1
Exhibit 1.1
[Number of Shares]
SILICON ENTERTAINMENT, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
November __, 1999
XX XXXXX SECURITIES CORPORATION
CIBCWorld Markets Corp.
X.X. Xxxxxxxx & Co.
E*OFFERING Corp.
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. Silicon Entertainment, Inc., a Delaware corporation (the
"Company"), proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of _____ shares of common stock, $0.001 par
value (the "Common Stock") of the Company (the "Company"). The aggregate of ____
shares so proposed to be sold is hereinafter referred to as the "Firm Stock".
The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 3 hereof, up to an additional ______ shares of
Common Stock (the "Optional Stock"). The Firm Stock and the Optional Stock are
hereinafter collectively referred to as the "Stock." XX Xxxxx Securities
Corporation ("XX Xxxxx") and CIBC World Markets Corp, X.X. Xxxxxxxx & Co. and
E*OFFERING Corp. are acting as representatives of the several Underwriters and
in such capacity are hereinafter referred to as the "Representatives."
2. (I) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Underwriters that:
a. A registration statement on Form S-1 (File No. 333-87019) (the
"Initial Registration Statement") in respect of the Stock has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations (the "Rules and Regulations") of the Commission
thereunder, which became effective upon filing, no other document with respect
to the Initial Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective
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amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, is threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the Rules and Regulations, is hereinafter called a
"Preliminary Prospectus"); the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including (i) the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act and deemed by virtue of Rule 430A under the Securities Act to be
part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statements"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Securities Act, is
hereinafter called the "Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. No order
preventing or suspending the use of any Preliminary Prospectus has been issued
by the Commission.
b. The Registration Statement conforms (and the Rule 462(b) Registration
Statement, if any, the Prospectus and any amendments or supplements to either of
the Registration Statements or the Prospectus, when they become effective or are
filed with the Commission, as the case may be, will conform) in all material
respects to the requirements of the Securities Act and the Rules and Regulations
and do not and will not, as of the applicable effective date (as to the
Registration Statements and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement thereto)
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; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statements or the Prospectus or any such amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
c. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and it has
the power and authority necessary to own or hold its properties and to conduct
the business in which it is engaged, except where the failure to so qualify or
have such power or authority would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Company (a "Material Adverse Effect").
The Company does not have any Subsidiaries (as defined in Section 14 herein) and
does not own or control, directly or indirectly, any other corporations,
associations or other entities.
d. This Agreement has been duly authorized, executed and delivered by the
Company.
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e. The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued,
fully paid and nonassessable and free of any preemptive or similar rights and
will conform in all material respects to the description thereof contained in
the Prospectus.
f. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform in all material respects to the description thereof contained in the
Prospectus.
g. The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, except for such conflicts,
breaches, violations and defaults that would not, individually or in the
aggregate, result in a Material Adverse Effect, nor will such actions result in
any violation of the provisions of the charter or by-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties or assets.
h. Except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby.
i. PricewaterhouseCoopers LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the Registration
Statements and the Prospectus are independent public accountants as required by
the Securities Act and the Rules and Regulations.
j. The financial statements, together with the related notes and
schedules, included in the Prospectus and in each Registration Statement fairly
present the financial position and the results of operations and changes in
financial position of the Company at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the Prospectus.
k. The Company has not sustained, since the date of the latest audited
financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
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contemplated in the Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any material
adverse change, or to the Company's knowledge, any development involving a
prospective material adverse change, in or affecting the business, general
affairs, management, financial position, stockholders' equity or results of
operations of the Company otherwise than as set forth or contemplated in the
Prospectus.
l. Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company is a party or of which any
property or assets of the Company is the subject which, if determined adversely
to the Company, might have a Material Adverse Effect or would prevent or
adversely affect the ability of the Company to perform its obligations under
this Agreement; and to the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
m. The Company (i) is not in violation of its charter or by-laws, (ii) is
not in default in any respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject or (iii) is in violation in any respect of any
law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject, except any violations or defaults which,
singularly or in the aggregate, would not have a Material Adverse Effect.
n. The Company possesses all licenses, certificates, authorizations and
permits issued by, and have made all declarations and filings with, the
appropriate state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of its properties or the conduct of its
businesses as described in the Prospectus except where any failures to possess
or make the same, singularly or in the aggregate, would not have a Material
Adverse Effect, and the Company has not received notification of any revocation
or modification of any such license, authorization or permit and has no reason
to believe that any such license, certificate, authorization or permit will not
be renewed.
o. The Company will not, after giving effect to the offering of the Stock
and the application of the proceeds thereof as described in the Prospectus,
become an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission thereunder.
p. Neither the Company nor any of its officers, directors or affiliates
has taken or will take, directly or indirectly, any action designed or intended
to stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security
of the Company.
q. The Company owns or possesses the right to use all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by it for the
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conduct of its business, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company with
respect to the foregoing. The Company's business as now conducted and as
proposed to be conducted (in each case, as described in the Prospectus) does not
and will not infringe or conflict with any patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses or other intellectual property
or franchise right of any person. Except as described in the Prospectus, no
claim has been made against the Company alleging the infringement by the Company
of any patent, trademark, service xxxx, trade name, copyright, trade secret,
license in or other intellectual property right or franchise right of any
person.
r. The Company has good and marketable title in fee simple to, or has
valid rights to lease or otherwise use, all items of real or personal property
which is material to the business of the Company, in each case free and clear of
all liens, encumbrances, claims and defects that may result in a Material
Adverse Effect.
s. No labor disturbance by the employees of the Company exists or, to the
Company's knowledge, is imminent which might be expected to have a Material
Adverse Effect. The Company is not aware that any key employee or significant
group of employees of the Company plans to terminate employment with the
Company.
t. No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")), or
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has been
waived) has occurred with respect to any employee benefit plan which could have
a Material Adverse Effect; each employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the Code; the Company
has not incurred and does not expect to incur liability under Title IV of ERISA
with respect to the termination of, or withdrawal from, any "pension plan"; and
each "pension plan" (as defined in ERISA) for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could cause the loss of such qualification.
u. There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of toxic
or other wastes or other hazardous substances by, due to, or caused by the
Company (or, to the Company's knowledge, any other entity for whose acts or
omissions the Company is or may be liable) upon any of the property now or
previously owned or leased by the Company, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability which would
not have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no disposal, discharge,
emission or other release of any kind onto
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such property or into the environment surrounding such property of any toxic or
other wastes or other hazardous substances with respect to which the Company has
knowledge, except for any such disposal, discharge, emission, or other release
of any kind which would not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.
v. The Company (i) has filed all necessary federal, state and foreign
income and franchise tax returns, (ii) has paid all federal state, local and
foreign taxes due and payable for which it is liable, and (iii) does not have
any tax deficiency or claims outstanding or assessed or, to the Company's
knowledge, proposed against it which could reasonably be expected to have a
Material Adverse Effect.
w. The Company carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of its properties and as is customary for companies engaged in similar
businesses in similar industries.
x. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
y. The minute books of the Company have been made available to the
Underwriters and counsel for the Underwriters, and such books (i) contain a
complete summary of all meetings and actions of the directors and stockholders
of the Company since the time of its incorporation through the date of the
latest meeting and action, and (ii) accurately, in all material respects,
reflect all transactions referred to in such minutes.
z. There is no franchise, lease, contract, agreement or document required
by the Securities Act or by the Rules and Regulations to be described in the
Prospectus or to be filed as an exhibit to the Registration Statements which is
not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the
Registration Statements are accurate and complete descriptions of such documents
in all material respects.
aa. No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus and which is not so described.
bb. No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing or
effectiveness of the Registration Statements or otherwise, except for persons
and entities who have expressly waived such right or who have been given proper
notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right.
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cc. The Company does not own any "margin securities" as that term is
defined in Regulations G and U of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), and none of the proceeds of the sale of
the Stock will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation G, T, U or X of
the Federal Reserve Board.
dd. The Company is not a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company or the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Stock.
ee. No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Prospectus
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
ff. The Company has reviewed its operations and that of any third parties
with which the Company has a material relationship to evaluate the extent to
which the business or operations of the Company will be affected by the Year
2000 Problem. As a result of such review, the Company has no reason to believe,
and does not believe that the Year 2000 Problem will have a Material Adverse
Effect. The "Year 2000 Problem" as used herein means any significant risk that
computer hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
gg. The Stock has been approved for listing subject to notice of issuance
on the NASDAQ Stock Market's National Market.
3. PURCHASE SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company that number of shares of Firm Stock (rounded up or down, as
determined by XX Xxxxx in its discretion, in order to avoid fractions) obtained
by multiplying _____ shares of Firm Stock by a fraction, the numerator of which
is the number of shares of Firm Stock set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the total
number of shares of Firm Stock.
The purchase price per share to be paid by the Underwriters to the Company
for the Stock will be $_____ per share (the "Purchase Price").
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names
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and in such denominations as the Representatives may direct by notice in writing
to the Company given at or prior to 12:00 Noon, New York time, on the second
full business day preceding the First Closing Date (as defined below)) against
payment of the aggregate Purchase Price therefor by wire transfer to an account
at a bank reasonably acceptable to XX Xxxxx, payable to the order of the
Company, all at the offices of Xxxx Xxxx Xxxx & Freidenrich LLP, 000 Xxxxxxxx
Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 10:00 A.M., New York time, on , 1999, in
accordance with Rule 15c6-1 of the Exchange Act. The time and date of such
payment and delivery are herein referred to as the "First Closing Date." The
First Closing Date and the location of delivery of, and the form of payment for,
the Firm Stock may be varied by agreement between the Company and XX Xxxxx.
The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters in New York, New
York at least twenty-four hours prior to the First Closing Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase all or less than all of the Optional Stock. The price
per share to be paid for the Optional Stock shall be the Purchase Price. The
Company agrees to sell to the Underwriters the number of shares of Optional
Stock specified in the written notice by XX Xxxxx described below and the
Underwriters agree, severally and not jointly, to purchase such shares of
Optional Stock. Such shares of Optional Stock shall be purchased from the
Company for the account of each Underwriter in the same proportion as the number
of shares of Firm Stock set forth opposite such Underwriter's name bears to the
total number of shares of Firm Stock (subject to adjustment by XX Xxxxx to
eliminate fractions). The option granted hereby may be exercised as to all or
any part of the Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by XX Xxxxx to the Company.
The option granted hereby may be exercised by written notice given to the
Company by XX Xxxxx setting forth the number of shares of the Optional Stock to
be purchased by the Underwriters and the date and time for delivery of and
payment for the Optional Stock. Each date and time for delivery of and payment
for the Optional Stock (which may be the First Closing Date, but not earlier) is
herein called the "Option Closing Date" and shall in no event be earlier than
two (2) business days nor later than five (5) business days after written notice
is given. (The Option Closing Date and the First Closing Date are herein called
the "Closing Dates.")
The Company will deliver the Optional Stock to the Underwriters (in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York time,
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on the second full business day preceding the Option Closing Date) against
payment of the aggregate Purchase Price therefor in federal (same day) funds by
certified or official bank check or checks or wire transfer to an account at a
bank reasonably acceptable to XX Xxxxx payable to the order of the Company all
at the offices of Xxxx Xxxx Xxxx & Freidenrich LLP, 000 Xxxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000. Time shall be of the essence, and delivery at the time
and place specified pursuant to this Agreement is a further condition of the
obligations of each Underwriter hereunder. The Company shall make the
certificates for the Optional Stock available to the Representatives for
examination on behalf of the Underwriters in New York, New York not later than
10:00 A.M., New York Time, on the business day preceding the Option Closing
Date. The Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by agreement between the Company
and XX Xxxxx.
The several Underwriters propose to offer the Stock for sale upon the terms
and conditions set forth in the Prospectus.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
a. The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form reasonably satisfactory to the Representatives and file
such Rule 462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form reasonably satisfactory to the Representatives
and file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the second business day following the execution and delivery of this
Agreement; make no further amendment or any supplement to the Registration
Statements or to the Prospectus to which the Representatives shall reasonably
object by written notice to the Company after a reasonable period to review;
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to either Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Representatives with copies thereof; advise
the Representatives, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statements or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, use promptly its best efforts to obtain its withdrawal.
b. If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus relating
to the Stock is required to be delivered any event occurs as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus,
the Company will promptly notify the Representatives thereof and upon their
request will prepare an amended or
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supplemented Prospectus which will correct such statement or omission or effect
such compliance. The Company will furnish without charge to each Underwriter and
to any dealer in securities as many copies as the Representatives may from time
to time reasonably request of such amended or supplemented Prospectus; and in
case any Underwriter is required to deliver a prospectus relating to the Stock
nine months or more after the effective date of the Initial Registration
Statement, the Company upon the request of the Representatives and at the
expense of such Underwriter will prepare promptly an amended or supplemented
Prospectus as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act.
c. The Company will furnish promptly to each of the Representatives and
to counsel for the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed therewith.
d. The Company will deliver promptly to the Representatives in New York
City such number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration Statements as
originally filed with the Commission and each amendment thereto (in each case
excluding exhibits), (ii) each Preliminary Prospectus, (iii) the Prospectus (not
later than 10:00 A.M., New York time, of the business day following the
execution and delivery of this Agreement) and any amended or supplemented
Prospectus (not later than 10:00 A.M., New York City time, on the business day
following the date of such amendment or supplement).
e. The Company will make generally available to its stockholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company, Rule
158).
f. The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may designate and to continue such qualifications in effect for
so long as required for the distribution of the Stock; provided that the Company
and its subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
g. During the period of three years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the other
Underwriters, (i) as soon as they are available, copies of all reports or other
communications furnished to shareholders and (ii) as soon as they are available,
copies of any reports and financial statements furnished or filed with the
Commission pursuant to the Exchange Act or any national securities exchange or
automatic quotation system on which the Stock is listed or quoted.
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h. The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock for a period of 180 days from the date of the Prospectus without the prior
written consent of XX Xxxxx other than the Company's sale of the Stock hereunder
and the issuance of shares pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans existing on the date hereof or
pursuant to currently outstanding options, warrants or rights; the Company will
cause each officer, director and shareholder listed in Schedule B to furnish to
the Representatives, prior to the First Closing Date, a letter, substantially in
the form of Exhibit I hereto, pursuant to which each such person shall agree not
to directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock for a period of
180 days from the date of the Prospectus, without the prior written consent of
XX Xxxxx.
i. The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Stock under the Securities Act.
j. Prior to each of the Closing Dates the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.
k. Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and consistent with
the past practices of the Company and of which the Representatives are
notified), without the prior consent of the Representatives, unless in the
judgment of the Company and its counsel, and after notification to the
Representatives, such press release or communication is required by law.
l. In connection with the offering of the Stock, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Stock, the
Company will not, and will cause its affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Stock, or attempt to induce
any person to purchase any Stock; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the Stock.
m. The Company will not take any action prior to the Option Closing Date
which would require the Prospectus to be amended or supplemented pursuant to
Section 4(b);
n. The Company will apply the net proceeds from the sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds."
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5. PAYMENT OF EXPENSES. The Company agrees with the Underwriter to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statement,
Preliminary Prospectus, Prospectus, any amendments and exhibits thereto, the
costs of printing, reproducing and distributing the "Agreement Among
Underwriters" between the Representatives and the Underwriters, the Master
Selected Dealers' Agreement, the Underwriters' Questionnaire and this Agreement
by mail, telex or other means of communications; (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the National Association of Securities
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(f) and of preparing, printing and distributing Blue Sky
Memoranda and Legal Investment Surveys (including related fees and expenses of
counsel to the Underwriters in an amount not to exceed $10,000); (g) all fees
and expenses of the registrar and transfer agent of the Stock; and (h) all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement (including, without limitation, the fees and expenses of
the Company's counsel and the Company's independent accountants); provided that,
except as otherwise provided in this Section 5 and in Section 9, the
Underwriters shall pay their own costs and expenses, including the fees and
expenses of their counsel, any transfer taxes on the Stock which they may sell
and the expenses of advertising any offering of the Stock made by the
Underwriters.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of their obligations hereunder, and to each of the following additional
terms and conditions:
a. No stop order suspending the effectiveness of either the Registration
Statements shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statements or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives. The Rule 462(b) Registration
Statement, if any, and the Prospectus shall have been timely filed with the
Commission in accordance with Section 4(a).
b. None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of counsel for the Underwriters, is material or
omits to state any fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to make the statements therein
not misleading.
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c. All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Stock, the
Registration Statement and the Prospectus and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
x. Xxxx Xxxx Xxxx & Freidenrich LLP shall have furnished to the
Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and substance
reasonably satisfactory to the Representatives, 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 its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business as described in the Registration
Statements requires such qualification, and it has the power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged, except where the failure to so qualify or have such power or
authority would not have a Material Adverse Effect.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company,
including the Stock being delivered on the Closing Date, have been duly and
validly authorized and issued, are fully paid (assuming receipt of payment for
the Stock by the Underwriters as provided herein) and non-assessable and conform
to the description thereof contained in the Prospectus.
(iii) There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any shares of the
Stock pursuant to the Company's charter or by-laws or any agreement or other
instrument known to such counsel.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company.
(v) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not conflict with
or result in a material breach or violation of any agreement, stock plan or
stock option plan filed as an exhibit to the Registration Statement, nor will
such actions result in any violation of the Charter or by-laws of the Company or
any statute or any order, rule or regulation of any court or governmental agency
or body or court having jurisdiction over the Company or any of its properties
or assets.
(vi) Except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the
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execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(vii) The statements in the Prospectus under the headings
"Business--Licensing Agreements", "Management--Stock Option Plans", "Description
of Capital Stock" and "Shares Eligible for Future Sale" and in Item 14 and Item
15 of the Registration Statement, to the extent that they constitute summaries
of matters of law or regulation or legal conclusions, have been reviewed by such
counsel and fairly summarize the matters described therein in all material
respects.
(viii) The description in the Registration Statement and Prospectus of
statutes, legal or governmental proceedings and contracts and other documents
are accurate in all material respects; and to such counsel's knowledge, there
are no statutes, legal or governmental proceedings, contracts or other documents
of a character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement which are
not described or filed as required.
(ix) To such counsel's knowledge, the Company (i) is not in
violation of its charter or by-laws, (ii) is not in default, and no event has
occurred, which, with notice or lapse of time or both, would constitute a
default, in the due performance or observance of any term, covenant or condition
contained in any agreement or stock plan or stock option plan filed as an
exhibit to the Registration Statement or (iii) is not in violation of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business except, in
the case of clauses (ii) and (iii), for those defaults, violations or failures
which, in the aggregate, would not have a Material Adverse Effect.
(x) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company is a party or of which any property or asset of the Company is the
subject which, in the aggregate, if determined adversely to the Company, might
have a Material Adverse Effect or would prevent or adversely affect the ability
of the Company to perform its obligations under this Agreement; and, to such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xi) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the Rule
462(b) Registration Statement, if any, was filed with the Commission on the date
specified therein, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in such
opinion on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission.
(xii) The Registration Statements, as of the respective effective
dates and the Prospectus, as of its date, and any further amendments or
supplements thereto, as of their
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respective dates, made by the Company prior to the Closing Date (other than the
financial statements and other financial data contained therein, as to which
such counsel need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the Rules and
Regulations (other than the financial statements and related schedules therein,
as to which such counsel need express no opinion), when they were filed with the
Commission.
(xiii) To such counsel's knowledge, no person or entity has the right
to require registration of shares of Common Stock or other securities of the
Company because of the filing or effectiveness of the Registration Statements or
otherwise, except for persons and entities who have expressly waived such right
or who have been given proper notice and have failed to exercise such right
within the time or times required under the terms and conditions of such right.
(xiv) The Company is not an "investment company" within the meaning
of the Investment Company Act and the rules and regulations of the Commission
thereunder.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that (x) such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statements and that (y) based on such counsel's examination
of the Registration Statements and such counsel's "conferences with certain
officers and employees of and with auditors for and counsel to the Company",
such counsel has no reason to believe that the Registration Statements, as of
the respective effective dates, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that the
Prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data contained in the
Registration Statement or the Prospectus.
The foregoing opinion and statement may be qualified by a statement to the
effect that such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and takes no responsibility therefor except to the
extent set forth in the opinion described in clauses (vii) and (viii) above.
e. The Representatives shall have received from Xxxxxxx, Phleger &
Xxxxxxxx LLP counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to such matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for enabling them to pass upon such matters.
f. At the time of the execution of this Agreement, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to the
Representatives (i) confirming that they are independent certified public
accountants with respect to the Company and its subsidiaries within the meaning
of the Securities Act and the Rules and Regulations and (ii) stating the
conclusions
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and findings of such firm with respect to the financial statements and certain
financial information contained or incorporated by reference in the Prospectus.
g. On the Closing Date, the Representatives shall have received a letter
(the "bring-down letter") from PricewaterhouseCoopers LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus as of a date not more than three business days prior to the
date of the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its letter
delivered to the Representatives concurrently with the execution of this
Agreement pursuant to Section 6(g).
h. The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that (i) such officers have
carefully examined the Registration Statements and the Prospectus and, in their
opinion, the Registration Statements as of their respective effective dates and
the Prospectus, as of each such effective date, did not include any untrue
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) since the effective date of the Initial Registration Statement no event has
occurred which should have been set forth in a supplement or amendment to the
Registration Statements or the Prospectus, (iii) to their knowledge after
reasonable investigation, as of the Closing Date, the representations and
warranties of the Company in this Agreement are true and correct and the Company
has complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and (iv) subsequent to the date of the most recent financial
statements included in the Prospectus, there has been no material adverse change
in the financial position or results of operation of the Company, or any change,
or any development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, except as set forth in the
Prospectus.
i. (i) The Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
(ii) since such date there shall not have been any change in the capital stock
or long-term debt of the Company or any change, or any development involving a
prospective change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the
Company, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the Stock
on the terms and in the manner contemplated in the Prospectus.
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j. No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Stock; and no injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance or sale of the Stock.
k. Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
l. The Nasdaq National Market System shall have approved the Stock for
inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution.
m. XX Xxxxx shall have received the written agreements, substantially in
the form of Exhibit I hereto, of the officers, directors and shareholders of the
Company listed in Schedule B to this Agreement.
n. All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. INDEMNIFICATION AND CONTRIBUTION.
a. The Company shall indemnify and hold harmless each Underwriter, its
officers, employees, representatives and agents and each person, if any, who
controls any Underwriter within the meaning of the Securities Act (collectively
the "Underwriter Indemnified Parties" and each an "Underwriter Indemnified
Party") against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which that Underwriter Indemnified Party may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, either of the Registration Statements or the Prospectus
or in any amendment or supplement thereto, (ii) the omission or alleged omission
to state in any Preliminary Prospectus, either of the Registration Statements or
the Prospectus or in any amendment or supplement thereto a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (iii) any act or failure to
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act, or any alleged act or failure to act, by any Underwriter in connection
with, or relating in any manner to the Stock or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above, (provided that the Company shall not be liable in the
case of any matter covered by this clause (iii) to the extent that it is
determined in a final judgement by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted from any such act or failure
to act undertaken or omitted to be taken by such Underwriter through its gross
negligence or wilful misconduct) and shall reimburse each Underwriter
Indemnified Party promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action 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, liability or action arises out of or is based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
the Preliminary Prospectus, either of the Registration Statements or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for use therein,
which information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 16), and, provided further, however, that
with respect to any Preliminary Prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person asserting
any loss, claim, damage, liability or action purchased Stock, or any person
controlling such Underwriter, if copies of the Prospectus were timely delivered
to the Underwriter pursuant to Section 4(a) and (d) and 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 the written confirmation of the sale of the Stock to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or action. This indemnity
agreement is not exclusive and will be in addition to any liability which the
Company might otherwise have and shall not limit any rights or remedies which
may otherwise be available at law or in equity to each Underwriter Indemnified
Party.
b. Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, its officers, employees, representatives and agents, each
of its directors and each person, if any, who controls the Company within the
meaning of the Securities Act (collectively the "Company Indemnified Parties"
and each a "Company Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company Indemnified Parties may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Prospectus, either of the
Registration Statements or the Prospectus or in any amendment or supplement
thereto or (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, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
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Company through the Representatives by or on behalf of that Underwriter
specifically for use therein, and shall reimburse the Company Indemnified
Parties for any legal or other expenses reasonably incurred by such parties in
connection with investigating or preparing to defend or defending against or
appearing as third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided that the
parties hereto hereby agree that such written information provided by the
Underwriters consists solely of the Underwriter's Information. This indemnity
agreement is not exclusive and will be in addition to any liability which the
Underwriters might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to the Company Indemnified
Parties.
c. Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by XX Xxxxx, if the
indemnified parties under this Section 7 consist of any Underwriter Indemnified
Party, or by the Company, if the indemnified
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parties under this Section 7 consist of any Company Indemnified Parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 7(a) and 7(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. Subject to the
provisions of Section 7(e) below, no indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
d. If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
e. If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section 7(a) or
7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Stock or if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, 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 with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Stock purchased under this Agreement (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the Stock purchased
under this Agreement, 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 on the one hand or the Underwriters on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission; provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of the
Underwriters for use in any Preliminary Prospectus, either of the Registration
Statements or the Prospectus consists solely of the Underwriter's Information.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this
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Section 7(e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7(e) shall be deemed to include, for purposes
of this Section 7(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(e), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Stock underwritten by it and distributed to the public
was offered to the public less the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any 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.
f. The Underwriters' obligations to contribute as provided in this
Section 7(f) are several in proportion to their respective underwriting
obligations and not joint.
8. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by XX Xxxxx, in its absolute discretion by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 6(i) or 6(k) have
occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8 or 10, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason permitted under
this Agreement, or (c) the Underwriters shall decline to purchase the Stock for
any reason permitted under this Agreement the Company shall reimburse the
Underwriters for the fees and expenses of their counsel and for such other
out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the XX Xxxxx. If this
Agreement is terminated pursuant to Section 10 by reason of the default of one
or more Underwriters, the Company shall not be obligated to reimburse any
Underwriter on account of those expenses.
10. SUBSTITUTION OF UNDERWRITERS
a. If any Underwriter or Underwriters shall default in its or their
obligations to purchase shares of Stock hereunder and the aggregate number of
shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of shares
with respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and
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arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
b. If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full business days in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid or
reimbursed pursuant to Sections 5 and 9 and except the provisions of Section 7
shall not terminate and shall remain in effect.
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties, and the
indemnities of the several Underwriters shall also be for the benefit of the
Company Indemnified Parties.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Company or any person controlling any of them and shall
survive delivery of and payment for the Stock.
13. NOTICES. All statements, requests, notices and agreements hereunder shall
be in writing, and:
a. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to SG Securities Corporation Attention: Xxxxx Xxxxxxxx
(Fax: 000-000-0000); any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof;
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b. if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Silicon Entertainment, Inc. Attention: Xxxxx X. Xxxxx
(Fax: 000-000-0000); any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof.
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. UNDERWRITERS' INFORMATION. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the fourth,
ninth and tenth paragraphs under the heading "Underwriting."
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
20. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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If the foregoing is in accordance with your understanding of the agreement
between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
SILICON ENTERTAINMENT, INC.
By:
-------------------------------------
Name:
Title:
Accepted as of
the date first above written:
XX XXXXX SECURITIES CORPORATION
CIBC WORLD MARKETS CORP.
X.X. XXXXXXXX & CO.
E*OFFERING CORP.
Acting on their own behalf
and as Representatives of
several Underwriters referred
to in the foregoing Agreement.
By: XX XXXXX SECURITIES CORPORATION
By:
-------------------------------------
Name:
Title:
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SCHEDULE A
Number of Number of
Firm Shares Optional Shares
Name to be Purchased to be Purchased
---- --------------- ---------------
XX Xxxxx Securities Corporation
---------- ----------
CIBC World Markets Corp.
---------- ----------
X.X. Xxxxxxxx & Co.
---------- ----------
E*OFFERING Corp.
---------- ----------
Total
========== ==========
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SCHEDULE B
[list of shareholders subject to Section 4(h)]
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EXHIBIT I
LOCK-UP AGREEMENT
----------, ----
XX Xxxxx Securities Corporation
CIBC World Markets Corp.
X.X. Xxxxxxxx & Co.
E*OFFERING Corp.
As representatives of the
several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Silicon Entertainment, Inc.
Dear Sirs:
In order to induce XX Xxxxx Securities Corporation ("XX Xxxxx"), CIBC World
Markets Corp., X.X. Xxxxxxxx & Co. and E*OFFERING Corp. (together with XX Xxxxx,
the "Representatives"), to enter in to a certain underwriting agreement with
Silicon Entertainment, Inc. (the "Company"), with respect to the public offering
of shares of the Company's Common Stock ("Common Stock"), the undersigned hereby
agrees that for a period of 180 days following the date of the final prospectus
filed by the Company with the Securities and Exchange Commission in connection
with such public offering, the undersigned will not, without the prior written
consent of XX Xxxxx, directly or indirectly, offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares, the "Beneficially Owned
Shares")) or securities convertible into or exercisable or exchangeable in
Common Stock.
Anything contained herein to the contrary notwithstanding, any person to
whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Agreement.
In addition, the undersigned hereby waives, from the date hereof until the
expiration of 180-day period following the date of the Company's final
Prospectus, any and all rights, if any, to request or demand registration
pursuant to the Securities Act of any shares of Common Stock that are registered
in the name of the undersigned or that are Beneficially Owned Shares. In order
to enable the aforesaid covenants to be enforced, the undersigned hereby
consents to the
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placing of legends and/or stop-transfer orders with the transfer agent of the
Common Stock with respect to any shares of Common Stock or Beneficially Owned
Shares.
Dated:
----------------------
By:
-----------------------------------
Name:
Title:
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