preliminary prospectus or the Prospectus or in
any amendment thereof or supplement thereto, as the case may be.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying
25
party shall not relieve it from any liability which it may have under this
Section 7). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary not
withstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Selling Stockholders on the one hand and the Underwriters on the other hand
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company, the Selling Stockholders and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the
26
other hand from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Stockholders and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and the Selling Stockholders on
the one hand and of the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Stockholders or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter be liable
or responsible for any amount in excess of the underwriting discount applicable
to the Shares purchased by such Underwriter hereunder, (ii) in no case shall any
Selling Stockholder be liable or responsible for any amount in excess of the
proceeds (net of underwriting discounts and commissions but before deducting
expenses) received by such Selling Stockholder from the sale of Shares
pursuant to this Agreement, and (iii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section
8 and the preceding sentence, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
27
Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company or any Selling Stockholder within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company or such Selling Stockholder,
subject in each case to clauses (i) and (ii) of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties, notify each party
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. No party shall be liable for contribution with respect
to any action or claim settled without its consent; provided, however, that such
consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Shares to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to the respective
proportions which the numbers of Firm Shares set forth opposite their
respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company or the Selling Stockholders with respect
thereto (except in each case as provided in Section 5, 7(a), 7(b) and 8 hereof)
or the Underwriters, but
28
nothing in this Agreement shall relieve a defaulting Underwriter or Underwriters
of its or their liability, if any, to the other Underwriters and the Company or
the Selling Stockholders for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, either (i) you or
(ii) the Company and the Selling Stockholders shall have the right to postpone
the Closing Date or the Additional Closing Date, as the case may be, for a
period, not exceeding five business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents and arrangements, and the Company agrees to file promptly
any amendment or supplement to the Registration Statement or the Prospectus
which, in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
10. Default by One or More of the Selling Stockholders or the
Company.
(a) If a Selling Stockholder shall fail at the Closing Date to sell
and deliver the number of Shares which such Selling Stockholder or Selling
Stockholders are obligated to sell hereunder, and the remaining Selling
Stockholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Shares to be sold by them hereunder to the total number
to be sold by all Selling Stockholders as set forth in Schedule II hereto, then
the Underwriters may, at your option, by notice from you to the Company and the
non-defaulting Selling Stockholders, either (i) terminate this Agreement without
any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 5, 7, 8, 11 and 12(d) shall remain in full force and
effect or (ii) elect to purchase the Shares which the non-defaulting Selling
Stockholders and the Company have agreed to sell hereunder. No action taken
pursuant to this Section 10 shall relieve any Selling Stockholder so defaulting
from liability, if any, in respect of such default.
In the event of a default by any Selling Stockholder as referred to
in this Section 10, each of you, the Company and the non-defaulting Selling
Stockholders shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required change in the Registration
Statement or Prospectus or in any other documents or arrangements.
29
(b) If the Company shall fail at the Closing Date to sell the number
of Shares that it is obligated to sell hereunder, then this Agreement shall
terminate without any liability on the part of any nondefaulting party except
that the provisions of Sections 1, 5, 7, 8, 11 and 12(d) shall remain in full
force and effect. No action taken pursuant to this Section 10 shall relieve the
Company from liability, if any, in respect of such default.
11. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters, the Company and
the Selling Stockholders contained in this Agreement, including the agreements
contained in Section 5, the indemnity agreements contained in Section 7 and the
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person thereof, by or on behalf of the
Company, any of its officers and directors or any controlling person thereof or
by or on behalf of any Selling Stockholder, and shall survive delivery of and
payment for the Shares to and by the Underwriters. The representations
contained in Section 1 and the agreements contained in Sections 5, 7, 8 and
12(d) hereof shall survive the termination of this Agreement, including
termination pursuant to Section 9, 10 or 12 hereof.
12. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 P.M., New York time, on the fifth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company, the Selling
Stockholders or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying you or by you notifying the Company. Notwithstanding the foregoing,
the provisions of this Section 12 and of Sections 1, 5, 7 and 8 hereof shall at
all times be in full force and effect.
(b) You shall have the right to terminate this Agreement, by notice
to the Company, at any time prior to the Closing Date or the obligations of the
Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (i) any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, the market for the
Company's securities or securities in general; or (ii) if trading in any
30
securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading on the New York or
American Stock Exchanges or on the Nasdaq National Market shall have been
suspended or materially limited, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required, by the New York or American Stock Exchanges or by the Nasdaq National
Market or by order of the Commission, the NASD or any other governmental
authority having jurisdiction; or (iii) if a banking moratorium has been
declared by a state or federal authority or if any new restriction materially
adversely affecting the distribution of the Firm Shares or the Additional
Shares, as the case may be, shall have become effective; or (iv) (a) if the
United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (b) if there shall have been such
change in political, financial or economic conditions, if the effect of any such
event in (a) or (b) as in your judgment makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this Section 12 shall be by
telephone, telex, or telecopy, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 12(a) hereof or (ii) Section 9(b) or 12(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company or the Selling Stockholders to perform any agreement herein or comply
with any provision hereof, the Company and the Selling Stockholders will,
subject to demand by you, reimburse the Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
13. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telecopied and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: Equity Syndicate; if sent to the Company, shall
be mailed, delivered, or telecopied and confirmed in writing to the Company,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, Attention: ____________; and if sent to any
Selling Stockholder, shall be mailed,
31
delivered, or telecopied and confirmed in writing to such Selling Stockholder
c/o ______________, Attention: ______________.
14. Parties. This Agreement shall insure solely to the benefit of,
and shall be binding upon, the Underwriters, the Company and the Selling
Stockholders and the controlling persons, directors, officers, employees and
agents referred to in Section 7 and 8, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The term "successors and assigns"
shall not include a purchaser, in its capacity as such, of Shares from any of
the Underwriters.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
32
If the foregoing correctly sets forth the understanding between you,
the Company and the Selling Stockholders, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
STARMET CORPORATION
By ________________________
[Attorney-in-Fact]
By
As Attorney-in-Fact acting on behalf of
the Selling Stockholders named in
Schedule II hereto
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇ LLC
By
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
33
SCHEDULE I
Number of Firm
Name of Underwriter Shares-to-be-Purchased
------------------------------------------------------------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇ LLC
Total...............
SCHEDULE II
Maximum Number
Number of Firm Shares of Additional Shares
to be Sold to be Sold
---------------------- --------------------
Starmet Corporation
Wiaf Investors Co.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Total.................................................
2
SCHEDULE III
[Names of stockholders subject to the lock-up provision]