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Exhibit 1.1
1,500,000 Shares
SCM MICROSYSTEMS, INC.
Common Stock
U.S. UNDERWRITING AGREEMENT
April __, 1998
XXXXX & COMPANY
XXXXXXXXX & XXXXX LLC
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
As Representatives of the several U.S. Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Dear Sirs:
1 Introductory. SCM Microsystems, Inc., a Delaware corporation (the
"Company"), and the selling stockholders named in Schedule B hereto (the
"Selling Stockholders") propose to sell, pursuant to the terms of this
Agreement, to the several U.S. Underwriters named in Schedule A hereto
(the "U.S. Underwriters," or, each, a "U.S. Underwriter"), an aggregate
of 1,500,000 shares of Common Stock, $0.001 par value per share (the
"Common Stock"), of the Company. The aggregate of 1,500,000 shares so
proposed to be sold is hereinafter referred to as the "Firm Stock." The
Company also proposes to sell to the U.S. Underwriters and the
International Managers (as hereinafter defined), upon the terms and
conditions set forth in Section 3 hereof, up to an additional 450,000
shares of Common Stock (the "Optional Stock"). The Firm Stock and the
Optional Stock are hereinafter collectively referred to as the "Stock."
Xxxxx & Company ("Cowen"), Xxxxxxxxx & Xxxxx LLC and Xxxxxxx, Xxxxxx &
Xxxxxxxxx, L.L.C. are acting as representatives of the several U.S.
Underwriters and in such capacity are hereinafter referred to as the
"Representatives."
It is understood by all parties that the Company and the Selling
Stockholders are concurrently entering into an agreement dated the date
hereof (the "International Underwriting Agreement") providing for the
sale by the Company and the Selling Stockholders of an aggregate of
1,500,000 shares of Common Stock (the "International Stock") through
arrangements with certain international managers outside the United
States and Canada (the "International Managers"), for whom Xxxxx
International L.P., Westdeutsche Landesbank Girozentrale and Xxxxxxxxx &
Xxxxx LLC are acting as lead managers (the "Lead Managers"). The U.S.
Underwriters and the International Managers simultaneously are entering
into an agreement among the U.S. and International underwriting
syndicates (the "Agreement Among U.S. Underwriters and International
Managers") which provides for, among other things, the transfer of
shares of Stock, between the two syndicates. Two forms of
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prospectus are to be used in connection with the offer and sale of
shares of Common Stock contemplated by the foregoing, one relating to
the Stock and the other relating to the International Stock. Except as
used in the first paragraph hereof and in Section 8 herein, and except
as the context may otherwise require, references herein to the Stock
shall include all the shares of Common Stock which may be sold pursuant
to both this Agreement and the International Underwriting Agreement, and
references herein to any prospectus whether in preliminary or final
form, and whether as amended or supplemented, shall include the U.S. and
the International versions thereof; provided, however, that any such
references shall not be deemed to be references to the prospectus
prepared in the German language in connection with the listing of shares
of Stock on the Neuer Markt of the Frankfurt Stock Exchange. The German
language prospectus included in the Application for Admission (as
defined in the International Underwriting Agreement) and the final form
of the German language prospectus are collectively referred to as the
"German Prospectus."
2a. Representations and Warranties of the Company. The Company hereby
represents and warrants to, and agrees with, the several U.S.
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-47635) in the
form in which it became or becomes effective and also in such
form as it may be when any post-effective amendment thereto
shall become effective with respect to the Stock, including any
pre- effective prospectuses included as part of the registration
statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the
Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission")
promulgated thereunder, copies of which have heretofore been
delivered to you, has been prepared by the Company in conformity
with the requirements of the Securities Act and has been filed
with the Commission under the Securities Act; one or more
amendments to such registration statement, including in each
case an amended pre-effective prospectus, copies of which
amendments have heretofore been delivered to you, have been so
prepared and filed. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared
effective before the offering of the Stock may commence, the
term "Registration Statement" as used in this Agreement means
the registration statement as amended by said post-effective
amendment. The term "Registration Statement" as used in this
Agreement shall also include any registration statement relating
to the Stock that is filed and becomes effective pursuant to
Rule 462(b) under the Securities Act. The term "Prospectus" as
used in this Agreement means the prospectus in the form included
in the Registration Statement, or, (A) if the prospectus
included in the Registration Statement omits information in
reliance on Rule 430A under the Securities Act and such
information is included in a prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act, the
term "Prospectus" as used in this Agreement means the prospectus
in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information
contained in the prospectus filed with the Commission pursuant
to Rule 424(b) and (B) if prospectuses that meet the
requirements of Section 10(a) of the Securities Act are
delivered pursuant to Rule 434 under the Securities Act, then
(i) the term "Prospectus" as used in this Agreement means the
"prospectus subject to completion" (as such term is defined in
Rule 434(g) under the Securities Act) as supplemented by (a) the
addition of Rule 430A information or other information contained
in the form of prospectus delivered pursuant to Rule 434(b)(2)
under the Securities Act or (b) the information contained in the
term sheets described in Rule 434(b)(3) under the Securities
Act, and (ii) the date of such prospectuses shall be deemed
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to be the date of the term sheets. The term "Pre-effective
Prospectus" as used in this Agreement means the prospectus
subject to completion dated March __, 1998, and as such
prospectus shall have been amended from time to time prior to
the date of the Prospectus.
(b) The Commission has not issued or, to the Company's knowledge,
threatened to issue any order preventing or suspending the use
of any Pre-effective Prospectus, and, at its date of issue, each
Pre-effective Prospectus complied in all material respects with
the applicable provisions of the Securities Act, except that the
outside front cover and back cover pages of the International
version omitted certain captions and legends that are required
in the U.S. prospectus, and did not contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, other than any noncompliance or
untrue statement or omission in a Pre-effective Prospectus that
has been corrected in the Prospectus; and, when the Registration
Statement becomes effective and at all times subsequent thereto
up to and including each of the Closing Dates (as hereinafter
defined), the Registration Statement and the Prospectus and any
amendments or supplements thereto contained and will contain all
material statements and information required to be included
therein by the Securities Act, except that the outside front
cover and back cover pages of the International version omitted
certain captions and legends that are required in the U.S.
prospectus, and complied and will comply in all material
respects with the applicable provisions of the Securities Act,
except that the outside front cover and back cover pages of the
International version omitted certain captions and legends that
are required in the U.S. prospectus, and neither the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, contained or will contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
foregoing representations and warranties shall not apply to
information contained in or omitted from any Pre-effective
Prospectus or the Registration Statement or the Prospectus or
any such amendment or supplement thereto in reliance upon, and
in conformity with, written information furnished to the Company
by the Representatives on behalf of the several U.S.
Underwriters, directly or through you, specifically for use in
the preparation thereof. With respect to the preceding sentence,
the Company acknowledges that the only information furnished in
writing by the Representatives on behalf of the several U.S.
Underwriters for use in the Pre-effective Prospectus, the
Registration Statement and the Prospectus is the paragraph with
respect to stabilization on the inside front cover page of the
Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus.
(c) The Registration Statement is effective under the Securities Act
and no stop order suspending effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus
has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, are threatened under
the Securities Act; any required filing of the Prospectus and
any amendment or supplement thereto pursuant to Rule 424(b) of
the Rules and Regulations has been or will be made in the manner
and within the time period required by Rule 424(b).
(d) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required by the
Securities Act or the Rules and
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Regulations. Each agreement described in the Registration
Statement and the Prospectus or listed in the Exhibits to the
Registration Statement is in full force and effect and is valid
and enforceable by and against the Company or its subsidiaries
in accordance with its terms, except to the extent that rights
to indemnity and contribution hereunder may be limited by
applicable bankruptcy, insolvency and other similar laws
affecting conditions, rights and rules of law governing specific
performance, injunctive relief and other equitable remedies and
except to the extent that the enforceability of certain
indemnification provisions of certain registration rights
agreements entered into by the Company may be limited by
principles of public policy. Neither the Company nor any
subsidiary is in default in the observance or performance of any
material term or obligation to be performed by it under any such
agreement, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in any such
case which default or event would have a material adverse effect
on the Company and its subsidiaries taken as a whole. No default
exists, and, to the knowledge of the Company, no event has
occurred which, with notice or lapse of time or both would
constitute a default, in the due performance and observance of
any term, covenant or condition, by the Company or any of its
subsidiaries of any other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of
them or their respective properties or businesses may be bound
or affected, in any case which default or event could reasonably
be expected to have a material adverse effect on the operations
of the Company and its subsidiaries considered as a whole.
(e) None of the Company or its subsidiaries is in violation of any
franchise, license, permit, judgment, decree, order, statute or
rule or regulation, which could reasonably be expected to have a
material adverse effect on the operations of the Company and its
subsidiaries considered as a whole, or any term or provision of
its certificate of incorporation or by-laws.
(f) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except
as set forth or contemplated in the Prospectus, neither the
Company nor any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, nor entered
into any transactions not in the ordinary course of business,
and there has not been any material adverse change in the
condition (financial or otherwise), properties, business,
management, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the
capital stock, short-term or long-term debt of the Company and
its subsidiaries considered as a whole, except for issuances of
Common Stock pursuant to the Company's 1997 Stock Plan, 1997
Employee Stock Purchase Plan, 1997 Director Option Plan, 1997
Stock Option Plan for French Employees and the 1997 Employee
Stock Purchase Plan for Non-U.S. Employees (collectively, the
"1997 Plans").
(g) The financial statements, together with the related notes and
schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly present the financial position and
the results of operations and changes in financial position of
the Company and its consolidated subsidiaries at the respective
dates or for the respective periods therein specified. Such
statements and related notes and schedules have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis except as may be set forth in the
Prospectus. The summary and selected financial and statistical
data set forth in the Prospectus under the captions "Summary
Consolidated Financial Data," "Selected Consolidated Financial
Data," "Management's Discussion and
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Analysis of Financial Condition and Results of Operations --
Results of Operations" and "-- Quarterly Results of Operations"
fairly present, on the basis stated in the Registration
Statement, the information set forth therein as of the
respective dates and for the respective periods specified, and
such data have been presented on a basis consistent with the
financial statements so set forth in the Prospectus and other
financial information.
(h) To the Company's knowledge, KPMG Peat Marwick LLP, who have
expressed their opinions on the audited financial statements and
related schedules included in the Registration Statement and the
Prospectus are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(i) The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing as
corporations under the laws of their respective jurisdictions of
organization, with power and authority (corporate and other) to
own or lease their properties and to conduct their businesses as
described in the Registration Statement and the Prospectus; each
of the Company and its subsidiaries is in possession of and
operating in compliance with all franchises, grants,
authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect,
except where the failure to possess or comply would not have a
material adverse effect on the Company and its subsidiaries
considered as a whole; and each of the Company and its
subsidiaries is duly qualified to do business and in good
standing as a foreign corporation in all other jurisdictions
where its ownership or leasing of properties or the conduct of
its businesses requires such qualification, except where failure
to so qualify would not have a material adverse effect on the
Company and its subsidiaries considered as a whole. No public
regulatory or governmental consent, approval, authorization,
order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in
the Registration Statement and the Prospectus. The Company owns
or controls, directly or indirectly, only the corporations,
associations or other entities named in Schedule C hereto.
(j) The Company's authorized and outstanding capital stock is on the
date hereof, and will be on the Closing Dates, as set forth
under the heading "Capitalization" in the Prospectus; the
outstanding shares of Common Stock of the Company conform to the
description thereof in the Prospectus and have been duly
authorized and validly issued and are fully paid and
nonassessable; and have been issued in compliance with all
federal and state securities laws and were not issued in
violation of or subject to any pre-emptive rights or similar
rights to subscribe for or purchase securities. Except as
disclosed in or contemplated by the Prospectus and the
consolidated financial statements of the Company and related
notes thereto included in the Prospectus, the Company does not
have outstanding any options or warrants to purchase, or any
pre-emptive rights or other rights to subscribe for or to
purchase any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital
stock or any such options, rights, convertible securities or
obligations, except for options granted subsequent to the date
of information provided in the Prospectus pursuant to the
Company's employee and stock option plans as disclosed in the
Prospectus. The description of the Company's stock option and
other stock plans or arrangements, and the options or other
rights granted or exercised thereunder, as set forth in the
Prospectus, accurately and fairly presents the information
required to be shown with respect to such plans, arrangements,
options and rights. All outstanding shares of capital stock of
each subsidiary have been duly authorized and validly issued,
and are fully paid and
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nonassessable and are owned directly by the Company or by
another wholly owned subsidiary of the Company free and clear of
any liens, encumbrances, equities or claims.
(k) The Stock to be issued and sold by the Company to the U.S.
Underwriters hereunder and the International Stock to be issued
and sold by the Company to the International Managers under the
International Underwriting Agreement has been duly and validly
authorized and, when issued and delivered against payment
therefor as provided herein and therein, will be duly and
validly issued, fully paid and nonassessable and free of any
pre-emptive or similar rights and will conform to the
description thereof in the Prospectus, and the U.S. Underwriters
and the International Managers will receive good title to the
Stock and the International Stock, respectively, free and clear
of all liens, security interests, pledges, charges, claims and
encumbrances.
(l) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the
Company or any subsidiary is subject, which, if determined
adversely to the Company or any such subsidiary, could
individually or in the aggregate be reasonably expected to (i)
prevent or adversely affect the transactions contemplated by
this Agreement, (ii) suspend the effectiveness of the
Registration Statement, (iii) prevent or suspend the use of the
Pre-effective Prospectus in any jurisdiction or (iv) result in a
material adverse change in the condition (financial or
otherwise), properties, business, management, net worth or
results of operations of the Company and its subsidiaries
considered as a whole and the Company is not aware of any valid
basis for any such legal or governmental proceeding; and, to the
Company's knowledge, no such proceedings are threatened or
contemplated against the Company or any subsidiary by
governmental authorities or others. Neither the Company nor any
subsidiary is a party nor is subject to the provisions of any
material injunction, judgment, decree or order of any court,
regulatory body or other governmental agency or body. The
description of the Company's litigation under the heading "Legal
Proceedings" in the Prospectus is true and correct and complies
with the Rules and Regulations and no other suit or proceeding
before any court or governmental authority known to the Company
is required to be disclosed in the Prospectus that is not so
disclosed.
(m) The execution, delivery and performance of this Agreement and
the International Underwriting Agreement and the consummation of
the transactions herein and therein contemplated (A) will not
result in any violation of the provisions of the certificate of
incorporation, by-laws or other organizational documents of the
Company or its subsidiaries, or any law, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its subsidiaries or any of
their respective properties or assets, and (B) will not conflict
with or result in a breach or violation of any of the terms or
provision of or constitute a default under any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which it or any of their respective properties is or
may be bound nor will such delivery and performance result in
the creation of a security interest, lien, encumbrance, charge
or claim, except where such conflict, breach or violation would
not have a material adverse effect on the Company and its
subsidiaries considered as a whole.
(n) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement and the International
Underwriting Agreement by the Company or its subsidiaries and
the
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consummation of the transactions contemplated hereby and thereby
(including the issuance, sale and delivery of the Stock), except
such as may be required by the National Association of
Securities Dealers, Inc. (the "NASD"), the NASDAQ National
Market, the Neuer Markt of the Frankfurt Stock Exchange or under
the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the securities or "Blue Sky"
laws of any jurisdiction, the German Stock Exchange Act, Stock
Exchange Regulation, Admission Regulation of the Neuer Markt and
the German Sales Prospectus Act in connection with the purchase
and distribution of the Stock by the U.S. Underwriters and the
International Stock by the International Managers.
(o) The Company has the full corporate power and authority to enter
into this Agreement and the International Underwriting Agreement
and to perform its obligations hereunder and thereunder
(including to issue, sell and deliver the Stock and the
International Stock), and this Agreement and the International
Underwriting Agreement have each been duly and validly
authorized, executed and delivered by the Company and each
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with their
respective terms, except to the extent that rights to indemnity
and contribution hereunder may be limited by U.S. or foreign
federal or state securities laws or the public policy underlying
such laws and except as may be limited by applicable bankruptcy,
insolvency and other similar laws affecting conditions, rights
and rules of law governing specific performance, injunctive
relief and other equitable remedies.
(p) The Company and its subsidiaries are in all material respects in
compliance with, and conduct their respective businesses in
conformity with, all applicable federal, state, local and
foreign laws, rules and regulations or any court or governmental
agency or body; and to the knowledge of the Company, otherwise
than as set forth in the Registration Statement and the
Prospectus, no prospective change in any of such federal or
state laws, rules or regulations has been adopted which, when
made effective, could reasonably be expected to have a material
adverse effect on the operations of the Company and its
subsidiaries considered as a whole.
(q) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and
other tax returns and have paid all taxes shown as due thereon
or with respect to any of their properties, and there is no tax
deficiency that has been or to the knowledge of the Company is
reasonably likely to be, asserted against the Company or any of
its subsidiaries or any of their respective properties or assets
that would materially and adversely affect the financial
position, business or operations of the Company and its
subsidiaries considered as a whole.
(r) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement or otherwise, except for persons and entities who have
expressly waived such right or who have been given proper notice
and have failed to exercise such right within the time or times
required under the terms and conditions of such right.
(s) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price
of the Common Stock in violation of Regulation M of the Exchange
Act, or which caused or resulted in, or which might in the
future reasonably be expected to cause or result in,
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stabilization or manipulation of the price of the Common Stock
in violation of Regulation M of the Exchange Act.
(t) Each of the Company and its subsidiaries owns, or possesses
adequate and enforceable rights, either as owner or licensee, to
use all patents, trademarks (including "SwapBox(TM),"
"SwapSmart(TM)," "SwapAcces(TM)," "SmartOS(TM)," "Smart
Transporter(TM)" and CIMax(TM)" ), trademark registrations,
service marks, service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, know-how and
other similar rights described in the Prospectus as being owned
or licensed by them and except as described in the Prospectus
the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and
its subsidiaries with respect to the foregoing. To the knowledge
of the Company, the Company's business as now conducted and as
proposed to be conducted does not and will not infringe or
conflict with in any material respect any patents, trademarks,
service marks, trade name, copyright, trade secrets, know- how,
licenses or other intellectual property or franchise right of
any person. Except as described in the Prospectus, no claim has
been made against the Company alleging the infringement by the
Company of any patent, trademark, service xxxx, trade name,
copyright, trade secret, know-how, license in or other
intellectual property right or franchise right of any person.
(u) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened. Except
as described in the Prospectus, the Company is not aware that
(A) any executive, key employee or significant group of
employees of the Company or any subsidiary plans to terminate
employment with the Company or any such subsidiary or (B) any
such executive or key employee is subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or
similar agreement that would be violated by the present or
proposed business activities of the Company and its
subsidiaries. Neither the Company nor any subsidiary has or
expects to have any liability for any prohibited transaction or
funding deficiency or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), to which the Company or any
subsidiary makes or ever has made a contribution and in which
any employee of the Company or any subsidiary is or has ever
been a participant. With respect to such plans, the Company and
each subsidiary is in compliance in all material respects with
all applicable provisions of ERISA.
(v) No transaction has occurred, and no relationship, direct or
indirect, exists, between or among the Company or its
subsidiaries, on the one hand, and any of its stockholders,
officers, directors, customers or suppliers of the Company or
its subsidiaries or any affiliate or affiliates of any such
stockholder, officer, director, customer or supplier, on the
other hand, that is required to be described and is not so
described in the Prospectus.
(w) The Company and its subsidiaries have, and the Company and its
subsidiaries as of the Closing Dates will have, good and
marketable title to all personal property owned by them which is
material to the business of the Company or of its subsidiaries,
in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such
as would not have a material adverse effect on the Company and
its subsidiaries considered as a whole; and any real property
and buildings held under lease by the Company and its
subsidiaries are, or will be as of each of the Closing Dates,
held by them under valid, subsisting and enforceable leases with
such exceptions as would not have a material adverse
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effect on the Company and its subsidiaries considered as a
whole, in each case except as described in or contemplated by
the Prospectus.
(x) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in
which they are engaged or propose to engage after giving effect
to the transactions described in the Prospectus; and neither the
Company nor any subsidiary of the Company has any reason to
believe that it will not be able to renew any of its existing
insurance coverages as and when such coverage expires or to
obtain similar coverage from similar insurers as may be
necessary to continue their business at a cost that would not
have a material adverse effect on the Company and its
subsidiaries considered as a whole, except as described in or
contemplated by the Prospectus.
(y) Other than as contemplated by this Agreement and the
International Underwriting Agreement, there is no broker, finder
or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result
of any of the transactions contemplated by this Agreement or the
International Underwriting Agreement.
(z) The Stock has been duly authorized for (i) quotation on the
National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System, subject to official Notice of
Issuance, and (ii) listing on the Neuer Markt of the Frankfurt
Stock Exchange.
(aa) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in all material
respects, the transactions in, and dispositions of, the assets,
and the results of operation, of the Company and its
subsidiaries. The Company and each of its subsidiaries maintains
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(bb) To the Company's knowledge, neither the Company nor any of its
subsidiaries nor any employee or agent of the Company or any of
its subsidiaries has made any payment of funds of the Company or
any of its subsidiaries or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt
or retention of funds is of a character required to be disclosed
in the Prospectus.
(cc) Neither the Company nor any of its subsidiaries is or, after
application of the net proceeds of this offering as described
under the caption "Use of Proceeds" in the Prospectus, will
become an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
(dd) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any of its
subsidiaries, has used any corporate funds for any unlawful
contribution, gift, entertainment
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or other unlawful expense relating to political activity; made
any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds;
or has violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977.
2b. Representations and Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder represents and warrants to, and
agrees with, the several U.S. Underwriters that such Selling
Stockholder:
(a) Now has, and on the Closing Date will have, valid and marketable
title to the Stock and the International Stock to be sold by
such Selling Stockholder, free and clear of any lien, claim,
security interest or other encumbrance, including, without
limitation, any restriction on transfer, and has full right,
power and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement (each as hereinafter
defined).
(b) Now has, and on the Closing Date will have, upon delivery of and
payment for each share of Stock hereunder and the International
Stock under the International Underwriting Agreement, full
right, power and authority, and approval required by law to
sell, transfer, assign and deliver the Stock being sold by such
Selling Stockholder hereunder and the International Stock being
sold by such Selling Stockholder under the International
Underwriting Agreement, and each of the several U.S.
Underwriters will acquire valid and marketable title to all of
the Stock being sold to the U.S. Underwriters by such Selling
Stockholder and each of the several International Managers will
acquire valid and marketable title to all of the International
Stock being sold to the International Managers by such Selling
Stockholder, in each case, free and clear of any liens,
encumbrances, equities claims, restrictions on transfer or other
defects whatsoever.
(c) For a period of 90 days after the date of this Agreement,
without the consent of Cowen, such Selling Stockholder will not
offer, sell, assign, transfer, encumber, contract to sell, grant
an option to purchase or otherwise dispose of any Stock or
securities convertible into or exchangeable for Stock,
including, without limitation Stock which may be deemed to be
beneficially owned by such Selling Shareholder in accordance
with the Rules and Regulations, except for the Stock being sold
hereunder and the International Stock being sold under the
International Underwriting Agreement.
(d) Has duly executed and delivered a power of attorney, in
substantially the form heretofore delivered by the
Representatives (the "Power of Attorney"), appointing Xxxxxx
Xxxxxxxxx and Xxxx Neidermaier and each of them, as
attorney-in-fact (the "Attorneys-in-fact") with authority to
execute and deliver this Agreement and the International
Underwriting Agreement on behalf of such Selling Stockholder, to
authorize the delivery of the shares of Stock to be sold by such
Selling Stockholder hereunder and the shares of International
Stock to be sold by such Selling Stockholder under the
International Underwriting Agreement and otherwise to act on
behalf of such Selling Stockholder in connection with the
transactions contemplated by this Agreement and the
International Underwriting Agreement.
(e) Has duly executed and delivered a custody agreement, in
substantially the form heretofore delivered by the
Representatives (the "Custody Agreement"), with American Stock
Transfer & Trust Company, as custodian (the "Custodian"),
pursuant to which certificates in negotiable form for the shares
of Stock and International Stock to be sold by such Selling
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Stockholder hereunder have been placed in custody for delivery
under this Agreement and the International Underwriting
Agreement.
(f) Has, by execution and delivery of each of this Agreement, the
International Underwriting Agreement, the Power of Attorney and
the Custody Agreement, created valid and binding obligations of
such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, except to the extent
that rights to indemnity and contribution hereunder may be
limited by U.S. or foreign federal laws, state securities laws
or the public policy underlying such laws and except as may be
limited by applicable bankruptcy, insolvency and other similar
laws affecting conditions, rights and rules of law governing
specific performance, injunctive relief and other equitable
remedies and except to the extent that the irrevocability of the
Power of Attorney and Custody Agreement and the enforcement of
the arbitration provisions therein may be limited by German law.
(g) The performance of this Agreement, the International
Underwriting Agreement, the Custody Agreement and the Power of
Attorney, and the consummation of the transactions contemplated
hereby and thereby will not result in a breach or violation by
such Selling Stockholder of any of the terms or provisions of,
or constitute a default by such Selling Stockholder under, any
material indenture, mortgage, deed of trust, trust (constructive
or other), loan agreement, lease, franchise, license or other
agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any of its
properties is bound, or any judgement of any court or
governmental agency or body applicable to such Selling
Stockholder or any of its properties, or to such Selling
Stockholder's knowledge, any statute, decree, order, rule or
regulation of any court or governmental agency or body
applicable to such Selling Stockholder or any of its properties,
except to the extent that the irrevocability of the Power of
Attorney and Custody Agreement and the enforcement of certain
arbitration provisions may be limited by German law.
Each Selling Stockholder agrees that the shares of Stock and
International Stock represented by the certificates held in
custody under the Custody Agreement are for the benefit of and
coupled with and subject to the interests of the U.S.
Underwriters, the International Managers, the Selling
Stockholders, and the Company hereunder, and that the
arrangement for such custody and the appointment of the
Attorneys-in-fact are irrevocable, except to the extent that the
irrevocability of the Power of Attorney and Custody Agreement
may be limited by German law; that the obligations of such
Selling Stockholder hereunder shall not be terminated by
operation of law, whether by the death or incapacity of such
Selling Stockholder, or any other event, that if such Selling
Stockholder should die or become incapacitated or any other
event occurs, before the delivery of the Stock hereunder and the
International Stock under the International Underwriting
Agreement, certificates for the Stock and International Stock to
be sold by such Selling Stockholder shall be delivered on behalf
of such Selling Stockholder in accordance with the terms and
conditions of this Agreement, the International Underwriting
Agreement and the Custody Agreement, and action taken by the
Attorneys- in-fact or any of them under the Power of Attorney
shall be as valid as if such death, incapacity, or other event
had not occurred, whether or not the Custodian, the Attorneys-
in-fact or any of them shall have notice of such death,
incapacity or other event.
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3 Purchase by, and Sale and Delivery to, U.S. Underwriters--Closing Dates.
The Company and the Selling Stockholders agree, severally and not
jointly, to sell to the U.S. Underwriters the Firm Stock with the number
of shares to be sold by the Company and each Selling Stockholder being
the number of shares set forth opposite its or his name in Schedule B,
and on the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions
herein set forth, the U.S. Underwriters agree, severally and not
jointly, to purchase the Firm Stock from the Company and the Selling
Stockholders, the number of shares of Firm Stock to be purchased by each
U.S. Underwriter being set opposite its name in Schedule A, subject to
adjustment in accordance with Section 12 hereof. The number of shares of
Stock to be purchased by each U.S. Underwriter from each Selling
Stockholder hereunder shall bear the same proportion to the total number
of shares of Stock to be purchased by such U.S. Underwriter hereunder as
the number of shares of Stock being sold by each Selling Stockholder
bears to the total number of shares of Stock being sold by all Selling
Stockholders, subject to adjustment by the Representatives to eliminate
fractions.
The purchase price per share to be paid by the U.S. Underwriters to the
Company and the Selling Stockholders will be the price per share set
forth in the "Per Share" row of the table on the cover page of the
Prospectus under the heading "Proceeds to Company" and "Proceeds to
Selling Stockholders," respectively (the "Purchase Price").
The Company and the Selling Stockholders will deliver the Firm Stock to
the Representatives for the respective accounts of the several U.S.
Underwriters (in the form of definitive certificates, issued in such
names and in such denominations as Cowen may direct by notice in writing
to the Company and the Selling Stockholders given at or prior to 12:00
Noon, New York Time, on the second full business day preceding the First
Closing Date (as defined below) or, if no such direction is received, in
the names of the respective U.S. Underwriters or in such other names as
Cowen may designate (solely for the purpose of administrative
convenience) and in such denominations as Cowen may determine), against
payment of the aggregate Purchase Price therefore by wire transfer in
immediately available funds (same day funds), to the Company and
American Stock Transfer & Trust Company, as Custodian for the Selling
Stockholders, all at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000. The time and date of
the delivery and closing shall be at 10:00 A.M., New York Time, on April
__, 1998. The time and date of such payment and delivery are herein
referred to as the "First Closing Date". The First Closing Date and the
location of delivery of, and the form of payment for, the Firm Stock may
be varied by agreement among the Company, Cowen and the Selling
Stockholders. The First Closing Date may be postponed pursuant to the
provisions of Section 12.
The Company and the Selling Stockholders shall make the certificates for
the Stock available to the Representatives for examination on behalf of
the U.S. Underwriters not later than 10:00 A.M., New York time, on the
business day preceding the First Closing Date at the offices of Xxxxx &
Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that Cowen or the other Representatives, individually
and not as Representatives of the several U.S. Underwriters, may (but
shall not be obligated to) make payment to the Company or to the Selling
Stockholders on behalf of any U.S. Underwriter or U.S. Underwriters, for
the Stock to be purchased by such U.S. Underwriter or U.S. Underwriters.
Any such payment by Cowen or other Representatives shall not relieve
such U.S. Underwriter or U.S. Underwriters from any of its or their
other obligations hereunder.
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The several U.S. Underwriters agree to make a public offering of the
Firm Stock at the public offering price set forth on the cover page of
the Prospectus as soon after the effectiveness of the Registration
Statement as in their judgment is advisable. The Representatives shall
promptly advise the Company and the Selling Stockholders of the making
of the public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the
Prospectus, the Company hereby grants to the U.S. Underwriters and the
International Managers an option to purchase, severally and not jointly,
up to an aggregate of 450,000 shares of Optional Stock. The price per
share to be paid for the Optional Stock shall be the Purchase Price. The
option granted hereby may be exercised as to all or any part of the
Optional Stock at any time, and from time to time, not more than thirty
(30) days subsequent to the effective date of this Agreement. No
Optional Stock shall be sold and delivered unless the Firm Stock
previously has been, or simultaneously is, sold and delivered. The right
to purchase the Optional Stock or any portion thereof may be surrendered
and terminated at any time upon notice by the U.S. Underwriters and the
International Managers to the Company.
The option granted hereby may be exercised by the U.S. Underwriters and
the International Managers by giving written notice from Cowen to the
Company setting forth the number of shares of the Optional Stock to be
purchased by them and the date and time for delivery of and payment for
the Optional Stock. Each date and time for delivery of and payment for
the Optional Stock (which may be the First Closing Date, but not
earlier) is herein called an "Option Closing Date" and shall in no event
be earlier than two (2) business days nor later than ten (10) business
days after written notice is given. (The Option Closing Date and the
First Closing Date are herein called the "Closing Dates".) Optional
Stock shall be purchased for the account of each U.S. Underwriter and or
International Manager, as the case may be, in the same proportion as the
number of shares of Firm Stock set forth opposite such U.S.
Underwriter's and/or International Managers name in Schedule A hereto or
Schedule A to the International Underwriting Agreement, as the case may
be, bears to the total number of shares of Firm Stock (subject to
adjustment by the U.S. Underwriters to eliminate odd lots). Upon
exercise of the option of the U.S. Underwriters and International
Managers, the Company agrees to sell to the U.S. Underwriters and the
International Managers the number of shares of Optional Stock set forth
in the written notice of exercise and the U.S. Underwriters and
International Managers agree, severally and not jointly and subject to
the terms and conditions herein set forth, to purchase the number of
such shares determined as aforesaid.
The Company will deliver the Optional Stock to the U.S. Underwriters and
the International Managers (in the form of definitive certificates,
issued in such names and in such denominations as Cowen may direct by
notice in writing to the Company given at or prior to 12:00 Noon, New
York Time, on the second full business day preceding the Option Closing
Date or, if no such direction is received, in the names of the
respective U.S. Underwriters and International Managers or in such other
names as Cowen may designate (solely for the purpose of administrative
convenience) and in such denominations as Cowen may determine), against
payment of the aggregate Purchase Price therefor by wire transfer in
immediately available funds (same day funds), to the Company, all at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000. The Company shall make the certificates for the
Optional Stock available to the U.S. Underwriters and the International
Managers for examination not later than 10:00 A.M., New York Time, on
the business day preceding the Option Closing Date at the offices of
Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Option
Closing Date and the location of delivery of, and the form of payment
for, the Option Stock may be varied by agreement
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between the Company and Cowen. The Option Closing Date may be postponed
pursuant to the provisions of Section 12.
4 Covenants and Agreements of the Company. The Company covenants and
agrees with the several U.S. Underwriters that:
(a) The Company will (i) if the Company and the Representatives have
determined not to proceed pursuant to Rule 430A of the Rules and
Regulations, use its best efforts to cause the Registration
Statement to become effective, (ii) if the Company and the
Representatives have determined to proceed pursuant to Rule 430A
of the Rules and Regulations, use its best efforts to comply
with the provisions of and make all requisite filings with the
Commission pursuant to Rule 430A and Rule 424 of the Rules and
Regulations and (iii) if the Company and the Representatives
have determined to deliver Prospectuses pursuant to Rule 434 of
the Rules and Regulations, to use its best efforts to comply
with all the applicable provisions thereof. The Company will
advise the Representatives promptly as to the time at which the
Registration Statement becomes effective, will advise the
Representatives promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that
purpose, and will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible the
lifting thereof, if issued. The Company will advise the
Representatives promptly of the receipt of any comments of the
Commission or any request by the Commission for any amendment of
or supplement to the Registration Statement or the Prospectus or
for additional information and will not at any time file any
amendment to the Registration Statement or supplement to the
Prospectus which shall not previously have been submitted to the
Representatives a reasonable time prior to the proposed filing
thereof or, unless such filing is required by applicable law, to
which the Representatives shall reasonably object in writing or
which is not in compliance with the Securities Act and the Rules
and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon the request of the Representatives, any amendments or
supplements to the Registration Statement or the Prospectus
which in the reasonable opinion of the Representatives may be
necessary to enable the several U.S. Underwriters to continue
the distribution of the Stock and the several International
Managers to continue the distribution of the International Stock
and will use its best efforts to cause the same to become
effective as promptly as possible.
(c) If, at any time after the effective date of the Registration
Statement when a prospectus relating to the Stock is required to
be delivered under the Securities Act, any event relating to or
affecting the Company or any of its subsidiaries occurs as a
result of which the Prospectus or any other prospectus as then
in effect would contain any untrue statement of a material fact,
or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Securities Act,
the Company will promptly notify the Representatives thereof and
will prepare an amended or supplemented prospectus which will
correct such statement or omission; and in case any U.S.
Underwriter is required to deliver a prospectus relating to the
Stock nine (9) months or more after the effective date of the
Registration Statement, the Company upon the request of the
Representatives and at the expense of such U.S. Underwriter will
prepare promptly
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such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the
Securities Act.
(d) The Company will deliver to each of the Representatives, at or
before the Closing Dates, one signed copy of the Registration
Statement, as originally filed with the Commission, and one
signed copy of all amendments thereto including all financial
statements and exhibits thereto and will deliver to the
Representatives such number of unsigned copies of the
Registration Statement, including such financial statements but
without exhibits, and all amendments thereto, as the
Representatives may reasonably request. The Company will deliver
or mail to or upon the order the Representatives, from time to
time until the effective date of the Registration Statement, as
many copies of the Pre-effective Prospectus as the
Representatives may reasonably request. The Company will deliver
or mail to or upon the order of the Representatives on the date
of the public offering, and thereafter from time to time during
the period when delivery of a prospectus relating to the Stock
is required under the Securities Act, as many copies of the
Prospectus, in final form or as thereafter amended or
supplemented as the Representatives may reasonably request;
provided, however, that the expense of the preparation and
delivery of any prospectus required for use nine (9) months or
more after the effective date of the Registration Statement
shall be borne by the U.S. Underwriters required to deliver such
prospectus.
(e) The Company will make generally available to its stockholders as
soon as practicable, but not later than fifteen (15) months
after the effective date of the Registration Statement, an
earnings statement which will be in reasonable detail (but which
need not be audited) and which will comply with Section 11(a) of
the Securities Act, covering a period of at least twelve (12)
months beginning after the "effective date" (as defined in Rule
158 under the Securities Act) of the Registration Statement.
(f) The Company will cooperate with the Representatives to enable
the Stock to be registered or qualified for offering and sale by
the U.S. Underwriters and by dealers under the securities laws
of such jurisdictions as the Representatives may designate and
at the request of the Representatives will make such
applications and furnish such consents to service of process or
other documents as may be required of it as the issuer of the
Stock for that purpose; provided, however, that the Company
shall not be required to qualify to do business or to file a
general consent (other than that arising out of the offering or
sale of the Stock) to service of process in any such
jurisdiction where it is not now so subject. The Company will,
from time to time, prepare and file such statements and reports
as are or may be required of it as the issuer of the Stock to
continue such qualifications in effect for so long a period as
the Representatives may reasonably request for the distribution
of the Stock. The Company will advise the Representatives
promptly after the Company becomes aware of the suspension of
the qualifications or registration of (or any such exception
relating to) the Common Stock of the Company for offering, sale
or trading in any jurisdiction or of any initiation or threat of
any proceeding for any such purpose, and in the event of the
issuance of any orders suspending such qualifications,
registration or exception, the Company will, with the
cooperation of the Representatives use its best efforts to
obtain the withdrawal thereof.
(g) The Company will furnish to its stockholders annual reports
containing financial statements certified by independent public
accountants.
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(h) The Company will maintain a transfer agent and registrar for its
Common Stock.
(i) The Company will not offer, sell, assign, transfer, encumber,
contract to sell, register for sale, grant an option to purchase
or otherwise dispose of, other than by operation of law, gifts,
pledges or dispositions by estate representatives, any shares of
Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock (including, without limitation,
Common Stock of the Company which may be deemed to be
beneficially owned by the Company in accordance with the Rules
and Regulations) during the 180 days following the date of this
Agreement, other than (i) the Company's sale of Common Stock
hereunder, (ii) issuances of Common Stock, stock options, stock
purchase rights or other similar rights issued pursuant to the
1997 Plans as described in the Prospectus, and (iii) any Common
Stock or preferred stock issued by the Company in any
transaction of the type described in Rule 145 under the
Securities Act or otherwise issued by the Company in exchange
for technology or other non-cash assets of any third party.
(j) The Company will apply the net proceeds from the sale of the
Stock as set forth in the description under "Use of Proceeds" in
the Prospectus.
(k) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by,
the Commission in connection with the registration of the Stock
under the Securities Act and the respective German authorities
in connection with the listing on the Neuer Markt of the
Frankfurt Stock Exchange in connection with the offer and sale
of the International Stock pursuant to the International
Underwriting Agreement.
(l) Prior to the First Closing Date the Company will furnish to the
Representatives, as soon as they have been prepared, copies of
any unaudited interim consolidated financial statements of the
Company and its subsidiaries for any periods subsequent to the
periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.
(m) Prior to the Closing Dates the Company will issue no press
release or other public communications directly or indirectly
and hold no press conference with respect to the Company (other
than customary product related sales and marketing
communications) or any of its subsidiaries, the financial
condition, results of operations, business, prospects, assets or
liabilities of the Company or any of its subsidiaries, or the
offering of the Stock, without Xxxxx'x prior written consent,
which shall not be unreasonably withheld.
(n) During the period of five (5) years hereafter, the Company will
furnish to the Representatives, and upon request of the
Representatives, to each of the Underwriters: (i) as soon as
practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of the
Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent
public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other
report filed by the Company on a non-confidential basis with the
Commission, or the NASD or any securities exchange; (iii) as
soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock; and
(iv) from time to time such other information concerning the
Company as you may reasonably request.
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5 Payment of Expenses.
(a) The Company will pay (directly or by reimbursement) all costs,
fees and expenses incurred in connection with the performance of
the obligations of the Company and of the Selling Stockholders
under this Agreement and the International Underwriting
Agreement and in connection with the transactions contemplated
hereby, including but not limited to (i) all expenses and taxes
incident to the issuance and delivery of the Stock to the
Representatives; (ii) all expenses incident to the registration
of the Stock and the International Stock under the Securities
Act; (iii) the costs of preparing stock certificates (including
printing and engraving costs); (iv) all fees and expenses of the
registrar and transfer agent of the Stock and the International
Stock; (v) all necessary issue, transfer and other taxes in
connection with the issuance and sale of the Stock to the U.S.
Underwriters; (vi) fees and expenses of the Company's counsel
and the Company's independent accountants; (vii) all costs and
expenses incurred by the Company in connection with the
preparation, printing, filing, shipping and distribution of the
Registration Statement, each Pre-effective Prospectus and the
Prospectus (including all exhibits and financial statements) and
all amendments and supplements provided for herein, (viii) all
costs and expenses incurred in connection with the shipping and
distribution of the Selling Stockholders' Power of Attorney, the
Custody Agreement, the "Agreement Among U.S. Underwriters and
International Managers" between the Representatives and Lead
Managers, the "Agreement Among U.S. Underwriters" between the
Representatives and the U.S. Underwriters, the Master Selected
Dealers' Agreement, the U.S. Underwriters' Questionnaire and the
Blue Sky memoranda (including with respect to such Blue Sky
memoranda related fees and expenses of counsel to the
Underwriters) and this Agreement; (ix) all filing fees,
attorneys' fees and expenses incurred by the Company or the U.S.
Underwriters in connection with exemptions from the qualifying
or registering (or obtaining qualification or registration of)
all or any part of the Stock for offer and sale and
determination of its eligibility for investment under the Blue
Sky or other securities laws of such jurisdictions as the
Representatives may designate; (x) all fees and expenses paid or
incurred in connection with filings made with the NASD and the
Neuer Markt of the Frankfurt Stock Exchange; and (xi) all other
costs and expenses incurred by the Company and the Selling
Stockholders incident to the performance of their obligations
hereunder which are not otherwise specifically provided for in
this Section.
(b) In addition to their other obligations under Section 6(a)
hereof, the Company and the Selling Stockholders agree that, as
an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or
based upon (i) any statement or omission or any alleged
statement or omission by the Company or the Selling Stockholders
or (ii) any breach or inaccuracy in their representations and
warranties contained in this Agreement, they will reimburse each
U.S. Underwriter on a quarterly basis for all reasonable legal
or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Company's and each Selling Stockholder's obligation to reimburse
each U.S. Underwriter for such expenses and the possibility that
such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper,
each U.S. Underwriter shall promptly return it to the Company or
such Selling Stockholder, as the case may be, together with
interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to time by
Citibank,
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N.A., New York, New York (the "Prime Rate"). Any such interim
reimbursement payments which are not made to a U.S. Underwriter
in a timely manner as provided below shall bear interest at the
Prime Rate from the due date for such reimbursement. This
expense reimbursement agreement will be in addition to any other
liability which the Company or any Selling Stockholder may
otherwise have. The request for reimbursement will be sent to
the Company with a copy to each Selling Stockholder.
(c) In addition to its other obligations under Section 6(b) hereof,
each U.S. Underwriter severally agrees that, as an interim
measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission,
described in Section 6(b) hereof which relates to information
furnished to the Company pursuant to Section 6(c) hereof, it
will reimburse the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Stockholder) on
a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the U.S. Underwriters'
obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or
Selling Stockholder) for such expenses and the possibility that
such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper,
the Company (and, to the extent applicable, each officer,
director, controlling person or Selling Stockholder) shall
promptly return it to the U.S. Underwriters together with
interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made
to the Company within thirty (30) days of a request for
reimbursement shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in
addition to any liability which such U.S. Underwriter may
otherwise have.
(d) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in paragraph
(b) and/or (c) of this Section 5, including the amounts of any
requested reimbursement payments and the method of determining
such amounts, shall be settled by arbitration conducted under
the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to
the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such
an arbitration would be limited to the operation of the interim
reimbursement provisions contained in paragraph (b) and/or (c)
of this Section 5 and would not resolve the ultimate propriety
or enforceability of the obligation to reimburse expenses which
is created by the provisions of Section 6.
6 Indemnification and Contribution.
(a) The Company and SCM Microsystems GmbH jointly and severally
agree to indemnify and hold harmless each U.S. Underwriter and
each person, if any, who controls such U.S. Underwriter within
the meaning of the Securities Act and the respective officers,
directors, partners, employees, representatives and agents of
each of such U.S. Underwriter
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(collectively, the "Underwriter Indemnified Parties" and, each,
an "Underwriter Indemnified Party"), against any losses, claims,
damages, liabilities or expenses (including the reasonable cost
of investigating and defending against any claims therefor and
counsel fees incurred in connection therewith), joint or
several, which may be based upon the Securities Act, or any
other statute or at common law, (i) on the ground or alleged
ground that any Pre-effective Prospectus, the Registration
Statement or the Prospectus (or any Pre-effective Prospectus,
the Registration Statement or the Prospectus as from time to
time amended or supplemented) includes or allegedly includes an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading, unless such statement or
omission was made in reliance upon, and in conformity with,
written information furnished to the Company by any U.S.
Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof and provided
that the foregoing indemnity agreement with respect to any
Pre-effective Prospectus shall not inure to the benefit of any
U.S. Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased Stock, or any person
controlling such U.S. Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such U.S. Underwriter to such person,
if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Stock to such person,
and the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure to deliver the Prospectus (as
so amended or supplemented) resulted from the Company's failure
to perform its obligations pursuant to Section 4(c) above or
(ii) for any act or failure to act or any alleged act or failure
to act by any U.S. Underwriter in connection with, or relating
in any manner to, the Stock or the offering contemplated hereby,
and which is included as part of or referred to in any loss,
claim, damage, liability or expense arising out of or based upon
matters covered by clause (i) above (provided that the Company
shall not be liable under this clause (ii) to the extent that it
is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, or liability or
expense resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such U.S. Underwriter
through its gross negligence or willful misconduct). The Company
will be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Company elects
to assume the defense, such defense shall be conducted by
counsel chosen by it and reasonably acceptable to the U.S.
Underwriters. In the event the Company elects to assume the
defense of any such suit and retain such counsel, any
Underwriter Indemnified Parties, defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and
expenses of such counsel unless (i) the Company shall have
specifically authorized the retaining of such counsel or (ii)
the parties to such suit include both any such Underwriter
Indemnified Party and the Company, and such Underwriter
Indemnified Parties have been advised by counsel to the U.S.
Underwriters that one or more legal defenses may be available to
it or them which may not be available to the Company, in which
case the Company shall not be entitled to assume the defense of
such suit without the written consent of the Underwriter
Indemnified Parties party to such suit notwithstanding its
obligation to bear the fees and expenses of such counsel. In
circumstances where the Company does not assume the defense of a
suit for which indemnification is sought by one or more
Underwriter Indemnified Parties, the Company will be obligated
to bear the fees and expenses of only one firm on behalf of all
Underwriter Indemnified Parties (plus local counsel, if, in the
judgment of the primary
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counsel to the Underwriter Indemnified Parties use of such local
counsel is necessary). This indemnity agreement is not exclusive
and will be in addition to any liability which the Company might
otherwise have and shall not limit any rights or remedies which
may otherwise be available at law or in equity to each
Underwriter Indemnified Party.
(b) Each Selling Stockholder severally and not jointly agrees to
indemnify and hold harmless each Underwriter Indemnified Party
against any losses, claims, damages, liabilities or expenses
(including, unless such Selling Stockholder elects to assume the
defense, the reasonable cost of investigating and defending
against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which may be based upon
the Securities Act, or any other statute or at common law, on
the ground or alleged ground that any Pre-Effective Prospectus,
the Registration Statement or the Prospectus (or any
Pre-Effective Prospectus, the Registration Statement or the
Prospectus, as from time to time amended and supplemented)
includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by
any U.S. Underwriter, directly or through the Representatives
specifically for use in the preparation thereof; provided
however that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any Pre-Effective
Prospectus, the indemnity agreement contained in this subsection
(b) shall not inure to the benefit of any Underwriter
Indemnified Party from whom the person asserting any such
losses, claims, damages or liabilities purchased the shares of
Stock concerned to the extent that any such loss, claim, damage
or liability of such Underwriter Indemnified Party results from
the fact that a copy of the Prospectus was not sent or given to
such person at or prior to the written confirmation of the sale
of such shares of Stock, as required by the Securities Act, and
if the untrue statement or omission concerned has been corrected
in the Prospectus. Such Selling Stockholder shall be entitled to
participate at his own expense in the defense, or, if he so
elects, to assume the defense of any suit brought to enforce any
such liability, but, if such Selling Stockholder elects to
assume the defense, such defense shall be conducted by counsel
chosen by him. In the event that any Selling Stockholder elects
to assume the defense of any such suit and retain such counsel,
the Underwriter Indemnified Parties, defendant or defendants in
the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) such Selling Stockholder
shall have specifically authorized the retaining of such counsel
or (ii) the parties to such suit include both such Underwriter
Indemnified Parties and such Selling Stockholder and such
Underwriter Indemnified Parties have been advised by counsel
that one or more legal defenses may be available to it or them
which may not be available to such Selling Stockholder, in which
case such Selling Stockholder shall not be entitled to assume
the defense of such suit notwithstanding its obligation to bear
the fees and expenses of such counsel. This indemnity agreement
is not exclusive and will be in addition to any liability which
such Selling Stockholder might otherwise have and shall not
limit any rights or remedies which may otherwise be available at
law or in equity to each Underwriter Indemnified Party. The
Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the U.S.
Underwriters under this Agreement, as to their respective
amounts of such liability for which they each shall be
responsible.
Notwithstanding any other provision of this Agreement or the
International Underwriting Agreement, the liability of each
Selling Stockholder to the U.S. Underwriters and
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International Managers under this Agreement, the International
Underwriting Agreement or otherwise shall be limited to an
amount equal to the proceeds paid to such Selling Stockholder in
the initial public offering.
(c) Each U.S. Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement
and each person, if any, who controls the Company within the
meaning of the Securities Act (collectively, the "Company
Indemnified Parties") and each Selling Stockholder (the "Selling
Stockholder Indemnified Parties") against any losses, claims,
damages, liabilities or expenses (including, unless the U.S.
Underwriter or U.S. Underwriters elect to assume the defense,
the reasonable cost of investigating and defending against any
claims therefor and counsel fees incurred in connection
therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or
any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground
that any Pre-effective Prospectus, the Registration Statement or
the Prospectus (or any Pre-effective Prospectus, the
Registration Statement or the Prospectus, as from time to time
amended and supplemented) includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made,
not misleading, but only insofar as any such statement or
omission was made in reliance upon, and in conformity with,
written information furnished to the Company by such U.S.
Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof. Such U.S.
Underwriter shall be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but, if such
U.S. Underwriter elects to assume the defense, such defense
shall be conducted by counsel chosen by it. In the event that
any U.S. Underwriter elects to assume the defense of any such
suit and retain such counsel, the Company Indemnified Parties or
Selling Stockholders Indemnified Parties and any other U.S.
Underwriter or U.S. Underwriters or controlling person or
persons, defendant or defendants in the suit, shall bear the
fees and expenses of any additional counsel retained by them,
respectively. The U.S. Underwriter against whom indemnity may be
sought shall not be liable to indemnify any person for any
settlement of any such claim effected without such U.S.
Underwriter's consent. This indemnity agreement is not exclusive
and will be in addition to any liability which such U.S.
Underwriter might otherwise have and shall not limit any rights
or remedies which may otherwise be available at law or in equity
to any Company Indemnified Party or Selling Stockholder
Indemnified Party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified
party under subsection (a), (b) or (c) above in respect of any
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to herein, then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one
hand and the U.S. Underwriters on the other from the offering of
the Stock. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the
Selling Stockholders on the one
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hand and the U.S. Underwriters on the other in connection with
the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company
and the Selling Stockholders on the one hand and the U.S.
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 U.S. 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,
the Selling Stockholders or the U.S. Underwriters and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the U.S. Underwriters
agree that it would not be just and equitable if contribution
were determined by pro rata allocation (even if the U.S.
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. The amount paid
or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party
in connection with investigating, defending, settling or
compromising any such claim. Notwithstanding the provisions of
this subsection (d), no U.S. Underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the shares of the Stock underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages which such U.S. Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The U.S.
Underwriters' obligations to contribute are several in
proportion to their respective underwriting obligations and not
joint. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) 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 to so notify the
indemnifying party shall not relieve the indemnifying party from
any liability that it may have to any indemnified party except
to the extent that any such delay results in the loss of the
ability to assert any affirmative or negative defense the loss
of which is materially prejudicial to the disposition of this
matter.
7 Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations,
warranties and other statements of the Company and its subsidiaries, the
Selling Stockholders and the several U.S. Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement,
shall remain in full force and effect, regardless of any investigation
made by or on behalf of any U.S. Underwriter, the Selling Stockholders,
the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock until
all applicable statutes of limitation have expired.
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8 Conditions of U.S. Underwriters' Obligations. The respective obligations
of the several U.S. Underwriters hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date
hereof and at and as of each of the Closing Dates, of the
representations and warranties made herein by the Company and the
Selling Stockholders to compliance at and as of each of the Closing
Dates by the Company and the Selling Stockholders with their covenants
and agreements herein contained and other provisions hereof to be
satisfied at or prior to each of the Closing Dates, and to the following
additional conditions:
(a) The Registration Statement shall have become effective and no
stop order suspending the effectiveness thereof shall have been
issued and no proceedings for that purpose shall have been
initiated or, to the knowledge of the Company or the
Representatives, shall be threatened by the Commission, and any
request for additional information on the part of the Commission
(to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the reasonable
satisfaction of the Representatives. Any filings of the
Prospectus, or any supplement thereto, required pursuant to Rule
424(b) or Rule 434 of the Rules and Regulations, shall have been
made in the manner and within the time period required by Rule
424(b) and Rule 434 of the Rules and Regulations, as the case
may be.
(b) The Representatives shall have been satisfied that there shall
not have occurred any change prior to each of the Closing Dates,
in the condition (financial or otherwise), properties, business,
management, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the
capital stock, short-term or long-term debt of the Company and
its subsidiaries considered as a whole, such that (i) the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact which,
in the reasonable opinion of the Representatives, is material,
or omits to state a fact which, in the reasonable opinion of the
Representatives, is required to be stated therein or is
necessary to make the statements therein not misleading or (ii)
it is impracticable in the reasonable judgment of the
Representatives to proceed with the public offering or purchase
the Stock as contemplated hereby.
(c) The Representatives shall be satisfied that no legal or
governmental action, suit or proceeding affecting the Company
which is material and adverse to the Company or which affects or
may affect the Company's or the Selling Stockholders' ability to
perform their respective obligations under this Agreement shall
have been instituted or threatened and there shall have occurred
no material adverse development in any existing such action,
suit or proceeding.
(d) At the time of execution of this Agreement, the Representatives
shall have received from KPMG Peat Marwick LLP, independent
certified public accountants, a letter, dated the date hereof,
in form and substance satisfactory to the U.S. Underwriters to
the effect set forth in Exhibit I hereto.
(e) The Representatives shall have received from KPMG Peat Marwick
LLP, independent certified public accountants, letters, dated
each of the Closing Dates, to the effect that such accountants
reaffirm, as of each of the Closing Dates, and as though made on
each of the Closing Dates, the statements made in the letter
furnished by such accountants pursuant to paragraph (d) of this
Section 8.
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(f) The Representatives shall have received (i) from Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, United States
securities counsel for the Company; (ii) from Oppenhoff &
Xxxxxx, German counsel for the Company; and (iii) from the Law
Offices of Xxxxxx Xxxxxx, Esq., intellectual property counsel to
the Company, an opinion, dated each of the Closing Date, to the
effect set forth in Exhibits II, III and IV hereto,
respectively.
(g) The Representatives shall have received from Xxxxxx & Xxxxx,
counsel for the U.S. Underwriters, their opinion dated each of
the Closing Dates with respect to the incorporation of the
Company, the validity of the Stock, the Registration Statement
and the Prospectus and such other related matters as it may
reasonably request, and the Company shall have furnished to such
counsel such documents as they may request for the purpose of
enabling them to pass upon such matters.
(h) The Representatives shall have received from
_____________________, counsel for the Selling Stockholders, an
opinion dated the Closing Date, to the effect set forth in
Exhibit V.
(i) The Representatives shall have received a certificate or
certificates, dated each of the Closing Dates, of the chief
executive officer or the President and the chief financial or
accounting officer of the Company to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the
knowledge of the signers, no proceedings for that
purpose have been instituted or are pending or
contemplated under the Securities Act;
(ii) Neither any Pre-effective Prospectus, as of its date,
nor the Registration Statement or the Application for
Admission nor the Prospectus or the German Prospectus,
nor any amendment or supplement thereto, as of the time
when the Registration Statement or the Application for
Admission, as the case may be, became effective and at
all times subsequent thereto up to the delivery of such
certificate, contained any untrue statement of a
material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading;
(iii) The representations and warranties of the Company in
this Agreement are true and correct at and as of each of
the Closing Dates, and the Company has complied with all
the agreements and performed or satisfied all the
conditions on its part to be performed or satisfied at
or prior to the Closing Dates; provided, however, that
the representation contained in clause (ii) of paragraph
2(a)(z) hereof need not be true as of a Closing Date;
and
(iv) Since the respective dates as of which information is
given in the Registration Statement, the Prospectus and
the German Prospectus, and except as disclosed in or
contemplated by the Prospectus, (i) there has not been
any material adverse change or a development involving a
material adverse change in the condition (financial or
otherwise), properties, business, management, net worth
or results of operations of the Company and its
subsidiaries considered as a whole; (ii) the business
and operations conducted by the Company and its
subsidiaries have not sustained a loss by strike, fire,
flood, accident or other calamity (whether or not
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insured) of such a character as to interfere materially
with the conduct of the business and operations of the
Company and its subsidiaries considered as a whole;
(iii) no legal or governmental action, suit or
proceeding is pending or to the knowledge of the signers
threatened against the Company which is material to the
Company, whether or not arising from transactions in the
ordinary course of business, or which may materially and
adversely affect the transactions contemplated by this
Agreement; (iv) since such dates and except as so
disclosed, the Company has not incurred any material
liability or obligation, direct, contingent or indirect,
made any change in its capital stock (except pursuant to
the 1997 Plans), made any material change in its
short-term or funded debt or repurchased or otherwise
acquired any of the Company's capital stock; and (v) the
Company has not declared or paid any dividend, or made
any other distribution, upon its outstanding capital
stock payable to stockholders of record on a date prior
to the Closing Date.
(j) The Selling Stockholders shall have furnished to the
Representatives certificates as to the accuracy, at and as of
each of the Closing Dates, of the representations and warranties
made herein by them and as to compliance at and as of each of
the Closing Dates by them with their covenants and agreements
herein contained and other provisions hereof to be satisfied at
or prior to each of the Closing Dates, and as to satisfaction of
the other conditions to the obligations of the U.S. Underwriters
hereunder.
(k) Cowen shall have received the written agreements, substantially
in the form of Exhibit VI hereto, of the officers, directors and
certain holders of Common Stock that each will not offer, sell,
assign, transfer, encumber, contract to sell, register for sale,
grant an option to purchase or otherwise dispose of, other than
by operation of law, gifts, pledges or dispositions by estate
representatives, any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially
owned by such officer, director or holder in accordance with the
Rules and Regulations) during the 90 days following the date of
the final Prospectus except as provided therein.
(l) The Nasdaq National Market shall have approved the Stock for
listing, subject only to official notice of issuance.
(m) The Closing under the International Underwriting Agreement shall
have occurred concurrently with the Closing hereunder on the
Closing Date.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company
will furnish to the Representatives conformed copies of such opinions,
certificates, letters and other documents as the Representatives shall
reasonably request. If any of the conditions hereinabove provided for in
this Section shall not have been satisfied when and as required by this
Agreement, this Agreement may be terminated by the Representatives by
notifying the Company of such termination in writing or by telegram at
or prior to each of the Closing Dates, but Cowen, on behalf of the
Representatives, shall be entitled to waive any of such conditions.
9 Effective Date. This Agreement shall become effective immediately as to
Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business
day following the effectiveness of the Registration Statement or at such
earlier
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time after the Registration Statement becomes effective as the
Representatives may determine on and by notice to the Company or by
release of any of the Stock for sale to the public. For the purposes of
this Section 9, the Stock shall be deemed to have been so released upon
the release for publication of any newspaper advertisement relating to
the Stock or upon the release by you of notices (i) advising U.S.
Underwriters that the shares of Stock are released for public offering
or (ii) offering the Stock for sale to securities dealers, whichever may
occur first.
10 Termination. This Agreement (except for the provisions of Section 5) may
be terminated by the Company at any time before it becomes effective in
accordance with Section 9 by notice to the Representatives and may be
terminated by the Representatives at any time before it becomes
effective in accordance with Section 9 by notice to the Company. In the
event of any termination of this Agreement under this or any other
provision of this Agreement, there shall be no liability of any party to
this Agreement to any other party, other than as provided in Sections 5,
6 and 11 and other than as provided in Section 12 as to the liability of
defaulting U.S. Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the First
Closing Date trading in securities on any of the New York Stock Exchange
or the Nasdaq National Market System shall have been suspended (other
than any short term suspension of trading pursuant to any "circuit
breaker" provisions of the New York Stock Exchange) or minimum or
maximum prices shall have been established on any such exchange or
market, or a banking moratorium shall have been declared by New York or
United States authorities; (ii) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter
market; (iii) if at or prior to the First Closing Date there shall have
been (A) an outbreak or escalation of hostilities between the United
States and any foreign power or of any other insurrection or armed
conflict involving the United States or (B) any material change in
financial markets or any calamity or crisis which, in the reasonable
judgment of the Representatives, makes it impractical or inadvisable to
offer or sell the Stock on the terms contemplated by the Prospectus;
(iv) if there shall have been any material adverse development or
prospective material adverse development involving particularly the
business or properties or securities of the Company or any of its
subsidiaries or the transactions contemplated by this Agreement, which,
in the reasonable judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the Stock on the terms
contemplated by the Prospectus; (v) if there shall be any litigation or
proceeding, pending or threatened, which, in the reasonable judgment of
the Representatives, makes it impracticable or inadvisable to offer or
deliver the on the terms contemplated by the Prospectus; or (vi) if
there shall have occurred any of the events specified in the immediately
preceding clauses (i) - (v) together with any other such event that
makes it, in the reasonable judgment of the Representatives, impractical
or inadvisable to offer or deliver the Stock on the terms contemplated
by the Prospectus.
11 Reimbursement of U.S. Underwriters. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any
election of the Company or the Selling Stockholder pursuant to the first
paragraph of Section 10 or shall be terminated by the Representatives
under Section 8 (excluding Section 8(g)) or Section 10, the Company will
bear and pay the expenses specified in Section 5 hereof and, in addition
to their obligations pursuant to Section 6 hereof, the Company will
reimburse the reasonable out-of-pocket expenses of the several U.S.
Underwriters (including reasonable fees and disbursements of counsel for
the U.S. Underwriters) incurred in connection with this Agreement and
the proposed purchase of the Stock, and promptly upon demand the Company
will pay such amounts to you as Representatives.
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12 Substitution of U.S. Underwriters. If any U.S. Underwriter or U.S.
Underwriters shall default in its or their obligations to purchase
shares of Stock hereunder and the aggregate number of shares which such
defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of shares
underwritten, the other U.S. Underwriters shall be obligated severally,
in proportion to their respective commitments hereunder, to purchase the
shares which such defaulting U.S. Underwriter or U.S. Underwriters
agreed but failed to purchase. If any U.S. Underwriter or U.S.
Underwriters shall so default and the aggregate number of shares with
respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and arrangements
satisfactory to the Representatives and the Company for the purchase of
such shares by other persons are not made within forty-eight (48) hours
after such default, this Agreement shall terminate.
If the remaining U.S. Underwriters or substituted U.S. Underwriters are
required hereby or agree to take up all or part of the shares of Stock
of a defaulting U.S. Underwriter or U.S. Underwriters as provided in
this Section 12, (i) the Company and the Selling Stockholders shall have
the right to postpone the Closing Dates for a period of not more than
five (5) full business days in order that the Company may effect
whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents or arrangements,
and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may
thereby be made necessary, and (ii) the respective numbers of shares to
be purchased by the remaining U.S. Underwriters or substituted U.S.
Underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained
shall relieve any defaulting U.S. Underwriter of its liability to the
Company, the Selling Stockholders or the other U.S. Underwriters for
damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 12 shall be without liability on the
part of any non-defaulting U.S. Underwriter, the Selling Stockholders or
the Company, except for expenses to be paid or reimbursed pursuant to
Section 5 and except for the provisions of Section 6.
13 Notices. All communications hereunder shall be in writing and, if sent
to the U.S. Underwriters shall be mailed, delivered or facsimilied and
confirmed to you, as their Representatives c/o Cowen & Company at
Xxxxxxxxx Xxxxxx, Xxx Xxxx. Xxx Xxxx 00000 except that notices given to
a U.S. Underwriter pursuant to Section 6 hereof shall be sent to such
U.S. Underwriter at the address furnished by the Representatives or, if
sent to the Company, shall be mailed, delivered or facsimilied and
confirmed c/o SCM Microsystems, Inc., 000 Xxxxxxxx Xxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attention: President.
14 Successors. This Agreement shall inure to the benefit of and be binding
upon the several U.S. Underwriters, the Company and the Selling
Stockholders and their respective successors and legal representatives.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy or claim under
or in respect of this Agreement, or any provisions hereby contained,
this Agreement and all conditions and provisions hereof being intended
to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company and the
Selling Stockholders contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any U.S.
Underwriter or U.S. Underwriters within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the indemnities of
the several U.S. Underwriters shall also be for the benefit of each
director of the Company, each of its officers who
27
28
has signed the Registration Statement and the person or persons, if any,
who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
15 Applicable Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York.
16 Authority of the Representatives. In connection with this Agreement, you
will act for and on behalf of the several U.S. Underwriters, and any
action taken under this Agreement by Cowen, as Representative, will be
binding on all the U.S. Underwriters; and any action taken under this
Agreement by any of the Attorneys-in-fact will be binding on all the
Selling Stockholders.
17 Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is for
any reason determined to be invalid or unenforceable, there shall be
deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.
18 General. This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not
affect the construction or interpretation of this Agreement. This
Agreement may be amended or modified, and the observance of any term of
this Agreement may be waived, only by a writing signed by the party or
parties to this Agreement directly affected by such amendment,
modification or waiver.
19 Counterparts. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
28
29
If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
SCM MICROSYSTEMS, INC.
By:___________________________________
Name:
Title:
Accepted and delivered in SELLING STOCKHOLDERS
Palo Alto, California as of LISTED IN SCHEDULE B
the date first above written.
XXXXX & COMPANY By:___________________________
XXXXXXXXX & XXXXX LLC
XXXXXXX, XXXXXX & XXXXXXXXX L.L.C.
Acting on their own behalf
and as Representatives of the several By:___________________________
U.S. Underwriters referred to in the Attorney-in-fact
foregoing Agreement.
By: XXXXX & COMPANY
By: Cowen Incorporated,
its general partner
By:___________________________
Name:
Title:
For purposes of agreeing to the indemnification provisions set forth in Section
6 of this agreement:
SCM MICROSYSTEMS GmbH
By: ___________________________
29
30
Name:
Title:
30
31
SCHEDULE A
U.S. UNDERWRITERS
Number of Number of
Firm Shares Optional Shares
to be to be
Name Purchased Purchased
---- --------- ---------
Xxxxx & Company...........................................
Xxxxxxxxx & Xxxxx LLC ....................................
Xxxxxxx, Xxxxxx & Xxxxxxxxx...............................
Total 1,500,000
=========
32
SCHEDULE B
SELLING STOCKHOLDERS
Number of Shares of
Firm Stock
to be
Name Purchased
---- ---------
[TO COME]
---------
Total 2,000,000
=========
33
SCHEDULE C
SUBSIDIARIES
SCM Microsystems GmbH, a German entity
SCM Microsystems (U.S.) Inc., a Delaware corporation
34
SCHEDULE D
LIST OF PARTIES EXECUTING LOCK-UP AGREEMENTS
Index Securities S.A.
Algoquin Trust S.A.
Alpinvest International B.V.
Xxxxx Xxxxxxxxx
Banque SCS Alliance S.A.
Xxxxxx Xxxx
British Bank of the Middle East
Bulk Partners AS
Xxxxxx Xxxx
CERN Pension Fund
Xxxx & Cie S.A.
Xxxxxx Xxxx
Claus Dieckell
Xxxxxxxxx Xxxxxxxx
Xxxx Xxxx
Xxxxxxx Xxxxx
Faisal Finance (Jersey) Ltd.
X. X. Xxxxx
Fidulex Management Inc.
X. Xxxxxxxxxxx
Fondation Galba
The Forum Finance Group
Genevest Consulting Group S.A.
The Xxxxxxx Fund
Xxx X. Xxxx
Xxxxx Xxxx
Xxxxxx Xxxx
Xxxxxxxxx & Xxxxx California
Hoegh Invest ACS
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Intel Corporation
Intellicard
ITOHU Corporation
Xxxxxx Xxxxxx
KBL Founder Ventures S.C.A.
Per Xxxxxxx
X.X. Finance XX
Xxxxxxxxx Xxxx
Xxxxxx Xxxxxxxxxxxxxx
Xxxx Xxxx Xx Xxxx
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxx
35
Torsten Mayuranz
Xxxxx Xxxxx
Xxxxx Xxxxx
Merifin Capital N.V.
Mirabaud & Cie
Xxxxxxx & Company
Xxxx X. Xxxxxxxxxxx
Nippon Investment & Founders
Xxxxxxx Xxxxx
Xxxxxx Xxxxx
Jaochim Grafzu Ortenbum
Xxx X. Xxxxxx
Xxxx X. Xxxxxxxx
ppon PICTET & Cie
Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxx X. Xxxx
Xxxxx Xxxxx
Xxxxxxx Xxxx
Xxxx Xxxxx
Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxx Xxxxxx
Swiss Bank Corporation
Societe Financiere Mirelis S.A.
Xxxxxx Xxxxxx
Xxxxxx Solja
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx
Telenor
TVM Eurotech Limited Partnership
Union Bank of Switzerland
Xxxxxxxxx Xxxxx
Vertex
Xxxxxxx xxx Xxxxx
Xxxxxxx xxx Xxxxx
Luitpold xxx Xxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxx
WS Investments 97A
Zweite Beteilgump
36
EXHIBIT I
[Form of Accountant's Letter]
The Accountants shall confirm that they are independent accountants to the
Company within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct insofar as it
relates to them and stating that:
a. in their opinion the audited financial
statements and financial statement schedules included in the
Registration Statement and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules and
Regulations;
b. on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus under
the headings "Summary Consolidated Financial Data" and "Selected
Consolidated Financial Data," carrying out certain procedures
(but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to their
attention which caused them to believe that:
(1) the amounts in "Summary Consolidated
Financial Data," and "Selected Consolidated Financial
Data" included in the Registration Statement and the
Prospectus do not agree with the corresponding amounts
in the audited or unaudited financial statements from
which such amounts were derived; or
(2) with respect to the Company, there were, at
a specified date not more than five business days prior
to the date of the letter, any change in the capital
stock of the Company, increase in the long-term debt of
the Company or any decreases in net income or in
stockholders' equity in the Company, as compared with
the amounts shown on the Company's audited balance sheet
for the fiscal year ended December 31, 1997 included in
the Registration Statement; and
c. they have performed certain other procedures as
may be permitted under generally acceptable auditing standards as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably
specified by the Representatives agrees with the accounting
records of the Company; and
d. based upon the procedures set forth in clauses
(ii) and (iii) above and a reading of the amounts included in the
Registration Statement under the headings "Summary Consolidated
Financial Data" and "Selected Consolidated Financial Data"
included in the Registration Statement and Prospectus and a
reading of the financial
37
statements, from which certain of such data were derived, nothing
has come to their attention that gives them reason to believe
that the "Selected Consolidated Financial Data" included in the
Registration Statement and Prospectus do not comply as to the
form in all material respects with the applicable accounting
requirements of the Securities Act and the Rules or that the
information set forth therein is not fairly stated in relation to
the financial statements included in the Registration Statement
or Prospectus from which certain of such data were derived are
not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included in the Registration
Statement and Prospectus.
2
38
Exhibit II
[Form of Opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx]
1. The Company and each of the corporations set forth in Exhibit A
hereto (the "US Subsidiary") have been duly incorporated and are validly
existing and in good standing as corporations under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and are in
good standing as foreign corporations in California which, to such counsel's
knowledge, is the only jurisdiction in which the location of the properties
owned or leased by it or in which the character of the business conducted by it
makes such qualification necessary, and have all corporate power necessary to
own or hold their respective properties and conduct their businesses as
described in the Prospectus;
2. 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 nonassessable
and all of the Shares to be issued and sold by the Company to the U.S.
Underwriters pursuant to the Underwriting Agreement and to the International
Managers pursuant to the International Underwriting Agreement have been duly and
validly authorized and, when issued and delivered against payment therefor as
provided for in the Underwriting Agreement or the International Underwriting
Agreement, as the case may be, shall be duly and validly issued, fully paid and
non-assessable and, to our knowledge, free of any pre-emptive or similar rights;
3. Other than as described in the Prospectus, to our knowledge, there
are no pre-emptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any of the Shares pursuant to the
Company's Certificate of Incorporation or By-Laws or pursuant to any agreement
or other instrument known to us;
4. Except as disclosed in the Prospectus, to our knowledge, there are no
legal or governmental proceedings pending to which the Company or the US
Subsidiary is a party or of which any property or assets of the Company or the
US Subsidiary is the subject which, if determined adversely to the Company or
the US Subsidiary, could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the Company and its subsidiaries
taken as a whole; and, to our knowledge, no such proceedings are threatened or
contemplated by governmental authorities or other third parties;
5. The Company has full corporate power and authority to enter into the
Underwriting Agreement and the International Underwriting Agreement and to
perform its obligations thereunder (including to issue, sell and deliver the
Shares), and each of the Underwriting Agreement and the International
Underwriting Agreement has been duly and validly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company,
enforceable against it in accordance with their respective terms.
6. The execution, delivery and performance of the Underwriting Agreement
and the International Underwriting Agreement by the Company and the consummation
of the transactions contemplated by the Underwriting Agreement and the
International Underwriting Agreement by the Company will not result in a breach
or violation of (A) 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 that is filed as an exhibit to the Registration Statement, (B) the
Certificate of Incorporation or By-laws, or (C) any law, order, rule or
regulation of any U.S. court or U.S. governmental agency or body having
jurisdiction over the Company or the US Subsidiary or any of their properties or
result in the creation of a lien;
39
7. No consent, approval, authorization or order of any U.S. court or
U.S. governmental agency or body is required for the consummation by the Company
of the transactions contemplated by the Underwriting Agreement or the
International Underwriting Agreement, except such as may be required by the
National Association of Securities Dealers, Inc. (the "NASD"), the NASDAQ
National Market, the Neuer Markt of the Frankfurt Stock Exchange or under the
Securities Act or the Exchange Act or the securities or "Blue Sky" laws of any
U.S. or foreign jurisdiction in connection with the purchase and distribution of
the Shares by the U.S. Underwriters or the International Managers;
8. The Registration Statement was declared effective under the
Securities Act as of April __, 1998, the Prospectus was filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations on April __,
1998, and no stop order suspending the effectiveness of the Registration
Statement has been issued and to our knowledge no proceeding for that purpose is
pending or threatened by the Commission;
9. The Registration Statement and the Prospectus and any amendments or
supplements thereto (other than the financial statements and the notes thereto
and the schedules and other financial and statistical data included in the
Registration Statement or the Prospectus as to which we express no opinion)
comply as to form in all respects with the requirements of the Securities Act
and the Rules and Regulations, and to our knowledge, there are no contracts or
documents of a character required to be filed as exhibits to the Registration
Statement which are not filed as required;
10. Other than as described in the Prospectus and to our knowledge,
there are no contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have been waived
or satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to this Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act;
11. The descriptions in the Registration Statement and the Prospectus
under the captions "Risk Factors -- Concentration of Stock Ownership;
Anti-Takeover Provisions," Risk Factors -- Shares Eligible for Future Sale,"
Description of Common Stock" and "Shares Eligible for Future Sale," solely to
the extent they reflect matters of federal law arising under the laws of the
United States or of the Delaware General Corporation Law or legal conclusions
relating to such laws, accurately summarize and fairly present the legal and
regulatory matters described therein; and
12. The Company is not nor will it be immediately after receiving the
proceeds from the sale of the Shares, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
In addition, although we have not undertaken, except as otherwise
indicated herein, to determine independently, and do not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, we have participated in conferences with officers and
other representatives of the Company, at which conferences representatives of
the Representatives, counsel to the Underwriters and representatives of the
independent certified public accountants of the Company were present, and at
which conferences the contents of the Registration Statement and Prospectus and
related matters were discussed, and based upon the foregoing nothing has come to
our attention that has caused us to believe that the Registration Statement at
the time the Registration Statement became effective, or the Prospectus, as of
its date and as of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any
2
40
amendment or supplement to the Prospectus, as of its respective date, and as of
the date hereof, contained any untrue statement of a material fact or omitted 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 (it being
understood that we express no belief with respect to the financial statements
and the notes thereto and the schedules and other financial and statistical data
included in the Registration Statement or the Prospectus).
3
41
Exhibit III
[Form of Opinion of Issuer's German Counsel and Intellectual Property Counsel]
1. SCM Microsystems GmbH, a limited liability company (the "Subsidiary")
is duly incorporated and duly registered with the commercial register at the
local court in Neuburg on der Donau under No. HRB 90556 and is validly existing
as a limited liability company under the laws of Germany and is duly qualified
to do business in accordance with the objectives of the Subsidiary set forth in
its articles of association, and has all power and authority (corporate and
other) necessary to own or hold its properties and conduct its business in
accordance with its articles of association. The objective of the Subsidiary
pursuant to its articles of association is to develop, produce and market
electronic parts of microsystems, electronic and electric instruments, data
terminals and data processing equipment as well as to trade all related
products. The Subsidiary is also authorized to conduct all activities which are
appropriate to serve these objectives. In particular the Subsidiary is
authorized to establish, acquire or hold interest in enterprises of identical or
similar kind and to grant or acquire licenses;
2. The Subsidiary has an authorized, issued and outstanding share
capital in the nominal amount of DM 522,700 (consisting of 33 shares with
different nominal amounts). To the best of our knowledge after reasonable
investigations all of the issued shares of capital stock of the Subsidiary have
been duly and validly authorized and issued and are to the best of our knowledge
fully paid, non-assessable and are owned by SCM Microsystems Inc., a Delaware
corporation, to the best of our knowledge free and clear of all liens,
encumbrances, equities or claims;
3. Other than as described in the Prospectus after reasonable
investigations (i.e., due inquiry of the management of the Subsidiary) there are
no pre-emptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any of the capital stock of the
Subsidiary pursuant to the Subsidiary's organizational documents or pursuant to
any agreement or other instrument know to us providing for such rights or
restrictions;
4. Except as disclosed in the Prospectus after reasonable investigations
(i.e., due inquiry of the management of the Subsidiary), to our knowledge, there
are no legal or governmental proceedings pending to which the Subsidiary is a
party or of which any property or assets of the Subsidiary is the subject which,
if determined adversely to the Subsidiary, could individually or in the
aggregate have a material adverse effect on the Subsidiary and, to our
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or other third parties;
5. The statements in the Prospectus under the heading "Risk Factors -
Proprietary Technology and Intellectual Property" and "Business - Proprietary
Technology and Intellectual Property," insofar as such statements constitute
summary descriptions of the legal matters, documents or proceedings referred to
therein, fairly represent the information called for with respect to such legal
matters, documents or proceedings and such statements do not omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading;
6. To such counsel's knowledge, the Subsidiary owns or possesses all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and rights described in the Prospectus as
being owned by it or necessary for the conduct of its business; and to such
counsel's knowledge, except as described in the Prospectus, the
42
Subsidiary has not received any notice of infringement of or conflict with and
such counsel knows of no infringement of or conflict with asserted rights of
others with respect to any such patents, trademarks, service marks or other
proprietary information or materials which could result in any material adverse
effect on the Subsidiary and to the knowledge of such counsel there is no
infringement or violation by others of any of the Subsidiary's patents,
licenses, trade secrets, trademarks, service marks or other proprietary
information or materials which in the judgment of such counsel could materially
affect the use thereof by the Subsidiary;
7. The patents have been licensed to the Subsidiary as described in the
Prospectus, and such licenses are valid, binding and enforceable; and the
Subsidiary has rights to the products and technology covered thereby as
described in the Prospectus;
8. The Subsidiary has full corporate power and authority to enter into
the Underwriting Agreement and the International Underwriting Agreement and to
perform its obligations thereunder, and the Underwriting Agreement and the
International Underwriting Agreement have each been duly and validly authorized,
executed and delivered by the Subsidiary;
9. The execution, delivery and performance of the Underwriting Agreement
and the International Underwriting Agreement and the consummation of the
transactions contemplated by the Underwriting Agreement and the International
Underwriting Agreement by the Subsidiary will not result in a breach or
violation of any of (A) the terms or provisions of or constitute a default under
any indenture, mortgage, deed of trust note agreement or other agreement or
instrument known to us after reasonable investigations (i.e., due inquiry of the
management of the Subsidiary) to which the Subsidiary is a party or by which any
of its properties is or may be bound, (B) the organizational documents of the
Subsidiary, or (C) any law, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Subsidiary known to us
or any of its properties nor will such execution, delivery and performance
result in the creation of a lien;
10. No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Subsidiary
of the transactions contemplated by the Underwriting Agreement or the
International Underwriting Agreement other than the approval of the German
authorities pursuant to the German Stock Exchange Act (Borsengesctz), the German
Sale Prospectus Act "Verkaufsprospektgsctz", the Stock Exchange Regulation
("Borscnordnung") and the Rules and Regulations of the New Market "(Regelwerk
Neuer Markt").
11. The Prospectus used in connection with the application to list the
Stock on the Neuer Markt of the Frankfurt Stock Exchange and any amendments or
supplements thereto comply as to form in all respects with the requirements of
German law and the Frankfurt Stock Exchange.
12. The Stock has been approved for listing on the Neuer Markt of the
Frankfurt Stock Exchange.
2
43
Exhibit IV
[Form of Intellectual Property Counsel Opinion]
1. The statements in the Prospectus under the heading "Risk Factors -
Proprietary Technology and Intellectual Property" and "Business - Proprietary
Technology and Intellectual Property," insofar as such statements constitute
summary descriptions of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents or proceedings and such statements do not omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading;
2. To such counsel's knowledge, the Company owns or possesses all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and rights described in the Prospectus as
being owned by it or necessary for the conduct of its business; and to such
counsel's knowledge, except as described in the Prospectus, the Company has not
received any notice of infringement of or conflict with and such counsel knows
of no infringement of or conflict with asserted rights of others with respect to
any such patents, trademarks, service marks or other proprietary information or
materials which could result in any material adverse effect on the Company and
to the knowledge of such counsel there is no infringement or violation by others
of any of the Company's patents, licenses, trade secrets, trademarks, service
marks or other proprietary information or materials which in the judgment of
such counsel could materially affect the use thereof by the Company; and
3. The patents have been licensed to the Company as described in the
Prospectus, and such licenses are valid, binding and enforceable; and the
Company has rights to the products and technology covered thereby as described
in the Prospectus;
44
Exhibit V
[Form of Opinion of Selling Stockholders' Counsel]
1. [Corporate Selling Stockholder] Each of ______, ________ and ______
has full corporate power and authority to enter into the Underwriting Agreement,
the International Underwriting Agreement, the Custody Agreement and the Power of
Attorney and to perform its obligations thereunder (including to issue, sell and
deliver the Shares), and each of the Underwriting Agreement, the International
Underwriting Agreement, the Custody Agreement and the Power of Attorney has been
duly and validly authorized, executed and delivered by the Company and is a
valid and binding obligation of ________, _________ and ______, enforceable
against it in accordance with their respective terms.
2. [Individual Selling Stockholder] The Underwriting Agreement, the
International Underwriting Agreement, the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement to be executed by the Selling Stockholders
each have been duly and validly executed and delivered by or on behalf of each
Selling Stockholder.
3. The Underwriting Agreement, the International Underwriting Agreement,
the Custody Agreement, the Power of Attorney and the Lock-Up Agreement executed
and delivered by the Selling Stockholders each contains a valid choice of New
York law.
4. [Individual Selling Stockholder - To our knowledge after reasonable
investigations,] each of the Selling Stockholders has full legal right and power
to enter into the Underwriting Agreement and the International Underwriting
Agreement and to sell, transfer and deliver in the manner provided in the
Underwriting Agreement and the International Underwriting Agreement the Shares
to be sold by the Selling Stockholders.
5. Each of the Selling Stockholders is the record owner of and has
marketable title to the Shares to be sold by such Selling Stockholder.
6. All of the Selling Stockholders' rights in the Shares to be sold by
such Selling Stockholder, have been transferred to the Underwriters who have
severally purchased such Shares, free and clear of adverse claims, assuming that
the Underwriters purchased the same in good faith without notice of any adverse
claims.
7. The transfer and sale by the Selling Stockholders of the Shares to be
sold by the Selling Stockholders as contemplated in the Underwriting Agreement
and the International Underwriting Agreement will not violate any agreement,
judgment, decree, order, statute, rule or regulation which the Selling
Stockholders are a party or by which either Selling Stockholder is bound or
subject.
8. To our knowledge, no consent, approval, authorization, license,
certificate, permit or order of any court, governmental or regulatory agency,
authority or body or financial institution is required in connection with the
performance of the Underwriting Agreement or the International Underwriting
Agreement by such Selling Stockholder or the consummation of the transactions
contemplated therein, including the delivery and sale of the Shares to be
delivered and sold by such Selling Stockholder, except such as have been
obtained and except such as may be required under state securities or blue sky
laws in
45
connection with the purchase and distribution of the Shares by the several
Underwriters and the provisions of German law including the German Stock
Exchange Act (Borsengesetz), the German Stock Exchange Regulation
(Borsenordnung), the Rules and Regulations for the New Market (Regelwerk Neuer
Markt) and the Sales Prospectus Act (Verkaufsprospektgesetz).
46
Exhibit VI
[Form of Lock-Up Agreement]
-----------------------
Print Stockholder Name
SCM MICROSYSTEMS, INC.
LOCK-UP AGREEMENT
Xxxxx & Company
Xxxxxxxxx & Xxxxx LLC
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C.
As representatives of the
several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: SCM Microsystems, Inc.
Ladies and Gentlemen:
In order to induce Xxxxx & Company ("Cowen"), Xxxxxxxxx & Xxxxx LLC and Xxxxxxx,
Xxxxxx & Xxxxxxxxx (together, the "Representatives"), to enter into a certain
underwriting agreement with SCM Microsystems, Inc., a Delaware corporation (the
"Company"), with respect to the public offering of shares of the Company's
Common Stock, par value $ 0.001 per share ("Common Stock"), the undersigned
hereby agrees that for a period of 90 days following the date of the final
prospectus filed by the Company with the Securities and Exchange Commission in
connection with such public offering, the undersigned will not, without the
prior written consent of Cowen, directly or indirectly, (i) offer, sell, assign,
transfer, encumber, pledge, contract to sell, grant an option to purchase or
otherwise dispose of, other than by operation of law, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares, the "Beneficially Owned
Shares") or (ii) enter into any swap or similar agreement that transfers, in
whole or in part, the economic risk of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
Notwithstanding the foregoing, this Lock-Up Agreement (the "Agreement") shall
not apply to shares of the Company's Common Stock acquired on the open market
and that shares so acquired may be sold or otherwise disposed of without regard
to this Agreement.
Notwithstanding the foregoing, if the undersigned is an individual, he or she
may transfer any Shares either during his or her lifetime or on death by will or
intestacy to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member of his or her immediate
family or to a charitable organization; provided, however, that in any such case
it shall be a condition to the transfer
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that the transferee execute an agreement stating that the transferee is
receiving and holding the Shares transferred subject to the provisions of this
Agreement, and there shall be no further transfer of such Shares except in
accordance with this Agreement. For purposes of this Agreement, "immediate
family" shall mean spouse, lineal descendant, father, mother, brother or sister
of the transferor and "charitable organization" shall mean an organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
Notwithstanding the foregoing, if the undersigned is a partnership, the
partnership may transfer any Shares to a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner, and any partner who is an
individual may transfer such Shares by gift, will or intestate succession to his
or her spouse or lineal descendants or ancestors; and if the undersigned is a
corporation, the corporation may transfer such Shares to any stockholder or
subsidiary of such corporation and any stockholder who is an individual may
transfer Shares by gift, will or intestate succession to his or her immediate
family or to a charitable organization; provided, however, that in any such
case, it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding the Shares
subject to the provisions of this Agreement, and there shall be no further
transfer of such Shares except in accordance with this Agreement.
The undersigned agrees that the provisions of this Agreement shall be binding
also upon the successors, assigns, heirs and personal representatives of the
undersigned. The undersigned agrees and consents to the placing of legends
and/or the entry of stop transfer instructions with the Company's transfer agent
against the transfer of any shares of Common Stock or Beneficially Owned Shares
held by the undersigned except in compliance with this Agreement.
It is understood that, if the Underwriting Agreement does not become effective,
or if the Underwriting Agreement (other than the provisions thereof which
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares, you will release us from our obligations under this
Agreement.
This Agreement shall terminate and be of no further force or effect in the event
that the offering contemplated by the Underwriting Agreement is not completed on
or before August 31, 1998.
Very truly yours,
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(Signature)
------------------------------------
(Title)
------------------------------------
(Date)
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