Exhibit 1.1
LeapFrog Enterprises, Inc.
Shares a/
Class A Common Stock
($0.0001 par value)
Underwriting Agreement
New York, New York
________, 2002
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
LeapFrog Enterprises, Inc., a corporation organized under the laws of
Delaware (the "Company"), and the persons named in Schedule II hereto (the
"Selling Stockholders") propose to sell to the several underwriters named in
Schedule I hereto (the "Underwriters"), for whom you (the "Representatives") are
acting as representatives, ______ and _______________, shares, respectively, of
Class A Common Stock, $0.0001 par value ("Common Stock") of the Company (said
shares to be sold by the Company and the Selling Stockholders being hereinafter
called the "Underwritten Securities"). The Company also proposes to grant to the
Underwriters an option to purchase up to ____________ additional shares of
Common Stock to cover over-allotments (the "Option Securities"; the Option
Securities, together with the Underwritten Securities, being hereinafter called
the "Securities"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. In addition, to the
extent that there is not more than one Selling Stockholder named in Schedule II,
the term Selling Stockholder shall mean either the singular or plural. The use
of the neuter in this Agreement shall
--------
a/ Plus an option to purchase from the Company, up to additional
_________ Securities to cover over-allotments.
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include the feminine and masculine wherever appropriate. Certain terms used
herein are defined in Section 17 hereof.
As part of the offering contemplated by this Agreement, Xxxxxxx Xxxxx
Xxxxxx Inc. has agreed to reserve out of the Securities set forth opposite its
name on the Schedule I to this Agreement, up to _______ shares, for sale to the
Company's employees, officers, and directors and other parties associated with
the Company (collectively, "Participants"), as set forth in the Prospectus under
the heading "Underwriting" (the "Directed Share Program"). The Securities to be
sold by Xxxxxxx Xxxxx Barney Inc. pursuant to the Directed Share Program (the
"Directed Shares") will be sold by Xxxxxxx Xxxxx Xxxxxx Inc. pursuant to this
Agreement at the public offering price. Any Directed Shares not orally confirmed
for purchase by any Participants by the end of the business day immediately
following the date on which this Agreement is executed will be offered to the
public by Xxxxxxx Xxxxx Barney Inc. as set forth in the Prospectus.
1. Representations and Warranties.
(i) The Company and each of the Selling Stockholders jointly and
severally represent and warrant to, and agree with, each Underwriter as set
forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-86898) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus, each
of which has previously been furnished to you. The Company will next file
with the Commission either (1) prior to the Effective Date of such
registration statement, a further amendment to such registration statement
(including the form of final prospectus) or (2) after the Effective Date
of such registration statement, a final prospectus in accordance with
Rules 430A and 424(b). In the case of clause (2), the Company has included
in such registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and the
rules thereunder to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together with
all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised
you, prior to the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date on
which Option
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Securities are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date and at the Execution
Time, the Registration Statement did not or will 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
not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company and the Selling Stockholders make no
representations or warranties as to the information contained in or
omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification, except where a failure to be so
qualified would not reasonably be expected to result in a Material Adverse
Effect on the Company;
(d) All the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus and
except as prohibited in the Amended and Restated Loan and Security
Agreement by and among the Company, the lenders that are signatories
thereto and Foothill Capital Corporation, dated as of July 10, 2001, all
outstanding shares of capital stock of the subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest or any other security interests,
claims, liens or encumbrances;
(e) The Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
the outstanding shares of Common Stock (including the Securities being
sold hereunder by the Selling Stockholders) have been duly and validly
authorized and issued and are fully paid and nonassessable; the Securities
have been duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this
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Agreement, will be fully paid and nonassessable; the Securities are duly
listed, and admitted and authorized for trading, subject to official
notice of issuance and evidence of satisfactory distribution, on the New
York Stock Exchange; the certificates for the Securities are in valid and
sufficient form; the holders of outstanding shares of capital stock of the
Company are not entitled to preemptive or other rights to subscribe for
the Securities; and, except as set forth in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to
issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in the
Company are outstanding, and all outstanding options and warrants have
been duly and validly authorized and issued and have been issued in
compliance with all applicable federal and state securities laws.
(f) There is no franchise, contract or other document of a character
required to be described in the Registration STATEMENT or Prospectus, or
to be filed as an exhibit thereto, which is not described or filed as
required; and the statements in the Prospectus under the headings "Certain
United States Tax Considerations to Non-United States Holders," "Risk
Factors--Third parties have claimed, and may claim in the future, that we
are infringing their intellectual property rights, which may cause us to
incur significant litigation or licensing expenses or to stop selling some
or all of our products or using some of our trademarks," "Risk
Factors--Our intellectual property rights may not prevent our competitors
from using our technologies or similar technologies to develop competing
products, which could weaken our competitive position and harm our
operating results, "Business--Intellectual Property," and "Business--Legal
Proceedings" insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are accurate and
fair summaries of such legal matters, agreements, documents or
proceedings.
(g) This Agreement has been duly authorized, executed and delivered
by the Company.
(h) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in
the Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien,
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charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, (i) the charter or by-laws of the Company or
any of its subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its or
their property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or any of its subsidiaries or any of its or their properties.
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(l) The consolidated historical financial statements and schedules
of the Company and its consolidated subsidiaries included in the
Prospectus and the Registration Statement present fairly in all material
respects the financial condition, results of operations and cash flows of
the Company as of the dates and for the periods indicated, comply as to
form with the applicable accounting requirements of the Act and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under the
caption "Selected Consolidated Financial Data" in the Prospectus and
Registration Statement fairly present, on the basis stated in the
Prospectus and the Registration Statement, the information included
therein.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or,
to the best knowledge of the Company, threatened that (i) could reasonably
be expected to have a material adverse effect on the performance by the
Company of its obligations under this Agreement or the consummation by it
of any of the transactions contemplated hereby or (ii) could reasonably be
expected to have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(n) Each of the Company and each of its subsidiaries owns or leases
all such properties as are necessary to the conduct of its operations as
presently conducted.
(o) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
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Company or such subsidiary or any of its properties, as applicable except,
with respect to clause (ii), any such violations or defaults that would,
individually or in the aggregate, have a Material Adverse Effect.
(p) Ernst & Young LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included in the Prospectus, are independent public
accountants with respect to the Company within the meaning of the Act and
the applicable published rules and regulations thereunder.
(q) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery
of this Agreement or the issuance by the Company or sale by the Company of
the Securities.
(r) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto)) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(s) No labor dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of
any of its or its subsidiaries' principal suppliers, contractors or
customers, that could have a Material Adverse Effect, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(t) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; all policies of insurance held by the Company insuring
the Company or any of its subsidiaries or their respective businesses,
assets, employees, officers and directors are in full force and effect;
the Company and its subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and there are no claims
by the Company or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; neither the Company nor
any such subsidiary has been refused any insurance coverage sought or
applied for; and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and
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when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not have a Material Adverse Effect, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto).
(u) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock, from repaying to
the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as described in or
contemplated by the Prospectus.
(v) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, would have a Material Adverse
Effect, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(w) The Company and its subsidiaries, on a consolidated basis,
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) The Company has not taken, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(y) The Company and its subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the use, disposal or release of hazardous or toxic substances
relating to protection or restoration of the environment or relating to
human exposure to hazardous or toxic substances, wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability
for the investigation or remediation of any disposal or release of
hazardous or toxic
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substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive or comply with
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto). Except as set forth in the Prospectus, neither the
Company nor any of the subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
(z) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and such
regulations and published interpretations) in which employees of the
Company and its subsidiaries are eligible to participate and each such
plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. The Company and its subsidiaries have not incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other than
for the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA.
(aa) The subsidiaries listed on Annex A attached hereto are the only
subsidiaries of the Company, none of which are significant subsidiaries as
defined by Rule 1-02 of Regulation S-X and combined such subsidiaries do
not constitute a significant subsidiary as defined by Rule 1-02 of
Regulation S-X.
(bb) Except as described in the Prospectus, the Company and its
subsidiaries own, possess, license or have other rights to use, on
reasonable terms, all patents, patent applications, trade and service
marks, trade and service xxxx registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property")
necessary for the conduct of the Company's business as now conducted or as
proposed in the Prospectus to be conducted. Except as set forth in the
Prospectus under the captions "Risk Factors--Third parties have claimed,
and may claim in the future, that we are infringing their intellectual
property rights, which may cause us to incur significant litigation or
licensing expenses or to stop selling some or all of our products or using
some of our trademarks," "Risk Factors--Our intellectual property rights
may not prevent our competitors from using our technologies or similar
technologies to develop competing products, which could weaken our
competitive position and harm our operating results,"
"Business--Intellectual Property" or "Business--Legal Proceedings" (a)
there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's rights in or
to any such Intellectual Property owned by the Company, and the Company is
unaware of any facts which would form a reasonable basis for any such
claim, and, with respect to any Intellectual Property not owned by the
Company, the
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Company does not know of any such action, suit, proceeding or claim; (b)
there is no pending, or to the Company's knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other
facts which would form a reasonable basis for any such claim; (c) there is
no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
such Intellectual Property owned by the Company, and with respect to any
Intellectual Property not owned by the Company, the Company is unaware of
any such action, suit, proceeding or claim, and, in either case, the
Company is unaware of any facts which would form a reasonable basis for
any such claim; (d) the Company believes that each of its patents is valid
and enforceable; however, the Company does not represent that it has
performed any validity or enforceability analysis with respect to any of
its patents; and (f) the Company believes that it has complied with its
duty of candor and good faith in dealing with the U.S. Patent and
Trademark Office with respect to all of its pending patent applications.
(cc) The statements contained in the Prospectus under the captions
"Risk Factors--Third parties have claimed, and may claim in the future,
that we are infringing their intellectual property rights, which may cause
us to incur significant litigation or licensing expenses or to stop
selling some or all of our products or using some of our trademarks,"
"Risk Factors--Our intellectual property rights may not prevent our
competitors from using our technologies or similar technologies to develop
competing products, which could weaken our competitive position and harm
our operating results," "Business--Intellectual Property" and
"Business--Legal Proceedings," insofar as such statements summarize legal
matters, agreements, documents, or proceedings discussed therein, are
accurate and fair summaries of such legal matters, agreements, documents
or proceedings.
(dd) Except as disclosed in the Registration Statement and the
Prospectus, the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of Xxxxxxx Xxxxx Barney
Holdings Inc. and (ii) does not intend to use any of the proceeds from the
sale of the Securities hereunder to repay any outstanding debt owed to any
affiliate of Xxxxxxx Xxxxx Xxxxxx Holdings Inc.
(ee) The Company has not offered, or caused the Underwriters to
offer, Securities to any person pursuant to the Directed Share Program
with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or
type of business with the Company, or (ii) a trade journalist or
publication to write or publish favorable information about the Company or
its products.
(ff) Furthermore, the Company represents and warrants to Xxxxxxx
Xxxxx Barney Inc. that (i) the Registration Statement, the Prospectus and
any
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preliminary prospectus comply, and any further amendments or supplements
thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus or any preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with
the Directed Share Program, and that (ii) no authorization, approval,
consent, license, order, registration or qualification of or with any
government, governmental instrumentality or court, other than such as have
been obtained, is necessary under the securities laws and regulations of
foreign jurisdictions in which the Directed Shares are offered outside the
United States.
Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(ii) Each Selling Stockholder, on his own behalf and not jointly,
represents and warrants to, and agrees with, each Underwriter that:
(a) Such Selling Stockholder is the record and beneficial owner of
the Securities to be sold by such Selling Stockholder hereunder free and
clear of all liens, encumbrances, equities and claims and has duly
endorsed such Securities in blank; the Securities to be sold by such
Selling Stockholder pursuant to this Agreement are certificated securities
in registered form and are not held in any securities account or by or
through any securities intermediary within the meaning of the Uniform
Commercial Code as in effect in the State of New York ("UCC"). Such
Selling Stockholder has, and on the Closing Date will have, full right,
power and authority to hold, sell, transfer and deliver the Securities to
be sold by such Selling Stockholder pursuant to this Agreement; and upon
the Underwriters' acquiring possession of such Securities (or an agent's
acquiring possession of such Securities on the Underwriters' behalf) and
paying the purchase price therefore as herein contemplated, the
Underwriters will acquire their respective interests in such Securities
(including, without limitation, all rights that such Selling Stockholder
had or has the power to transfer in such Securities) free of any adverse
claim.
(b) Such Selling Stockholder has not taken, directly or indirectly,
any action designed to or that would constitute or that might reasonably
be expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(c) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except such
as may have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals as have been obtained.
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(d) Certificates in negotiable form for such Selling Stockholder's
Securities have been placed in custody, for delivery pursuant to the terms
of this Agreement, under a Custody Agreement and Power of Attorney duly
authorized (if applicable) executed and delivered by such Selling
Stockholder, in the form heretofore furnished to you (the "Custody
Agreement"), with , as Custodian (the "Custodian");
the Securities represented by the certificates so held in custody for each
Selling Stockholder are subject to the interests hereunder of the
Underwriters; the arrangements for custody and delivery of such
certificates, made by such Selling Stockholder hereunder and under the
Custody Agreement, are not subject to termination by any acts of such
Selling Stockholder, or by operation of law, whether by the death or
incapacity of such Selling Stockholder or the occurrence of any other
event; and if any such death, incapacity or any other such event shall
occur before the delivery of such Securities hereunder, certificates for
the Securities will be delivered by the Custodian in accordance with the
terms and conditions of this Agreement and the Custody Agreement as if
such death, incapacity or other event had not occurred, regardless of
whether or not the Custodian shall have received notice of such death,
incapacity or other event.
(e) Neither the sale of the Securities being sold by such Selling
Stockholder nor the consummation of any other of the transactions herein
contemplated by such Selling Stockholder or the fulfillment of the terms
hereof by such Selling Stockholder will conflict with, result in a breach
or violation of, or constitute a default under any law or the terms of any
indenture or other agreement or instrument to which such Selling
Stockholder is a party or bound, or any judgment, order or decree
applicable to such Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over such Selling Stockholder.
Any certificate signed by any Selling Stockholder and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by
such Selling Stockholder, as to matters covered thereby, to each Underwriter.
(iii) Knowledge Universe, L.L.C. ("KU") represents and warrants to,
and agrees with, each Underwriter as set forth below in this Section 1(iii):
(a) On the Effective Date and at the Execution Time, the portions of
the Registration Statement in (i) footnote 5 under the heading "The
Offering," (ii) the second and third sentences of the third paragraph and
the entire fourth paragraph under the heading "Risk Factors -- Knowledge
Universe, which is jointly controlled by Xxxxxxxx X. Xxxxxxx, Xxxxxxx X.
Milken and Xxxxxx X. Milken, will control all stockholder voting power as
well as our board of directors after this offering," (iii) the first and
second paragraphs under the heading "Risk Factors - Conflicts of interest
may arise between Knowledge Universe and its other affiliates and us,"
(iv) the second and third sentences of the first paragraph and the last
sentence of the third paragraph under the heading "Related Party
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Transactions" in the Management's Discussion and Analysis of Financial
Condition and Results of Operations section, (v) the sixth sentence of the
first paragraph under the heading "Compensation Committee Interlocks and
Insider Participation" in the Management section, (vi) the "$265,000" in
the column headed "Annual Compensation" in the table entitled "Summary
Compensation Table" in the Management section (subject to the explanation
provided in footnote 2 under such table) and the first and second
sentences of such footnote 2, (vii) the second and third sentences of the
fourth paragraph, the last sentence of the ninth paragraph, the fourth and
fifth sentences of the eleventh paragraph (including the occurrence of
such sentences under the heading "8. Related Party Transactions" in the
notes to the Financial Statements), the last two sentences of the twelfth
paragraph (including the occurrence of such sentences under the heading
"8. Related Party Transactions" in the notes to the Financial Statements),
the penultimate sentence of the thirteenth paragraph and the second
sentence of the fourteenth paragraph (including the occurrence of such
sentence under the heading "8. Related Party Transactions" in the notes to
the Financial Statements) under the heading "Related Party Transactions,"
(viii) the sixth and eighth sentences of the "Conversion Rights" paragraph
under the heading "Description of Capital Stock - Common Stock," and (ix)
the second paragraph, footnotes (4) and (5), the first and second
sentences of footnote (10) and the second bullet of each of footnotes (17)
and (20) under the heading "Principal and Selling Stockholders," (clauses
(i) through (ix) being collectively referred to herein as the "KU
Information") did not and will 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 not
misleading; and, on the Effective Date, the KU Information contained in
the Registration Statement, did not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date and any settlement date,
the KU Information contained in the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) KU has been duly organized and is validly existing under the
laws of the State of Delaware with full power and authority to enter into
this Agreement.
(c) This Agreement has been duly authorized, executed and
delivered by KU.
(d) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of (i) KU, (ii) any subsidiary of KU that directly or
indirectly owns any capital stock of the Company, or (iii) any direct or
indirect controlling owner of KU (collectively, the persons and entities
in clauses (i), (ii) and (iii) being referred to herein as, and each such
person or entity being a "Relevant KU Entity") pursuant to, (A) the
charter, limited liability company agreement or other organizational
document or by-laws
13
of any Relevant KU Entity, (B) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which any
Relevant KU Entity is a party or bound or to which its or their property
is subject, or (C) any statute, law, rule, regulation, judgment, order or
decree applicable to any Relevant KU Entity of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over any Relevant KU Entity or any of its or their
properties.
(e) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving any
Relevant KU Entity or its or their property is pending or, to the best
knowledge of KU, threatened that (i) could reasonably be expected to have
a material adverse effect on the performance of this Agreement by KU or
the consummation of any of the transactions contemplated hereby or (ii)
could reasonably be expected to have a Material Adverse Effect except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(f) No Relevant KU Entity has taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(g) KU has made available to Shearman & Sterling, counsel for the
Underwriters, complete and accurate copies of all agreements, instruments
and other documents that govern the management, voting and control of the
Relevant KU Entities (the "KU Governing Documents"), except for (i)
agreements, instruments or other documents that could not reasonably be
expected to materially alter the management, voting and control of the
Relevant KU Entities as such management, voting and control is described
in the KU Governing Documents, and (ii) redactions of provisions in the KU
Governing Documents, none of which are material to the management, voting
or control of the Relevant KU Entities.
(h) The ownership by the controlling owners of KU of, and the
activities of such owners in connection with their ownership of the
Company, and any activities undertaken by such persons or entities on
behalf of or in connection with or affecting the Company and its
subsidiaries since the organization of the Company (collectively, the
"Ownership Activities"), have not conflicted or violated, and do not
conflict with or violate, any court order or other legally binding
agreement or document binding upon or affecting such persons or entities,
including without limitation any of the foregoing imposed or applicable
pursuant to Securities and Exchange Commission v. Xxxxxx Xxxxxxx Xxxxxxx
Incorporated, et al. (S.D.N.Y. 1990) and Securities and Exchange
Commission v. Xxxxxxx X. Milken, et al. (S.D.N.Y. 1998), and to KU's
knowledge the Ownership Activities have not conflicted or violated, and do
not conflict with or violate, any
14
law, statute or regulation applicable to such persons or entities, except
for conflicts or violations that would not reasonably be expected to have
a Material Adverse Effect.
(i) None of KU or any of its majority-owned subsidiaries is an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
(j) Ridgeview Associates LLC is controlled only by Xxxxxxx X. Milken
and Xxxxxx X. Milken; Mollusk LLC is controlled only by Xxxxxxxx X.
Xxxxxxx.
Any certificate signed by KU and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the Securities
shall be deemed a representation and warranty by KU, as to matters covered
thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and each of the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Stockholders,
at a purchase price of $________ per share, the number of Underwritten
Securities (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number of Underwritten Securities to be
sold by the Company and each of the Selling Stockholders as set forth opposite
their respective names in Schedule II hereto by a fraction, the numerator of
which is the aggregate number of Underwritten Securities to be purchased by such
Underwriter as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the aggregate number of Underwritten
Securities to be purchased by all of the Underwriters from the Company and all
of the Selling Stockholders hereunder.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
Option Securities at the same purchase price per share as the Underwriters
shall pay for the Underwritten Securities. Said option may be exercised only to
cover over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at any time on or
before the 30th day after the date of the Prospectus upon written or telegraphic
notice by the Representatives to the Company setting forth the number of shares
of the Option Securities as to which the several Underwriters are exercising the
option and the settlement date. Such Option Securities shall be purchased for
the account of each Underwriter in the same proportion as the number of shares
of Underwritten Securities set forth opposite such Underwriter's name in
Schedule I bears to the total number of shares of Underwritten Securities,
subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
15
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
, 2002, or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement among the Representatives and the Company
or as provided in Section 9 hereof (such date and time of delivery and payment
for the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the respective aggregate purchase prices of the Securities
being sold by the Company and each of the Selling Stockholders, if applicable,
to or upon the order of the Company and each of the Selling Stockholders, if
applicable, by wire transfer payable in same-day funds to the accounts specified
by the Company and each of the Selling Stockholders, if applicable. Delivery of
the Underwritten Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.
Each Selling Stockholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the several Underwriters of the
Securities to be purchased by them from such Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved in
further transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to the accounts specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
(i) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
16
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed amendment
or supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required
under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives
of such timely filing. The Company will promptly advise the
Representatives (1) when the Registration Statement, if not effective at
the Execution Time, shall have become effective, (2) when the Prospectus,
and any supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (4) of
any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order
or the suspension of any such qualification and, if issued, to obtain as
soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules thereunder, the Company promptly will (1) notify the
Representatives of any such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (i)(a) of this
Section 5, an amendment or supplement which will correct such statement or
omission or effect such compliance and (3) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(c) As soon as reasonably practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
17
(d) The Company will furnish to the Representatives and counsel for
the Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Prospectus and the Prospectus and any
supplement thereto as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
Xxxxxxx Xxxxx Barney Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.
("Xxxxxxx Xxxxx"), offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any shares of Common Stock or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock other than the
Securities; or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of the Underwriting
Agreement, provided, however, that the Company may (i) file a registration
statement on Form S-8, (ii) issue and sell Common Stock pursuant to any
employee equity incentive plan, stock ownership plan, director equity
incentive plan, employee stock purchase plan or dividend reinvestment plan
of the Company in effect at the Execution Time or as described in the
Prospectus and (iii) issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement (including
financial statements and
18
exhibits thereto), each Preliminary Prospectus, the Prospectus, and each
amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and all amendments
or supplements to any of them, as may, in each case, be reasonably
requested for use in connection with the offering and sale of the
Securities; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the New York Stock Exchange; (vi)
any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii) any
filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD") (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such filings);
(viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; and (x) all other costs and expenses
incident to the performance by the Company of its obligations hereunder.
(i) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required
by the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. Xxxxxxx Xxxxx Barney Inc.
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the removal of such transfer
restrictions upon the expiration of such period of time.
(j) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program
(including the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies
of the Directed Share Program materials) and stamp duties, similar taxes
or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program.
Furthermore, the Company covenants with Xxxxxxx Xxxxx Xxxxxx Inc.
that the Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed
19
Shares are offered in connection with the Directed Share Program.
(ii) Each Selling Stockholder agrees with the several Underwriters
that:
(a) Such Selling Stockholder will not, without the prior written
consent of Xxxxxxx Xxxxx Barney Inc. and Xxxxxxx Xxxxx, offer, sell,
contract to sell, pledge or otherwise dispose of, (or enter into any
transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Selling
Stockholder or any affiliate of the Selling Stockholder or any person in
privity with the Selling Stockholder or any affiliate of the Selling
Stockholder) directly or indirectly, or file (or participate in the filing
of) a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a
call equivalent position within the meaning of Section 16 of the Exchange
Act with respect to, any shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for such
capital stock other than the Underwritten Securities to be sold by such
Selling Stockholder, or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of this Agreement,
other than shares of Common Stock disposed of as bona fide gifts approved
by Xxxxxxx Xxxxx Barney Inc. and Xxxxxxx Xxxxx.
(b) Such Selling Stockholder will not take, directly or indirectly,
any action designed to or that would constitute or that might reasonably
be expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(c) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as delivery
of a prospectus relating to the Securities by an underwriter or dealer may
be required under the Act, of (i) any material change in the Company's
condition (financial or otherwise), prospects, earnings, business or
properties, (ii) any change in information in the Registration Statement
or the Prospectus relating to such Selling Stockholder or (iii) any new
material information relating to the Company or relating to any matter
stated in the Prospectus which comes to the attention of such Selling
Stockholder.
(d) Such Selling Stockholder will pay all fees and expenses incident
to the performance of his obligations under this Agreement which are not
otherwise specifically provided for herein, including but not limited to
(i) fees and expenses of counsel and other advisors for such Selling
Stockholder[, (ii) fees and expenses of the Custodian,] and (iii) expenses
and taxes incident to the sale and delivery of the Underwritten Securities
to be sold by such Selling Stockholder to the Underwriters hereunder.
This section 5(ii) shall not affect or modify any separate, valid
agreement, if any,
20
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, on the other hand.
(iii) KU agrees with the several Underwriters that:
(a) KU will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the KU to facilitate the
sale or resale of the Securities.
(b) KU will not, without the prior written consent of Xxxxxxx
Xxxxx Barney Inc. and Xxxxxxx Xxxxx, offer, sell, contract to sell, pledge
or otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether
by actual disposition or effective economic disposition due to cash
settlement or otherwise) by KU or any affiliate of KU or any person in
privity with KU or any affiliate of KU) directly or indirectly, or file
(or participate in the filing of) a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act with respect to, any shares of
capital stock of the Company or any securities convertible into or
exercisable or exchangeable for such capital stock other than the
Securities, or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of this Agreement,
except for (i) the transfer of shares of capital stock of the Company
pursuant to the options described in the Registration Statement in
footnotes 4, 10 (formerly 9), 17 and 20 to the table under the heading
"Principal and Selling Stockholders," (ii) the transfer of shares of
capital stock of the Company to any affiliates and/or members of KU or to
any of their respective affiliates and/or members and (iii) the transfer
of shares of capital stock of the Company as bona fide gifts approved by
Xxxxxxx Xxxxx and Xxxxxxx Xxxxx Xxxxxx Inc., provided that any transferee
pursuant to the foregoing clauses (i) or (ii) agrees in writing to be
bound by the terms of this Section 5(iii)(c).
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public
offering price, if such
21
determination occurred at or prior to 3:00 PM New York City time on such
date or (ii) 9:30 AM on the Business Day following the day on which the
public offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Prospectus, or
any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(b) The Representatives shall have received from Xxxxxx Godward LLP,
counsel for the Company and the Selling Stockholders, such opinions, dated
the Closing Date and addressed to the Representatives, in the form and
substance satisfactory to the counsel for the Underwriters, to the effect
as set forth in Exhibit B hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(c) The Representatives shall have received from Shearman &
Sterling, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Company and
each Selling Stockholder shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(d) The Representatives shall have received from Xxxxxxxx and
Xxxxxxxx and Crew LLP, intellectual property counsel for the Company, such
opinion or opinions, dated the Closing Date and addressed to the
Representatives, in the form and substance satisfactory to counsel for the
Underwriters, to the effect as set forth in Exhibit C hereto and to such
further effect as counsel to the Underwriters may reasonably request.
(e) The Representatives shall have received from Xxxxxx & Xxxxxxx,
special counsel for the Company, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, in the form and
substance satisfactory to counsel for the Underwriters, to the effect as
set forth in Exhibit D hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(f) The Representatives shall have received from Maron & Sandler,
special counsel for the Company, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, in the form and
substance satisfactory to counsel for the Underwriters, to the effect as
set forth in Exhibit E hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(g) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the
22
principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus, any
supplements to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(h) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by such Selling Stockholder, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that the
representations and warranties of such Selling Stockholder in this
Agreement are true and correct on and as of the Closing Date to the same
effect as if made on the Closing Date.
(i) The Company shall have requested and caused Ernst & Young LLP to
have furnished to the Representatives letters, at the Execution Time and
at the Closing Date, dated respectively as of the Execution Time and as of
the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Act and the applicable rules and regulations adopted by
the Commission thereunder and that they have performed a review of the
unaudited interim financial information of the Company for the three-month
period ended March 31, 2002 and as at March 31, 2002, in accordance with
Statement on Auditing Standards No. 71, and stating in effect that:
(i) 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
Act and the related rules and regulations adopted by the Commission;
23
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review, in accordance with standards
established under Statement on Auditing Standards No. 71, of the
unaudited interim financial information for the three-month period
ended March 31, 2002, and as at March 31, 2002, carrying out certain
specified 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, directors and the compensation committee of the
Company and the Subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions and
events subsequent to December 31, 2001, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply as to
form in all material respects with applicable accounting
requirements of the Act and with the related rules and
regulations adopted by the Commission with respect to
registration statements on Form S-1; and said unaudited
financial statements 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 the
Prospectus;
(2) with respect to the period subsequent to March 31,
2002, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
long-term debt of the Company and its subsidiaries or capital
stock of the Company and its subsidiaries or decreases in
working capital or the stockholders' equity of the Company and
its subsidiaries as compared with the amounts shown on the
March 31, 2002 consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period
from April 1, 2002 to such specified date there were any
decreases, as compared with the correspondence period in the
preceding year in net sales, income (loss) from operations, or
income (loss) before provision for income taxes or in total or
per share amounts of net income (loss) of the Company and its
subsidiaries except in all instances for changes or decreases
set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives; and
(3) the information included in the Registration
Statement
24
and Prospectus in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary Financial
Information), Item 402 (Executive Compensation) and Item
503(d) (Ratio of Earnings to Fixed Charges) is not in
conformity with the applicable disclosure requirements of
Regulation S-K;
(iii) they have performed certain other specified procedures
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 and its subsidiaries) set
forth in the Registration Statement and the Prospectus, including
the information set forth under the captions "Summary," "Risk
Factors," "Use of Proceeds," "Dividend Policy," "Capitalization,"
"Dilution," "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operation,"
"Business," "Management," "Related Party Transactions" and
"Principal and Selling Stockholders" in the Prospectus, agrees with
the accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (i) include any supplement
thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (1) any change or decrease specified
in the letter or letters referred to in paragraph (i) of this Section 6 or
(2) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries taken as a whole, whether
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto) the effect of which, in any case referred to in clause
(1) or (2) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(k) Prior to the Closing Date, the Company and the Selling
Stockholders shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may
reasonably request.
(l) The Securities shall have been listed and admitted and
authorized for trading on the New York Stock Exchange and satisfactory
evidence of such actions shall have been provided to the Representatives.
25
(m) At the Execution Time, the Company shall have furnished to the
Representatives a letter addressed to the Representatives substantially in
the form of Exhibit A-1 hereto from each officer and director of the
Company, FrogPond, LLC, each option holder of the Company, and
substantially all of the other stockholders of the Company (except with
respect to (i) the Underwritten Securities to be sold by the Selling
Stockholders, (ii) any of the Securities purchased by the signatory (other
than the Company's directors and officers as defined under Rule 16(a)-1(f)
of the Exchange Act) to such letter in the offering contemplated by this
Agreement and (iii) any affiliate, subsidiary or employee of KU that is a
stockholder of the Company, in which case subsection (n) below shall
apply).
(n) At the Execution Time, the Company shall have furnished to the
Representatives a letter addressed to the Representatives substantially in
the form of Exhibit A-2 hereto from each affiliate, subsidiary or employee
of KU that is a stockholder of the Company.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company and each Selling Stockholder in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Shearman & Sterling, counsel for the Underwriters, at
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000-0000, on the
Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Selling
Stockholders to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Xxxxxxx Xxxxx Xxxxxx Inc. on demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company and
each of Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxx, Xxxxxx X. Xxxxx and Xxxxx X.
Xxxxxxxxx (the "Primary Selling Stockholders"), jointly and severally, agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities,
26
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Securities as originally
filed or in any amendment thereof, or in any Preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Primary Selling
Stockholders will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein; provided further, that with respect to any
untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any Underwriter from whom the person asserting any such
loss, claim, damage or liability purchased the securities concerned, to the
extent that any such loss, claim, damage or liability of such Underwriter occurs
under the circumstance where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (w) the Company
had previously furnished copies of the Prospectus to the Representatives, (x)
delivery of the Prospectus was required by the Act to be made to such person,
(y) the untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus, and (z) there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such securities to such person, a copy of the Prospectus. This indemnity
agreement will be in addition to any liability which the Company or the Primary
Selling Stockholders may otherwise have.
(b) The Company agrees to indemnify and hold harmless Xxxxxxx Xxxxx
Barney Inc., the directors, officers, employees and agents of Xxxxxxx Xxxxx
Xxxxxx Inc. and each person, who controls Xxxxxxx Xxxxx Barney Inc. within the
meaning of either the Act or the Exchange Act ("Xxxxxxx Xxxxx Xxxxxx Inc.
Entities"), from and against any and all losses, claims, damages and liabilities
to which they may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim), insofar
as such losses, claims damages or liabilities (or actions in respect thereof)
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the prospectus wrapper material
prepared by or with the consent of the Company for distribution in foreign
jurisdictions in connection with the Directed Share Program attached to the
Prospectus or any preliminary prospectus, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein, when
27
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading; (ii) are caused by the failure of any Participant to
pay for and accept delivery of the Directed Shares allocated by the Company to
such Participant; or (iii) relate to, arise out of, or occur in connection with
the Directed Share Program, provided that, in the case of clause (i) the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of Xxxxxxx Xxxxx Barney Inc. specifically for inclusion
therein and that in the case of clause (iii) the Company will not be liable to
the extent that such loss, claim, damage or liability results from the gross
negligence or willful misconduct of Xxxxxxx Xxxxx Xxxxxx Inc.
(c) Each Selling Stockholder severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls any Underwriter within
the meaning of either the Act or the Exchange Act, and each other Selling
Stockholder against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, but only with
reference to information furnished to the Company by or on behalf of such
Selling Stockholder specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability that any Selling Stockholder may otherwise have.
(d) KU agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers who signs the Registration Statement, each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Act or the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the KU Information set forth in the registration statement for the registration
of the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are
28
based upon the omission or alleged omission to state in the KU Information a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that with respect to any untrue
statement or omission of material fact made in any Preliminary Prospectus with
respect to KU Information, the indemnity agreement contained in this Section
8(d) shall not inure to the benefit of any Underwriter from whom the person
asserting any such loss, claim, damage or liability purchased the securities
concerned, to the extent that any such loss, claim, damage or liability of such
Underwriter occurs under the circumstance where it shall have been determined by
a court of competent jurisdiction by final and nonappealable judgment that (w)
the Company had previously furnished copies of the Prospectus to the
Representatives, (x) delivery of the Prospectus was required by the Act to be
made to such person, (y) the untrue statement or omission of a material fact
contained in the Preliminary Prospectus with respect to KU information was
corrected in the Prospectus, and (z) there was not sent or given to such person,
at or prior to the written confirmation of the sale of such securities to such
person, a copy of the Prospectus.
(e) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, KU, each of its
directors and officers and each person who controls KU within the meaning of
either the Act or the Exchange Act, and each Selling Stockholder against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, but only with reference to
written information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Company, KU and each Selling Stockholder acknowledge
that the statements set forth in the last paragraph of the cover page regarding
delivery of the Securities and, under the heading "Underwriting", (i) the list
of underwriters and their respective participation in the sale of the
Securities, (ii) the sentences related to concessions and reallowances and (iii)
the paragraph related to stabilization, syndicate covering transactions and
penalty bids in any Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the
29
Prospectus.
(f) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a), (b), (c), (d) or (e)
above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b), (c), (d) or (e)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding. Notwithstanding anything contained herein to the contrary,
if indemnity may be sought pursuant to paragraph (b) of this Section 8 hereof in
respect of such action or proceeding, then in addition to such separate firm for
the indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in addition to
any local counsel) for Xxxxxxx Xxxxx Xxxxxx Entities for the defense of any
losses, claims, damages and liabilities arising out of the Directed Share
Program.
(g) In the event that the indemnity provided in paragraph (a), (b),
(c), (d) or (e) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified
30
party for any reason, the Company and the Primary Selling Stockholders, jointly
and severally, and each of the other Selling Stockholders, KU and the
Underwriters, severally, agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Company, KU, the Selling Stockholders and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and by the Underwriters on the other from the offering of the
Securities; provided, however, that in no case shall any Underwriter (except as
may be provided in any agreement among underwriters relating to the offering of
the Securities) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by such
Underwriter hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Primary Selling
Stockholders, jointly and severally, and each of the other Selling Stockholders,
KU and the Underwriters, severally, shall contribute 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 hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company and each Selling Stockholder shall be deemed to
be equal to the total net proceeds from the offering (before deducting expenses)
received by it, and benefits received by the Underwriters shall be deemed to be
equal to the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company, KU or each Selling
Stockholder on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company, KU, the
Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (g), (i) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation and (ii) the provisions of this
paragraph (g) shall only apply to KU to the extent that the statements or
omissions which resulted in such Losses relate to the KU Information. For
purposes of this Section 8, each person who controls KU or an Underwriter within
the meaning of either the Act or the Exchange Act and each director, officer,
employee and agent of KU or an Underwriter shall have the same rights to
contribution as KU or such Underwriter, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (g).
(h) The liability of each Selling Stockholder under such Selling
31
Stockholder's representations and warranties contained in Section 1 hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the initial public offering price of the
Securities sold by such Selling Stockholder to the Underwriters. The Company and
the Selling Stockholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Stockholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange or trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
32
Company or its officers, of each Selling Stockholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Stockholder or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Xxxxxxx Xxxxx Barney Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx Xxxxxx
Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
LeapFrog Enterprises, Inc. (fax no.: (000) 000-0000) 0000 Xxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxxxx, 00000, attention of the Legal Department; and
confirmed to it at Xxxxxx Godward LLP at Xxx Xxxxxxxx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq., (fax no.: (415)
000-0000) or if sent to KU, will be mailed, delivered or telefaxed to 000 Xxxxxx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (fax no.: (000) 000-0000 ), Attention:
Xxxxxxx X. Xxxxx, Esq., or if sent to any Selling Stockholder, will be mailed,
delivered or telefaxed and confirmed to it at the address set forth in Schedule
II hereto.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City.
33
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Material Adverse Effect" shall mean a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(i)(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or,
if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date, shall
also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date
as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred to
in Section 1(a) hereof.
34
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholder(s) and the several Underwriters.
Very truly yours,
LEAPFROG ENTERPRISES, INC.
By: _____________________
Name:
Title:
SELLING STOCKHOLDERS
By: ______________________
Xxxxxxx X. Xxxx
As Attorney-in-Fact acting on behalf of each
of the Selling Stockholders named in
Schedule II to this Agreement.
KNOWLEDGE UNIVERSE, L.L.C.
By: ______________________
Name:
Title:
35
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
By: Xxxxxxx Xxxxx Barney Inc.
By: _______________________
Name:
Title:
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By: _______________________
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
SCHEDULE I
NUMBER OF UNDERWRITTEN SECURITIES TO
UNDERWRITERS BE PURCHASED
------------ ------------
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
-----------------
Total
=================
SCHEDULE II
NUMBER OF UNDERWRITTEN MAXIMUM NUMBER OF OPTION
SECURITIES TO BE SOLD SECURITIES TO BE SOLD
--------------------- ---------------------
COMPANY:
SELLING STOCKHOLDERS:
Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax : (000) 000-0000
Xxxxx X. Xxxxxx
000-X Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax:
Xxxx X. Xxxxxxx
000-X Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax:
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax : (000) 000-0000
Xxxxxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax : (000) 000-0000
X. Xxxxx. Marggraff
000-X Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax:
-------------
Total
=============
ANNEX A
List of subsidiaries:
Leap Frog Toys (UK) Limited
LeapFrog (HK) Limited
Leap Frog Japan, Inc.
NT2 LLC
Ubiquity LLC
EXHIBIT A-1
[FORM OF LOCK-UP AGREEMENT]
[LETTERHEAD OF OFFICER, DIRECTOR OR MAJOR STOCKHOLDER OF
LEAPFROG ENTERPRISES, INC.]
LeapFrog Enterprises, Inc.
Public Offering of Common Stock
, 2002
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between LeapFrog
Enterprises, Inc., a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Class A Common Stock, $0.0001 par value (the
"Class A Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Xxxxxxx Xxxxx Xxxxxx Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx"), offer, sell, contract to sell, pledge or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into,
2
or exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of the Underwriting Agreement, other than shares of Class A Common Stock
disposed of as bona fide gifts approved by Xxxxxxx Xxxxx and Xxxxxxx Xxxxx
Xxxxxx Inc.
If for any reason the Underwriting Agreement shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreement), the
agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR
MAJOR STOCKHOLDER]
[NAME AND ADDRESS OF OFFICER, DIRECTOR OR MAJOR STOCKHOLDER]
EXHIBIT A-2
[FORM OF LOCK-UP AGREEMENT]
[LETTERHEAD OF KU-RELATED PARTY]
LeapFrog Enterprises, Inc.
Public Offering of Common Stock
, 2002
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between LeapFrog
Enterprises, Inc., a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Class A Common Stock, $0.0001 par value (the
"Class A Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Xxxxxxx Xxxxx Xxxxxx Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx"), offer, sell, contract to sell, pledge or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of the Underwriting Agreement, except for (i) the issuance of the
Securities pursuant to the Underwriting Agreement, (ii) the transfer of shares
of capital stock of the Company pursuant to the
2
options described in the Registration Statement in footnotes 4, 9, 17 and 20 to
the table under the heading "Principal and Selling Stockholders," (iii) the
transfer of shares of capital stock of the Company to any affiliates and/or
members of Knowledge Universe, L.L.C. or to any of their respective affiliates
and/or members and (iv) the transfer of shares of capital stock of the Company
as bona fide gifts approved by Xxxxxxx Xxxxx and Xxxxxxx Xxxxx Xxxxxx Inc.,
provided that any transferee pursuant to the foregoing clauses (ii) and (iii)
agrees to be bound by the terms of this letter.
If for any reason the Underwriting Agreement shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreement), the
agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE KU-RELATED PARTY]
[NAME AND ADDRESS OF KU RELATED PARTY]
EXHIBIT B
[Letterhead of Cooley Godward LLP]
July ___, 2002
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: PUBLIC OFFERING OF ____________ SHARES OF CLASS A
COMMON STOCK OF LEAPFROG ENTERPRISES, INC.
Ladies and Gentlemen:
We have acted as counsel for LeapFrog Enterprises, Inc., a Delaware corporation
(the "Company") and special counsel for those selling stockholders of the
Company listed on Exhibit A hereto (the "Selling Stockholders"), in connection
with the sale by the Company of ___________ shares of Class A Common Stock of
the Company (the "Company Securities") and the sale by the Selling Stockholders
of ___________ shares of Class A Common Stock of the Company (the "Selling
Stockholder Securities"), all pursuant to that certain Underwriting Agreement
dated June ___, 2002, by and among the underwriters listed on Schedule I thereto
(the "Underwriters"), the Selling Stockholders and the Company (the
"Agreement"). We are rendering this opinion pursuant to Sections 6(b) and 6(c)
of the Agreement. The Company Securities and the Selling Stockholder Securities
are referred to collectively herein as the "Securities." Except as otherwise
defined herein, capitalized terms used herein have the respective meanings given
to them in the Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below.
As to certain factual matters, we have relied upon certificates of officers of
the Company and have not sought to independently verify such matters. Where we
render an opinion "to our knowledge" or concerning an item "known to us" or our
opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer
of the Company or by the Selling Stockholders covering such matters and (iii)
such other investigation, if any, that we specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by (i) the Company of the Agreement, (ii) the Attorney-in-Fact on behalf of the
Selling Stockholders of the Agreement and the Custody Agreement, and (iii) the
Selling Stockholders of their respective Powers of Attorney) where
authorization, execution and delivery are prerequisites to the effectiveness of
such documents. We have also assumed: that all individuals executing and
delivering documents in their individual capacities had the legal capacity to so
execute and deliver; that you have received all documents you were to receive
under the Agreement; that the Agreement is an obligation binding upon you and
the several Underwriters; that each of the Underwriters has filed any required
California franchise or income tax returns and paid any required California
franchise income taxes; and that there are no extrinsic agreements or
understandings among the parties to the Agreement, the Custody Agreement or any
Power of Attorney that would modify or interpret the terms thereof or the
respective rights or obligations of the parties thereunder.
Our opinion is expressed only with respect to the federal laws of the United
States of America, the laws of the State of California and the General
Corporation Law of the State of Delaware. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable to
the subject matter hereof. With regard to our opinions in paragraphs 8 and 15
with respect to compliance with any statute, law, rule, or regulation applicable
to the Company or the Selling Stockholders, we are not rendering any opinion as
to compliance with any antifraud law, rule or regulation relating to securities,
or to the sale or issuance thereof. Furthermore, we express no opinion with
respect to compliance with state securities or blue sky laws in connection with
the purchase and distribution of the Securities by the Underwriters or clearance
with the National Association of Securities Dealers, Inc. ("NASD").
With regard to our opinion in paragraph 2 below with respect to full payment of
the outstanding capital stock of the Company, we have examined and relied upon a
certificate executed by an officer of the Company to the effect that the
consideration for all outstanding shares of capital stock of the Company was
received by the Company in accordance with the provisions of the applicable
resolutions of the Board of Directors and any plan or agreement relating to the
issuance of such shares, and we have undertaken no independent verification with
respect thereto. We have assumed that the Underwriters have paid for the
Securities in accordance with the terms of the Underwriting Agreement.
With regard to our opinion in paragraph 3 below with respect to legal or
governmental proceedings and contracts and other documents required to be
described in the Registration Statement or the Prospectus, we have relied solely
upon (i) inquiries of officers of the Company, (ii) the list of agreements or
other instruments filed by the Company as exhibits to the Registration
Statement, (iii) an examination of the items on
the aforementioned list, and (iv) an inquiry of attorneys within this firm who
perform legal services for the Company. We have made no further investigation in
connection therewith.
With respect to our opinion in paragraph 12 as to due execution of the Power of
Attorney by each Selling Stockholder, we have relied on medallion guarantees of
the execution of such documents and have not sought to independently verify such
matters.
With respect to our opinion in paragraph 15 as to the effect of compliance by
each Selling Stockholder with such Selling Stockholder's Power of Attorney, the
Custody Agreement and the Agreement, we have relied upon certificates of the
Selling Stockholders and have not sought to independently verify such matters.
With regard to our opinions in paragraphs 8, 12 and 15, we express no opinion as
to enforceability of any rights to indemnity to the extent such rights may be
limited by applicable laws.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own or lease, as the case may be,
and to operate its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business.
2. The Company's authorized equity capitalization is as set forth in the
Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock (including the Selling Stockholder
Securities) have been duly and validly authorized and issued and are fully
paid and nonassessable; the Company Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to the Agreement, will be fully paid and
nonassessable; the Selling Stockholder Securities are duly listed, and
admitted and authorized for trading, on the New York Stock Exchange and
the Company Securities are duly listed, and admitted and authorized for
trading on the New York Stock Exchange, in each case subject to official
notice of issuance and evidence of satisfactory distribution; the
certificates for the Securities are in valid and sufficient form; the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or, to our knowledge, other rights to subscribe for
the Securities; and, except as set forth in the Prospectus, to our
knowledge no options, warrants or other rights to purchase from the
Company, agreements or other obligations to issue, or rights binding upon
the Company to convert any obligations into or exchange any securities
for, shares of capital stock of or ownership interests in the Company are
outstanding.
3. To our knowledge, there is no pending or threatened action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its subsidiaries or
its or their property of a character required to be disclosed in the
Registration Statement which is not disclosed in the Prospectus as
required, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements in the Prospectus under the
headings "Description of Capital Stock," "Shares Eligible for Future Sale"
and "Tax Consequences to Non-United States Holders," insofar as such
statements purport to summarize legal matters, agreements, documents or
proceedings discussed therein, are accurate and provide fair summaries of
such legal matters, agreements, documents or proceedings.
4. The Registration Statement has become effective under the Act; any
required filing of the Prospectus, and any supplements thereto, pursuant
to Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than the financial
statements and notes thereto or other financial or statistical data
derived from the financial statements contained therein, as to which we
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules thereunder.
5. The Agreement has been duly authorized, executed and delivered by the
Company.
6. The Company is not and, after giving effect to the offering and sale of
the Company Securities and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as
defined in the Investment Company Act of 1940, as amended.
7. No consent, approval, authorization, filing with or order of any court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated by the Agreement, except such as
have been obtained under the Act and except such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in the Agreement and in the Prospectus, or under the bylaws,
rules and regulations of the NASD, as to which we express no opinion.
8. Neither the issue and sale of the Securities pursuant to the Agreement,
nor the performance by the Company of its obligations set forth in the
Agreement, will conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to, (i) the charter or by-laws of the Company,
(ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument filed as an exhibit to the Registration Statement;
(iii) any statute, law, rule, or regulation applicable to the
Company or (iv) to such counsel's knowledge, any judgment, order or decree
applicable to the Company or its subsidiaries of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its properties,
except for the bylaws, rules and regulations of the NASD and state
securities or blue sky laws, as to which we express no opinion.
9. To such counsel's knowledge, no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement.
10. According to the records of the United States Patent and Trademark Office,
the Company is the sole owner of record (under its current or former
corporate name) of the United States trademark registrations listed on
Exhibit B hereto (the "U.S. Trademark Registrations").
11. To such counsel's knowledge, each of the U.S. Trademark Registrations is
in full force and effect and none of the U.S. Trademark Registrations is
subject to any outstanding decree, order, injunction, judgment or ruling
restricting the use of such trademark registration or that would impair
the validity of such trademark registration.
12. The Agreement and the Custody Agreement and Power of Attorney have been
duly executed and delivered by the Selling Stockholders and the Custody
Agreement and Power of Attorney are valid and binding on the Selling
Stockholders, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief,
including specific performance.
13. Assuming that (i) the certificate or certificates representing the Selling
Stockholder Securities pursuant to the Agreement have been effectively
endorsed in blank in accordance with Section 8304 of the California
Commercial Code and (ii) neither the Underwriters, nor the agents
acquiring possession of such Selling Stockholder Securities on their
behalf, have notice of any adverse claim to such Selling Stockholder
Securities, then, upon the Underwriters' acquiring possession of such
certificate or certificates for such Selling Stockholder Securities (or
the agent's acquiring possession of such certificate or certificates for
such Selling Stockholder Securities on the Underwriters' behalf) and
paying the purchase price therefor pursuant to the Agreement, each
Underwriter will be a "protected purchaser" of such Selling Stockholder
Securities to be purchased by it (within the meaning of Section 8303 of
the California Commercial Code) and will acquire its interest in such
Selling Stockholder Securities (including, without limitation, all rights
that such Selling Stockholder had or has the power to transfer in such
Selling Stockholder Securities) free of any adverse claim.
14. To our knowledge, no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation by
any Selling Stockholder of the transactions contemplated herein, except
such as may have been obtained under the Act and such as may be required
under the blue sky laws
of any jurisdiction in connection with the purchase and distribution of
the Selling Stockholder Securities by the Underwriters (as to which we
express no opinion).
15. To our knowledge, neither the sale of the Selling Stockholder Securities
pursuant to the Agreement, nor the performance by the Selling Stockholders
of the obligations set forth in the Agreement will conflict with, result
in a breach or violation of, or constitute a default under any law,
statute or regulation or the terms of any indenture or other agreement or
instrument known to such counsel and to which any Selling Stockholder is a
party or bound, or any judgment, order or decree known to such counsel to
be applicable to any Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over any Selling Stockholder.
In connection with the preparation of the Registration Statement and the
Prospectus, we have participated in conferences with officers and other
representatives of the Company and with its certified public accountants, as
well as with representatives of the Underwriters and their counsel. At such
conferences, the contents of the Registration Statement and the Prospectus and
related matters were discussed. We have not independently verified and
accordingly are not confirming and assume no responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus. On the basis of the foregoing, no facts have come
to our attention that has caused us to believe (i) that the Registration
Statement (except as to the financial statements and schedules, related notes
and other financial data and statistical data derived therefrom, as to which we
express no belief) at the Effective Date contained any 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, in light of the circumstances under
which they were made, not misleading, or (ii) that the Prospectus (except as to
the financial statements and schedules, related notes and other financial data
and statistical data derived therefrom, as to which we express no belief) as of
its date or the date hereof contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary, in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
This opinion is intended for the sole benefit of the several Underwriters and
may not be made available to or relied upon by any other person, firm or entity
without our prior written consent.
Very truly yours,
Cooley Godward LLP
By: ____________________
Xxxxxxx X. Xxxxxxxx
EXHIBIT A
SELLING STOCKHOLDERS
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxx
L. Xxxxx Xxxxxxxxx
EXHIBIT B
U.S. TRADEMARK REGISTRATIONS
EXHIBIT C
[Letterhead of Xxxxxxxx and Xxxxxxxx and Crew LLP]
______________, 2002
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Banc Xxxx Xxxxx
U.S. Bancorp Xxxxx Xxxxxxx
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We have acted as special intellectual property counsel to LeapFrog
Enterprises, Inc. ("Company"), a Delaware corporation. Our representation of
LeapFrog Enterprises is currently limited to patent matters including patent
prosecution and patent litigation. This opinion is being rendered to you
pursuant to Section 6(e) of the Underwriting Agreement, dated [ ], 2002 (the
"Underwriting Agreement"), between the Company and Xxxxxxx Xxxxx Barney Inc.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Incorporated, Banc of America Securities
LLC, Bear, Xxxxxxx & Co. Inc., Deutsche Banc Xxxx Xxxxx, U.S. Bancorp Xxxxx
Xxxxxxx, as representatives of the several underwriters named on Schedule I
thereto (the "Underwriters"). Capitalized terms used herein without definition
shall have the respective meanings ascribed to them in the Underwriting
Agreement.
We are familiar with the efforts of the Company to obtain patents in the
United States and abroad. In connection with this opinion, we have reviewed the
following documents and performed the following actions (collectively, the
"Review"):
(i) We have reviewed the portions of the Company's Registration Statement
on Form S-1 (Registration No. 333-86898 (the "Registration Statement")),
entitled ["Risk Factors - Third parties have claimed and may claim in the future
that we are infringing their intellectual property, which may cause us to incur
significant litigation or licensing expenses or to stop selling some of our
products," "Risk Factors - Our intellectual property rights might not prevent
our competitors from using our technologies or similar technologies to develop
competing products, which could weaken our competitive position and reduce our
revenues," "Business - Intellectual Property" and "Business -- Legal
Proceedings"] (collectively, "the Intellectual Property Portion").
(ii) We have also reviewed all records, documents, instruments and
agreements in our possession or under our control relating to patent matters of
the
Company, including those relating to the Company's patents and patent
applications identified in Schedule A attached hereto. In performing our review
of such records, documents, instruments and agreements, we have assumed the
genuineness of all signatures on the copies of such records, documents,
instruments and agreements submitted to us as certified, conformed or
photographic copies.
(iii) We have had discussions with officers and representatives of the
Company responsible for the development, protection and/or enforcement of
patents for the Company in order to review the status of the Company's patents.
Based upon and subject to (i) our knowledge of the Company's patent
matters from our representation of the Company and (ii) the Review, we are of
the opinion that:
(1) To the best of our knowledge, actions undertaken in the
operation of the Company's business do not constitute infringement or
misappropriation of any U.S. or foreign patent, copyright, trademark,
trade secret or other proprietary right of any third party or otherwise
conflict with or violate the patent rights of any third party and except
as disclosed in the Registration Statement, no actions, claims or
proceedings have been asserted or are pending or threatened against the
Company alleging any of the foregoing.
(2) The Intellectual Property Portion of the Registration Statement
contains accurate and complete descriptions of the Company's patent
applications and issued patents and fairly summarizes the legal matters,
documents and proceedings relating thereto.
(3) To the best of our knowledge, at least 18 United States patents
have issued to the Company, wherein the Company is the sole assignee and
the assignments are of record with the U.S. Patent and Trademark Office or
have been submitted for recording with the U.S. Patent and Trademark
Office, and such patents are being duly maintained by the Company and are
in full force and effect. With respect to patents that have been assigned
to the Company, we have no reason to believe that such assignments are
invalid.
(4) To the best of our knowledge, at least 36 United States patent
applications have been filed on behalf of the Company in the U.S. Patent
and Trademark Office; such pending patent applications have been properly
prepared as to form and have been assigned solely to the Company, which
assignments are either recorded in the U.S. Patent and Trademark Office or
have been submitted for recording in the U.S. Patent and Trademark Office;
and each of such patent applications is being diligently prosecuted by the
Company. With respect to patent applications that have been assigned to
the Company, we have no reason to believe that such assignments are
invalid.
(5) To the best of our knowledge, at least 14 foreign patents are
assigned solely to the Company and at least 26 foreign patent applications
assigned to the Company have been filed.
(6) To the best of our knowledge, there are no legal or government
proceedings relating to the patent rights of the Company, other than
patents
pending, to which the Company is a party and no such proceedings are
threatened or contemplated by government authorities or others.
(7) To the best of our knowledge, no patents owned by the Company
are subject to any outstanding decree, order, injunction, judgment or
ruling restricting the use of such patents or that would impair the
validity or enforceability of such patents.
(8) We have no reason to believe that on the Effective Date or the
date the Registration Statement was last deemed amended the Intellectual
Property Portion in the Registration Statement 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
not misleading, or that the Intellectual Property Portion in the
Prospectus as of its date and on the Closing Date included or includes any
untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
This opinion letter is furnished to you as the underwriter and
solely for your benefit and may not be made available to or relied upon by
any other person, firm or entity without our prior written consent. The
foregoing information is being furnished as of the date of this letter,
and we do not undertake any advisory obligations after this date if
knowledge hereafter would result in a change herein.
Very truly yours,
Schedule A (Patents and Patent Applications)
EXHIBIT D
[Letterhead of Xxxxxx & Xxxxxxx]
[__________], 2002
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: LeapFrog Enterprises, Inc.; Knowledge Universe, L.L.C.
Ladies and Gentlemen:
We have acted as special counsel to LeapFrog Enterprises, Inc., a Delaware
corporation ("LEAPFROG"), in connection with the sale to you and the other
Underwriters on the date hereof by LeapFrog and the Selling Stockholders (as
defined below) of 9,000,000 shares of Class A common stock of LeapFrog, par
value $.0001 per share (the "Securities"), pursuant to a registration statement
on Form S-1 under the Securities Act of 1933, as amended, filed with the
Securities and Exchange Commission on April 24, 2002 (File No. 333-86898), as
amended to date, and an underwriting agreement dated [__________], 2002 among
you, the selling stockholders named in the underwriting agreement (the "SELLING
STOCKHOLDERS"), Knowledge Universe, L.L.C., a Delaware limited liability company
("KU"), and LeapFrog (the "UNDERWRITING AGREEMENT").
This opinion is being rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms defined in the Underwriting Agreement
used herein without definition have the meanings assigned to them in the
Underwriting Agreement.
As such counsel, we have examined such matters of fact and questions of
law as we have considered appropriate for purposes of this letter, except where
a statement is qualified as to knowledge (in which case we have with your
consent made no or limited inquiry as specified below). We have examined, among
other things, the following:
(a) The Underwriting Agreement;
(b) The [relevant charter, limited liability company agreement or
other organizational documents or by-laws to be listed] of KU;
(c) The [relevant charter, limited liability company agreement or
other organizational documents or by-laws to be listed] of Knowledge
Universe II LLC ("KU II");
(d) The [relevant charter, limited liability company agreement or
other organizational documents or by-laws to be listed] of Knowledge
Kids, L.L.C. ("KKIDS");
(e) The [relevant charter, limited liability company agreement or
other organizational documents or by-laws to be listed] of Knowledge
Universe Learning Group, LLC ("KU LEARNING" and, together with KU,
KU II and KKids, the "KU ENTITIES");
(f) Information available by docket searches under KU's name made on
[__________], 2002 at the United States District Court for the
Central District of California, the United States Bankruptcy Court
for the Central District of California, the Los Angeles County
Superior Court, the New York County Supreme Court and the New Castle
County Court of Chancery (collectively, the "DOCKET SEARCHES"); and
(g) Such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
The documents described in subsections (b) - (e) above are referred to
herein collectively as the "GOVERNING DOCUMENTS."
As to facts material to the opinions, statements and assumptions expressed
herein, we have, with your consent, relied upon oral or written statements and
representations of officers and other representatives of the KU Entities,
LeapFrog and others, including the representations and warranties of KU in the
Underwriting Agreement. We have not independently verified such factual matters.
Whenever a statement herein is qualified as to knowledge or a similar
phrase, it is intended to indicate that those attorneys in the firm responsible
for preparing this opinion, after consultation with such other attorneys in the
firm and review of such documents in our possession as they consider
appropriate, do not have current actual knowledge of the inaccuracy of such
statement. However, except as otherwise expressly indicated, we have not
undertaken any independent investigation to determine the accuracy of any such
statement.
We are opining herein as to the effect on the subject transaction only of
the federal laws of the United States, the internal laws of the State of
California and the Delaware General Corporation Law, and we express no opinion
with respect to the applicability thereto, or the effect thereon, of the laws of
any other jurisdiction or, in the case of Delaware, any other laws, or as to any
matters of municipal law or the laws of any local agencies within any state. Our
opinions set forth in paragraph 4 below are based upon our consideration of only
those statutes, rules and regulations which, in our experience, are normally
applicable to underwritten public offerings of common equity securities.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that, as of the date hereof:
1. KU is validly existing and in good standing under the laws of the
State of Delaware, with limited liability company power and
authority to enter into the Underwriting Agreement and perform its
obligations thereunder.
2. To our knowledge, there is no action, suit, proceeding or
investigation currently pending against KU before any court,
governmental authority or arbitrator that questions the validity of
the Underwriting Agreement or the ability of KU to enter into, and
perform its obligations under, the Underwriting Agreement. With
respect to the foregoing opinion, with your permission, we are
relying solely upon our knowledge, certificate(s) of officers of KU
and the Docket Searches. We call to your attention the fact that
docket searches may be unreliable and may not accurately reflect
proceedings before the respective courts. We have not undertaken any
independent investigation to determine the accuracy of the Docket
Searches.
3. The execution, delivery and performance of the Underwriting
Agreement have been duly authorized by all necessary limited
liability company action on the part of KU, and the Underwriting
Agreement has been duly executed and delivered by KU.
4. To our knowledge, the issue and sale of the Securities by
LeapFrog pursuant to the Underwriting Agreement will not:
(i) violate the Governing Documents; or
(ii) violate any federal or State of California statute, rule
or regulation applicable to any of the KU Entities.
5. To our knowledge, none of KU or its consolidated subsidiaries is
an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
This opinion is rendered only to you as Representatives of the several
Underwriters under the Underwriting Agreement and is solely for the benefit of
the Underwriters in connection with the transactions covered hereby. This
opinion may not be relied upon by you for any other purpose, or furnished to,
quoted to, or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
Very truly yours
[DRAFT]
EXHIBIT E
[Maron & Sandler Letterhead]
DRAFT
______________, 2002
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: LeapFrog Enterprises, Inc.
Ladies and Gentlemen:
We have acted as special counsel to LeapFrog Enterprises, Inc., a Delaware
corporation (the "COMPANY"), in connection with the sale to you and the other
Underwriters on the date hereof by the Company of 9,000,000 (the "SHARES") of
Class A Common Stock of the Company, par value $0.0001 per share (the "CLASS A
COMMON STOCK"), pursuant to a registration statement on Form S-1 under the
Securities Act of 1933, as amended (the "ACT"), filed with the Securities and
Exchange Commission (the "COMMISSION") on April 24, 2002 (File No. 333-86898),
as amended by Amendment No. 1 filed with the Commission on May 30, 2002,
Amendment No. 2 filed with the Commission on June 24, 2002, and Amendment No. 3
filed with the Commission on ______________, 2002 (collectively, the
"REGISTRATION STATEMENT"), a Prospectus dated ______________, 2002 filed with
the Commission pursuant to Rule 424(b) under the Act (the "PROSPECTUS") and an
underwriting agreement dated ______________, 2002 between you, as
Representatives of the several Underwriters named in Schedule I to the
underwriting agreement, the Company, Knowledge Universe, L.L.C., a Delaware
limited liability company ("KU"), and the Selling Stockholders (the
"UNDERWRITING AGREEMENT"). This opinion is being rendered to you pursuant to
Section 6(f) of the Underwriting Agreement.
2
As used in this letter, the term "Relevant KU Entities" has the same
meaning given to that term in the Underwriting Agreement, except that for
purposes of this letter such term shall exclude Mollusk LLC and any direct or
indirect owner of Mollusk LLC so long as such direct or indirect owner is not
controlled directly or indirectly by Xxxxxxx X. Milken or Xxxxxx X. Milken.
As such counsel, we have examined such matters of fact and questions of
law as we have considered appropriate for purposes of this letter, except where
a statement is qualified as to knowledge (in which case we have with your
consent made no or limited inquiry as provided below). In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies.
As to facts material to the opinions, statements and assumptions expressed
herein, we have, with your consent, relied upon oral or written statements and
representations of officers and other representatives of the Company, the
Relevant KU Entities and others, including the representations and warranties of
the Company and KU in the Underwriting Agreement. We have not independently
verified such factual matters.
Whenever a statement herein is qualified as to knowledge or a similar
phrase, it is intended to indicate that those attorneys in this firm responsible
for preparing this opinion, after consultation with such other attorneys in this
firm and review of such documents in our possession as they consider
appropriate, do not have current actual knowledge of the inaccuracy of such
statement. However, except as otherwise expressly indicated, we have not
undertaken any independent investigation to determine the accuracy of any such
statement.
We are opining herein as to the effect on the subject transaction only of
the federal laws of the United States and the internal laws of the State of
California, and we express no opinion with respect to the applicability thereto,
or the effect thereon, of the laws of any other jurisdiction or as to any
matters of municipal law or the laws of any local agencies within any state.
Capitalized terms used herein without definition have the meanings
assigned to them in the Underwriting Agreement.
Subject to the foregoing and the other matters set forth
herein, it is our opinion that, as of the date hereof:
1. To our knowledge, there is no franchise, contract or other document to
which any Relevant KU Entity is a party that is required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit thereto,
which is not described or filed as required.
2. To our knowledge, neither the issue and sale of the Securities by the
Company pursuant to the Underwriting Agreement, nor the performance by KU of its
3
obligations set forth in the Underwriting Agreement, will conflict with, result
in a breach or violation of or imposition of any lien, charge or encumbrance
upon any property or assets of any Relevant KU Entity pursuant to:
a. the charter, limited liability company agreement, or
other organizational document of any Relevant KU Entity;
b. the terms of any material indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other material
agreement, obligation, condition, covenant or instrument to which
any Relevant KU Entity is a party or bound or to which its or
their property is subject; or
c. any statute, law, rule, regulation, judgment, order or decree
applicable to any Relevant KU Entity of any court, regulatory
body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over any Relevant KU Entity
or any of its or their properties.
3. To our knowledge, the ownership by the controlling owners of KU of, and
the activities of such owners in connection with their ownership of the Company,
and any activities undertaken by such persons or entities on behalf of or in
connection with or affecting the Company and its subsidiaries since the
organization of the Company, have not conflicted or violated, and do not
conflict with or violate, any law, statute, regulation, court order or other
legally binding agreement or document, in each case, binding upon or affecting
such persons or entities, including without limitation any of the foregoing
imposed or applicable pursuant to Securities and Exchange Commission v. Xxxxxx
Xxxxxxx Xxxxxxx Incorporated, et al. (S.D.N.Y. 1990) and Securities and Exchange
Commission v. Xxxxxxx X. Milken et al. (S.D.N.Y. 1998), except for conflicts or
violations that would not reasonably be expected to have a Material Adverse
Effect.
4. Ridgeview Associates LLC is controlled only by Xxxxxxx X. Milken and
Xxxxxx X. Milken.
In addition, although we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus and have not made any
independent check or verification thereof, no facts have come to our attention
that have caused us to believe that the KU Information in the Registration
Statement on the Effective Date 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 not misleading or that the KU
Information in the Prospectus as of its date and on the date hereof included or
includes any untrue statement of a material fact or omitted or omits to state a
material fact necessary 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, schedules
and other financial data or exhibits included in, or omitted from, the
Registration Statement or the Prospectus.
4
In rendering the opinions set forth above insofar as they require
interpretation of the agreements filed as exhibits to the Registration
Statement, (i) we have assumed with your permission that all courts of competent
jurisdiction would enforce such agreements as written but would apply the
internal laws of the State of California without giving effect to any choice of
law provisions contained therein or any choice of law principles that would
result in application of the internal laws of any other state, and (ii) to the
extent that any questions of legality or legal construction have arisen in
connection with our review, we have applied the laws of the State of California
in resolving such questions. We advise you that certain of the agreements filed
as a exhibits to the Registration Statement may be governed by other laws, that
such laws may vary substantially from the law assumed to govern for purposes of
this opinion, and that this opinion may not be relied upon as to whether or not
a breach or default would occur under the law actually governing such
agreements.
This opinion is rendered only to you as Representatives of the
several Underwriters under the Underwriting Agreement and is solely for the
benefit of the Underwriters in connection with the transactions covered hereby.
This opinion may not be relied upon by you for any other purpose, or furnished
to, quoted to, or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
Very truly yours,
