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EXHIBIT 1.1
DRAFT -- NOVEMBER 20, 1996
3,750,000 SHARES
TRANSCRYPT INTERNATIONAL, INC.
COMMON STOCK
PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
______________, 1996
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇ LLC
As Representatives of the several Underwriters
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Transcrypt International, Inc., a Delaware corporation (the
"Company"), and the stockholders of the Company named in Schedule B hereto (the
"Selling Shareholders") propose, subject to the terms and conditions stated
herein, to issue and sell, or to sell, as the case may be, to the several
Underwriters named in Schedule A hereto (the "Underwriters"), for which you are
acting as representatives (the "Representatives"), an aggregate of 3,750,000
shares (the "Firm Shares") of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), including 2,500,000 shares to be sold by the
Company and 1,250,000 shares to be sold by the Selling Shareholders. The Selling
Shareholders also propose, subject to the terms and conditions stated herein, to
issue and sell, or to sell, as the case may be, to the Underwriters, at their
election, up to an aggregate of 562,500 shares of Common Stock (the "Option
Shares"). The Firm Shares and the Option Shares are herein collectively called
the "Shares."
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-14351) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the "Act"). The
registration statement, as amended at the time it was declared effective,
including the information (if any) deemed to be part thereof pursuant to Rule
430A under the Act is herein referred to as the "Registration Statement." The
form of prospectus first filed by the Company with the Commission pursuant to
Rules 424(b) and 430A under the Act is referred to herein as the
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"Prospectus." Each preliminary prospectus included in the Registration Statement
prior to the time it becomes effective or filed with the Commission pursuant to
Rule 424(a) under the Act is referred to herein as a "Preliminary Prospectus."
Copies of the Registration Statement, including all exhibits and schedules
thereto, any amendments thereto and all Preliminary Prospectuses have been
delivered to you.
The Company and the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Shares by the
Underwriters as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:
(i) The Registration Statement has been declared
effective under the Act, and no post-effective amendment to
the Registration Statement has been filed with the SEC as of
the date of this Agreement. No stop order suspending the
effectiveness of the Registration Statement under the Act has
been issued and no proceeding for that purpose has been
instituted or threatened by the Commission.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and
each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission
promulgated thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, the Company
makes no representation or warranty as to information
contained in or omitted in reliance upon, and in conformity
with, written information furnished to the Company by or on
behalf of any Underwriter through the Representatives
expressly for use in the preparation thereof.
(iii) The Registration Statement conforms, and the
Prospectus and any amendments or supplements thereto will
conform, in all material respects to the requirements of the
Act and the rules and regulations thereunder. Neither the
Registration Statement nor any amendment thereto, and neither
the Prospectus nor any supplement thereto, contains or will
contain, as the case may be, any untrue statement of a
material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
Company makes no representation or warranty as to information
contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information
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furnished to the Company by or on behalf of any Underwriter
through the Representatives, expressly for use in the
preparation thereof.
(iv) The Company has been duly organized, is validly
existing as a corporation in good standing under the laws of
the State of Delaware, has the corporate power and authority
to own or lease its properties and conduct its business as
described in the Prospectus, and is duly qualified to transact
business in all jurisdictions in which the conduct of its
business or its ownership or leasing of property requires such
qualification and the failure so to qualify would have a
material adverse effect on the business or condition,
financial or otherwise, of the Company, taken as a whole.
(v) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own or
lease its properties and conduct its business as described in
the Prospectus, and is duly qualified to transact business in
all jurisdictions in which the conduct of its business or its
ownership or leasing of property requires such qualification
and the failure so to qualify would have a material adverse
effect on the business or condition, financial or otherwise,
of the Company and its subsidiaries, taken as a whole. All
outstanding shares of capital stock of each of the
subsidiaries of the Company have been duly authorized and
validly issued, are fully paid and non-assessable, and are
owned, directly or indirectly, by the Company free and clear
of all liens, encumbrances and security interests. No options,
warrants or other rights to purchase, agreements or other
obligations to issue, or other rights to convert any
obligations into, shares of capital stock or ownership
interests in any of the subsidiaries of the Company are
outstanding.
(vi) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid and nonassessable. All offers and sales by the
Company of outstanding shares of capital stock and other
securities of the Company, prior to the date hereof, were made
in compliance with the Act and all applicable state securities
or blue sky laws. The Shares to be issued and sold by the
Company to the Underwriters pursuant to this Agreement have
been duly authorized and, when issued and paid for as
contemplated herein, will be validly issued, fully paid and
nonassessable. The Option Shares are validly issued, fully
paid and nonassessable. Except as otherwise stated or
described in the Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of
capital stock of the Company pursuant to the Company's
Certificate of Incorporation, Bylaws or any agreement or other
instrument to which the Company is a party or by which the
Company is bound. Neither the filing of the Registration
Statement nor the offering or the sale of the Shares as
contemplated by this Agreement gives rise to any rights for,
or
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relating to, the registration of any shares of capital stock
or other securities of the Company, except such rights which
have been validly waived or satisfied. Except as described in
the Prospectus, there are no outstanding options, warrants,
agreements, contracts or other rights to purchase or acquire
from the Company any shares of its capital stock. The Company
has the authorized and outstanding capital stock as set forth
under the heading "Capitalization" in the Prospectus. The
outstanding capital stock of the Company, including the
Shares, conforms, and the Shares to be issued by the Company
to the Underwriters will conform, to the description thereof
contained in the Prospectus.
(vii) The financial statements, together with the
related notes and schedules as set forth in the Registration
Statement and Prospectus, present fairly the consolidated
financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the
basis stated in the Registration Statement at the indicated
dates and for the indicated periods. Such financial statements
have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the
periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made,
except as otherwise stated therein. The summary and selected
financial data of the Company included in the Registration
Statement present fairly the information shown therein on the
basis stated in the Registration Statement and have been
compiled on a basis consistent with the financial statements
presented therein.
(viii) There is no action or proceeding pending or,
to the knowledge of the Company, threatened or contemplated
against the Company or any of its subsidiaries before any
court or administrative or regulatory agency which, if
determined adversely to the Company or any of its
subsidiaries, would, individually or in the aggregate, result
in a material adverse change in the business or condition
(financial or otherwise), results of operations, stockholders'
equity or prospects of the Company and its subsidiaries, taken
as a whole, except as set forth in the Registration Statement.
(ix) The Company has good and marketable title to all
properties and assets reflected as owned in the financial
statements hereinabove described (or as described as owned in
the Prospectus), in each case free and clear of all liens,
encumbrances and defects, except such as are described in the
Prospectus or do not substantially affect the value of such
properties and assets and do not materially interfere with the
use made and proposed to be made of such properties and assets
by the Company and its subsidiaries; and 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.
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(x) Since the respective dates as of which
information is given in the Registration Statement, as it may
be amended or supplemented, (A) there has not been any
material adverse change, or any development reasonably likely
to result in a material adverse change, in or affecting the
condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole, or the business affairs,
management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries,
taken as a whole, whether or not occurring in the ordinary
course of business, (B) there has not been any transaction not
in the ordinary course of business entered into by the Company
or any of its subsidiaries which is material to the Company
and its subsidiaries, taken as a whole, other than
transactions described or contemplated in the Registration
Statement, (C) the Company and its subsidiaries have not
incurred any material liabilities or obligations, which are
not in the ordinary course of business or which are reasonably
likely to result in a material reduction in the future
earnings of the Company and its subsidiaries, (D) the Company
and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties
from fire, flood, windstorm, accident or other calamity,
whether or not covered by insurance, (E) there has not been
any change in the capital stock of the Company (other than
upon the exercise of options and warrants described in the
Registration Statement), or any material increase in the
short-term or long-term debt (including capitalized lease
obligations) of the Company and its subsidiaries taken as a
whole, (F) there has not been any declaration or payment of
any dividends or any distributions of any kind with respect to
the capital stock of the Company other than any dividends or
distributions described or contemplated in the Registration
Statement, or (G) there has not been any issuance of warrants,
options, convertible securities or other rights to purchase or
acquire capital stock of the Company and its subsidiaries,
except as described in the Registration Statement.
(xi) Neither the Company nor any of its subsidiaries
is in violation of, or in default under, its Certificate of
Incorporation or Bylaws, or any statute, or any rule,
regulation, order, judgment, decree or authorization of any
court or governmental or administrative agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties, or any indenture, mortgage, deed of
trust, loan agreement, lease, franchise, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them are
bound or to which any property or assets of the Company or any
of its subsidiaries is subject, which violation or default
would have a material adverse effect on the business,
condition (financial or otherwise), results of operations,
stockholders' equity or prospects of the Company and its
subsidiaries taken as a whole.
(xii) The issuance and sale of the Shares by the
Company and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions contemplated herein will not violate any
provision of the Certificate of Incorporation or Bylaws of the
Company or any of its
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subsidiaries or any statute or any order, judgment, decree,
rule, regulation or authorization of any court or governmental
or administrative agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties,
and will not conflict with, result in a breach or violation
of, or constitute, either by itself or upon notice or passage
of time or both, a default under any indenture, mortgage, deed
of trust, loan agreement, lease, franchise, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any property or assets of
the Company or any of its subsidiaries is subject. No
approval, consent, order, authorization, designation,
declaration or filing by or with any court or governmental
agency or body is required for the execution and delivery by
the Company of this Agreement and the consummation of the
transactions herein contemplated, except as may be required
under the Act or any state securities or blue sky laws.
(xiii) The Company and each of its subsidiaries holds
and is operating in material compliance with all material
licenses, approvals, certificates and permits from
governmental and regulatory authorities, foreign and domestic,
which are necessary to the conduct of its business as
described in the Prospectus.
(xiv) The Company has the power and authority to
enter into this Agreement and to authorize, issue and sell the
Shares it will sell hereunder as contemplated hereby. This
Agreement has been duly and validly authorized, executed and
delivered by the Company.
(xv) Coopers & ▇▇▇▇▇▇▇ L.L.P., which has certified
certain of the financial statements filed with the Commission
as part of the Registration Statement, are independent public
accountants as required by the Act and the rules and
regulations thereunder.
(xvi) The Company has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or
result in, stabilization or manipulation of the price of the
Common Stock to facilitate the sale of the Shares.
(xvii) The Company's registration statement pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), has been declared effective by
the Commission; and the Shares have been approved for
designation upon notice of issuance on the Nasdaq National
Market under the symbol "TRII."
(xviii) The Company has obtained and delivered to the
Representatives written agreements, in form and substance
satisfactory to the Representatives, of each of its directors,
executive officers and shareholders that no offer, sale,
assignment,
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transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of any Common Stock or other
capital stock of the Company will be made for a period of 180
days after the date of the Prospectus, directly or indirectly,
by such holder otherwise than hereunder or with the prior
written consent of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated.
(ixx) The Company has not distributed and will not
distribute any prospectus or other offering material in
connection with the offering and sale of the Shares other than
any Preliminary Prospectus or the Prospectus or other
materials permitted by the Act to be distributed by the
Company.
(xx) The Company is in material compliance with all
provisions of Florida Statutes Section 517.075 (Chapter
92-198, laws of Florida). [The Company does not do any
business, directly or indirectly, with the government of Cuba
or with any person or entity located in Cuba.]
(xxi) The Company and its subsidiaries have filed all
federal, state, local and foreign tax returns or reports
required to be filed, and have paid in full all taxes
indicated by said returns or reports and all assessments
received by it or any of them to the extent that such taxes
have become due and payable, except where the Company and its
subsidiaries are contesting in good faith such taxes and
assessments or the amounts involved are not material to the
Company.
(xxii) The Company and each of its subsidiaries owns
or licenses all material patents, patent applications,
trademarks, service marks, tradenames, trademark
registrations, service ▇▇▇▇ registrations, copyrights,
licenses, inventions, trade secrets and other similar rights
necessary for the conduct of its business as described in the
Prospectus. The Company has no knowledge of any infringement
by it or its subsidiaries of any patents, patent applications,
trademarks, service marks, tradenames, trademark
registrations, service ▇▇▇▇ registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of
others, and neither the Company nor any of its subsidiaries
has received any notice or claim of conflict with the asserted
rights of others with respect any of the foregoing.
(xxiii) The Company is not, and upon completion of
the sale of Shares contemplated hereby will not be, required
to register as an "investment company" under the Investment
Company Act of 1940, as amended.
(xxiv) The Company maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for
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assets; (C) access to records is permitted only in accordance
with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxv) Other than as contemplated by this Agreement
and as disclosed in the Registration Statement, the Company
has not incurred any liability for any finder's or broker's
fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel to the Underwriters shall be deemed
to be a representation and warranty of the Company to each Underwriter as to the
matters covered thereby.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING
SHAREHOLDERS.
(a) Each Selling Shareholder severally represents and warrants
to, and covenants and agrees with, each of the Underwriters and the Company
that:
(i) Such Selling Shareholder has duly executed and
delivered a Power of Attorney (the "Power of Attorney"),
appointing ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and each of
them, as attorney-in-fact (the "Attorneys-In-Fact") with full
power and authority to execute and deliver this Agreement on
behalf of such Selling Shareholder, to authorize the delivery
of the Shares to be sold by the Selling Shareholder hereunder,
and otherwise to act on behalf of such Selling Shareholder in
connection with the transactions contemplated by this
Agreement.
(ii) Such Selling Shareholder has duly executed and
delivered a Custody Agreement (the "Custody Agreement") with
Norwest Bank Minnesota, N.A., as Custodian, pursuant to which
certificates in negotiable form for the Shares to be sold by
such Selling Shareholder hereunder have been placed in custody
for delivery under this Agreement.
(iii) Such Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement, and to sell, assign,
transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder; and all consents, approvals,
authorizations and orders necessary for the execution and
delivery by such Selling Shareholder of this Agreement, the
Power of Attorney and the Custody Agreement, and for the sale
and delivery of the Shares to be sold by such Selling
Shareholder hereunder, have been obtained, except such as may
be required by any state securities or blue sky laws.
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(iv) Such Selling Shareholder has, and at the Closing
Date and the Option Closing Date, as the case may be (as such
dates are hereinafter defined), will have good and valid title
to the Firm Shares and the Option Shares, respectively, to be
sold by such Selling Shareholder hereunder, free of any liens,
encumbrances, security interests, equities or claims
whatsoever; and upon delivery of and payment for such Firm
Shares and Option Shares pursuant to this Agreement, good and
valid title thereto, free of any liens, encumbrances, security
interests, equities or claims whatsoever, will be transferred
to the several Underwriters.
(v) The consummation by such Selling Shareholder of
the transactions herein contemplated and the fulfillment by
such Selling Shareholder of the terms hereof will not conflict
with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any will,
mortgage, deed of trust, loan agreement or other agreement,
instrument or obligation to which such Selling Shareholder is
a party or to which any of the property or assets of such
Selling Shareholder is subject, except for such agreements,
instruments or obligations for which consents have been
obtained, nor will such actions result in any violations of
the provisions of the charter or by-laws if such Selling
Shareholder is a corporation, the partnership agreement,
certificate or articles if the Selling Shareholder is a
partnership, or any statute, rule, regulation or order
applicable to such Selling Shareholder of any court or of any
regulatory body or administrative agency or other governmental
body having jurisdiction over such Selling Shareholder.
(vi) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to, or
which has constituted, or which might reasonably be expected
to cause or result in, stabilization or manipulation of the
price of the Common Stock.
(vii) To the extent that any statements or omissions
made in the Registration Statement, any Preliminary Prospectus
thereof, the Prospectus or any amendment or supplement thereto
are made in reliance upon and in conformity with written
information with respect to such Selling Shareholder furnished
to the Company by such Selling Shareholder expressly for use
therein, such Preliminary Prospectus and the Registration
Statement did not, and the Prospectus and any further
amendments or supplements to the Registration Statement and
the Prospectus will not, when they become effective or are
filed with the Commission, as the case may be, 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.
(viii) Such Selling Shareholder will not offer to
sell, sell, transfer, assign or otherwise dispose of any
Common Stock or other capital stock of the Company,
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directly or indirectly, for a period of 180 days after the
date of the Prospectus, otherwise than hereunder or with the
written consent of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated.
(ix) Such Selling Shareholder does not have knowledge
or any reason to believe that the Registration Statement or
the Prospectus (or any amendment or supplement thereto)
contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading, it
being understood that such Selling Shareholder has not made
any independent investigation concerning the facts stated in
or omitted from the Registration Statement or the Prospectus.
(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, each of the
Selling Shareholders 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).
(c) Each of the Selling Shareholders specifically agrees that
the Shares represented by the certificates held in custody for such Selling
Shareholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder, and that the arrangements made by such Selling
Shareholder for such custody and the appointment by such Selling Shareholder of
the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable.
Each of the Selling Shareholders specifically agrees that the obligations of the
Selling Shareholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling Shareholder or, in
the case of an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of a
corporation or partnership, by the dissolution of such corporation or
partnership, or by the occurrence of any other event. If any individual Selling
Shareholder or any such executor or trustee should die or become incapacitated,
or if any such estate or trust should be terminated, or if any such corporation
or partnership should be dissolved, or if any other such event should occur
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Shareholders 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, incapacity, 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.
(d) Any certificate signed by or on behalf of any Selling
Shareholder and delivered to the Representatives or to counsel to the
Underwriters shall be deemed to be a representation and warranty of such Selling
Shareholder to each Underwriter as to the matters covered thereby.
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3. PURCHASE, SALE AND DELIVERY OF SHARES.
On the basis of the representations, warranties and covenants
contained herein, and subject to the terms and conditions herein set forth, the
Company and each Selling Shareholder agrees, severally and not jointly, to sell
to each Underwriter and each Underwriter agrees, severally and not jointly, to
purchase from the Company and each Selling Shareholder, at a price of $_______
per share, the number of Firm Shares (to be adjusted by you to eliminate
fractional shares) determined by multiplying the aggregate number of Firm Shares
to be sold by the Company and each of the Selling Shareholders, as set forth
opposite their respective names in Schedule B 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
A hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all the Underwriters from the Company and the Selling
Shareholders hereunder.
In addition, on the basis of the representations, warranties
and covenants herein contained and subject to the terms and conditions herein
set forth, the Selling Shareholders, as and to the extent indicated in Schedule
B hereto, hereby grant, severally and not jointly, to the several Underwriters
an option to purchase at their election up to an aggregate of 562,500 Option
Shares at the same price per share as set forth for the Firm Shares in the
paragraph above, for the sole purpose of covering overallotments in the sale of
the Firm Shares. The option granted hereby may be exercised in whole or in part,
but only once, and at any time upon written notice given within 30 days after
the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company, the Attorneys-in-Fact and the Custodian setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option and the time and date at which certificates are to be
delivered. [Any such election to purchase Option Shares shall be made as set
forth in Schedule B hereto.] If any Option Shares are purchased, each
Underwriter agrees, severally and not jointly, to purchase that portion of the
number of Option Shares as to which such election shall have been exercised
(subject to adjustment to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction the numerator of which is the maximum
number of Option Shares which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule A hereto and the
denominator of which is the maximum number of Option Shares which all of the
Underwriters are entitled to purchase hereunder. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than two or later than ten full
business days after the exercise of such option, and shall not in any event be
prior to the Closing Date. If the date of exercise of the option is three or
more full days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date.
Certificates in definitive form for the Shares to be purchased
by each Underwriter hereunder, and in such denominations and registered in such
names as ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated may request upon at least forty-eight hours'
prior notice to the Company, shall be delivered by or on behalf of the Company
and the Selling Shareholders to you for the account of such Underwriter at such
time and place as shall hereafter be designated by the Representatives, against
payment by
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such Underwriter or on its behalf of the purchase price therefor by wire
transfer of immediately available funds to such accounts as the Company and the
Custodian shall have designated to the Representatives in writing at least two
business days preceding the Closing Date. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, ____ a.m. Minneapolis time,
at the offices of _____________________________________, on _____, 1996, or such
other time and date as you and the Company may agree upon in writing, such time
and date being herein referred to as the "Closing Date," and, with respect to
the Option Shares, at the time and on the date specified by you in the written
notice given by you of the Underwriters' election to purchase the Option Shares,
or such other time and date as you and the Company may agree upon in writing,
such time and date being referred to herein as the "Option Closing Date." Such
certificates will be made available for checking and packaging at least
twenty-four hours prior to the Closing Date or the Option Closing Date, as the
case may be, at a location as may be designated by you.
4. OFFERING BY UNDERWRITERS.
It is understood that the several Underwriters propose to make
a public offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 3 hereof, the Underwriters will offer such
Option Shares to the public on the foregoing terms.
It is understood that 150,000 Firm Shares will initially be
reserved by the several Underwriters for offer and sale upon the terms and
conditions set forth in the Prospectus to directors and principal stockholders
(including their affiliated entities) and other persons identified by the
Company who have heretofore delivered to you offers or indications of interest
to purchase Firm Shares in form satisfactory to you, and that any allocation of
such Firm Shares among such persons will be made in accordance with timely
directions received by you from the Company, provided that under no
circumstances will you or any Underwriter be liable to the Company or any such
person for any action taken or omitted in good faith which results in the
failure to consummate such offering to such persons. It is further understood
that any of such Firm Shares which are not purchased by such persons will be
offered by the Underwriters to the public upon the terms and conditions set
forth in the Prospectus.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters
that:
(a) The Company will prepare and timely file with the
Commission under Rule 424(b) under the Act a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A under the Act, and will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
and as to which
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the Representatives shall have objected in writing promptly after reasonable
notice thereof or which is not in compliance with the Act or the rules and
regulations thereunder.
(b) The Company will advise the Representatives promptly of
any request of the Commission for amendment of the Registration Statement or for
any supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for that purpose, and the Company
will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus or suspending such
qualification and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with you and your counsel in
order to qualify or register the Shares for sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated in
writing and to continue such qualifications in effect for so long as the
Representatives may reasonably request for distribution of the Shares (or obtain
exemptions from the application of such laws), provided that the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports and other documents as are or may be required.
(d) The Company will furnish the Underwriters with as many
copies of any Preliminary Prospectus as the Representatives may reasonably
request and, during the period when delivery of a prospectus is required under
the Act, the Company will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may, from time to time, reasonably request. The Company will
deliver to the Representatives, at or before the Closing Date, two signed copies
of the Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Representatives such number of copies
of the Registration Statement, without exhibits, and of all amendments thereto,
as the Representatives may reasonably request.
(e) If, during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or if
for any other reason it shall be necessary at any time to amend or supplement
the Prospectus to comply with any law, the Company promptly will prepare and
file with the Commission an appropriate amendment to the Registration Statement
or supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein in
light of the circumstances existing when it is so delivered, not misleading, or
so that the Prospectus will comply with law. In case any Underwriter is required
to deliver a prospectus in connection with sales of any Shares at any time
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nine months or more after the effective date of the Registration Statement, upon
the request of the Representatives but at the expense of such Underwriter, the
Company will prepare and deliver to such Underwriter as many copies as the
Representatives may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 thereunder and will advise you in
writing when such statement has been so made available.
(g) The Company will, for such period up to five years from
the Closing Date, deliver to the Representatives copies of its annual report and
copies of all other documents, reports and information furnished by the Company
to its security holders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or the
Exchange Act. The Company will deliver to the Representatives similar reports
with respect to significant subsidiaries, as that term is defined in the rules
and regulations under the Act, which are not consolidated in the Company's
financial statements.
(h) No offering, sale or other disposition of any Common Stock
or other capital stock of the Company, or warrants, options, convertible
securities or other rights to acquire such Common Stock or other capital stock
(other than pursuant to employee stock option plans and, outstanding options as
disclosed in the Prospectus and other than securities issued in connection with
any merger, consolidation, acquisition of stock or assets, joint venture or
other business combination or arrangement which are not effectively registered
under the Act for at least 180 days after the date of this Agreement) will be
made for a period of 180 days after the date of this Agreement, directly or
indirectly, by the Company otherwise than hereunder or with the prior written
consent of the Representatives.
(i) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
purposes set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to maintain the
designation of the Common Stock on the Nasdaq National Market.
(k) The Company will file with the Commission such reports on
Form SR as may be required pursuant to Rule 463 under the Act.
6. COSTS AND EXPENSES.
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The Company will pay (directly or by reimbursement) all costs,
expenses and fees incident to the performance of the obligations of the Company
under this Agreement, including, without limiting the generality of the
foregoing, the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company; the cost of preparing, printing and
filing of the Registration Statement, Preliminary Prospectuses and the
Prospectus and any amendments and supplements thereto and the printing, mailing
and delivery to the Underwriters and dealers of copies thereof and of this
Agreement, the Agreement Among Underwriters, any Selected Dealers Agreement, the
Underwriters' Selling Memorandum, the Invitation Letter, the Power of Attorney,
the Blue Sky Memorandum and any supplements or amendments thereto (excluding,
except as provided below, fees and expenses of counsel to the Underwriters); the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements of counsel for the Underwriters) incident to securing any
required review by the NASD of the terms of the sale of the Shares; listing
fees, if any, transfer taxes and the expenses, including the reasonable fees and
disbursements of counsel for the Underwriters incurred in connection with the
qualification of the Shares under state securities or Blue Sky laws; the fees
and expenses incurred in connection with the designation of the Shares on the
Nasdaq National Market; the costs of preparing stock certificates; the costs and
fees of any registrar or transfer agent and all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 6. In addition, the Company will pay
all travel and lodging expenses incurred by management of the Company in
connection with any informational "road show" meetings held in connection with
the offering and will also pay for the preparation of all materials used in
connection with such meetings. The Selling Shareholders will pay the fees and
expenses of any separate counsel retained by them in connection with the
transactions contemplated hereby and any other costs incurred by them in
performing their obligations hereunder. The Company and the Selling Shareholders
shall not be required to pay for any of the Underwriters' expenses (other than
those related to qualification of the Shares under state securities or Blue Sky
laws and those incident to securing any required review by the NASD of the terms
of the sale of the shares which shall be paid by the Company as provided above)
except that, if this Agreement shall not be consummated because the conditions
in Section 7 hereof are not satisfied, or because this Agreement is terminated
by the Representatives pursuant to Section 11(b) hereof, or by reason of any
failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on their respective parts to
be performed, unless such failure to satisfy said condition or to comply with
said terms shall be due to the default or omission of any Underwriter, then the
Company shall promptly upon request by the Representatives reimburse the several
Underwriters for all out-of-pocket accountable expenses, including reasonable
fees and disbursements of counsel, incurred in connection with investigating,
marketing and proposing to market the Shares or in contemplation of performing
their obligations hereunder; but the Company shall not in any event be liable to
any of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares. If the Company is required to pay
the expenses of the Underwriters under the preceding sentence as a result of any
failure, refusal or inability on the part of any Selling Shareholder to perform
any undertaking or satisfy any condition of this Agreement or to comply with any
of the
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terms hereof on its part to be performed, the Company shall be entitled to
collect the amount so paid from such Selling Shareholder.
7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date, are subject to the condition that all representations and
warranties of the Company and the Selling Shareholders contained herein are true
and correct, at and as of the Closing Date or the Option Closing Date, as the
case may be, the condition that the Company and the Selling Shareholders shall
have performed all of their respective covenants and obligations hereunder and
to the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, or any part thereof shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the reasonable
satisfaction of the Representatives.
(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of Manatt,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with corporate power and
authority to own or lease its properties and conduct its
business as described in the Prospectus.
(ii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in
the Prospectus. The outstanding shares of capital stock of
each such subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable and are owned of
record and, to the knowledge of such counsel, beneficially, by
the Company, free and clear of all liens, encumbrances and
security interests known to such counsel, other than security
interests specifically disclosed in the Prospectus. To the
knowledge of such counsel, no options, warrants or other
rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into any shares of
capital stock or ownership interests in each such subsidiary
are outstanding.
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(iii) The Company has authorized and outstanding
capital stock as described in the Prospectus. The outstanding
shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and
nonassessable. The form of certificate for the Shares is in
due and proper form and complies with all applicable statutory
requirements. The Shares to be issued and sold by the Company
pursuant to this Agreement have been duly authorized and, when
issued and paid for as contemplated herein, will be validly
issued, fully paid and nonassessable. Holders of the capital
stock of the Company are not entitled to preemptive rights to
subscribe to any additional shares of the Company's capital
stock under the Company's Certificate of Incorporation or
Bylaws. To the knowledge of such counsel, there are no other
similar subscription rights of shareholders of the Company, or
of holders of warrants, options, convertible securities or
other rights to acquire shares of capital stock of the
Company, with respect to any of the Shares or the issue and
sale thereof. To the knowledge of such counsel, no rights to
register outstanding shares of the Company's capital stock, or
shares issuable upon the exercise of outstanding warrants,
options, convertible securities or other rights to acquire
shares of such capital stock, exist which have not been
validly exercised or waived with respect to the Registration
Statement. The capital stock of the Company, including the
Shares, conforms in all material respects to the description
thereof contained in the Prospectus.
(iv) The Registration Statement has become effective
under the Act and, to the knowledge of such counsel, no stop
order proceedings with respect thereto have been instituted or
are pending or threatened by the Commission.
(v) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the
rules and regulations thereunder (except that such counsel
need express no opinion as to the financial statements and
other financial information included therein).
(vi) The statements (A) in the Prospectus under the
captions "Risk Factors - Shares Eligible for Future Sale,"
"Business - Government Regulation and Export Controls,"
"Description of Capital Stock," and "Shares Eligible for
Future Sale" and (B) in the Registration Statement in Item 15,
insofar as such statements constitute a summary of matters of
law, are accurate summaries and fairly present the information
called for with respect to such matters.
(vii) Such counsel does not know of any contracts,
agreements, documents or instruments required to be filed as
exhibits to the Registration Statement, or described in the
Registration Statement or the Prospectus which are not so
filed, or described as required; and insofar as any statements
in the Registration Statement or the Prospectus constitute
summaries of any contract, agreement, document or
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instrument to which the Company is a party, such statements
are accurate summaries and fairly present the information
called for with respect to such matters.
(viii) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or
administrative body or regulatory agency, to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or Prospectus and are not so described, or statutes
or regulations that are required to be described in the
Registration Statement or the Prospectus that are not so
described.
(ix) The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated do
not and will not conflict with or result in a violation of or
default under the Certificate of Incorporation or Bylaws of
the Company or any of its subsidiaries, or under any statute,
permit, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its
subsidiaries or any of their properties (except that such
counsel need express no opinion regarding any Blue Sky or
other state securities laws), or under any lease, contract,
indenture, mortgage, loan agreement or other agreement or
other instrument or obligation known to such counsel to which
the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which
any property or assets of the Company or any of its
subsidiaries is subject, except such agreements, instruments
or obligations with respect to which valid consents or waivers
have been obtained by the Company or any of its subsidiaries.
(x) The Company has the corporate power and authority
to enter into this Agreement and to authorize, issue and sell
the Shares as contemplated hereby. This Agreement has been
duly and validly authorized, executed and delivered by the
Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement
and the consummation of the transactions herein contemplated
(other than as may be required by state securities and blue
sky laws and by the NASD, as to which such counsel need
express no opinion) except such as have been obtained or made,
specifying the same.
(xii) The Company is not, and immediately upon
completion of the sale of Shares contemplated hereby will not
be, required to register as an "investment company" under the
Investment Company Act of 1940, as amended.
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Such counsel shall also state that on the basis of such counsel's review and
participation in conferences in connection with the preparation of the
Registration Statement and the Prospectus, such counsel has no reason to believe
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the Closing Date or the Option
Closing Date, as the case may be, (other than the financial statements and other
financial information therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to the Closing Date or the
Option Closing Date, as the case may be, (other than the financial statements
and other financial information therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that, as of the
Closing Date or the Option Closing Date, as the case may be, either the
Registration Statement or the Prospectus or any further amendment or supplement
thereto made by the Company prior to the Closing Date or the Option Closing
Date, as the case may be, (other than the financial statements and financial
information therein, as to which such counsel need express no opinion) contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and they do not know of any amendment to
the Registration Statement required to be filed.
In rendering the above opinions, counsel may rely as to factual matters
upon the representations of the Company contained in this Agreement and upon
certificates of officers of the Company and of public officials.
(c) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of counsel for
each of the Selling Shareholders, which counsel shall be reasonably acceptable
to the Representatives, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters, to the effect that:
(i) A Power of Attorney and a Custody Agreement have
been duly executed and delivered by such Selling Shareholder
and are the valid and binding agreements of such Selling
Shareholder.
(ii) This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling
Shareholder.
(iii) The sale of the Shares to be sold by such
Selling Shareholder hereunder and the compliance by such
Selling Shareholder with all of the provisions of this
Agreement, the Power of Attorney and the Custody Agreement,
and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute a
default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or
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other agreement or instrument known to such counsel to which
such Selling Shareholder is a party or by which such Selling
Shareholder is bound or to which any of the property or assets
of such Selling Shareholder is subject, nor will such action
result in any violation of the provisions of the
organizational documents of such Selling Shareholder if such
Selling Shareholder is a corporation or partnership, or any
order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over such
Selling Shareholder or the property of such Selling
Shareholder.
(iv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by such
Selling Shareholder hereunder, except such consents,
approvals, authorizations or orders as have been validly
obtained and are in full force and effect, such as have been
obtained under the Act and such as may be required under the
state securities or blue sky laws in connection with the
purchase and distribution of such Shares by the Underwriters.
(v) Such Selling Shareholder has full right, power
and authority to sell, assign, transfer and deliver the Shares
to be sold by such Selling Shareholder hereunder.
(vi) Good and valid title to the Shares being sold by
such Selling Shareholder, free and clear of any claims, liens,
encumbrances, security interests or other adverse claims, has
been transferred to each of the several Underwriters who have
purchased such Shares in good faith and without notice of any
such claim, lien, encumbrance, security interest or other
adverse claim within the meaning of the Uniform Commercial
Code.
In rendering the opinions described above, counsel for each of
the Selling Shareholders may rely, as to matters of fact with respect to such
Selling Shareholder, upon the representations of such Selling Shareholder
contained in this Agreement, the Power of Attorney and the Custody Agreement.
(d) The Representatives shall have received from ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.C., counsel for the Underwriters, an opinion dated the Closing Date
or the Option Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares, the Registration
Statement, the Prospectus, and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
(e) The Representatives shall have received on each of the
date hereof, the Closing Date and the Option Closing Date, as the case may be, a
signed letter, dated as of the date
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hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to the Representatives of Coopers & ▇▇▇▇▇▇▇, L.L.P.,
to the effect that they are independent public accountants with respect to the
Company within the meaning of the Act and the related rules and regulations and
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Option Closing Date, as the case may be,
there shall not have been any change or any development involving a reasonably
foreseeable change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in your reasonable judgment, is material and adverse to the Company and
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at the Closing Date or the Option Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
(g) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the chief executive officer and the chief financial officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) The Prospectus was filed with the Commission
pursuant to Rule 424(b) within the applicable period
prescribed for such filing by the rules and regulations under
the Act and in accordance with Section 5(a) of this Agreement;
no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose
have been initiated or are, to his knowledge, threatened by
the Commission.
(ii) The representations and warranties of the
Company set forth in Section 1 of this Agreement are true and
correct at and as of the Closing Date or the Option Closing
Date, as the case may be, and the Company has performed all of
its obligations under this Agreement to be performed at or
prior to the Closing Date or the Option Closing Date, as the
case may be.
(h) The Representatives shall have received on the Closing
Date or the Option Date, as the case may be, a certificate of the Selling
Shareholders pursuant to which the Selling Shareholders certify that their
representations and warranties set forth in this Agreement are true and correct
at and as of the Closing Date or the Option Date, as the case may be, and that
they have performed all of their obligations under this Agreement to be
performed at or prior to the Closing Date or the Option Closing Date, as the
case may be.
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(i) The Company and the Selling Shareholders shall have
furnished to the Representatives such further certificates and documents as the
Representatives may reasonably have requested.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects reasonably satisfactory to the Representatives and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C., counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 7 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date or the Option Closing Date, as
the case may be. In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 6
and 8 hereof).
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each officer and director thereof, and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities to which such Underwriter or such persons may
became subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus, including any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not misleading
in light of the circumstances under which they were made, or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Common Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, and will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made in the
Registration Statement, any Preliminary Prospectus or the Prospectus, including
any amendments or supplements thereto, in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein; and provided, further, that the
Company shall not be liable in the case of any matter covered by clause (iii)
above to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such losses, claims, damages or liabilities resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct.
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(b) Each of the Selling Shareholders, severally in proportion
to the number of Shares to be sold by such Selling Shareholder hereunder, agrees
to indemnify and hold harmless each Underwriter, each officer and director
thereof, and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages, or liabilities to which
such Underwriter or such persons may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus or the Prospectus, including
any amendments or supplements 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
light of the circumstances under which they were made, but only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon and
conformity with written information furnished to the Company by such Selling
Shareholders for use therein, and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that no Selling Shareholder shall be required to pay amounts for
indemnification, including expenses, which exceed the aggregate net proceeds
received by such Selling Shareholder from the sale of Shares to the
Underwriters; and further provided that the Selling Shareholders shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission, made in the Registration Statement,
any Preliminary Prospectus or the Prospectus, including any amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.
(c) Each Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement, each Selling Shareholder and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of the Act,
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, Selling Shareholder or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, Selling Shareholder or controlling person in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that each Underwriter will be liable
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission has been made in the
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Registration Statement, any Preliminary Prospectus, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 8, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a), (b) or (c) or contribution
provided for in Section 8(e) shall be available with respect to a proceeding to
any party who shall fail to give notice of such proceeding as provided in this
Section 8(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party otherwise than on account of the provisions of
Section 8(a), (b), (c) or (d). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay promptly as incurred the reasonable fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties which are different from
or additional to those available to the indemnifying party. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm at any time for all such indemnified
parties. Such firm shall be designated in writing by the Representatives and
shall be reasonably satisfactory to the Company in the case of parties
indemnified pursuant to Section 8(a) or (b) and shall be designated in writing
by the Company and shall be reasonably satisfactory to the Representatives in
the case of parties indemnified pursuant to Section 8(c). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
(e) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a), (b) or (c) above in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to
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therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bears to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by 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 and the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 8(e) 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 in this Section
8(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereto) referred to above in this Section 8(e) shall be deemed to include 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 8(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter; and 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. The Underwriters' obligations in
this Section 8(e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling
Shareholders under this Section 8 shall be in addition to any liability which
the Company and the Selling Shareholders may otherwise have, and the obligations
of the Underwriters under this Section 8 shall be in addition to any liability
which the Underwriters may otherwise have.
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9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Selling
Shareholder), you, as Representatives of the Underwriters, shall use your best
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company and the Selling
Shareholders such amounts as may be agreed upon, and upon the terms set forth
herein, of the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as Representatives, shall not have procured such other Underwriters,
or any others, to purchase the Firm Shares or Option Shares, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of Shares with respect to which such default shall occur
does not exceed 10% of the Firm Shares or Option Shares, as the case may be,
covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective numbers of Firm Shares or Option Shares, as the
case may be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate number
of shares of Firm Shares or Option Shares, as the case may be, with respect to
which such default shall occur exceeds 10% of the Firm Shares or Option Shares,
as the case may be, covered hereby, the Company and the Selling Shareholders or
you as the Representatives of the Underwriters will have the right, by written
notice given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company and the Selling Shareholders except for expenses
to be borne by the Company, the Selling Shareholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof. In the event of a default by any Underwriter or Underwriters,
as set forth in this Section 9, the Closing Date or Option Closing Date, as the
case may be, may be postponed for such period, not exceeding seven days, as you,
as Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters, to ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated,
▇▇▇▇ ▇▇▇▇▇▇▇▇ Plaza, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director, and _______________________________, Attn:
______________ with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq., ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
L.L.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; if to the
Company, to Transcrypt International, Inc., ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer, with a copy
to ▇▇▇▇▇▇▇ Quicksilver, Esq.,
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Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Selling Shareholders, to
________________________, with a copy to __________________, and
__________________, with a copy to _______________________.
11. TERMINATION.
This Agreement may be terminated by you by notice to the
Company and the Selling Shareholders as follows:
(a) at any time prior to the earlier of (i) the time the
Shares are released by you for sale by notice to the Underwriters or (ii) 4:00
p.m., Minneapolis time, on the first business day following the later of the
date on which the Registration Statement becomes effective or the date of this
Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change in or affecting the condition, financial or otherwise, of the Company
taken as a whole or the business affairs, management, financial position,
shareholders' equity or results of operations of the Company taken as a whole,
whether or not arising in the ordinary course of business, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency after the
date hereof or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets of
the United States would, in your reasonable judgment, make the offering or
delivery of the Shares impracticable or inadvisable, (iii) suspension of trading
in securities on the New York Stock Exchange or the American Stock Exchange or
limitation on prices (other than limitations on hours or numbers of days of
trading) for securities on either such Exchange, or a halt or suspension of
trading in securities generally which are quoted on Nasdaq National Market
System, or (iv) declaration of a banking moratorium by either federal or New
York State authorities; or
(c) as provided in Sections 7 and 9 of this Agreement.
This Agreement also may be terminated by you, by notice to the
Company, as to any obligation of the Underwriters to purchase the Option Shares,
upon the occurrence at any time prior to the Option Closing Date of any of the
events described in subparagraph (b) above or as provided in Sections 6 and 8 of
this Agreement.
12. WRITTEN INFORMATION.
For all purposes under this Agreement (including, without
limitation, Section 1, Section 2, Section 3 and Section 8 hereof), the Company
and the Selling Shareholders understand and agree with each of the Underwriters
that the following constitutes the only written information furnished to the
Company by or through the Representatives specifically for use in preparation of
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the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto: (i) the per share "Price to Public" and per
share "Underwriting Discounts and Commissions" set forth on the cover page of
the Prospectus, (ii) the information relating to stabilization set forth in the
last paragraph on page two of the Preliminary Prospectus and the Prospectus, and
(iii) the information set forth in the first, second, fifth, seventh and eighth
(insofar as the information therein concerns the Underwriters) paragraphs under
the caption "Underwriting" in the Preliminary Prospectus and the Prospectus.
13. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
and shall be binding upon the Underwriters, the Company, the Selling
Shareholders and their respective successors, executors, administrators, heirs
and assigns, and the officers, directors and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares merely because
of such purchase.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers or the Selling Shareholders and (c) delivery of and
payment for the Shares under this Agreement.
Each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable under any
applicable law or rule in any jurisdiction, such provision will be ineffective
only to the extent of such invalidity, illegality or unenforceability in such
jurisdiction or any provision hereof in any other jurisdiction
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota.
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If the foregoing letter is in accordance with your
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Company, the Selling Shareholders and the several Underwriters in accordance
with its terms.
Very truly yours,
TRANSCRYPT INTERNATIONAL, INC.
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
SELLING SHAREHOLDERS
LISTED ON SCHEDULE B
By:
---------------------------------------
Attorney-in-Fact
By:
---------------------------------------
Attorney-in-Fact
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written.
▇▇▇▇ ▇▇▇▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇ LLC
As Representatives of the several Underwriters
By ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
By:
---------------------------------
Its:
---------------------------------
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30
SCHEDULE A
SCHEDULE OF UNDERWRITERS
Number of Firm Maximum Number
Underwriter Shares to be Purchased of Option Shares
----------- ---------------------- ----------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated....................................
▇▇▇▇▇▇ ▇▇▇▇ LLC ..............................................
[Names of Underwriters by Grouping]...........................
Total...................................
3,750,000 562,500
========= =======
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SCHEDULE B
Number of Maximum Number
Seller Firm Share of Option Shares*
------ ---------- -----------------
Transcrypt International, Inc........................................ 2,500,000 --
Selling Shareholders:
Farm Bureau Insurance Company.................................... 347,222 374,573
[Kuijvenhoven Group]............................................. 902,778 187,927
---------- -------
Total.......................................... 3,750,000 562,500
========== =======
----------
*If the Underwriters elect to purchase some, but less than all, of the Option
Shares, the Option Shares to be purchased shall be as follows:
_______________________________________.
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