EXHIBIT 1.1
Sonic Innovations, Inc.
Common Stock
par value $0.001 per share
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Underwriting Agreement
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April __, 2000
Xxxxxxx, Xxxxx & Co.,
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Sonic Innovations, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
........ shares (the "Firm Shares") and, at the election of the Underwriters, up
to ........ additional shares (the "Optional Shares") of Common Stock, par
value $0.001 per share ("Stock"), of the Company (the Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof being collectively called the "Shares").
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-30566) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in any
amendment to
the Initial Registration Statement or filed on or after March 22, 2000 with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective, each as amended at
the time such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Xxxxxxx, Sachs & Co. expressly for use therein;
(c) The Registration Statement conforms, and any further amendments or
supplements to the Registration Statement will conform, in all material respects
to the requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; the
Prospectus conforms, and any further amendments or supplements to the Prospectus
will conform, in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and do not and will not, as
of the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly
for use therein;
(d) The Company's only subsidiary is Sonic Innovations A/S (the
"Significant Subsidiary"); neither the Company nor the Significant Subsidiary
has sustained since the date of the latest audited financial statements included
in the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock (other than upon
the issuance and exercise of options granted pursuant to employee or director
stock option plans or the exercise of warrants or the conversion of outstanding
indebtedness) or long-term debt of the Company or the Significant Subsidiary or
any material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs,
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management, financial position, stockholders' equity or results of operations of
the Company and the Significant Subsidiary, otherwise than as set forth or
contemplated in the Prospectus;
(e) Neither the Company nor the Significant Subsidiary owns any real
property; the Company and the Significant Subsidiary have good and marketable
title to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and the Significant Subsidiary; and any real property and buildings held
under lease by the Company and the Significant Subsidiary are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and the Significant Subsidiary, in each
case except as described in the Prospectus;
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Delaware, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except where
failure to be so qualified in any such jurisdiction does not, and is not
reasonably likely to, have a material adverse effect upon the assets, business,
financial condition or results of operations of the Company and the Significant
Subsidiary, taken as a whole, or on the consummation of any of the transactions
contemplated hereby (a "Material Adverse Effect"); and the Significant
Subsidiary of the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description of the Stock contained in the Prospectus; and all
of the issued shares of capital stock of the Significant Subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares, are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(h) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(i) (A) Except as would not result in a Material Adverse Effect, the
issue and sale of the Shares by the Company and the compliance by the Company
with all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or the Significant Subsidiary is a party or by
which the Company or the Significant Subsidiary is bound or to which any of the
property or assets of the Company or the Significant Subsidiary is subject; (B)
nor will such action result in (i) any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or (ii) except as would
not result in a Material
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Adverse Effect, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or the
Significant Subsidiary or any of their properties; and (C) no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws or by the National Association
of Securities Dealers, Inc. in connection with the purchase and distribution of
the Shares by the Underwriters and except as where failure to obtain them or
take such action would not result in a Material Adverse Effect,;
(j) Neither the Company nor the Significant Subsidiary is in violation
of (A) its Certificate of Incorporation or By-laws or (B) except as does not,
and is not reasonably likely to, have a Material Adverse Effect, in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(k) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock and under the caption "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate summaries and descriptions of such provisions in all
material respects;
(l) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or the Significant
Subsidiary is a party or of which any property of the Company or the Significant
Subsidiary is the subject which, if determined adversely to the Company or the
Significant Subsidiary, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(m) The Company is not and, after giving effect to the offering and
sale of the Shares, the receipt of the proceeds therefrom and the investment of
such funds as contemplated by the Propectus, will not be an "investment
company", as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(n) To the Company's knowledge, Xxxxxx Xxxxxxxx LLP, who have
certified certain financial statements of the Company and the Significant
Subsidiary, are independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder; and
(o) The holders of [more than 95% of] all outstanding shares of Stock
and securities convertible into or exercisable or exchangeable for Stock, have
delivered agreements (collectively, the "Lock-up Agreements") that restrict the
holders thereof from, among other things, offering, selling, contracting to
sell, pledging, granting any option for the purchase of, making any short sale
of, or otherwise transferring or disposing of the economic interest in, any of
shares of Stock, or any securities that are convertible into or exercisable or
exchangeable for, Stock, for a period of 180 days after the date of the
Prospectus without the prior written consent of Xxxxxxx, Sachs & Co., except
that in the case of holders who are not officers or directors of the Company,
do not own 5% of the outstanding Stock or are not institutional investors the
Lock-up Agreement does
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not apply to shares acquired in the open market following the offering of the
Shares; and the Company has no reason to believe any Lock-up Agreement is not a
valid and binding obligation of each party thereto other than the Underwriters;
and
(p) The Company has imposed a stop-transfer instruction with the
Company's transfer agent in order to enforce the Lock-up Agreements;
(q) The Company (i) to the extent the Company is required under any of
its equity incentive plans or any agreement affecting its capital stock
(collectively, the "Plans"), has notified each holder of any outstanding shares
of Stock and each holder of any securities convertible into or exercisable or
exchangeable for Stock issued under the Plans that pursuant to the terms of the
plans, none of such options or shares may be sold or otherwise transferred or
disposed of for a period of 180 days after the date of the Prospectus and (ii)
has imposed a stop-transfer instruction with the Company's transfer agent in
order to enforce the foregoing lock-up provision imposed pursuant to the Plans;
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $................, the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at the purchase price per share set
forth in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction, the numerator of which is the maximum number
of Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the one-time right to
purchase at their election up to ................... Optional Shares, at the
purchase price per share set forth in the paragraph above, for the sole purpose
of covering sales of shares in excess of the number of Firm Shares. Any such
election to purchase Optional Shares may be exercised only by written notice
from you to the Company, given within a period of 30 calendar days after the
date of this Agreement, setting forth the aggregate number of Optional Shares to
be purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than three or later than ten business days after the date of
such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf
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of the Company to Xxxxxxx, Sachs & Co., through the facilities of the Depository
Trust Company ("DTC"), for the account of such Underwriter, against payment by
or on behalf of such Underwriter of the purchase price therefor by wire transfer
of Federal (same-day) funds to the account specified by the Company to Xxxxxxx,
Xxxxx & Co. at least forty-eight hours in advance. The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the Time of Delivery (as defined
below) with respect thereto at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Shares, 9:30 a.m., New York City time, on
............., 2000 or such other time and date as Xxxxxxx, Sachs & Co. and the
Company may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., New York time, on the date specified by Xxxxxxx, Xxxxx & Co. in the
written notice given by Xxxxxxx, Sachs & Co. of the Underwriters' election to
purchase such Optional Shares, or such other time and date as Xxxxxxx, Xxxxx &
Co. and the Company may agree upon in writing. Such time and date for delivery
of the Firm Shares is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(j) hereof, will be delivered at the offices
of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000-0000 (the "Closing Location"), and the Shares will be delivered
at the Designated Office, all at such Time of Delivery. A meeting will be held
at the Closing Location at .......p.m., local time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be reasonably disapproved by you promptly after reasonable notice thereof;
to advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
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(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as you may reasonably request, and, if the delivery of a prospectus
is required at any time prior to the expiration of six months after the time of
issue of the Prospectus in connection with the offering or sale of the Shares
and if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time six months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and the Significant Subsidiary (which need not
be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale of, or otherwise transfer or dispose of the economic interest in, except as
provided hereunder, any securities of the Company that are substantially similar
to the Shares, including but not limited to any securities that are convertible
into or exercisable or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than (i) upon the
conversion or exchange of convertible or exchangeable securities outstanding as
of the date of this Agreement or (ii) pursuant to employee stock option or stock
purchase plans existing on the date of this Agreement or in connection with any
acquisition of or merger with another company or the acquisition of assets,
provided that each recipient of any securities in a transaction referred to in
this clause (ii) executes and delivers a Lock-up Agreement to the Company and
Xxxxxxx, Xxxxx & Co.), without your prior written consent;
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public
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accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), to make available to
its stockholders consolidated summary financial information of the Company and
the Significant Subsidiary for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and the Significant Subsidiary are consolidated in reports furnished to
its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the
Nasdaq National Market ("Nasdaq");
(j) To file with the Commission such information on Form 10-Q or Form
10-K as may be required by Rule 463 under the Act;
(k) If the Company elects to rely upon Rule 462(b), to file a Rule
462(b) Registration Statement with the Commission in compliance with Rule 462(b)
by 10:00 P.M., Washington, D.C. time, on the date of this Agreement and, at the
time of filing, to either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act;
(l) To (i) cooperate with the Underwriters to enforce the terms of
each Lock-up Agreement (as defined in Section 1(p)), (ii) issue stop-transfer
instructions to the transfer agent for the Stock with respect to any transaction
or contemplated transaction that would constitute a breach of or default under
the applicable Lock-up Agreement, (iii) use reasonable efforts to obtain a Lock-
up Agreement as a condition to the issuance of any Stock upon exercise of
options under employee stock plans , (iv) upon written request of Xxxxxxx,
Sachs & Co., release from the Lock-up Agreements those shares of Stock held by
those holders set forth in such request and (v) except with the prior written
consent of Xxxxxxx, Xxxxx & Co., not amend or terminate, waive any right under
or consent to any transaction that would otherwise be prohibited under any Lock-
up Agreement, or take any other action that would directly or indirectly have
the same effect as such an amendment, termination, waiver or consent; and
(m) To place a restrictive legend on any shares of Stock acquired
pursuant to the exercise, after the date hereof and prior to the expiration of
the 180-day period after the date of the Prospectus, of any option granted under
the Plans (as defined in Section 1(r)), which legend shall restrict the transfer
of such shares prior to the expiration of such 180-day period, or without the
prior written consent of Xxxxxxx, Sachs & Co., not to release any stockholder or
option holder from the market standoff provision agreed to between such
stockholder or option holder and the Company (or, if allowed, imposed by the
Company) pursuant to the terms of the Plans earlier than 180 days after the date
of the Prospectus.
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6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey
(not to exceed $5,000); (iv) all fees and expenses in connection with listing
the Shares on the Nasdaq; (v) the filing fees incident to, and the reasonable
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares, provided that the fees and
disbursements of counsel for the Underwriters shall not exceed $[15,000]; (vi)
the cost of preparing stock certificates; (vii) the cost and charges of any
transfer agent or registrar; and (viii) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions, dated such Time of Delivery,
with respect to such matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters;
(c) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Company, shall have furnished to you their written opinion,
dated such Time of Delivery, in form and substance satisfactory to you, to the
effect that:
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(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of
the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; and the Shares conform to the
description of the Stock contained in the Prospectus;
(iii) Except as does not, and is not reasonably likely to,
have a Material Adverse Effect, the Company has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in the United
States in which it owns or leases properties or conducts any business
so as to require such qualification or is subject to no material
liability or disability by reason of failure to be so qualified in any
such jurisdiction (such counsel being entitled to rely in respect of
the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions and
certificates);
(iv) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company is a party or of which any property of the
Company is the subject which, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse Effect;
and, to such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company;
(vi) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company and the compliance by the Company with
all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
material breach or violation of any of the terms or provisions of, or
constitute a material default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Company or the Significant Subsidiary is a party
or by which the Company or the Significant Subsidiary is bound or to
which any of the property or assets of the Company or the Significant
Subsidiary is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation known to such
counsel and directed specifically to the Company of any court or
governmental agency or body having jurisdiction over the Company or
the Significant Subsidiary or any of their properties;
(vii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body having jurisdiction over the
10
Company is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares, and
such consents, approvals, authorizations, registrations or
qualifications as (i) may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters, (ii) have been obtained or waived or (iii)
if not obtained or waived, would not have a Material Adverse Effect;
(viii) The Company is not in violation of its Certificate of
Incorporation or By-laws or, to such counsel's knowledge and except as
does not, and is not reasonably likely to, have a a Material Adverse
Effect, in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
instrument which has been filed as an exhibit to the Registration
Statement and to which it is a party or by which it or any of its
properties may be bound;
(ix) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock and under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate summaries and
descriptions of such terms and provisionsin all material respects;
(x) The Company is not and, after giving effect to the
offering and sale of the Shares, the receipt of the proceeds therefrom
and the investment of such funds as contemplated by the Propectus,
will not be an "investment company", as such term is defined in the
Investment Company Act; and
In addition such counsel shall state that in addition to
rendering legal advice and assistance to the Company in the course of
the preparation of the Registration Statement and Prospectus,
involving, among other things, discussions and inquiries concerning
various legal matters and the review of certain corporate records,
documents and proceedings (in addition to those described in
paragraphs (i) through (x) above), such counsel also participated in
conferences with certain officers and other representatives of the
Company, including its independent certified public accountants and
with the Underwriters and their counsel, at which the contents of the
Registration Statement and the Prospectus and related matters were
discussed; provided, however, that such counsel may state that they
have not independently verified the accuracy, completeness or fairness
of the information contained in the Registration Statement and
Prospectus, except for those referred to in the opinion in subsection
(ix) of this Section 7(c);
Such counsel shall also state that based upon its participation
as described in the preceding paragraph, they confirm that they have
no reason to believe that (except for financial statements and
schedules as to which such counsel need not express any belief) (A)
the Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the company prior to such
Time of Delivery did not, and as of the date such opinion is
11
delivered, do not, comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder; (B)
the Registration Statement and the Prospectus included therein at the
time the Registration Statement became effective contained, or as of
the date such opinion is delivered, the Registration Statement
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; (C) the
Prospectus when issued contained, or as of the date such opinion is
delivered 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 light of the circumstances under which they
were made, not misleading; or (D) any amendment to the Registration
Statement required to be filed or any contracts or other documents of
a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus have not been so filed or described as required.
In rendering such opinion, such counsel may state that their
opinion is limited to the federal laws of the United States, the
Delaware General Corporation law and the laws of the State of
California.
(d) ___________, as special [Danish] counsel for the Company, shall
have furnished to you their written opinion dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Significant Subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation; and all of the issued shares of
capital stock of have been duly and validly authorized and issued, are
fully paid and non-assessable, and [(except for directors' qualifying
shares)] are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims;
(ii) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Significant Subsidiary is a party or of which any
property of the Significant Subsidiary is the subject which, if
determined adversely to the Significant Subsidiary, would individually
or in the aggregate have a Material Adverse Effect; and, to such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(iii) The Significant Subsidiary is not in violation of its
Certificate of Incorporation or By-laws or, except as does not, and is
not reasonably likely to, have a Material Adverse Effect, in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any instrument which has
been filed as an exhibit to the Registration Statement and to which it
is a party or by which it or any of its properties may be bound;
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Xxxxxx Xxxxxxxx LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-
12
effective amendment to the Registration Statement and as of each Time of
Delivery is attached as Annex I(b) hereto);
(f) (i) Neither the Company nor the Significant Subsidiary shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or the Significant
Subsidiary or any change, or any development involving a prospective change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and the Significant Subsidiary,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment of
the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on Nasdaq; (ii) a suspension or
material limitation in trading in the Company's securities on Nasdaq; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
clause (iv) in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(h) The Shares to be sold at such Time of Delivery shall have been
duly listed for quotation on Nasdaq;
(i) The Company has obtained and delivered to the Underwriters
executed copies of Lock-up Agreements from the holders of more than 95% of all
outstanding shares of Stock and securities convertible into or exercisable or
exchangeable for Stock,;
(j) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(k) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company reasonably
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and (e) of
this Section and as to such other matters as you may reasonably request.
(l) D'Allesandro & Xxxxxxx, P.C. and Lyon & Lyon LLP, each as special
counsel for the Company, shall each have furnished to you their written opinion
dated such Time of Delivery, in form and substance satisfactory to you, to the
effect that such counsel are familiar with the technology relevant to the
intellectual property matters for which such counsel has been engaged, and have
read the Registration Statement and the Prospectus, including particularly the
portions of
13
the Registration Statement and the Prospectus referring to patents, trade
secrets, trademarks, service marks or other proprietary information or material
and have examined such corporate records, certificates and other documents, and
such questions of law, as such counsel has considered necessary or appropriate
for the purposes of this opinion, and to the effect that:
(i) The Company is listed in the records of the United States
Patent and Trademark Office under the name Sonic Innovations, Inc. as
the holder of record of the patents listed on the attached Schedule 1
(the "Patents") and each of the patent applications listed on that
schedule (the "Applications"). Such counsel are not presently aware
of any claims of third parties to any ownership interest or lien with
respect to any of the Patents or Applications, and not disclosed in
the Registration Statement and Prospectus. Such counsel are not
presently aware of any material defect in form in the preparation or
filing of the Applications on behalf of the Company. To such
counsel's knowledge, the Applications are pending and in prosecution
before the United States Patent and Trademark Office. To such
counsel's knowledge, the Company owns as its sole property the Patents
and pending Applications.
(ii) The Company is identified in the records of the appropriate
foreign offices as the sole owner of record of any foreign patents
listed on Schedule 1 (the "Foreign Patents") and each of the
applications listed on the attached schedule (the "Foreign
Applications"). Such counsel are not aware of any claims of third
parties to any ownership interest or lien with respect to the Foreign
Patents or Foreign Applications. Such counsel are not presently aware
of any material defect of form in the preparation or filing of the
Foreign Applications on behalf of the Company. To such counsel's
knowledge, any Foreign Applications are pending and in prosecution.
To such counsel's knowledge, the Company owns as its sole property the
Foreign Patents and pending Foreign Applications.
(iii) Such counsel is not presently aware of any reason why
the Patents or Foreign Patents are unenforceable as issued due to
inequitable conduct.
(iv) Such counsel has reviewed the statements in the
Registration Statement and the Prospectus under the captions "Risk
Factors -- Third Parties have claimed and may claim in the future that
we are infringing their intellectual property, and we could suffer
significant expense or be prevented from selling products if these
claims are successful" and "Risk Factors -- "Because our success
depends upon our proprietary technology, if third parties infringe our
intellectual property, we may be forced to expend significant
resources enforcing our rights or suffer competitive injury" and
"Business -- Intellectual Property". Based on such counsel's review,
such counsel believes that those statements, as of the effective date
of the Registration Statement, do not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein which is necessary to make the statements therein not
misleading. Also, nothing has come to such counsel's attention that
has caused it to believe that such statements in the Prospectus, as of
the date and time of delivery of this letter, contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
14
(v) Such counsel are not presently aware of any material action,
suit or proceeding relating to patents, patent rights or licenses,
trademarks or trademark rights, copyrights, collaborative research,
licenses or royalty arrangements or agreements or trade secrets, know-
how or proprietary techniques, including processes and substances, owned
by or affecting the business or operations of the Company which are
pending or threatened against the Company or any of its officers or
directors and not disclosed in the Registration Statement and
Prospectus.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Xxxxxxx, Sachs
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party
15
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company 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. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount
16
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to
17
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
18
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Representatives plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Sonic Innovations, Inc.
By: _________________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Deutsche Bank Securities Inc.
U.S Bancorp Xxxxx Xxxxxxx
By: _________________________________
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Underwriters
19
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ------------------
Xxxxxxx, Sachs & Co.............................................
Deutsche Bank Securities Inc....................................
U.S. Bancorp Xxxxx Xxxxxxx......................................
Total....................................................
20
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and the Significant Subsidiary within the meaning of the Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that cause them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years which
were included or incorporated by reference in the Company's Annual Reports
on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
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(vi) On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and the Significant Subsidiary, inspection of the
minute books of the Company and the Significant Subsidiary since the date
of the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company and the Significant Subsidiary
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated long-
term debt of the Company and the Significant Subsidiary, or any
decreases in consolidated net current assets or stockholders' equity
or other items specified by the Representatives, or any increases in
any items specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included
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in the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s) included in
the Prospectus and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company and the
Significant Subsidiary, which appear in the Prospectus, or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and the
Significant Subsidiary and have found them to be in agreement.
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