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EXHIBIT 1.1
1,468,026 Shares
POWERHOUSE TECHNOLOGIES, INC.
Common Stock
UNDERWRITING AGREEMENT
February 9, 1998
XXXXXX XXXXXX XXXXXXXX & CO., INC.
LADENBURG XXXXXXXX & CO. INC.
As Representatives of the
several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The persons named in Schedule I (the "SELLING STOCKHOLDERS") acting
severally and not jointly and Xxxxxxx Xxxxx, as authorized representative of the
Selling Stockholders, individually and on behalf of the Selling Stockholders
("Xxxxx") propose to sell an aggregate of 1,468,026 shares (the "FIRM SHARES")
of the Common Stock, $0.01 par value per share (the "COMMON STOCK"), of
Powerhouse Technologies, Inc., a Delaware corporation (the "COMPANY"), to you
and to the other underwriters named in Schedule II (collectively, the
"UNDERWRITERS"), for whom Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc., a New York
corporation ("GKM") and Ladenburg Xxxxxxxx & Co. Inc. are acting as
representatives (the "REPRESENTATIVES"). The Company has also agreed to grant to
you and the other Underwriters an option (the "OPTION") to purchase up to an
additional 220,204 shares of Common Stock, respectively (the "OPTION SHARES") on
the terms and for the purposes set forth in Section 1(b). The Firm Shares and
Option Shares are hereinafter collectively referred to as the "SHARES."
The initial public offering price per share for the Shares and the
purchase price per share for the Shares to be paid by the several Underwriters
shall be agreed upon by the Company, the Selling Stockholders and the
Representatives, acting on behalf of the several Underwriters, and such
agreement shall be set forth in a separate written instrument substantially in
the form of Exhibit A hereto (the "PRICE DETERMINATION AGREEMENT"). The Price
Determination Agreement
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may take the form of an exchange of any standard form of written
telecommunication among the Company, the Selling Stockholders and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares shall be governed by this
Agreement, as supplemented by the Price Determination Agreement. From and after
the date of the execution and delivery of the Price Determination Agreement,
this Agreement shall be deemed to incorporate, and, unless the context otherwise
indicates, all references contained herein to "this Agreement" and to the phrase
"herein" shall be deemed to include, the Price Determination Agreement.
Xxxxx, as authorized representative of the Selling Stockholders,
individually and on behalf of the other Selling Stockholders, has executed and
delivered a Custody Agreement in the form attached as Exhibit B (collectively,
the "CUSTODY AGREEMENT") pursuant to which such Selling Stockholders have placed
their Firm Shares in custody and appointed the persons designated therein as
attorneys-in-fact (collectively, the "ATTORNEYS") with authority to execute and
deliver this Agreement on behalf of such Selling Stockholders and to take
certain other actions with respect thereto and hereto.
The Company and the Selling Stockholders, acting severally and not
jointly, and Xxxxx, as authorized representative of the Selling Stockholders,
individually and on behalf of the other Selling Stockholders confirm as follows
their respective agreements with the Representatives and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the respective representations, warranties and
agreements of the Company, the Selling Stockholders and Xxxxx herein contained
and subject to all the terms and conditions of this Agreement, (i) the Selling
Stockholders agree to sell to the several Underwriters, and (ii) each of the
Underwriters, severally and not jointly, agrees to purchase from the Selling
Stockholders, at the purchase price per share for the Firm Shares to be agreed
upon by the Company, the Selling Stockholders and the Representatives, in
accordance with Section 1(c) hereof and set forth in the Price Determination
Agreement, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule II, plus such additional number of Firm Shares which
such Underwriter may become obligated to purchase pursuant to Section 9 hereof.
Schedule II may be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally and
not jointly, up to 220,204 Option Shares from the Company, respectively, at the
same price per share as the Underwriters shall pay for the Firm Shares. The
Option may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters and may be exercised in whole or in part at any time
(but not more than once) on or before the 45th day after the date of this
Agreement (or, if the Company has elected to rely on Rule 430A, on or before the
45th day after the date of the Price Determination Agreement), upon written or
telegraphic notice (the "OPTION SHARES NOTICE") by the Representatives to the
Company no later than 12:00 noon, New York City time, at least two and no more
than five business days before the date specified for closing in the Option
Shares Notice (the
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"OPTION CLOSING DATE") setting forth the aggregate number of Option Shares to be
purchased and the time and date for such purchase. On the Option Closing Date,
the Company shall issue and sell to the Underwriters the number of Option Shares
set forth in the Option Shares Notice, and each Underwriter shall purchase such
percentage of the Option Shares as is equal to the percentage of Firm Shares
that such Underwriter is purchasing, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional shares.
(c) The initial public offering price per share for the Firm
Shares and the purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement being executed concurrently herewith.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to the
Representatives for the accounts of the Underwriters against payment of the
purchase price by wire transfer payable in New York Clearing House to the
Custodian for disbursement in accordance with the instructions of the Attorney
to such account or accounts as the Attorney, on behalf of the Selling
Stockholders, shall designate no later than two business days prior to the
Closing Date. Such payment shall be made at 10:00 a.m., New York City time, on
the third business day (the fourth business day, should the offering be priced
after 4:30 p.m., EST) after the date on which the first bona fide offering of
the Shares to the public is made by the Underwriters or at such time on such
other date, not later than seven business days after such date, as may be agreed
upon by the Selling Stockholders and the Representatives (such date is
hereinafter referred to as the "CLOSING DATE").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) shall take
place at the offices specified in the preceding paragraph, at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and shall
be registered in such names and in such denominations as the Representatives
shall request at least two business days prior to the Closing Date or the Option
Closing Date, as the case may be, by written notice to the Company. For the
purpose of expediting the checking and packaging of certificates for the Shares,
the Company agrees to make such certificates available for inspection at least
24 hours prior to the Closing Date or the Option Closing Date, as the case may
be.
3. Representations and Warranties of the Company. The Company represents
and warrants to, and covenants with, each Underwriter that, except as set forth
in the Registration Statement:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-41417) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been
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required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "ACT"), and the
rules and regulations (collectively referred to as the "RULES AND REGULATIONS")
of the Securities and Exchange Commission (the "COMMISSION") thereunder, and has
been filed with the Commission. The term "preliminary prospectus" as used herein
means a preliminary prospectus as contemplated by Rule 430 or Rule 430A ("RULE
430A") of the Rules and Regulations included at any time as part of the
registration statement. Copies of such registration statement and amendments and
of each related preliminary prospectus have been delivered to the
Representatives. The term "REGISTRATION STATEMENT" means the registration
statement as amended at the time it becomes or became effective (the "EFFECTIVE
DATE"), including financial statements and all exhibits and any information
deemed to be included by Rule 430A or Rule 434 of the Rules and Regulations. If
the Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) of the Rules and Regulations for such registration
statement to become effective upon filing with the Commission (the "RULE 462
REGISTRATION STATEMENT"), then any reference to the "Registration Statement"
shall be deemed to include the Rule 462 Registration Statement, as amended from
time to time. The term "PROSPECTUS" means the prospectus as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no such
filing is required, the form of final prospectus included in the Registration
Statement at the Effective Date. Any reference herein to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), on or before the Effective Date or the date of
such preliminary prospectus or the Prospectus, as the case may be. Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange Act
after the Effective Date, or the date of any preliminary prospectus or the
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
(b) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included or
incorporated by reference in the Prospectus, did or will comply with all
applicable provisions of the Act, the Exchange Act, the rules and regulations
thereunder (the "EXCHANGE ACT RULES AND REGULATIONS") and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act, the Exchange Act, the Exchange Act Rules and
Regulations and the Rules and Regulations. On the Effective Date and when any
post-effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement or any such amendment did or will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, in light of the circumstances under which they were made. At the
Effective Date, the date the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing
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Date, the Prospectus did not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, in light of the circumstances under which they were
made. The foregoing representations and warranties in this Section 3(b) do not
apply to any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the amounts of the selling concession and reallowance set forth in
the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the preliminary prospectus, the Registration Statement or the
Prospectus. The Company has not distributed any offering material in connection
with the offering or sale of the Shares other than the Registration Statement,
the preliminary prospectus, the Prospectus or any other materials, if any,
permitted by the Act. The Commission has not issued any order preventing or
suspending the use of the preliminary prospectus or instituted proceedings for
that purpose.
(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they become effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act or the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations; and any documents so filed
and incorporated by reference subsequent to the Effective Date shall, when they
are filed with the Commission, conform in all material respects with the
requirements of the Act and the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations.
(d) The only subsidiaries (as defined in the Rules and
Regulations) of the Company are the subsidiaries listed on Exhibit C hereto (the
"SUBSIDIARIES"). The Company and each of its Subsidiaries is, and at the Closing
Date will be, a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The Company and
each of its Subsidiaries has, and at the Closing Date will have, full power and
authority to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. The Company and each of its
Subsidiaries is, and at the Closing Date will be, duly licensed or qualified to
do business in and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification necessary. All of the outstanding shares of capital stock of the
Subsidiaries have been duly authorized and validly issued, and are fully paid
and non-assessable and, except as set forth on Exhibit C, are owned by the
Company free and clear of all liens, encumbrances and claims whatsoever. Except
for the stock of the Subsidiaries and as disclosed in the Registration
Statement, the Company does not own, and at the Closing Date will not own,
directly or indirectly, any shares of stock or any other equity or long-term
debt securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and correct
copies of the certificate of incorporation and of the by-laws of the Company and
each of its Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
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(e) The outstanding shares of Common Stock, including the Firm
Shares, have been, and the Option Shares to be issued and sold by the Company
upon such issuance will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive, first refusal, or
similar right. The description of the Common Stock included in or incorporated
by reference in the Registration Statement and the Prospectus is now, and at the
Closing Date will be, complete and accurate in all respects. Except as set forth
in the Prospectus, the Company does not have outstanding, and at the Closing
Date will not have outstanding, any options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell, any shares of Common Stock, any
shares of capital stock of any Subsidiary or any such warrants, convertible
securities or obligations. Upon the issuance and delivery pursuant to the terms
of this Agreement, the Underwriters will acquire good and marketable title to
the Option Shares, free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever.
(f) The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Company as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the entire period involved, except as otherwise disclosed in
the Prospectus. No other financial statements or schedules of the Company are
required by the Act, the Exchange Act, the Exchange Act Rules and Regulations or
the Rules and Regulations to be included in the Registration Statement or the
Prospectus. KPMG Peat Marwick LLP (the "ACCOUNTANTS") who have reported on such
financial statements and schedules, are independent accountants with respect to
the Company as required by the Act and the Rules and Regulations. The statements
included in the Registration Statement with respect to the Accountants pursuant
to Rule 509 of Regulation S-K of the Rules and Regulations are true and correct
in all material respects.
(g) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurance 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.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of the Company, or in the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, arising for any reason whatsoever, (ii) neither
the Company nor any of its Subsidiaries has incurred, nor will it incur any
material liabilities or obligations, direct or contingent, nor has it entered
into, nor will it enter into any material transactions other than pursuant to
this
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Agreement and the transactions referred to herein and (iii) the Company has not
and will not have paid or declared any dividends or other distributions of any
kind on any class of its capital stock.
(i) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(j) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its Subsidiaries or any of their
respective officers in their capacity as such, before or by any Federal or state
court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, wherein an unfavorable ruling, decision or finding
might materially and adversely affect the Company or any of its Subsidiaries or
its business, properties, business prospects, condition (financial or otherwise)
or results of operations. Neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any authorization, approval, order, license, certificate, franchise or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would adversely affect the condition (financial or
otherwise), earnings, business, position, prospects, value, operation,
properties or results of operations of the Company and any of its Subsidiaries
taken as a whole. There are no pending investigations known to the Company
involving the Company or any of its Subsidiaries by any governmental agency
having jurisdiction over the Company or its Subsidiaries or their respective
businesses or operations, other than those that are normal and routine in
connection with the Company's or its subsidiaries' business (none of which would
have a material adverse effect on the business, business prospects, earnings,
condition (financial or otherwise), operations or results of operations of the
Company or its Subsidiaries taken as a whole). The disclosures in the
Registration Statement concerning the effects of federal, state, local and
foreign laws, rules and regulations on each of the Company's and any of its
Subsidiaries' businesses as currently conducted and as proposed to be conducted
are correct in all material respects and do not omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances under which they were made.
(k) Each of the Company and its Subsidiaries has, and at the
Closing Date will have, (i) all material governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on its
business as contemplated in the Prospectus, (ii) complied in all respects with
all material laws, regulations and orders applicable to it or its business and
(iii) performed all obligations required to be performed by it, and is not, and
at the Closing Date will not be, in default under any material indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, lease, contract or other agreement or instrument
(collectively, a "CONTRACT OR OTHER AGREEMENT") to which it is a party or by
which its property is bound or affected. To the best knowledge of the Company
and each of its Subsidiaries, no other party under any material Contract or
Other Agreement to which it is a party is in default in any respect thereunder.
Each of the Company and its Subsidiaries is not now, and at the Closing Date
will not be, in violation of any provision of its certificate of incorporation
or by-laws.
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(l) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Securities by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby or thereby, except as have been
obtained under the Act or the Rules and Regulations and such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares to be sold by the
Company.
(m) The Company has and will have full corporate power and
authority to enter into this Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with the terms hereof, except as rights to indemnification and contribution
hereunder may be limited by applicable law and public policy and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally or by
general equitable principles. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of the
net proceeds from the offering and sale of the Shares to be sold by the Company
in the manner set forth in the Prospectus under "Use of Proceeds" will not
result in the creation or imposition of any lien, charge or encumbrance upon any
of the assets of the Company or any of its Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, (x) the certificate of incorporation or by-laws of the Company
or any of its Subsidiaries, or (y) any contract or other agreement 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 its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the business or
properties of the Company or any of its Subsidiaries, except for violations,
defaults, breaches or accelerations which would not result in a material adverse
effect in the financial condition of the Company and its Subsidiaries.
(n) Each of the Company and its Subsidiaries has good and
marketable title to all properties and assets described in the Prospectus to be
owned respectively by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not material
to the business of the Company or its Subsidiaries. Each of the Company and its
Subsidiaries has valid, subsisting and enforceable leases for the properties
described in the Prospectus to be leased by it, with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such properties by the Company and such Subsidiaries.
(o) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company or any Subsidiary is a party
have been duly authorized, executed and delivered by the
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Company or such Subsidiary, constitute valid and binding agreements of the
Company or such Subsidiary and are enforceable against the Company or such
Subsidiary in accordance with the terms thereof.
(p) To the best knowledge of the Company, no statement,
representation, warranty or covenant made by the Company in this Agreement or
made in any certificate or document required by this Agreement to be delivered
to the Representatives was or will be, when made, inaccurate, untrue or
incorrect.
(q) To the best of the Company's knowledge, neither the Company
nor any of its directors, officers or controlling persons has taken, directly or
indirectly, any action intended to cause or result in, or which might reasonably
be expected to cause or result in, or which has constituted, stabilization or
manipulation, under the Act or otherwise, of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(r) No holder of securities of the Company has rights to register
any securities of the Company because of the filing of the Registration
Statement.
(s) The Shares are duly authorized for listing, subject to
official notice of issuance, on the Nasdaq National Market System.
(t) Neither the Company nor any of its Subsidiaries is involved in
any material labor dispute nor, to the knowledge of the Company, is any such
dispute threatened.
(u) The Company and its Subsidiaries own, or are licensed or
otherwise have the full exclusive right to use, all material trademarks and
trade names which are used in or necessary for the conduct of their respective
businesses as described in the Prospectus. Neither the Company nor any of its
Subsidiaries has received any notice of any claims asserted by any person with
respect to the use of any such trademarks or trade names, or challenging or
questioning the validity or effectiveness of any such trademark or trade name.
The use, in connection with the business and operations of the Company and its
Subsidiaries of such trademarks and trade names does not, to the Company's
knowledge, infringe on the rights of any person. Except as set forth in the
Prospectus, the Company and its Subsidiaries are not obligated or under any
liability whatsoever to make any payment by way of royalties, fees or otherwise
to any owner or licensee of, or other claimant to, any trademark, service xxxx
or trade name with respect to the use thereof or in connection with the conduct
of their respective businesses or otherwise, except that certain royalties, not
in excess of $250,000 annually, are paid in connection with the manufacture of
certain gaming units.
(v) Neither the Company, its Subsidiaries nor, to the best of the
Company's knowledge, any of their respective officers, directors, partners,
employees, agents or affiliates or any other person acting on behalf of the
Company or any of its Subsidiaries have, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price concessions
to customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, official or employee of any
governmental agency (domestic or
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foreign), instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is or may be in a position to help or hinder the business of the
Company or any of its Subsidiaries (or assist the Company or any of its
Subsidiaries in connection with any actual or proposed transaction) which (i)
might subject the Company or any of its Subsidiaries or any other such
individual or entity to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), (ii) if not given
in the past, might have had a materially adverse effect on the assets, business
or operations of the Company or any of its Subsidiaries or (iii) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company or any of its Subsidiaries.
(w) Each of the Company and its Subsidiaries (i) has paid all
federal, state, local and foreign taxes for which it is liable, including, but
not limited to, withholding taxes and amounts payable under Chapters 21 through
24 of the Internal Revenue Code of 1986, as amended (the "CODE"), and has
furnished all information returns it is required to furnish pursuant to the
Code, (ii) has established adequate reserves for all of such taxes which are not
immediately due and payable and (iii) does not have any tax deficiency or claims
outstanding, assessed or, to the Company's knowledge, threatened against it.
(x) Each of the Company and its Subsidiaries maintains insurance
policies and surety bonds, including, but not limited to, general liability and
property insurance, which insure the Company, its Subsidiaries and their
respective employees against losses and risks reasonably insured against by
comparable businesses. Neither the Company nor any of its Subsidiaries (i) has
failed to give notice or present any insurance claim with respect to any matter,
including, but not limited to, the Company's or any of its Subsidiaries'
business, property or employees, under any insurance policy or surety bond in a
due and timely manner, (ii) has any disputes or claims against any underwriter
of such insurance policies or surety bonds or has failed to pay any premiums due
and payable thereunder or (iii) has failed to comply with all material terms and
conditions contained in such insurance policies and surety bonds. There are no
facts or circumstances which would relieve any insurer of its obligation under
any such insurance policy or surety bond to satisfy in full any valid claim of
the Company or any of its Subsidiaries.
(y) Except as described in the Prospectus, neither the Company nor
any of its Subsidiaries maintains, sponsors or contributes to any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan" or a "multiemployer plan" (collectively, "ERISA PLANS") as such
terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Neither
the Company nor any of its Subsidiaries has maintained or contributed to a
defined benefit plan as defined in Section 3(35) of ERISA. No ERISA Plan (or any
trust created thereunder) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code, which could subject
the Company or any of its Subsidiaries to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all material reporting, disclosure and other requirements of the
Code and ERISA as they relate to such ERISA Plan. Determination letters have
been received from the Internal Revenue Service with respect to each ERISA Plan
which are intended to comply with Code Section 401(a) stating that such ERISA
Plan and the attendant trust are qualified thereunder. Neither the Company nor
any of its Subsidiaries has ever completely or partially withdrawn from such a
"multiemployer plan." Neither the
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Company nor any of its Subsidiaries will be subject to any material liability
under ERISA or any ERISA Plans.
(z) Each of the Company and its Subsidiaries owns and has the
unrestricted right to use all trade secrets, know-how, technology (including all
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), inventions, designs, processes, works of authorship,
computer programs and technical data and information (collectively, the
"INTELLECTUAL PROPERTY") that are or could reasonably be expected to be material
to its business as currently conducted or, to the best of the Company's
knowledge, proposed to be conducted or to the development, manufacture,
operation and sale of any products and services sold or, to the best of the
Company's knowledge, proposed to be sold by any of the Company or any of its
Subsidiaries, each free and clear of and without violating any right, claimed
right, charge, encumbrance, pledge, security interest, defect, restriction,
equity or lien of any kind whatsoever of others, including without limitation,
former employers of its employees. Neither the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any patent, patent application,
copyright or Intellectual Property which singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, might have a material
adverse effect on the general affairs, business, business prospects, earnings,
position, value, properties, management, condition (financial or otherwise),
operations or results of operations of the Company and its Subsidiaries taken as
a whole. Except as set forth in the Prospectus or in Section 3(u) hereof, the
Company and its Subsidiaries are not obligated or under any liability whatsoever
to make any payment by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any patent, patent application, copyright or
Intellectual Property, with respect to the use thereof or in connection with the
conduct of their respective businesses or otherwise.
(aa) Each of the Company and its Subsidiaries has taken reasonable
security measures to protect the secrecy, confidentiality and value of all their
Intellectual Property in all material aspects.
4. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder acting severally and not jointly, and Xxxxx, to the best of
his knowledge, individually and on behalf of the other Selling Stockholders,
represents and warrants to, and covenants with, each Underwriter that:
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(a) Such Selling Stockholder has full power and authority to enter
into this Agreement and the Custody Agreement. All authorizations and consents
necessary for the execution and delivery by such Selling Stockholder of the
Custody Agreement, and for the execution of this Agreement on behalf of such
Selling Stockholder, have been given. Each of the Custody Agreement and this
Agreement has been duly authorized (to the extent such Selling Stockholder is
not a natural person), executed and delivered by or on behalf of such Selling
Stockholder and constitutes a valid and binding agreement of such Selling
Stockholder and is enforceable against such Selling Stockholder in accordance
with the terms thereof and hereof, except as rights to indemnification and
contribution hereunder may be limited by applicable law and public policy and
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors rights generally or by general equitable principles.
(b) Such Selling Stockholder now has, and at the time of delivery
thereof hereunder will have, (i) good and valid title to the Firm Shares to be
sold by such Selling Stockholder hereunder, free and clear of all liens,
encumbrances and claims whatsoever (other than pursuant to the Agreement and the
Custody Agreement), and (ii) full legal right and power, and all authorizations
and approvals required by law, to sell, transfer and deliver such Firm Shares to
the Underwriters hereunder and to make the representations, warranties and
agreements made by such Selling Stockholder herein. Upon the delivery of and
payment for such Firm Shares hereunder, assuming each Underwriter has no notice
of any adverse claim as such term is used in the Uniform Commercial Code such
Selling Stockholder will deliver good and valid title thereto, free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects
or restrictions of any kind whatsoever.
(c) On the Closing Date all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Firm Shares to be sold by such Selling Stockholder to the
several Underwriters hereunder will have been fully paid or provided for by the
Selling Stockholder, and all laws imposing such taxes will have been fully
complied with.
(d) The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of such Selling
Stockholder pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the acceleration of any obligation under, as to such Selling
Stockholder, any contract or other agreement to which such Selling Stockholder
is a party or by which such Selling Stockholder or any of his property is bound
or affected, or any ruling, decree, judgment, order, statute, rule or regulation
of any court or other governmental agency or body having jurisdiction over such
Selling Stockholder or the property of such Selling Stockholder, except for
violations, defaults, breaches or accelerations which would not result in a
material adverse effect in the financial condition of the Selling Stockholder.
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(e) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required for
the consummation by such Selling Stockholder of the transactions on his part
contemplated herein and in the Custody Agreement, except such as have been
obtained under the Act or the Rules and Regulations and such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the Firm
Shares to be sold by such Selling Stockholder.
(f) The information under the caption "Selling Stockholder" in the
Prospectus is complete and accurate in all material respects.
(g) Other than as permitted by the Act and the Rules and
Regulations, such Selling Stockholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Stockholder has not taken, directly or indirectly, any action intended to cause
or result in, or which might reasonably be expected to cause or result in, or
which has caused or resulted in, stabilization or manipulation, under the Act or
otherwise, of the price of any security of the Company to facilitate the sale or
resale of the Shares.
(h) Certificates in negotiable form for the Firm Shares to be sold
hereunder by such Selling Stockholder have been placed in custody, for the
purpose of making delivery of such Firm Shares under this Agreement, under the
Custody Agreement which appoints the Company's Registrar and Transfer Agent as
custodian (the "CUSTODIAN") for such Selling Stockholder. Such Selling
Stockholder agrees that the Firm Shares represented by the certificates held in
custody for him under the Custody Agreement are for the benefit of and coupled
with and subject to the interest hereunder of the Custodian, the Underwriters
and the Company, that the arrangements made by such Selling Stockholder for such
custody and the appointment of the Custodian by such Selling Stockholder are
irrevocable, and that the obligations of such Selling Stockholder hereunder
shall not be terminated by operation of law, whether by the death, disability or
incapacity of such Selling Stockholder or the occurrence of any other event. If
the Selling Stockholder should die, become disabled or incapacitated or if any
other such event should occur before the delivery of the Firm Shares hereunder,
certificates for the Firm Shares shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement, and actions taken by
the Custodian pursuant to the Agreement and the Custody Agreement shall be as
valid, as if such death, incapacity or other event had not occurred, regardless
of whether or not the Custodian shall have received notice thereof.
4A. Representations and Warranties of Xxxxx. Xxxxx, acting individually,
represents and warrants to the Underwriter that:
(a) The information under the caption "Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
(b) He has reviewed the Registration Statement and the Prospectus and is
not aware of any fact which causes him to believe that the Registration
Statement, or any amendment
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thereto, as of the Effective Date and the Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading
or that any Prospectus or any amendment or supplement thereto, including any
documents incorporated by reference into the Prospectus, at the time such
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued and at the Effective Date and at the Closing Date contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to make the
statements made, in light of the circumstances under which they were made not
misleading (it being understood that Xx. Xxxxx is not a member of the Executive
Committee of the Company or a member of the management of the Company and that
the Company has not held meetings of the Board of Directors or any committee of
the Board of Directors of which Xx. Xxxxx is a member or otherwise provided Xx.
Xxxxx with any non-public information relating to the Company since December 3,
1997).
5. Agreements of the Company and the Selling Stockholder. The Company and
the Selling Stockholders ,severally and not jointly, and Xxxxxxx Xxxxx as
authorized representative of the Selling Stockholders, individually and on
behalf of the Selling Stockholders (in the case of the Selling Stockholders and
Xxxxx, as to Sections 5(j), (k), (n) and (o) only ) agree with the several
Underwriters as follows:
(a) The Company shall not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective, and shall notify the Representatives
and the Selling Stockholders promptly, and shall confirm such advice in writing,
(i) when the Registration Statement has become effective and when any
post-effective amendment thereto becomes effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the commencement by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Shares for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, including, without limitation, the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (iv) of
the happening of any event during the period mentioned in the second sentence of
Section 5(e) hereof that in the judgment of the Company makes any statement made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein, in light of the circumstances in which they are
made, not misleading and (v) of receipt by the Company or any representative of
the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement,
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the Company shall make every reasonable effort to obtain the withdrawal of such
order at the earliest possible moment. The Company shall use its best efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and to notify the Representatives promptly of all such
filings.
(c) The Company shall furnish to the Representatives, without
charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto (including any document filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus) and shall
furnish to the Representatives, without charge, for transmittal to each of the
other Underwriters, a copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.
(d) The Company shall comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company shall deliver to each of the Underwriters and the Selling Stockholders,
without charge, as many copies of the Prospectus or any amendment or supplement
thereto as the Representatives or the Selling Stockholders may reasonably
request. The Company consents to the use of the Prospectus or any amendment or
supplement thereto by the several Underwriters and by all dealers to whom the
Shares may be sold, both in connection with the offering or sale of the Shares
and for any period of time thereafter during which the Prospectus is required by
law to be delivered in connection therewith. If during such period of time any
event shall occur which in the judgment of the Company or counsel to the
Underwriters or the Selling Stockholders should be set forth in the Prospectus
in order to make any statement therein, in the light of the circumstances under
which it was made, not misleading, or if it is necessary to supplement or amend
the Prospectus to comply with law, the Company shall forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto, and
shall deliver to each of the Underwriters and the Selling Stockholders, without
charge, such number of copies thereof as the Representatives may reasonably
request. The Company shall not file any document under the Exchange Act before
the termination of the offering of the Shares by the Underwriters if such
document would be deemed to be incorporated by reference into the Prospectus
which is not approved by the Representatives and the Selling Stockholders after
reasonable notice thereof.
(f) Prior to any public offering of the Shares by the
Underwriters, the Company shall cooperate with the Representatives and counsel
to the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided, however, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject.
(g) During the period of five years commencing on the Effective
Date, the Company shall furnish to the Representatives and each other
Underwriter who may so request copies
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of such financial statements and other periodic and special reports as the
Company may from time to time distribute generally to the holders of any class
of its capital stock, and will furnish to the Representatives and each other
Underwriter who may so request a copy of each annual or other report it shall be
required to file with the Commission.
(h) The Company shall make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not any of the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company shall
pay, or reimburse if paid by the Representatives, all costs and expenses
incident to the performance of the obligations of the Company and, except as
specified in paragraph (j) below, the Selling Stockholder under this Agreement
(other than underwriting discounts and fees and fees and expenses of counsel and
accountants of the Selling Stockholders), including but not limited to costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits thereto, each preliminary prospectus, the
Prospectus and any amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates representing the
Securities, (iii) the printing of this Agreement, the Agreement Among
Underwriters, any Dealer Agreements, any Underwriters' Questionnaire and the
Power of Attorney and the Custody Agreement, (iv) furnishing (including costs of
shipping, mailing and courier) such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold, (v) the
listing of the Shares on the Nasdaq National Market System, (vi) any filings
required to be made by the Underwriters with the NASD, and the fees,
disbursements and other charges of counsel for the Underwriters in connection
therewith, (vii) the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions designated
pursuant to Section 5(f) hereof, including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (viii) counsel to the Company, (ix) the transfer agent for the Shares
and (x) the Accountants. The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Option Shares to the respective
Underwriters shall be borne by the Company. The cost of tax stamps, if any, in
connection with the sale of the Firm Shares by the Selling Stockholders shall be
borne by the Selling Stockholders. The Company with respect to the Option Shares
and the Selling Stockholders with respect to the Firm Shares shall pay and hold
each Underwriter and any subsequent holder of the Shares harmless from, any and
all liabilities with respect to or resulting from any failure or delay in paying
Federal and state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or sale to
such Underwriter of the Shares.
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(j)(I)If this Agreement shall be terminated by the Company or the
Selling Stockholders pursuant to any of the provisions hereof (other than
pursuant to Section 9) or if for any reason the Company or the Selling
Stockholders shall be unable to perform its or their obligations hereunder, the
Company shall reimburse the several Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith; provided,
however, that any payments received by the Underwriters pursuant to clause (j)
(II) below shall be deducted from any amounts due pursuant to this clause (j)
(I); (II) whether or not any of the transactions contemplated by this Agreement
are consummated or whether or not this Agreement is terminated, Selling
Stockholders shall reimburse the Representatives for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith (other than
fees and expenses paid by the Company pursuant to paragraphs 5(i)(vii) above);
provided, however, that Selling Stockholders' obligations pursuant to this
clause (j) (II) shall not exceed $150,000. The obligations of the Selling
Stockholders under this paragraph (j) shall be joint and several.
(k) Neither the Company nor the Selling Stockholders shall, at any
time, directly or indirectly, take any action intended to cause or result in, or
which might reasonably be expected to cause or result in, or which will
constitute, stabilization or manipulation, under the Act or otherwise, of the
price of the shares of Common Stock to facilitate the sale or resale of any of
the Shares.
(l) The Company shall apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds".
(m) The Company shall not, and shall cause each of its executive
officers, directors and each beneficial owner of more than 5% of the outstanding
shares of Common Stock to enter into agreements with the Representatives in the
form set forth in Exhibit D to the effect that they shall not, for a period of
120 days after the commencement of the public offering of the Shares, without
the prior written consent of the Representatives, offer to sell, sell, contract
to sell, grant any option to sell, pledge, grant any rights with respect to, or
otherwise dispose of, or require the Company to file with the Commission a
registration statement under the Act to register, any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or warrants or
other rights to acquire shares of Common Stock of which the undersigned is now,
or may in the future become, the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act). Furthermore, such person has also agreed and
consented to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Company Stock held by such person except in
compliance with this restriction. The Company has provided to counsel for the
Representatives a complete and accurate list of all securityholders of the
Company and the number and type of securities held by each securityholder. The
Company has provided to counsel for the Representatives true, accurate and
complete copies of all of the agreements pursuant to which its officers,
directors and stockholders have agreed to such or similar restrictions (the
"Lock-up Agreements") presently in effect or effected hereby. The Company hereby
represents and warrants
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that it will not release any of its officers, directors or stockholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of the Representatives.
(n) As soon as any Selling Stockholder is advised thereof, such
Selling Stockholder shall advise the Representatives and the Company and confirm
such advice in writing, (i) of receipt by such Selling Stockholder, or by any
representative of such Selling Stockholder, of any communication from the
Commission relating to the Registration Statement, the Prospectus or any
preliminary prospectus, or any notice or order of the Commission relating to the
Company or such Selling Stockholder in connection with the transactions
contemplated by this Agreement, and (ii) of the happening of any event during
the period from and after the Effective Date that in the reasonable judgment of
such Selling Stockholder makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(o) Each Selling Stockholder shall deliver to Representatives
prior to or on the Effective Date a properly completed and executed United
States Treasury Department Form W-8 or, as applicable, Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
6. Conditions of the Obligations of the Underwriters. In addition to the
execution and delivery of the Price Determination Agreement, the obligations of
each Underwriter hereunder are subject to the following conditions and the
obligations of the Selling Stockholders are subject to the applicable clauses of
paragraphs (f) and (h):
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b)(i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Representatives and the Representatives did
not object thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer
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of the Company (who may, as to proceedings threatened, rely upon the best of
their information and belief), to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change or development involving a prospective material adverse
change, in the general affairs, business, business prospects, earnings,
position, value, properties, management, condition (financial or otherwise),
operations or results of operations of the Company and its Subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus, (ii) neither the Company nor any of
its Subsidiaries shall have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in the judgment of the
Representatives any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price, (iii) there shall have been no transactions, not
in the ordinary course of business, entered into by the Company or any of its
Subsidiaries and no liabilities or obligations incurred by the Company or any of
its Subsidiaries, in each case from the latest date as of which the financial
condition of the Company and its Subsidiaries is set forth in the Registration
Statement and the Prospectus, which are materially adverse to the Company and
its Subsidiaries, taken as a whole, (iv) neither the Company nor any of its
Subsidiaries shall have issued any securities (other than the Securities) or
declared or paid any dividend or made any distribution in respect of its capital
stock of any class, debt (long term or short term) or, except in the ordinary
course of business, liabilities or obligations of the Company or any of its
Subsidiaries (contingent or otherwise), except as set forth in the Registration
Statement and Prospectus and (v) no material amount of the assets of the Company
or any of its Subsidiaries shall have been pledged, mortgaged or otherwise
encumbered, except as set forth in the Registration Statement and Prospectus.
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
Subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would materially and adversely affect the general affairs, business,
business prospects, earnings, position, value, properties, management, condition
(financial or otherwise), operations or results of operations, of the Company
and its Subsidiaries taken as a whole.
(e) Each of the representations and warranties of the Company, the
Selling Stockholders and Xxxxx contained herein shall be true and correct in all
material respects at the Closing Date and, with respect to the Option Shares,
the representations and warranties of the Company contained herein shall be true
and correct in all material respects at the Option Closing Date, as if made at
the Closing Date and, with respect to the Company and the Option Shares, at the
Option Closing Date, and all covenants and agreements contained herein to be
performed by the
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Company and all conditions contained herein to be fulfilled or complied with by
the Company at or prior to the Closing Date and, with respect to the covenants,
agreements and conditions relating to the Company in connection with the Option
Shares, at or prior to the Option Closing Date, shall have been duly performed,
fulfilled or complied with.
(f) The Representatives and, with respect to the Firm Shares, the
Selling Stockholders, shall have received opinions, each dated the Closing Date
and, with respect to the Option Shares, the Option Closing Date, satisfactory in
form and substance to counsel for the Underwriters and the Selling Stockholders,
as the case may be, from Xxxxxx & Xxxxxx, counsel to the Company, to the effect
set forth in Exhibit E and from Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx,
counsel to the Selling Stockholders, to the effect set forth in Exhibit F.
(g) The Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Xxxx, Scholer, Fierman, Xxxx &
Handler, LLP, counsel to the Underwriters, with respect to the Registration
Statement, the Prospectus and this Agreement, which opinion shall be
satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with respect
to the Company as required by the Act and the Rules and Regulations and with
respect to the financial and other statistical and numerical information
contained in the Registration Statement or incorporated by reference therein. At
the Closing Date and, as to the Option Shares, the Option Closing Date, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, which shall confirm, on the basis of a review in accordance
with the procedures set forth in the letter from the Accountants, that nothing
has come to their attention during the period from the date of the letter
referred to in the prior sentence to a date (specified in the letter) not more
than five days prior to the Closing Date and the Option Closing Date which would
require any change in their letter dated the date of the Prospectus, if it were
required to be dated and delivered at the Closing Date and the Option Closing
Date. At the Effective Date, the Selling Stockholders shall have received an
"agreed upon procedures" letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by such letters in connection with public offerings of securities as the
Selling Stockholders shall reasonably request, dated within five days of the
date of effectiveness or supplements, as the case may be, addressed to the
Selling Stockholders and with an appropriate bring down as of the Closing Date.
(i) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to the Representatives an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus (including
any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus), and (A) as
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of the date of such certificate, such documents are true and
correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein not misleading in light of the
circumstances under which they were made, and (B) since the
Effective Date, no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make
the statements therein not untrue or misleading in any material
respect, and there has been no document required to be filed under
the Exchange Act and the Exchange Act Rules and Regulations that
upon such filing would be deemed to be incorporated by reference
into the Prospectus that has not been so filed.
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made,
and are, at the time such certificate is delivered, true and
correct in all material respects.
(iii) Each of the covenants required herein to be performed
by the Company on or prior to the date of such certificate has
been duly, timely and fully performed and each condition herein
required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully
complied with.
(j) At the Closing Date, there shall have been furnished to the
Representatives an accurate certificate, dated the date of its delivery, signed
by Xxxxx on behalf of the Selling Stockholders, in form and substance
satisfactory to the Representatives, to the effect that the representations and
warranties of the Selling Stockholders and Xxxxx contained herein are true and
correct in all material respects on and as of the date of such certificate as if
made on and as of the date of such certificate, and each of the covenants and
conditions required herein to be performed or complied with by the Selling
Stockholders and Xxxxx on or prior to the date of such certificate has been
duly, timely and fully performed or complied with.
(k) On or prior to the Closing Date, the Representatives shall
have received the executed agreements referred to in Section 5(m).
(l) The Shares shall be qualified for sale in such states as the
Representatives may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
(m) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the Nasdaq National Market System upon official notice
of issuance.
(n) The Company, the Selling Stockholders and Xxxxx shall have
furnished to the Representatives such certificates, in addition to those
specifically mentioned herein, as the Representatives may have reasonably
requested as to the accuracy and completeness at the Closing Date and, with
respect to the Company and the Option Shares, the Option Closing Date of any
statement in the Registration Statement or the Prospectus or any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, as to the accuracy at the Closing Date and, with respect to the
Company, the Option Closing Date of the representations and
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warranties of the Company, the Selling Stockholders and Xxxxx herein, as to the
performance by the Company, the Selling Stockholders and Xxxxx of their
respective obligations hereunder or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Representatives.
7. Indemnification.
(a) The Company severally and each of the Selling Stockholders
shall indemnify and hold harmless each Underwriter, the directors, officers,
employees, counsel and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act from and against any and all losses, claims, liabilities,
expenses and damages (including any and all investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted), to which they, or any of
them, may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or alleged untrue statement of a material fact contained in
(i) any preliminary prospectus, the Registration Statement or the Prospectus or
any amendment or supplement to the Registration Statement or the Prospectus or
in any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, (ii) any application, other document or written
communication, executed by the Company or based upon written information
supplied by the Company, filed with or sent to the Commission, (iii) any
application, other document or written communication, executed by the Company or
based upon written information supplied by the Company, filed in any
jurisdiction in order to qualify the Shares under the securities laws of such
jurisdiction or (iv) any document, executed by the Company or based on written
information supplied by the Company, filed with any securities exchange, or the
omission or alleged omission to state in such documents enumerated in (i-iv) of
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made, provided that the Company and the Selling Stockholders shall not be
liable to the extent that such loss, claim, liability, expense or damage arises
from the sale of the Shares in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus, any
preliminary prospectus or the Prospectus; provided, further, that the Selling
Stockholders shall not be liable unless such loss, claim, liability, expense or
damages arises from the sale of the Firm Shares in the public offering to any
person by an Underwriter and arises out of or is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information furnished in writing to the Company by the Selling
Stockholders expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. In no event shall the aggregate
liability of any Selling Stockholder (other than Xxxxx) for indemnification
hereunder exceed the net proceeds received by such Selling Stockholder in the
offering of the Firm Shares hereunder and no Selling Stockholder (other than
Xxxxx) shall be liable for any untrue statement, alleged untrue statement,
omission or
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alleged omission of any other Selling Stockholder made in reliance on and in
conformity with information furnished in writing to the Company by the Selling
Stockholder expressly for inclusion in the Registration Statement. Xxxxx shall
be jointly and severally liable for any statement, alleged untrue statement,
omission or alleged omission of all the Selling Stockholders made in reliance on
and in conformity with information furnished in writing to the Company by the
Selling Stockholder expressly for inclusion in the Registration Statement. In no
event shall Xxxxx'x liability under this Agreement, as representative of himself
and the other Selling Stockholders exceed the aggregate net proceeds received by
all Selling Stockholders. If multiple claims are brought against any
Underwriter, the directors, officers, employees, counsel and agents of such
Underwriter and any person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, in an
arbitration proceeding, and indemnification is permitted under applicable law
and is provided for under this Agreement with respect to at least one such
claim, the Company agrees that any arbitration award shall be conclusively
deemed to be based on claims as to which indemnification is permitted and
provided for, except to the extent the arbitration award expressly states that
the award, or any portion thereof, is based solely on a claim as to which
indemnification is not available.
The Company agrees to indemnify and hold harmless each of the
Selling Stockholders to the same extent that the Company has agreed to indemnify
and hold harmless each Underwriter pursuant to the preceding paragraph;
provided, however, the Company shall not be liable under this paragraph to the
extent any loss, claim, liability, expense or damages described in the preceding
paragraph arises out of or is based upon an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by the Selling Stockholders or
Xxxxx expressly for inclusion in the Registration Statement, any preliminary
prospectus or the Prospectus. The Selling Shareholders agree to indemnify and
hold harmless the Company, to the same extent that the Selling Stockholders have
agreed to indemnify and hold harmless each Underwriter pursuant to the preceding
paragraph, provided that the Selling Stockholders shall not be liable unless
such loss, claim, liability, expense or damages arises out of or is based on an
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished in writing to the
Company by the Selling Stockholder expressly for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that the Company, the Selling
Stockholders and Xxxxx might otherwise have, including any other agreements
between the Company and the Selling Stockholders. The parties agree that the
only information furnished in writing by the Selling Stockholders to the Company
expressly for inclusion in the Registration Statement, any preliminary
prospectus or the Prospectus is the information contained under the caption
"Selling Stockholder" in the Prospectus.
(b) Each Underwriter shall indemnify and hold harmless the
Company, the Selling Stockholders, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
each director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company and the Selling Stockholders to each Underwriter, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information
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relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of such Underwriter expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus. This
indemnity will be in addition to any liability that each Underwriter might
otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 shall, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party shall not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel shall be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties except (i) where authorized by the indemnifying party, (ii) indemnified
parties have reasonably concluded (based on advice of counsel) that there may be
legal defenses available to each of them that are different from or in addition
to those available to the other indemnified parties or (iii) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified parties. All such fees, disbursements and other charges
shall be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party shall not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld or delayed). No indemnifying party shall, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of
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any judgment in any pending or threatened claim, action or proceeding relating
to the matters contemplated by this Section 7 (whether or not any indemnified
party is a party thereto), unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising or that may arise out of such claim, action or proceeding and does not
include any statement as to or an admission of fault, culpability or a failure
to act, by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Selling Stockholders
or the Underwriters, the Company, the Selling Stockholders and the Underwriters
shall contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company or the Selling Stockholders from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company or
the Selling Stockholders and any one or more of the Underwriters may be subject
in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and Selling Stockholders on the one hand and the
Underwriters on the other. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. If, but only if, the allocation provided by the foregoing sentence
is not permitted by applicable law, the allocation of contribution shall be made
in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the Company
and the Selling Stockholders, on the one hand, and the Underwriters, on the
other, with respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Representatives on behalf of the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that no Selling
Stockholder other than Xxxxx shall be liable for any untrue statement, alleged
untrue statement, omission or alleged omission of any other Selling Stockholder
made in reliance on and in compliance with information furnished in writing by
the Selling Stockholder expressly for inclusion in the Registration Statement,
preliminary prospectus or Prospectus. Xxxxx shall be jointly and severally
liable for any untrue statement, alleged untrue statement, omission or alleged
omission of all the Selling Stockholders made in reliance on and in compliance
with information furnished in writing by the Selling Stockholder expressly for
inclusion in the Registration Statement, preliminary prospectus or Prospectus.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 7(d) were to
be determined by pro rata allocation (even if the Underwriters
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any contribution received by the Company or the Selling Stockholders from
persons other than the Underwriters, such as persons who control the Company
within the meaning of the Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for
contribution) to which the Company or the Selling Stockholders and any one or
more of the Underwriters may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company and Selling
Stockholders on the one hand and the Underwriters on the other. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other, with respect
to the statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Representatives on
behalf of the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that no Selling Stockholder other than
Xxxxx shall be liable for any untrue statement, alleged untrue statement,
omission or alleged omission of any other Selling Stockholder made in reliance
on and in compliance with information furnished in writing by the Selling
Stockholder expressly for inclusion in the Registration Statement, preliminary
prospectus or Prospectus. Xxxxx shall be jointly and severally liable for any
untrue statement, alleged untrue statement, omission or alleged omission of all
the Selling Stockholders made in reliance on and in compliance with information
furnished in writing by the Selling Stockholder expressly for inclusion in the
Registration Statement, preliminary prospectus or Prospectus. The Company, the
Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation (even if the Underwriters
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were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 7(d) shall be deemed to include, for
purpose of this Section 7(d), 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(d), no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company, the Selling
Stockholders and Xxxxx contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any investigation made by or on behalf
of the Underwriters, (ii) acceptance of any of the Shares and payment therefor
or (iii) any termination of this Agreement.
8. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from the Representatives, without liability on the part of any
Underwriter to the Company or the Selling Stockholders, if, prior to delivery
and payment for the Shares (or the Option Shares, as the case may be), in the
sole judgment of the Representatives, (i) trading in any of the equity
securities of the Company shall have been suspended by the Commission, by an
exchange that lists the Shares or by the Nasdaq National Market System, (ii)
trading in securities generally on the New York Stock Exchange shall have been
suspended or limited or minimum or maximum prices shall have been generally
established on such exchange, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon trading
in securities generally by such exchange or by order of the Commission or any
court or other governmental authority, (iii) a general banking moratorium shall
have been declared by either Federal or New York State authorities, (iv) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States or
any outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred, the effect of any of which is such as to make it impracticable or
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inadvisable to market the Shares or Option Shares on the terms and in the manner
contemplated by the Prospectus, (v) if the Company or any of its Subsidiaries
shall have sustained a loss material or substantial to the Company or any of its
Subsidiaries by reason of flood, fire, accident, hurricane, earthquake, theft,
sabotage, or other calamity or malicious act which, whether or not such loss
shall have been insured, will make it inadvisable to proceed with the offering
and sale of the Shares or Option Shares or (vi) if there shall have been a
material adverse change in the condition (financial or otherwise), earnings,
business, prospects, stockholders' equity, operations, properties, business, or
results of operations, of the Company or the Company and its Subsidiaries taken
as a whole, as would make it inadvisable to proceed with the offering and sale
of the Shares or Option Shares.
9. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares which it or they have
agreed to purchase hereunder, and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Shares, the other
Underwriters shall be obligated, severally, to purchase the Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase, in the proportions which the number of Firm Shares which they have
respectively agreed to purchase pursuant to Section 1 bears to the aggregate
number of Firm Shares which all such non-defaulting Underwriters have so agreed
to purchase, or in such other proportions as the Representatives may specify;
provided that in no event shall the maximum number of Firm Shares which any
Underwriter has become obligated to purchase pursuant to Section 1 be increased
pursuant to this Section 9 by more than one-ninth of the number of Firm Shares
agreed to be purchased by such Underwriter without the prior written consent of
such Underwriter. If any Underwriter or Underwriters shall fail or refuse to
purchase any Firm Shares and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
exceeds one-tenth of the aggregate number of the Firm Shares and arrangements
satisfactory to the Company, the Attorneys and the Representatives for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, or the Company or the Selling Stockholders for the
purchase or sale of any Shares under this Agreement. In any such case either the
Representatives or the Company and the Attorneys 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. Any action
taken pursuant to this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 0000 Xxxxx 0xx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 Attention: Xxxxxxx X. Xxxxxxxx, (b) if to the
Selling Stockholders, to Xxxxxxx Xxxxx, Madison Partners, L.L.C., 000 Xxxxxxx
Xxxxxx - 38th Floor, New York, New York l0022, or (c) if to the Underwriters, to
GKM at the offices of GKM, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and to
Ladenburg Xxxxxxxx & Co. Inc. at its offices at 000 Xxxxxxx Xxxxxx - 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000. Any such notice shall be effective only upon receipt.
Any notice under Section 8 or 9 may be made by telex or telephone, but if so
made shall be subsequently confirmed in writing.
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This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company and the Selling Stockholders, and of the controlling
persons, directors and officers referred to in Section 7, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as used
in this Agreement shall not include a purchaser, as such purchaser, of Shares
from any of the several Underwriters.
With respect to any obligation of the Company and the Selling
Stockholders hereunder to make any payment, to indemnify for any liability or to
reimburse for any expense, the Underwriters (or any other person to whom such
payment, indemnification or reimbursement is owed) may pursue the Company with
respect thereto prior to pursuing any Selling Stockholder.
All representations, warranties and agreements of the Company and the
Selling Stockholders contained herein or in certificates or other instruments
delivered pursuant hereto, shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of any Underwriter (ii)
acceptance of and Shares and payment therefor or (iii) any termination of this
Agreement.
Any action required or permitted to be taken by the Representatives under
this Agreement may be taken by them jointly or by GKM.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE. Each party hereto hereby irrevocably submits for
purposes of any action arising from this Agreement brought by the other party
hereto to the jurisdiction of the courts of New York State located in the
Borough of Manhattan and the U.S. District Court for the Southern District of
New York. This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company, the Selling Stockholders and the Underwriters each hereby
irrevocably waive any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
This Agreement embodies the entire agreement and understanding between
the Company and Underwriters, on the one hand, and the Selling Stockholders and
the Underwriters on the other, and supersedes all prior agreements and
understandings relating to the subject matter hereof between those respective
parties, including the letter agreement dated December 1, 1997 between the
Representatives and Xxxxx, individually and on behalf of the Selling
Stockholders. This Agreement does not supersede the Stockholders Agreement dated
February 23, 1993 between the Company and the Purchasers (as defined therein) or
the Letter Agreement dated December 3, 1997
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between the Company and Xxxxxxx Xxxxx. This Agreement may not be amended or
otherwise modified or any provision hereof waived except by an instrument in
writing signed by the Representatives, the Selling Stockholders and the Company.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
POWERHOUSE TECHNOLOGIES, INC.
By:
----------------------------------
Name:
Title:
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE I ATTACHED HERETO
By:
----------------------------------
Name:
Attorney-in-Fact
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Confirmed as of the date first
above mentioned:
XXXXXX XXXXXX XXXXXXXX & CO., INC.
LADENBURG XXXXXXXX & CO. INC.
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule II hereof.
By: XXXXXX XXXXXX XXXXXXXX & CO., INC.
By:
------------------------------
Name:
Title:
By: LADENBURG XXXXXXXX & CO. INC.
By:
--------------------------
Name:
Title:
30
35
SCHEDULE I
SELLING STOCKHOLDERS
Total Number of Firm Shares to be
Name of Selling Stockholder Sold
--------------------------- ---------------------------------
Xxxxxxx Xxxxx 222,252
Video Investment Partners, L.P. 207,629
Xxxxxxx Capital, L.P. 222,459
Asgard Ltd. 148,307
LBN Investment Associates, L.P. 148,307
Parkway M&A Capital Corporation 74,153
Xxxxx Xxxxx 74,153
Alpine Associates, Ltd. 370,766
=========
1,468,026
36
SCHEDULE II
UNDERWRITERS
Names of Underwriters Number of Firm Shares to be Purchased
--------------------- -------------------------------------
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
Ladenburg Xxxxxxxx & Co. Inc.
Total --------------------
====================
37
EXHIBIT A
POWERHOUSE TECHNOLOGIES, INC.
---------------------
PRICE DETERMINATION AGREEMENT
February 9, 1998
XXXXXX XXXXXX XXXXXXXX & CO., INC.
LADENBURG XXXXXXXX & CO. INC.
As Representatives of the several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated February 9, 1998
(the "UNDERWRITING AGREEMENT"), among Powerhouse Technologies, Inc., a Delaware
corporation (the "COMPANY"), the Selling Stockholders named in Schedule I
thereto or hereto (the "SELLING STOCKHOLDERS") and the several Underwriters
named in Schedule II thereto or hereto (the "UNDERWRITERS"), for whom Xxxxxx
Xxxxxx Xxxxxxxx & Co., Inc. ("GKM") and Ladenburg Xxxxxxxx & Co. Inc. are acting
as Representatives (the "REPRESENTATIVES"). The Underwriting Agreement provides
for the purchase by the Underwriters from the Selling Stockholder, subject to
the terms and conditions set forth therein, of an aggregate of ________ shares
(the "FIRM SHARES") of the Company's common stock, par value $0.01 per share.
This Agreement is the Price Determination Agreement referred to in the
Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives as follows:
1. The public offering price per share for the Firm Shares shall be
$_______.
2. The purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be $_______, representing an amount equal to the
initial public offering price set forth above, less $______ per share. In
addition, the Underwriters shall retain $150,000, representing approximately
$___ per share from the proceeds payable to the Selling Stockholders
38
for reimbursement of Underwriters expenses in accordance with Section 5(j)(II)
of the Underwriting Agreement.
The Company represents and warrants to each of the Underwriters that the
representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
Each Selling Stockholder represents and warrants to each of the
Underwriters that the representations and warranties of such Selling Stockholder
set forth in Section 4 of the Underwriting Agreement are accurate as though
expressly made at and as of the date hereof.
Xxxxx represents and warrants to each Underwriter that the
representations and warranties set forth in Section 4A of the Underwriting
Agreement are accurate as though expressly made at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule II is
a completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE. Each party hereto hereby irrevocably submits for
purposes of any action arising from this Agreement brought by the other party
hereto to the jurisdiction of the courts of New York State located in the
Borough of Manhattan and the U.S. District Court for the Southern District of
New York.
If the foregoing is in accordance with your understanding of the
agreement among the Company, the Selling Stockholders and the Underwriters,
please sign and return to the Company a counterpart hereof, whereupon this
instrument along with all counterparts and together with the Underwriting
Agreement shall be a binding agreement among the Company, the Selling
Stockholders and the Underwriters in accordance with its terms and the terms of
the Underwriting Agreement.
Very truly yours,
POWERHOUSE TECHNOLOGIES, INC.
By:
----------------------------------
Name:
Title:
2
39
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE I TO THE
UNDERWRITING AGREEMENT
By: ------------------------
Name: Xxxxxxx Xxxxx
Attorney-in-Fact
Confirmed as of the date
first above mentioned:
XXXXXX XXXXXX XXXXXXXX & CO., INC.
LADENBURG XXXXXXXX & CO. INC.
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters
named in Schedule II hereof.
By: XXXXXX XXXXXX XXXXXXXX & CO., INC.
By:
-----------------------------------
Name:
Title:
By: LADENBURG XXXXXXXX & CO. INC.
By:
----------------------------------
Name:
Title:
3
40
POWER OF ATTORNEY
POWERHOUSE TECHNOLOGIES, INC.
Common Stock
Xxxxxxx Xxxxx
c/o Madison Partners, L.L.C.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned understands that Powerhouse Technologies, Inc., a
Delaware corporation (the "COMPANY"), intends to file a registration statement
(the "REGISTRATION STATEMENT") under the Securities Act of 1933, as amended (the
"ACT"), in connection with the proposed public offering and sale by the
undersigned (the "SELLING STOCKHOLDER") of the Company's Common Stock, par value
$0.01 per share (the "COMMON STOCK").
The Selling Stockholder desires to sell certain shares of Common Stock
and to include such shares among the shares covered by the Registration
Statement. The number of shares of Common Stock which the undersigned desires to
sell (the "SHARES") are set forth beneath the signature of the Selling
Stockholder below.
Concurrently with the execution and delivery of this Power of Attorney,
the undersigned is delivering to you, or requesting the Company to deliver to
you, certificates for the Shares, which you are authorized to deposit with a
custodian of your selection (the "CUSTODIAN"), pursuant to a custody agreement
substantially in the form attached as Attachment A hereto (the "CUSTODY
AGREEMENT") with such changes as the Attorney (as defined below) deems
necessary.
1. In connection with the foregoing, the Selling Stockholder hereby
makes, constitutes and appoints you (the "MEMBER") and your substitute under
Section 3, the true and lawful attorney-in-fact of the undersigned (the Member
or substitute, being herein referred to as the "Attorney"), with full power and
authority, in the name and on behalf of the Selling Stockholder:
(a) To enter into the Custody Agreement and deposit with the
Custodian pursuant thereto the certificates for the Shares delivered to the
Attorney concurrently herewith;
41
(b) For the purpose of effecting the sale of the Shares, to
execute and deliver (i) an Underwriting Agreement in the form filed as an
exhibit to the Registration Statement with such changes as the Attorney deems
necessary or advisable (the "UNDERWRITING AGREEMENT"), by and among the Company,
the Selling Stockholders and the Representatives (the "REPRESENTATIVES"),
selected by the Company, of the several Underwriters identified on Schedule II
to the Underwriting Agreement (the "UNDERWRITERS") and (ii) a Price
Determination Agreement (as defined in the Underwriting Agreement), by and among
the Company, the Selling Stockholders and the Representatives of the several
Underwriters;
(c) To endorse, transfer and deliver certificates for the Shares
to or on the order of the Representatives or to their nominee or nominees, and
to give such orders and instructions to the Custodian as the Attorney may in its
sole discretion determine with respect to (i) the transfer on the books of the
Company of the Shares in order to effect such sale (including the names in which
new certificates for such Shares are to be issued and the denominations
thereof); (ii) the delivery to or for the account of the Representatives of the
certificates for the Shares against receipt by the Custodian of the full
purchase price to be paid therefor; (iii) the remittance to the Selling
Stockholder of the Selling Stockholder's share of the proceeds, after payment of
expenses described in the Underwriting Agreement, from any sale of Shares; and
(iv) the return to the Selling Stockholder of certificates representing the
number of Shares (if any) deposited with the Custodian but not sold by the
Selling Stockholder under the Registration Statement for any reason;
(d) To retain Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx as legal
counsel for the Selling Stockholder in connection with any and all matters
referred to herein;
(e) To take for the Selling Stockholder all steps deemed necessary
or advisable by the Attorney in connection with the registration of the Shares
under the Act, including without limitation filing amendments to the
Registration Statement, requesting acceleration of effectiveness of the
Registration Statement, advising the Securities and Exchange Commission that the
reason the Selling Stockholder is offering the Shares for sale is to diversify
the Selling Stockholder's investments and to assist the Company in enlarging the
public market for the Common Stock, informing said Commission that the Selling
Stockholder has no knowledge of any material adverse information with regard to
the current and prospective operations of the Company which is not stated in the
Registration Statement, and such other steps as the Attorney may in its absolute
discretion deem necessary or advisable;
(f) To make, acknowledge, verify and file on behalf of the Selling
Stockholder applications, consents to service of process and such other
undertakings or reports as may be required by law with state commissioners or
officers administering state securities or Blue Sky laws and to take any other
action required to facilitate the qualification of the Shares under the
securities or Blue Sky laws of the jurisdictions in which the Shares are to be
offered;
(g) If necessary, to endorse (in blank or otherwise) on behalf of
the Selling Stockholder the certificate or certificates representing the Shares,
or a stock power or powers attached to such certificate or certificates; and
2
42
(h) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions, certificates,
letters and other writings and, in general, to do all things and to take all
actions which the Attorney in its sole discretion may consider necessary or
proper in connection with or to carry out the aforesaid sale of Shares, as fully
as could the Selling Stockholder if personally present and acting.
2. This Power of Attorney and all authority conferred hereby is granted
and conferred subject to and in consideration of the interests of the Company,
the Representatives and the Underwriters and, for the purpose of completing the
transactions contemplated by this Power of Attorney, this Power of Attorney and
all authority conferred hereby shall be irrevocable and shall not be terminated
by any act of the Selling Stockholder or by operation of law, whether by the
death, disability, incapacity or liquidation of the Selling Stockholder or by
the occurrence of any other event or events (including, without limitation, the
termination of any trust or estate for which the Selling Stockholder is acting
as a fiduciary or fiduciaries), and if, after the execution hereof, the Selling
Stockholder shall die or become disabled or incapacitated, or if any other such
event or events shall occur before the completion of the transactions
contemplated by this Power of Attorney, the Attorney shall nevertheless be
authorized and directed to complete all such transactions as if such death,
disability, incapacity or other event or events had not occurred and regardless
of notice thereof.
3. The Member shall have full power to make and substitute any person in
the place and stead of such Member, and the Selling Stockholder hereby ratifies
and confirms all that the Member or substitute shall do by virtue of these
presents. All actions hereunder may be taken by any the Member or his
substitute.
4. The Selling Stockholder hereby represents, warrants and covenants
that:
(a) The Selling Stockholder has full power and authority to enter
into this Agreement, the Underwriting Agreement and the Custody Agreement. All
authorizations and consents necessary for the execution and delivery by the
Selling Stockholder of this Agreement, the Underwriting Agreement and the
Custody Agreement have been given. Each of this Agreement, the Underwriting
Agreement and the Custody Agreement has been duly authorized (to the extent the
Selling Stockholder is not a natural person), executed and delivered by or on
behalf of the Selling Stockholder. This Agreement constitutes a valid and
binding agreement of the Selling Stockholder and is enforceable against the
Selling Stockholder in accordance with the terms hereof, and the Underwriting
Agreement and the Custody Agreement, when executed and delivered by the Attorney
in accordance herewith, will constitute the valid and binding agreement of the
Selling Stockholder and will be enforceable against the Selling Stockholder in
accordance with the terms thereof; except with respect to each agreement as
rights to indemnification and contribution thereunder may be limited by
applicable law and public policy and except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors rights generally or by
general equitable principles.
(b) The Selling Stockholder now has, and at the time of delivery
thereof pursuant to the Underwriting Agreement will have, (i) good and valid
title to the Shares to be sold by the Selling Stockholder hereunder, free and
clear of all liens, encumbrances and claims
3
43
whatsoever (other than pursuant to the Underwriting Agreement and the Custody
Agreement), and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver such Shares to the
Underwriters pursuant to the Underwriting Agreement and to make the
representations, warranties and agreements made by the Selling Stockholder
therein. Upon the delivery of and payment for such Shares pursuant to the
Underwriting Agreement, assuming each Underwriter has no notice of any adverse
claim as such term is used in the Uniform Commercial Code the Selling
Stockholder will deliver good and valid title thereto, free and clear of all
liens, charges, claims, encumbrances, pledges, security interests, defects or
restrictions of any kind whatsoever.
(c) On the Closing Date all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Firm Shares to be sold by the Selling Stockholder to the several
Underwriters pursuant to the Underwriting Agreement will have been fully paid or
provided for by the Selling Stockholder, and all laws imposing such taxes will
have been fully complied with.
(d) The performance of this Agreement, the Underwriting Agreement
and the Custody Agreement and the consummation of the transactions contemplated
hereby will not result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Selling Stockholder pursuant to the
terms or provisions of, or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the acceleration
of any obligation under, as to the Selling Stockholder, any contract or other
agreement to which such Selling Stockholder is a party or by which the Selling
Stockholder or any of his property is bound or affected, or any ruling, decree,
judgment, order, statute, rule or regulation of any court or other governmental
agency or body having jurisdiction over the Selling Stockholder or the property
of the Selling Stockholder, except for violations, defaults, breaches or
accelerations which would not result in a material adverse effect in the
financial condition of the Selling Stockholder.
(e) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required for
the consummation by the Selling Stockholder of the transactions on his part
contemplated in this Agreement, the Underwriting Agreement and the Custody
Agreement, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Firm Shares to be sold by such Selling
Stockholder.
(f) The information under the caption "Selling Stockholder" in the
Prospectus is complete and accurate in all material respects.
(g) Other than as permitted by the Act and the Rules and
Regulations, the Selling Stockholder has not distributed and will not distribute
any preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares. The Selling Stockholder has
not taken, directly or indirectly, any action intended to cause or result in, or
which might reasonably be expected to cause or result in, or which has caused or
resulted in, stabili-
4
44
zation or manipulation, under the Act or otherwise, of the price of any security
of the Company to facilitate the sale or resale of the Shares.
(h) Certificates in negotiable form for the Shares to be sold
pursuant to the Underwriting Agreement by such Selling Stockholder will be
placed in custody, for the purpose of making delivery of such Shares pursuant to
the Underwriting Agreement, under the Custody Agreement which appoints a
custodian (the "CUSTODIAN") for such Selling Stockholder. The Selling
Stockholder agrees that the Shares represented by the certificates held in
custody for him under the Custody Agreement are for the benefit of and coupled
with and subject to the interest hereunder of the Custodian, the Underwriters
and the Company, that the arrangements made by the Selling Stockholder for such
custody and the appointment of the Custodian by the Selling Stockholder are
irrevocable, and that the obligations of the Selling Stockholder pursuant to the
Underwriting Agreement shall not be terminated by operation of law, whether by
the death, disability or incapacity of the Selling Stockholder or the occurrence
of any other event. If the Selling Stockholder should die, become disabled or
incapacitated or if any other such event should occur before the delivery of the
Shares hereunder, certificates for the Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement, and
actions taken by the Custodian pursuant to the Agreement and the Custody
Agreement shall be as valid, as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian shall have received notice
thereof.
5. The representations, warranties and covenants of the Selling
Stockholder in this Power of Attorney are made for the benefit of, and may be
relied upon by, the Attorney, the Custodian, the Underwriters and the
Representatives.
6. The Attorney shall be entitled to act and rely upon any statement,
request, notice or instructions respecting this Power of Attorney given to it by
the Selling Stockholder, not only as to the authorization, validity and
effectiveness thereof, but also as to the truth and acceptability of any
information therein contained.
It is understood that the Attorney assumes no responsibility or liability
to any person other than to deal with the Shares deposited with it and the
proceeds from the sale of the Shares in accordance with the provisions hereof.
The Attorney makes no representations with respect to and shall have no
responsibility for the Registration Statement, the Prospectus or any Preliminary
Prospectus nor, except as herein expressly provided, for any aspect of the
offering of Common Stock, and shall not be liable for any error of judgment or
for any act done or omitted or for any mistake of fact or law except for its own
gross negligence, willful misconduct or bad faith. The Selling Stockholder
agrees to indemnify the Attorney for and to hold the Attorney harmless against
any loss, claim, damage or liability incurred on their part arising out of or in
connection with their acting as the Attorney under this Power of Attorney, as
well as the cost and expense of investigating and defending against any such
loss, claim, damage or liability, except to the extent such loss, claim, damage
or liability is due to the gross negligence, willful misconduct or bad faith of
the Member seeking indemnification. The Selling Stockholder agrees that the
Attorney may consult with counsel of their own choice (who may be counsel for
the Company) and they shall have full and complete authorization and protection
for any action taken or suffered by them hereunder in good faith and in
accordance with the opinion of such counsel.
5
45
It is understood that the Attorney may, without breaching any express or
implied obligation to the Selling Stockholder hereunder, release, amend or
modify any other Power of Attorney granted by any other Selling Stockholder.
7. It is understood that the Attorney shall serve entirely without
compensation.
8. This Power of Attorney shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely within such
State. Each party hereto hereby irrevocably submits for purposes of any action
arising from this Agreement brought by the other party hereto to the
jurisdiction of the courts of New York State located in the Borough of Manhattan
and the U.S. District Court for the Southern District of New York.
This Power of Attorney may be signed in two or more counterparts with the
same effect as if the signature thereto and hereto were upon the same
instrument.
In case any provision in this Power of Attorney shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
6
46
This Power of Attorney shall be binding upon the Attorney and the Selling
Stockholder and the heirs, legal representatives, distributees, successors and
assigns of the Selling Stockholder.
Dated: February __, 1998
Very truly yours,
SELLING STOCKHOLDER
By: (1)
---------------------------------
Name:
Title:
----------------------------------
(Address)
SHARES TO BE SOLD:
_________ shares of Common Stock
ACKNOWLEDGED AND ACCEPTED:
ATTORNEY-IN-FACT:
---------------------------------------
Xxxxxxx Xxxxx
(1) To be signed in exactly the same manner as the shares are registered.
NOTE: SIGNATURES MUST BE NOTARIZED
7
47
Attachment A
CUSTODY AGREEMENT
CUSTODY AGREEMENT, dated February __, 1998, between Continental Stock
Transfer & Trust Company, as Custodian (the "CUSTODIAN"), and the Selling
Stockholders specified on Schedule I (the "SELLING STOCKHOLDERS").
Powerhouse Technologies, Inc., a Delaware corporation (the "COMPANY"),
intends to file a Registration Statement (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission to register for sale to the public under the
Securities Act of 1933, as amended (the "ACT"), shares of the Company's common
stock, $0.01 par value per share (the "COMMON STOCK").
The shares to be covered by the Registration Statement shall consist of
up to 1,468,026 shares of Common Stock (the "SHARES") to be sold by the Selling
Stockholders.
Each of the Selling Stockholders have executed and delivered a Power of
Attorney (the "POWER OF ATTORNEY") naming Xxxxxxx Xxxxx as his attorney-in-fact
(the "ATTORNEY"), for certain purposes, including the execution, delivery and
performance of this Agreement in its name, place and stead, in connection with
the proposed sale by the Selling Stockholder of the shares set forth opposite
its name on Schedule I.
1. A custody arrangement is hereby established by each of the Selling
Stockholders with the Custodian with respect to the Shares, and the Custodian is
hereby instructed to act in accordance with this Agreement and any amendments or
supplements hereto authorized by the Attorney.
2. There are herewith delivered to the Custodian, and the Custodian
hereby acknowledges receipt of, certificates representing the Shares, which
certificates have been endorsed in blank or are accompanied by duly executed
stock powers, in each case with all signatures guaranteed by a commercial bank
or trust company or by a member firm of the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. or a member of the National Association of
Securities Dealers, Inc. Such certificates are to be held by the Custodian for
the account of the Selling Stockholder and are to be disposed of by the
Custodian in accordance with this Agreement.
3. The Custodian is authorized and directed by each of the Selling
Stockholders:
(a) To hold the certificates representing the Shares delivered by
the Selling Stockholder in its custody;
(b) On or immediately prior to the settlement date for any Shares
sold pursuant to the Registration Statement (the "CLOSING DATE"), to cause such
Shares to be transferred on the books of the Company into such names as the
Custodian shall have been instructed by the
48
Representatives (the "REPRESENTATIVES") of the several Underwriters (the
"UNDERWRITERS") pursuant to the Underwriting Agreement, dated February 9, 1998
(the "UNDERWRITING AGREEMENT"), among the Company, the Selling Stockholders and
the Underwriters; to cause to be issued, against surrender of the certificates
for the Shares, a new certificate or certificates for such Shares, free of any
restrictive legend, registered in such name or names; to deliver such new
certificates representing such Shares to the Representatives, as instructed by
the Representatives on the Closing Date for their account or accounts against
full payment therefor; and to give receipt for such payment;
(c) To disburse such payments in the following manner: (i) to
itself, as agent for the Selling Stockholder, a reserve amount to be designated
in writing by the Attorney from which amount the Custodian shall pay by the end
of the fifth business day following the Closing Date, (A) the Selling
Stockholder's proportionate share of all expenses of the offering and sale of
the Shares as provided in the Underwriting Agreement (unless previously
deducted), (B) any applicable stock transfer taxes and (C) the Selling
Stockholder's proportionate share of any other expenses of the Selling
Stockholders; and (ii) to such accounts as shall be designated by the Attorney
for the benefit of the Selling Stockholders, pursuant to the written
instructions of the Attorney, (A) on the Closing Date, a sum equal to the share
of the proceeds to which such Selling Stockholder is entitled, as determined by
the Attorney, less the reserve amount designated by such Attorney, and (B)
promptly after all proper charges, disbursements, costs and expenses shall have
been paid, any remaining balance of the amount reserved under clause (i) above.
Before making any payment from the amount reserved under clause (i) above,
except payments made pursuant to subclause (B) of clause (ii) above, the
Custodian shall request and receive the written approval of the Attorneys. To
the extent the expenses referred to in subclause (A) of clause (i) above exceed
the amount reserved, the Selling Stockholder shall remain liable for their
proportionate share of such expenses. The Company shall be responsible for any
fees of the Custodian.
4. Subject in each case to the indemnification obligations set forth in
Section 7, in the event Shares of any Selling Stockholder are not sold, the
Custodian shall deliver to such Selling Stockholder as soon as practicable after
termination of the offering of the Shares, certificates representing such Shares
deposited by such Selling Stockholder. Certificates returned to any Selling
Stockholder shall be returned with any related stock powers, and any new
certificates issued to such Selling Stockholder with respect to such Shares
shall bear any appropriate legend reflecting the unregistered status thereof
under the Act.
5. This Agreement is for the express benefit of the Company and the
Selling Stockholders, the Underwriters and the Representatives. Prior to the
termination of the offering of the Shares, the obligations and authorizations of
each Selling Stockholder hereunder are irrevocable and shall not be terminated
by any act of a Selling Stockholder or by operation of law, whether by the
death, disability or incapacity of such Selling Stockholder or by the occurrence
of any other event or events (including, without limitation, the termination of
any trust or estate for which such Selling Stockholder is acting as a
fiduciary), and if after the execution hereof the Selling Stockholder shall die
or become disabled or incapacitated, or if any other event or events shall occur
before the delivery of such Selling Stockholder's Shares hereunder to the
Representatives, such Shares shall be delivered to the Representatives in
accordance with the terms and conditions of this Agreement,
2
49
as if such event had not occurred, regardless of whether or not the Custodian
shall have received notice of such event.
6. Until payment of the purchase price for the Shares has been made to
the Selling Stockholders or to the Custodian, each Selling Stockholder shall
remain the owner of (and shall retain the right to receive dividends and
distributions on, and to vote) the number of Shares delivered by him to the
Custodian hereunder. Until such payment in full has been made or until the
offering of Shares has been terminated, each Selling Stockholder agrees that he
will not give, sell, pledge, hypothecate, grant any lien on, transfer, deal with
or contract with respect to the Shares and any interests therein.
7. The Custodian shall assume no responsibility to any person other than
to deal with the certificates for the Shares and the proceeds from the sale of
the Shares represented thereby in accordance with the provisions hereof, and
each Selling Stockholder hereby agrees to indemnify the Custodian for and to
hold the Custodian harmless against any and all losses, claims, damages or
liabilities incurred on its part arising out of or in connection with it acting
as the Custodian pursuant hereto, as well as the costs and expenses of
investigating and defending any such losses, claims, damages or liabilities,
except to the extent such losses, claims, damages or liabilities are due to the
negligence, willful misconduct or bad faith of the Custodian. Each Selling
Stockholder agrees that the Custodian may consult with counsel of its own choice
(who may be counsel for the Company), and the Custodian shall have full and
complete authorization and protection for any action taken or suffered by the
Custodian hereunder in good faith and in accordance with the opinion of such
counsel.
8. Each Selling Stockholder hereby represents and warrants that: (a) he
has, and at the time of delivery of its Shares to the Representatives he will
have, full power and authority to enter into this Agreement and the Power of
Attorney, to carry out the terms and provisions hereof and thereof and to make
all of the representations, warranties and agreements contained herein and
therein; and (b) this Agreement and the Power of Attorney are valid and binding
agreements of such Selling Stockholder and are enforceable against such Selling
Stockholder in accordance with their respective terms.
9. The Custodian's acceptance of this Agreement by the execution hereof
shall constitute an acknowledgment by the Custodian of the authorization herein
conferred and shall evidence the Custodian's agreement to carry out and perform
this Agreement in accordance with its terms.
10. The Custodian shall be entitled to act and rely upon any statement,
request, notice or instruction with respect to this Agreement given to it on
behalf of a Selling Stockholder if the same shall be made or given to the
Custodian by the Attorneys, not only as to the authorization, validity and
effectiveness thereof, but also as to the truth and acceptability of any
information therein contained.
11. This Agreement may be executed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument. Execution by the
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Custodian of one counterpart hereof and its delivery thereof to the Attorneys
shall constitute the valid execution of this Agreement by the Custodian.
12. This Agreement shall be binding upon the Custodian, each of the
Selling Stockholders and the heirs, legal representatives, distributees,
successors and assigns of each of the Selling Stockholders.
13. This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within such State.
Each party hereto hereby irrevocably submits for purposes of any action arising
from this Agreement brought by the other party hereto to the jurisdiction of the
courts of New York State located in the Borough of Manhattan and the U.S.
District Court for the Southern District of New York.
14. Any notice given pursuant to this Agreement shall be deemed given if
in writing and delivered in person, or if given by telephone or telegraph if
subsequently confirmed by letter: (i) if to any Selling Stockholder, to its
attorney-in-fact, Xxxxxxx Xxxxx c/o Madison Partners, L.L.C., 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; and (ii) if to the Custodian, to
it at Xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By:
----------------------------------
Name:
Title:
THE SELLING STOCKHOLDERS
By: THE ATTORNEY
By:
------------------------------
Xxxxxxx Xxxxx
Attorney-in-Fact
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SCHEDULE I
SELLING STOCKHOLDERS
Name of Selling Stockholder Total Number of Firm Shares to be Sold
--------------------------- --------------------------------------
Xxxxxxx Xxxxx 222,252
Video Investment Partners, L.P. 207,629
Xxxxxxx Capital, L.P. 222,459
Asgard Ltd. 148,307
LBN Investment Associates, L.P. 148,307
Parkway M&A Capital Corporation 74,153
Xxxxx Xxxxx 74,153
Alpine Associates, Ltd. 370,766
=========
1,468,026
52
EXHIBIT C
SUBSIDIARIES
53
EXHIBIT D
February __, 1998
XXXXXX XXXXXX XXXXXXXX & CO., INC.
LADENBURG XXXXXXXX & CO. INC.
As Representatives of the
several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In consideration of the agreement of the several Underwriters,
for which Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. ("GKM") and Ladenburg Xxxxxxxx &
Co. Inc. (the "REPRESENTATIVES") intend to act as Representatives, to underwrite
a proposed public offering (the "OFFERING") of 1,468,026 shares of Common Stock,
par value $0.01 per share (the "COMMON STOCK") of Powerhouse Technologies, Inc.,
a Delaware corporation, the undersigned hereby agrees that the undersigned shall
not, for a period of 120 days after the commencement of the public offering of
such shares, without the prior written consent of the Representatives, offer to
sell, sell, contract to sell, grant any option to sell, or otherwise dispose of,
or require the Company to file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended, to
register, any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or warrants or other rights to acquire shares of
Common Stock of which the undersigned is now, or may in the future become, the
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended).
Very truly yours,
--------------------------------------
By:
----------------------------------
Name:
Title:
54
EXHIBIT E
Form of Opinion of
Counsel to the Company
1. Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full corporate power and authority to
conduct all the activities conducted by it, to own or lease all the assets owned
or leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company is the sole record owner and, to our
knowledge, the sole beneficial owner of all of the capital stock of each of its
Subsidiaries.
2. The Firm Shares have been, and the Option Shares, when paid for by the
Underwriters in accordance with the terms of the Agreement will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right under (i) the statutes, judicial and
administrative decisions and the rules and regulations of the governmental
agencies of the State of Delaware, (ii) the Company's certificate of
incorporation or by-laws or (iii) any instrument, document, contract or other
agreement referred to in the Registration Statement or any instrument, document,
contract or agreement filed as an exhibit to, or incorporated as an exhibit by
reference in, the Registration Statement. Except as described in the
Registration Statement or the Prospectus, to the best of our knowledge, there is
no commitment or arrangement to issue, and there are no outstanding options,
warrants or other rights calling for the issuance of, any share of capital stock
of the Company or any Subsidiary to any person or any security or other
instrument that by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company.
3. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Agreement or the Price Determination Agreement (collectively
the "TRANSACTION AGREEMENTS") by the Company or in connection with the taking by
the Company of any action contemplated thereby [or, if so required, all such
consents, approvals, authorizations and orders, [specifying the same] have been
obtained and are in full force and effect], except such as have been obtained
under the Act and the Rules and Regulations and such as may be required under
state securities or "Blue Sky" laws or by the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the Shares
to be sold by the Company.
4. The authorized, issued and outstanding capital stock of the Company is
as set forth in the Registration Statement and the Prospectus under the caption
"Capitalization." To our knowledge, the description of the Common Stock
contained in the Prospectus is complete and accurate in all material respects.
The form of certificate used to evidence the Common Stock is in due and proper
form and complies with all applicable statutory requirements.
55
5. The Registration Statement and the Prospectus (including any documents
incorporated by reference into the Prospectus, at the time they were filed)
comply or complied in all material respects as to form with the requirements of
the Act, the Exchange Act, the Exchange Act Rules and Regulations and the Rules
and Regulations (except that we express no opinion as to financial statements,
schedules and other financial data contained in the Registration Statement or
the Prospectus or incorporated by reference therein).
6. To the best of our knowledge, any instrument, document, lease,
license, contract or other agreement (collectively, "DOCUMENTS") required to be
described or referred to in the Registration Statement or the Prospectus has
been properly described or referred to therein and any Document required to be
filed as an exhibit to the Registration Statement has been filed as an exhibit
thereto or has been incorporated as an exhibit by reference in the Registration
Statement; and to our knowledge no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any Document filed or required to be filed as an exhibit to the
Registration Statement.
7. To the best of our knowledge, the Company and its Subsidiaries have
obtained all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those with jurisdiction over
environmental or similar matters) necessary to own or lease their respective
properties and to conduct their respective businesses as described in the
Prospectus. To the best of our knowledge, the Company and its Subsidiaries have
been, and are currently, conducting their respective businesses in compliance
with all such approvals, orders, licenses, certificates, franchises and permits.
To the best of our knowledge, neither the Company nor any of its Subsidiaries
has received any notice of any proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would adversely affect the business,
condition (financial or otherwise), earnings, prospects, operations, properties,
or results of operations of the Company and its Subsidiaries taken as a whole.
8. To the best of our knowledge, except as disclosed in the Registration
Statement or the Prospectus, no person or entity has the right to require the
registration under the Act of shares of Common Stock or other securities of the
Company by reason of the filing or effectiveness of the Registration Statement.
9. To the best of our knowledge, the Company is not in violation of, or
in default with respect to, any law, rule, regulation, order, judgment or
decree, except as may be described in the Prospectus or such as in the aggregate
do not now have and will not in the future have a material adverse effect upon
the operations, business or assets of the Company and the Subsidiaries, taken as
a whole.
10. To our knowledge, all descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are accurate and fairly present
the information required to be shown.
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56
11. The Company has full corporate power and authority to enter into the
Transaction Agreements, and the Transaction Agreements have been duly
authorized, executed and delivered by the Company, are valid and binding
agreements of the Company and, except for the indemnification and contribution
provisions thereof, as to which we express no opinion, are enforceable against
the Company in accordance with the terms thereof.
12. The execution and delivery by the Company of, and the performance by
the Company of its agreements in, the Transaction Agreements do not and will not
(i) violate the certificate of incorporation or by-laws of the Company, (ii) to
our knowledge, breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the assets of the
Company or any of its Subsidiaries pursuant to the terms of, (x) any indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement,
capital lease or other evidence of indebtedness, (y) to our knowledge, any
voting trust arrangement or any contract or other agreement to which the Company
is a party that restricts the ability of the Company to issue securities or (z)
to our knowledge, any Document filed as an exhibit to, or incorporated as an
exhibit by reference in, the Registration Statement, (iii) to our knowledge,
breach or otherwise violate any existing obligation of the Company under any
court or administrative order, judgment or decree of which we have knowledge or
(iv) to our knowledge, violate applicable provisions of any statute or
regulation in the States of Delaware, or any other state where the Company has
material operations or of the United States.
13. Delivery of certificates for the Option Shares will transfer valid
and marketable title thereto to each Underwriter that has purchased such Shares
in good faith and without any notice of any adverse claim with respect thereto.
14. The Company is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
15. The Shares have been duly authorized for listing by the Nasdaq
National Market System upon official notice of issuance.
We hereby confirm to you that we have been advised by the Commission that
the Registration Statement has become effective under the Act and that no order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is threatened, pending or
contemplated.
We hereby further confirm to you that to our knowledge, there are no
actions, suits, proceedings or investigations pending or overtly threatened in
writing against the Company or any of its respective officers or directors in
their capacities as such, before or by any court, governmental agency or
arbitrator which (i) seek to challenge the legality or enforceability of the
Transaction Agreements, (ii) seek to challenge the legality or enforceability of
any of the Documents filed, or required to be filed, as exhibits to the
Registration Statement, (iii) seek damages or other remedies with respect to any
of the Documents filed, or required to be filed, as exhibits to the Xxxxxxxxxxxx
0
00
Xxxxxxxxx, (xx) except as set forth in or contemplated by the Registration
Statement and the Prospectus, seek money damages in excess of $100,000 or seek
to impose criminal penalties upon the Company, any of its Subsidiaries or any of
their respective officers or directors in their capacities as such and of which
we have knowledge, (v) seek to enjoin any of the business activities of the
Company or any of its Subsidiaries or the transactions described in the
Prospectus and of which we have knowledge, (vi) question the validity of the
capital stock, (vii) in any of which there is a reasonable possibility of an
adverse decision which may result in a material change in the condition
(financial or otherwise), earnings, business, prospects, stockholders' equity,
operations, properties, business, or results of operations, of the Company and
its Subsidiaries or (viii) are required to be disclosed in the Registration
Statement and Prospectus but are either not disclosed, or not disclosed
accurately in all material respects.
We have participated in the preparation of the Registration Statement and
the Prospectus and, without assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus or in any amendment or supplement thereto or in any
document incorporated by reference into the Prospectus, nothing has come to our
attention that causes us to believe that, both as of the Effective Date and as
of the Closing Date and the Option Closing Date, the Registration Statement, or
any amendment thereto, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that any
Prospectus or any amendment or supplement thereto including any documents
incorporated by reference into the Prospectus, at the time such Prospectus was
issued, at the time any such amended or supplemented Prospectus was issued, at
the Closing Date and the Option Closing Date, contained or contains any 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 in which they were made, not misleading (except that we express no
opinion as to financial statements, schedules and other financial data contained
in the Registration Statement or the Prospectus or incorporated by reference
therein).
The foregoing opinion is subject to the qualification that the
enforceability of the Transaction Agreements may be: (i) subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and (ii) subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or in
equity), including principles of commercial reasonableness or conscionability
and an implied covenant of good faith and fair dealing.
This letter is furnished by us solely for your benefit in connection with
the transactions referred to in the Transaction Agreements and may not be
circulated to, or relied upon by, any other person, except that this letter may
be relied upon by your counsel in connection with the opinion letter to be
delivered to you pursuant to Section 6(g) of the Agreement.
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EXHIBIT F
Form of Selling Stockholder Opinion
February __, 1998
XXXXXX XXXXXX XXXXXXXX & CO., INC.
LADENBURG XXXXXXXX & CO. INC.
As Representatives of
the several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We are acting as special counsel to the holders of Common Stock (the
"Common Stock") of Powerhouse Technologies, Inc., a Delaware corporation (the
"Company") who are listed as selling stockholders in the Registration Statement
(No. 333-41417) and Prospectus, dated February __, 1998, of the Company under
the heading "Selling Stockholders" (the "Selling Stockholders") in connection
with the secondary offering by the Selling Stockholders of up to 1,468,026
shares (the "Shares") of Common Stock of the Company. This opinion is being
delivered to you pursuant to Section 6(f) of the underwriting agreement, dated
February 9, 1998 (the "Underwriting Agreement"), among the Company, the Selling
Stockholders and Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. and Ladenburg Xxxxxxxx & Co.
Inc., as representatives (the "Representatives") of the several Underwriters
named in Schedule I thereto (the "Underwriters"). All terms used herein that are
defined in the Underwriting Agreement have the respective meanings set forth
therein, unless otherwise defined herein.
We have examined the originals, or certified, conformed or reproduction
copies, of all records, agreements, instruments and documents as we have deemed
relevant or necessary as the basis for the opinions hereinafter expressed,
including, without limitation, (i) a power of attorney (each a "Power of
Attorney" and collectively, the "Powers of Attorney"), executed and delivered by
or on behalf of each of the Selling Stockholders, pursuant to which Xx. Xxxxxxx
Xxxxx (the "Attorney-in-Fact") is appointed attorney-in-fact for the Selling
Stockholders, (ii) a custody agreement (the "Custody Agreement") between the
Attorney-in-Fact individually and on behalf of each of the Selling Stockholders
and Continental Stock Transfer & Trust Company, as custodian (the "Custodian"),
and (iii) the Underwriting Agreement. In all such examinations, we have assumed
that all natural persons executing documents have the legal capacity to execute
and deliver those documents. In addition, in all such examinations, we have
assumed the genuineness of all signatures, the authenticity of all original or
certified copies and the conformity to original or certified copies of all
copies submitted to us as conformed or reproduction copies. We have also
59
assumed for purposes of the opinions expressed herein that the Custodian has the
power to enter into and perform the Custody Agreement and that such agreement
has been duly authorized, executed and delivered by, and constitutes a valid and
binding obligation of, the Custodian. As to various questions of fact relevant
to the opinions expressed herein, we have relied upon and assume the accuracy of
the representations and warranties of each Selling Stockholder contained in the
Underwriting Agreement, his, her or its Power of Attorney or the Custody
Agreement, and of certificates and oral or written statements and other
information of or from public officials, representatives of the Company, the
Selling Stockholders, and others, and assume compliance on the part of all
parties to the Underwriting Agreement and the Custody Agreement with the
covenants and agreements contained therein.
For purposes of the opinions expressed below, we have, with your
permission, further assumed that:
[(a) Each of the Powers of Attorney, the Custody Agreement and the
Underwriting Agreement, executed by or on behalf of a Selling Stockholder, has
been duly authorized by all necessary corporate, partnership of other action by
each Selling Stockholder;
(b)] the opinion expressed in paragraph (v) below is governed
solely by the provisions of Article 8 of the Uniform Commercial Code as
currently in effect in the State of New York.
Based upon the foregoing, and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:
(i) The Powers of Attorney, and the Custody Agreement have been
duly executed and delivered by or on behalf of each Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with their respective terms,
subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting creditors' rights generally
and (ii) general principles of equity (whether considered in a proceeding at law
or in equity).
(ii) The Underwriting Agreement has been duly executed and
delivered by or on behalf of each Selling Stockholder.
(iii) The execution and delivery of the Underwriting Agreement,
the Powers of Attorney and the Custody Agreement by or on behalf of each Selling
Stockholder and the sale of the Shares to be sold by each Selling Stockholder
pursuant to the Underwriting Agreement and the compliance by each Selling
Stockholder with all of the provisions of the Underwriting Agreement, the Power
of Attorney and the Custody Agreement applicable to him, her, or it will not
result in a breach or violation of any terms or provisions of, or constitute a
default under, any law or present regulation of any governmental agency or
authority of the State of New York or the United States of America known to us
to be applicable to such Selling Stockholder (except that we express no opinion
as to (A) the Act and the Rules and Regulations thereunder, (B) the anti-fraud
provisions of any federal securities law of the United States and (C) the
securities or Blue Sky laws of the
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60
various states in connection with the offer and sale of the Shares), provided
that the foregoing opinion is limited to such laws which, in our experience, are
normally applicable to public offerings of securities of the type contemplated
by this Agreement.
(iv) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental agency or body of
the United States of America or the State of New York is required for the
consummation by each Selling Stockholder of the sale of the Shares to be sold by
such Selling Stockholder pursuant to the Underwriting Agreement (except that we
express no opinion as to any consent, approval, authorization, order, filing,
registration or qualification which may be required under the Act and the Rules
and Regulation or state securities or Blue Sky laws in connection with the
purchase and distribution of such Shares by the Underwriters), provided that the
foregoing opinion is limited to such consents, approvals, authorizations,
orders, filings, registrations or qualifications which, in our experience, are
normally applicable to public offerings of securities of the type contemplated
by this Agreement.
(v) Assuming that the Underwriters purchase the Shares to be
delivered at the Closing Date for value and without notice of any adverse claim
as such term is used in Section 8-102 of the Uniform Commercial Code as
currently in effect in the State of New York, the delivery of certificates
representing such Shares either registered in the name of the Underwriters or
effectively endorsed to the Underwriters or in blank will pass to the
Underwriters all rights that the transferor has in such Shares, free and clear
of all adverse claims.
The opinions expressed herein are limited to the federal law of the
United States of America and the internal laws of the State of New York and, to
the extent relevant hereto, the General Corporation Law of the State of
Delaware, as currently in effect.
The opinions expressed herein are solely for your benefit and may not be
relied upon in any manner or for any purpose by any other person and may not be
quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, XXXXXXX & XXXXXXXX
By:
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