7,000,000 Shares

EX-1.1 3 dex11.htm UNDERWRITING AGREEMENT UNDERWRITING AGREEMENT

Exhibit 1.1

 

7,000,000 Shares

 

LTX CORPORATION

 

COMMON STOCK, PAR VALUE $0.05 PER SHARE

 

UNDERWRITING AGREEMENT

 

February 12, 2004

February 12, 2004

 

Morgan Stanley & Co. Incorporated

Deutsche Bank Securities Inc.

Needham & Company, Inc.

 

c/o Morgan Stanley & Co.

Incorporated

1585 Broadway

New York, New York 10036

 

Dear Sirs and Mesdames:

 

LTX Corporation, a Massachusetts corporation (the “Company”), proposes to issue and sell to the several Underwriters named in Schedule I hereto (the “Underwriters”) 7,000,000 shares of its Common Stock, par value $0.05 per share (the “Firm Shares”). The Company also proposes to issue and sell to the several Underwriters not more than an additional 1,050,000 shares of its Common Stock, par value $0.05 per share (the “Additional Shares”), if and to the extent that you, as Managers of the offering, shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “Shares.” The shares of Common Stock, par value $0.05 per share, of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the “Common Stock.”

 

The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-111869), including a prospectus (the “Base Prospectus”), relating to the Shares and such registration statement and prospectus, as amended and supplemented to date, was declared effective on January 20, 2004 and is currently effective. The registration statement, as amended at the time it became effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as the “Registration Statement”. The Company has filed with, or transmitted for filing to, or shall promptly hereafter file with or transmit for filing to, the Commission a final prospectus supplement (as amended or supplemented from time to time, the “Prospectus Supplement”) specifically relating to the Shares pursuant to Rule 424 under the Securities Act. If the Company has filed an abbreviated registration statement to

register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement. The term “Prospectus” means the Base Prospectus together with the Prospectus Supplement. The term “Preliminary Prospectus” means any preliminary prospectus supplement specifically relating to the Shares, together with the Base Prospectus. All references to the “Registration Statement”, “Base Prospectus”, “Preliminary Prospectus” or “Prospectus” shall include in each case all documents incorporated therein by reference. No document has been or will be prepared or distributed in reliance on Rule 434 under the Securities Act.

 

1. Representations and Warranties. The Company represents and warrants to and agrees with each of the Underwriters that:

 

(a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the Company’s knowledge, threatened by the Commission.

 

(b) (i) Each document, if any, filed or to be filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated by reference in the Prospectus and the Registration Statement complied or will comply when so filed, as the case may be, in all material respects with the applicable requirements of the Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) the Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply in all material respects with the applicable requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder and (iv) the Prospectus does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by or on behalf of such Underwriter through you expressly for use therein.

 

(c) 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 its property and to conduct its business as described in the Prospectus and is duly

 

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qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole.

 

(d) Each subsidiary of the Company (i) has been duly incorporated, (ii) is validly existing as a corporation, (iii) is in good standing under the laws of the jurisdiction of its incorporation, (iv) has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and (v) is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company (A) have been duly and validly authorized and issued, (B) are fully paid and non-assessable, (C) are owned directly or indirectly by the Company, and (D) are free and clear of all liens, encumbrances, equities or claims. Notwithstanding the foregoing, to the extent the concepts identified in Section 1(d)(i) – 1d(v), 1d(A), 1d(B) and 1d(D) above do not exist in a particular foreign jurisdiction, the above noted representations in this Section 1(d) shall only be deemed given with respect to the equivalent foreign concept (to the extent an equivalent foreign concept exists).

 

(e) This Agreement has been duly authorized, executed and delivered by the Company.

 

(f) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus.

 

(g) The shares of Common Stock outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and non-assessable. Except as disclosed in the Prospectus or the financial statements of the Company included in the Prospectus, and the related notes thereto, neither the Company nor any subsidiary has outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or purchase any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations, except for options, shares of restricted stock or other awards granted or exercised pursuant to existing benefit plans between (i) the date of the applicable disclosure in the Prospectus or the financial statements of the Company included in the Prospectus and (ii) the Closing Date (it being understood and agreed that this exception shall not in any way limit the applicability of the third paragraph of Section 2 and Section 5(g) hereof).

 

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(h) The Shares have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights.

 

(i) The Company has filed a notice of listing of the Shares on the Nasdaq Stock Market’s National Market.

 

(j) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene any provision of (i) applicable law, (ii) the articles of organization or by-laws of the Company, (iii) any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, except with respect to clauses (i), (iii) and (iv) for any contraventions that would not, singly, or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. No consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such (i) as have been obtained or made under the Securities Act, (ii) as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares or (iii) as may be required by the rules and regulations of the National Association of Securities Dealers, Inc. (the “NASD”), other than those relating to the Nasdaq National Market.

 

(k) Except as disclosed in the Prospectus, since the date of the latest audited financial statements included in the Prospectus, (i) there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties, earnings or results of operations of the Company and its subsidiaries taken as a whole, (ii) the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction not in the ordinary course of business; and (iii) there has not been any material adverse change in the capital stock, short-term debt or long-term debt of the Company and its subsidiaries, taken as a whole, except in each case as described in the Prospectus.

 

(l) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or

 

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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 by the applicable rules and regulations under the Securities Act and the Exchange Act to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required by the applicable rules and regulations under the Securities Act and the Exchange Act to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required.

 

(m) Neither the Company nor any of its subsidiaries is in default and no event has occurred which, with notice or lapse of time or both, would constitute a default by the Company or any of its subsidiaries in the due performance and observance of any term, covenant or condition of any indenture, mortgage, deed of trust, lease 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 or any of their respective properties is bound except for any default that would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole.

 

(n) Each Preliminary Prospectus complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.

 

(o) The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(p) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole.

 

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(q) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole.

 

(r) There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company that would require the Company to register such securities with the Shares pursuant to the Registration Statement.

 

(s) Neither the Company nor any of its subsidiaries owns any real property. The property held under lease by the Company and its subsidiaries that is material to the conduct of the business of the Company and its subsidiaries, taken as a whole, is held under valid, subsisting and enforceable leases with only such exceptions as do not interfere in any material respect with the conduct of the business of the Company and its subsidiaries; the Company is not aware of the need for any acquisition or license by the Company of any rights under patents, patent applications, patent rights, inventions, trade secrets, know-how, trademarks, trademark applications, service marks, service mark applications, tradenames, copyrights, or other similar rights (collectively, the “Intellectual Property”) necessary for the conduct of the business of the Company as currently carried on and as described in the Registration Statement and the Prospectus, except where the failure to do so would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole. Except as disclosed in the Registration Statement or the Prospectus, to the Company’s knowledge no name which the Company or its subsidiaries use and no other aspect of the business of the Company or its subsidiaries will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property of others, except where it would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole.

 

(t) Except as disclosed in the Prospectus or the Registration Statement, (i) the Company has not received any notice of, and has no knowledge of any infringement of or conflict with asserted rights of the Company by others with respect to any of the Company’s material Intellectual Property; (ii) the Company has no knowledge of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property necessary for the conduct of the business of the

 

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Company as currently carried on other than as described in the Prospectus, which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company and its subsidiaries, taken as a whole; and (iii) to the knowledge of the Company, none of the patents owned or licensed by the Company and necessary for the conduct of the business of the Company as currently carried on are unenforceable or invalid. The Company has duly and properly filed or caused to be filed with the United States Patent and Trademark Office (the “PTO”) all patent applications covering the Company’ s products described or referred to in the Prospectus that the Company in its business judgment deemed appropriate, and believes it has met its duty of candor and good faith disclosure to the PTO for the Company patent applications; and the Company has not terminated or breached and is not in violation of any agreement covering its Intellectual Property rights, which agreement, if terminated, would have a material adverse effect on the Company and its subsidiaries, taken as a whole. The Company is not aware of the granting of any patents to third parties or the filing of patent applications by third parties to any Intellectual Property of the Company necessary for the conduct of the business of the Company other than as described in the Prospectus or the Registration Statement. The Company is not aware of any other rights of third parties to any Intellectual Property of the Company necessary for the conduct of the business of the Company other than non-exclusive licenses the Company has granted to third parties in the ordinary course of the Company’s business.

 

(u) No material labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, except as described in the Prospectus; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that would reasonably be expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole.

 

(v) The Company and its subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as the Company reasonably believes are (i) adequate for the conduct of its business and (ii) in an amount customary in the business in which it is engaged; neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company nor any of its subsidiaries believes that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, except as described in the Prospectus.

 

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(w) The Company maintains a system of internal accounting controls sufficient to provide on a consolidated basis reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(x) The Company has no direct or indirect subsidiary that is a significant subsidiary (as such term is defined in Rule 1-02 of Regulation S-X, as promulgated by the Commission as of the date hereof.)

 

(y) The financial statements incorporated by reference in the Registration Statement and Prospectus present fairly in all material respects the consolidated financial position of the Company and its subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and, except as otherwise disclosed in the Prospectus, such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and any schedules included in the Registration Statement present fairly in all material respects the information required to be stated therein.

 

(z) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries incorporated by reference in the Prospectus, are independent public accountants as required by the Securities Act and the applicable rules and regulations thereunder.

 

(aa) The Company’s Common Stock outstanding immediately prior to the date hereof is registered pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market, and the Company has not taken steps to effect the termination of the registration of the Common Stock under the Exchange Act or the delisting of the Common Stock from the Nasdaq National Market, nor has the Company received any notification that the Commission or the National Association of Securities Dealers, Inc. (the “NASD”) is contemplating terminating such registration or listing. Neither the Company nor, to the knowledge of the Company, any of its officers or directors has a direct or indirect affiliation or association with (i) a member of the NASD, (ii) a person associated with a member of the NASD, (iii) an affiliate of a member of the NASD, or (iv) an underwriter or related person with respect to the offering of Shares (as each term is defined in the rules of the NASD).

 

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2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective numbers of Firm Shares set forth in Schedule I hereto opposite its name at $15.7575 a share (the “Purchase Price”).

 

On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriters the Additional Shares, and the Underwriters shall have the right to purchase, severally and not jointly, up to 1,050,000 Additional Shares at the Purchase Price. You may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving written notice of each election to exercise the option not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. Each purchase date must be at least one business day after the written notice is given and may not be earlier than the closing date for the Firm Shares nor later than ten business days after the date of such notice. Additional Shares may be purchased as provided in Section 4 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. On each day, if any, that Additional Shares are to be purchased (an “Option Closing Date”), each Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares.

 

The Company hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during the period ending 90 days after the date of the final Prospectus Supplement, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold hereunder; (B) the issuance by the Company of shares of Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof; (C) the grant by the Company of any options, restricted stock or other awards that are not

 

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exercisable during the period ending 90 days after the date of the final Prospectus Supplement pursuant to benefit plans existing on the date hereof, as any such plan may be amended after the date hereof; or (D) the issuance by the Company of shares of Common Stock having an aggregate fair market value not in excess of $100 million (calculated using the five trading day average prior to the date of issuance) in connection with any acquisition, business combination or similar transaction, provided that the recipients of any such shares agree to the restrictions set forth in the foregoing sentence with respect to such shares for the remainder of the period ending 90 days after the date of the final Prospectus Supplement.

 

3. Terms of Public Offering. The Company is advised by you that the Underwriters propose to make a public offering of their respective portions of the Shares as soon as this Agreement has become effective as in your judgment is advisable. The Company is further advised by you that the Shares are to be offered to the public initially at $16.50 a share (the “Public Offering Price”) and to certain dealers selected by you at a price that represents a concession not in excess of $0.45 a share under the Public Offering Price.

 

4. Payment and Delivery. Payment for the Firm Shares shall be made to the Company by wire transfer of immediately available funds against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on February 19, 2004, or at such other time on the same or such other date, not later than February 26, 2004, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the “Closing Date.”

 

Payment for any Additional Shares shall be made to the Company by wire transfer of immediately available funds against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 2 or at such other time on the same or on such other date, in any event not later than March 26, 2004, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the “Option Closing Date.”

 

The Firm Shares and Additional Shares shall be registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall be delivered to you on the Closing Date or an Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with any transfer taxes payable in connection with the transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price therefor.

 

5. Conditions to the Underwriters’ Obligations. The obligations of the Company to sell the Shares to the Underwriters and the several obligations of the

 

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Underwriters to purchase and pay for the Shares on the Closing Date are subject to the condition that the Registration Statement shall continue to be effective on the date hereof.

 

The several obligations of the Underwriters are subject to the following further conditions:

 

(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date:

 

(i) there shall not have occurred any downgrading, nor shall any notice have been given to the Company of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating, if any, accorded any of the Company’s securities by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and

 

(ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Registration Statement and the Prospectus as amended or supplemented on or prior to the date of this Agreement that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus.

 

(b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect set forth in Section 5(a)(i) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.

 

The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened.

 

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(c) The Underwriters shall have received on the Closing Date an opinion of Joseph A. Hedal, Esq., General Counsel for the Company, dated the Closing Date, to the effect that:

 

(i) the Company has been duly organized, is validly existing as a corporation in good standing under the laws of the Commonwealth of Massachusetts, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing as a foreign corporation in Arizona, California, Indiana, Pennsylvania and Texas;

 

(ii) each of LTX Asia International, Inc. and LTX LLC has been duly incorporated or formed, as the case may be, and is validly existing as a corporation or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its incorporation or formation, has the corporate power and authority or limited liability company power and authority, as the case may be, to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing as a foreign corporation or foreign limited liability company, as the case may be, in Massachusetts;

 

(iii) all of the issued shares of capital stock or interests, as the case may be, of each of LTX Asia International, Inc. and LTX LLC have been duly and validly authorized and issued, are fully paid and non-assessable and are owned of record directly by the Company;

 

(iv) the issuance of the Shares will not be subject to any pre-emptive or similar right under the articles of organization of the Company, the by laws of the Company, the Massachusetts Business Corporation Law, or any agreement or other instrument binding upon the Company that is filed as an exhibit to the Registration Statement (for clarity and avoidance of doubt, it is understood and agreed that this includes all documents filed as exhibits to any document incorporated by reference in the Registration Statement);

 

(v) the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (A) conflict with or constitute a breach of any of the terms or provisions of, or a default under, the articles of organization or by-laws of the Company or, to such counsel’s knowledge, any indenture, agreement or other instrument binding upon the Company that is filed as an exhibit to the Registration Statement (for clarity and avoidance of doubt, it is understood and agreed that this includes all documents filed as exhibits to any document incorporated by reference in the Registration Statement), or (B) violate or conflict with any United States

 

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federal or Massachusetts state law, rule or regulation, or any judgment, order or decree of any governmental body, agency or court specifically naming the Company or any subsidiary of which such counsel is aware; and no consent, approval, authorization or order of, or qualification with, any United States federal or Massachusetts state governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares;

 

(vi) such counsel does not know of any (i) legal or governmental proceedings pending or threatened 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 by the applicable rules and regulations under the Securities Act to be described in the Registration Statement or the Prospectus and are not so described or (ii) contracts or other documents that are required by the applicable rules and regulations under the Securities Act to be filed as exhibits to the Registration Statement that are not filed as required;

 

(d) The Underwriters shall have received on the Closing Date an opinion of Hale and Dorr LLP, outside counsel for the Company, dated the Closing Date, to the effect that:

 

(i) the authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained or incorporated by reference into the Prospectus under the caption “Description of Common Stock”;

 

(ii) the Shares have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and the issuance of the Shares will not be subject to any pre-emptive or similar right under the articles of organization of the Company, the by laws of the Company or the Massachusetts Business Corporation Law;

 

(iii) this Agreement has been duly authorized, executed and delivered by the Company;

 

(iv) the statements (i) in the Prospectus under the caption “Description of Common Stock” and (ii) in the Registration Statement in Item 15 thereof, in each case insofar as such statements constitute matters of law or legal conclusions, have been reviewed by such counsel and are correct in all material respects;

 

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(v) the Company is not, and after giving effect to the issuance and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;

 

(vi) the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (A) conflict with or constitute a breach of any of the terms or provisions of, or a default under, the articles of organization or by-laws of the Company or (B) violate or conflict with any United States federal or Massachusetts state law, rule or regulation that in such counsel’s experience is normally applicable in transactions of the type contemplated by this Agreement, or any judgment, order or decree of any governmental body, agency or court specifically naming the Company or any subsidiary of which such counsel is aware; and no consent, approval, authorization or order of, or qualification with, any United States federal or Massachusetts state governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares; and

 

(vii) In addition to the opinions provided above, such counsel shall confirm to you as follows: In the course of acting as outside counsel for the Company in connection with the preparation of the Registration Statement and the Prospectus (other than the documents incorporated by reference therein), such counsel has participated in conferences with officers and other representatives of the Company, representatives of and counsel for the Underwriters and representatives of the independent public accountants of the Company, during which the contents of the Registration Statement and the Prospectus were discussed (including the documents incorporated by reference therein).

 

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While the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such that such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (except to the extent expressly set forth in Section 5(d)(i) and 5(d)(iv) above), subject to the foregoing and based on such participation and discussions, no facts have come to such counsel’s attention that have caused such counsel to believe that:

 

(A) any document filed pursuant to the Exchange Act and incorporated by reference in the Registration Statement and the Prospectus (except for the financial statements, including the notes and schedules thereto, and other financial, accounting or statistical data included or incorporated by reference therein, as to which such counsel need not express any view) when so filed did not appear on its face to be appropriately responsive in all material respects to the applicable requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder;

 

(B) the Registration Statement or the Prospectus (except for the financial statements, including the notes and schedules thereto, and other financial, accounting or statistical data included therein, as to which such counsel need not express any view) do not appear on their face to be appropriately responsive in all material respects to the applicable requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder;

 

(C) the Registration Statement or the prospectus included therein (except for the financial statements, including the notes and schedules thereto, and other financial, accounting or statistical data included therein, as to which such counsel need not express any view) at the time the Registration Statement became effective 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

 

(D) the Prospectus (except for the financial statements, including the notes and schedules thereto, and other financial, accounting or statistical data included therein, as to which such counsel need not express any view) as of its date or as of the Closing Date contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(e) The Underwriters shall have received on the Closing Date an opinion of Testa, Hurwitz & Thibeault, LLP, counsel for the Underwriters, dated the Closing Date, covering the matters referred to in Sections 5(d)(ii), 5(d)(iii), clauses (B), (C) and (D) of Section 5(d)(vii) above and the statements in the Prospectus Supplement under “Underwriters” insofar as such statements constitute matters of law or legal conclusions and have been reviewed by such counsel and are correct in all material respects;

 

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With respect to clauses (B), (C) and (D) of Section 5(d)(vii) above, Testa, Hurwitz & Thibeault, LLP may state that their views are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto (other than documents incorporated by reference) and upon review and discussion of the contents thereof (including documents incorporated by reference), but are without independent check or verification except as specified.

 

The opinions of Joseph A. Hedal, Esq. and Hale and Dorr LLP described in Sections 5(c) and 5(d) above shall be rendered to the Underwriters at the request of the Company and shall so state therein.

 

(f) The Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters, from Ernst & Young LLP, independent public accountants, 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 or incorporated by reference into the Registration Statement and the Prospectus (whether such information is included or incorporated by reference before or after the date of this Agreement); provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.

 

(g) The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and the executive officers and directors of the Company relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date.

 

The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to you on the applicable Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of such Additional Shares.

 

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6. Covenants of the Company. In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows:

 

(a) To furnish to you, without charge, 4 conformed copies of the Registration Statement (including exhibits thereto and documents incorporated by reference) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto but including documents incorporated by reference) and to furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 6(c) below, as many copies of the Prospectus, any documents incorporated by reference, and any supplements and amendments thereto or to the Registration Statement as you may reasonably request. The terms “supplement” and “amendment” or “amend” as used in this Agreement shall include all documents subsequently filed by the Company with the Commission pursuant to Exchange Act of 1934, as amended, that are deemed to be incorporated by reference in the Prospectus.

 

(b) Before amending or supplementing the Registration Statement or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably and promptly object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.

 

(c) If, during such period after the first date of the public offering of the Shares as in the reasonable opinion of counsel for the Underwriters the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law.

 

(d) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request; provided, however, that neither the Company nor its subsidiaries

 

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shall be obligated to qualify as a foreign corporation in any jurisdiction where it is not then qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject.

 

(e) To make generally available to the Company’s security holders and to you as soon as practicable an earnings statement covering the twelve-month period ending April 30, 2005 that satisfies the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder.

 

(f) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountants in connection with the registration and delivery of the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration Statement, the Preliminary Prospectus, the Prospectus and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or Legal Investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 6(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or Legal Investment memorandum, (iv) any filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by the National Association of Securities Dealers, Inc., (v) all costs and expenses incident to listing the Shares on the Nasdaq National Market, (vi) the cost of printing certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and one half of the cost of any aircraft chartered in connection with the road

 

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show, (ix) the document production charges and expenses associated with printing this Agreement and (x) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 7 entitled “Indemnity and Contribution”, and the last paragraph of Section 9 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make.

 

7. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, the Preliminary Prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by or on behalf of such Underwriter through you expressly for use therein, provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Shares, or any person controlling or who is an affiliate of such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered at or prior to written confirmation of the sale of the Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure to send or give a copy of the Prospectus (as so amended or supplemented) is the result of noncompliance by the Company with Section 6(a) hereof.

 

(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the

 

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same extent as the foregoing indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by or on behalf of such Underwriter through you expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto.

 

(c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay 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, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (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 representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party 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 (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to Section 7(a), and by the Company, in the case of parties indemnified pursuant to Section 7(b). 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. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement (other than reimbursement for fees and expenses that the indemnifying party is contesting in good faith). No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have

 

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been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

 

(d) To the extent the indemnification provided for in Section 7(a) or 7(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 7(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 7(d)(i) above but also the relative fault of the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares. The relative fault of the Company on the one hand and 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 by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint.

 

(e) The Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 7 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 that does not take account of the equitable considerations referred to in Section 7(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, 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 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the

 

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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. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

 

(f) The indemnity and contribution provisions contained in this Section 7 and the representations, warranties and other statements of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares.

 

8. Termination. The Underwriters may terminate this Agreement by notice given by you to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange or the Nasdaq National Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, (iv) any general moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in your judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Prospectus.

 

9. Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

 

If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule I bears to the aggregate number of Firm Shares set

 

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forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 9 by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased, and arrangements satisfactory to you and the Company for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

 

If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.

 

10. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

11. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

 

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12. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

 

Very truly yours,

LTX CORPORATION

By:

  

/s/    Roger W. Blethen

Name:

  

Roger W. Blethen

Title:

  

Chairman of the Board and

Chief Executive Officer

 

Accepted as of the date hereof

 

Morgan Stanley & Co. Incorporated

Deutsche Bank Securities Inc.

Needham & Company, Inc.

 

Acting severally on behalf of themselves and the several Underwriters named in Schedule I hereto.

 

By:

  

Morgan Stanley & Co. Incorporated

By:

  

/s/    Joseph P. Coleman

Name:

  

Joseph P. Coleman

Title:

  

Managing Director

 

 

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SCHEDULE I

 

Underwriter

   

Number of Firm Shares

To Be Purchased

Morgan Stanley & Co. Incorporated

    3,150,000

Deutsche Bank Securities Inc.

    2,450,000

Needham & Company, Inc..

    1,400,000
    

Total:

    7,000,000

 

EXHIBIT A

 

[FORM OF LOCK-UP LETTER]

 

                    , 2004

 

Morgan Stanley & Co. Incorporated

Deutsche Bank Securities Inc.

Needham & Company, Inc.

c/o Morgan Stanley & Co. Incorporated

       1585 Broadway

       New York, NY 10036

 

Dear Sirs and Mesdames:

 

The undersigned understands that Morgan Stanley & Co. Incorporated (“Morgan Stanley”) proposes to enter into an Underwriting Agreement (the “Underwriting Agreement”) with LTX Corporation, a Massachusetts corporation (the “Company”), providing for the public offering (the “Public Offering”) by the several Underwriters, including Morgan Stanley (the “Underwriters”), of                      shares (the “Shares”) of the Common Stock, par value $0.05 per share, of the Company (the “Common Stock”).

 

To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of Morgan Stanley on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 90 days after the date of the final supplement to the prospectus relating to the Public Offering (the “Prospectus”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares to the Underwriters pursuant to the Underwriting Agreement, (b) transactions relating to shares of Common Stock or other securities acquired in open market transactions after the completion of the Public Offering, (c) transactions relating to shares of Common Stock or other securities pursuant to trading plans that existed prior to the date hereof and that comply with the requirements of Rule 10b5-1(c)(1) of the

Securities Exchange Act of 1934, as amended, or (d) the transfer of shares of Common Stock or other securities to an immediate family member or any trust established for the benefit of the transferor or an immediate family member of the transferor or a corporation, partnership, limited partnership or limited liability company wholly owned by the transferor or any combination of the transferor and members of his or her immediate family, provided that, in each case pursuant to this clause (d), (i) the transferee signs and delivers to the Underwriters a lock-up letter substantially in the form of this letter and (ii) during the restricted period referred to in the foregoing sentence, the undersigned shall not be required to, and shall not voluntarily, file a report under Section 16 of the Securities Exchange Act of 1934, as amended, reporting a reduction in beneficial ownership of shares of Common Stock. In addition, the undersigned agrees that, without the prior written consent of Morgan Stanley on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 90 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s share of Common Stock except in compliance with the foregoing restrictions.

 

The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Public Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns.

 

Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters. Notwithstanding anything herein to the contrary, if the closing of the Public Offering has not occurred prior to March 1, 2004, this Lock-up Agreement shall terminate and be of no further force or effect.

 

Very truly yours,

(Name)

(Address)

 

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