EXHIBIT 1.1
Draft Dated May 6, 1998
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6,250,000 Shares/1/
INTERPLAY ENTERTAINMENT CORP.
Common Stock
PURCHASE AGREEMENT
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___________________, 1998
XXXXX XXXXXXX INC.
BEAR, XXXXXXX & CO. INC.
UBS SECURITIES LLC
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Xxxxx Xxxxxxx Inc.
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Gentlemen:
Interplay Entertainment Corp., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") 6,250,000 shares (the "Firm Shares") of Common
Stock, $0.001 par value per share (the "Common Stock"), of the Company.
Universal Studios, Inc. (the "Selling Stockholder") has also granted to the
several Underwriters an option to purchase up to 937,500 additional shares of
Common Stock on the terms and for the purposes set forth in Section 3 hereof
(the "Option Shares"). The Firm Shares and any Option Shares purchased pursuant
to this Purchase Agreement are herein collectively called the "Securities."
The Company and the Selling Stockholder hereby confirm their respective
agreements with respect to the sale and issuance of the Securities to the
several Underwriters, for whom you are acting as Representatives (the
"Representatives").
1. Registration Statement. A registration statement on Form S-1 (File
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No. 333-48473) with respect to the Securities, including a preliminary form of
prospectus, has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission")
/1/ Plus an option to purchase up to 937,500 additional shares to cover over-
allotments.
thereunder and has been filed with the Commission; one or more amendments to
such registration statement have also been so prepared and have been, or will
be, so filed. Copies of such registration statement and amendments and each
related preliminary prospectus have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, it will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. Such registration
statement as amended at the time it is or was declared effective by the
Commission, and, in the event of any amendment thereto after the effective date
and prior to the First Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A, if applicable, and
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the Securities are hereinafter called the "Registration
Statement." The prospectus included in the Registration Statement at the time
it is or was declared effective by the Commission is hereinafter called the
"Prospectus," except that if any prospectus filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or any other
prospectus provided to the Underwriters by the Company for use in connection
with the offering of the Securities (whether or not required to be filed by the
Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations) differs from the prospectus on file at the time the Registration
Statement is or was declared effective by the Commission, the term "Prospectus"
shall refer to such differing prospectus from and after the time such prospectus
is filed with the Commission or transmitted to the Commission for filing
pursuant to such Rule 424(b) or from and after the time it is first provided to
the Underwriters by the Company for such use. The term "Preliminary Prospectus"
as used herein means any preliminary prospectus included in the Registration
Statement prior to the time it becomes or became effective under the Act and any
prospectus subject to completion as described in Rule 430A of the Rules and
Regulations.
2. Representations and Warranties of the Company and the Selling
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Stockholder.
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(a) The Company represents and warrants to, and agrees with, the
several Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each
Preliminary Prospectus, at the time of filing thereof, did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; except that the foregoing shall not apply to statements in or
omissions from any Preliminary Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by you, or by
any Underwriter through you, specifically for use in the preparation
thereof.
(ii) As of the time the Registration Statement (or any post-
effective amendment thereto) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus) and at the First Closing
Date and Second Closing Date (as hereinafter defined), (A) the Registration
Statement and the Prospectus (in each case, as so amended and/or
supplemented) will conform or conformed in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the Registration
Statement (as so amended) will not or did not include an untrue statement
of a material fact or omit to state a material
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fact required to be stated therein or necessary to make the statements
therein not misleading and (C) the Prospectus (as so supplemented) will not
or did not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they are or
were made, not misleading; except that the foregoing shall not apply to
statements in or omissions from any such document in reliance upon, and in
conformity with, written information furnished to the Company by you, or by
any Underwriter through you, specifically for use in the preparation
thereof. If the Registration Statement has been declared effective by the
Commission, no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceeding for that purpose has been
initiated or, to the Company's knowledge, threatened by the Commission.
(iii) The consolidated financial statements of the Company,
together with the notes thereto, set forth in the Registration Statement
and the Prospectus comply in all material respects with the requirements of
the Act and fairly present the financial condition of the Company and its
subsidiaries as of the dates indicated and the results of operations and
changes in cash flows for the periods therein specified in conformity with
generally accepted accounting principles consistently applied throughout
the periods involved; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be
included in the Registration Statement or the Prospectus. Xxxxxx Xxxxxxxx
LLP, who have expressed their opinion with respect to the consolidated
financial statements and schedules filed as a part of the Registration
Statement and included in the Registration Statement and the Prospectus,
are independent public accountants as required by the Act and the Rules and
Regulations.
(iv) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries has full corporate power and authority to own its properties
and conduct its business as currently being carried on and as described in
the Registration Statement and the Prospectus, and is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in
which it owns or leases real property or in which the conduct of its
business makes such qualification necessary and in which the failure to so
qualify would have a material adverse effect upon the business, condition
(financial or otherwise) or properties of the Company and its subsidiaries,
taken as a whole.
(v) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct
or contingent, or entered into any material transactions, or declared or
paid any dividends or made any distribution of any kind with respect to its
capital stock; and there has not been any change in the capital stock, or
any material change in the short-term or long-term debt, or any issuance of
options, warrants, convertible securities or other rights to purchase the
capital stock, of the Company or any of its subsidiaries, or any material
adverse change, or any development reasonably likely to involve a
prospective material adverse change, in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects, net
worth or results of operations of the Company and its subsidiaries, taken
as a whole.
(vi) Except as set forth in the Prospectus under the caption
"Business -- Legal Proceedings," there is not pending or threatened or, to
the knowledge of the Company, contemplated,
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any action, suit or proceeding to which the Company or any of its
subsidiaries is a party before or by any court or governmental agency,
authority or body, or any arbitrator, which is required to be disclosed
pursuant to Item 103 of Regulation S-K.
(vii) There are no contracts or documents of the Company or any
of its subsidiaries that are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that have
not been so filed.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms, except
as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights
of creditors generally and subject to general principles of equity. The
execution, delivery and performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of its or their property
is subject, the charter or by-laws of the Company or any of its
subsidiaries, or any order, rule, regulation or decree of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of its or their properties; no consent, approval,
authorization or order of, or filing with, any court or governmental agency
or body is required for the execution, delivery and performance of this
Agreement or for the consummation of the transactions contemplated hereby,
including the issuance or sale of the Securities by the Company, except
such as may be required under the Act or state securities or blue sky laws;
and the Company has full power and authority to enter into this Agreement
and to authorize, issue and sell the Securities as contemplated by this
Agreement.
(ix) All of the issued and outstanding shares of capital stock
of the Company, including the outstanding shares of Common Stock, are duly
authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all applicable federal and state securities laws
and were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and the holders
thereof are not subject to personal liability by reason of being such
holders; the Securities which may be sold hereunder by the Company have
been duly authorized and, when issued, delivered and paid for in accordance
with the terms hereof, will have been validly issued and will be fully paid
and nonassessable, and the holders thereof will not be subject to personal
liability by reason of being such holders; and the capital stock of the
Company, including the Common Stock, conforms to the description thereof in
the Registration Statement and the Prospectus. Except as otherwise stated
in the Registration Statement and the Prospectus, there are no preemptive
rights or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument to which
the Company is a party or by which the Company is bound, other than
agreements that will terminate effective upon the offering contemplated by
this Agreement. Except to the extent of the sale by the Selling Stockholder
contemplated by this Agreement, neither the filing of the Registration
Statement nor the offering or sale of the Securities as contemplated by
this Agreement gives rise to any rights for or relating to the registration
of any shares of Common Stock or other securities of the Company, except
such rights as have been duly and validly waived. All of the issued and
outstanding shares of capital stock of each of the Company's subsidiaries
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise described
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in the Registration Statement and the Prospectus and except for any
directors' qualifying shares, the Company owns of record and beneficially,
free and clear of any security interests, claims, liens, proxies, equities
or other encumbrances, all of the issued and outstanding shares of such
stock, except as otherwise described in the Registration Statement and the
Prospectus. Except as described in the Registration Statement and the
Prospectus, there are no options, warrants, agreements, contracts or other
rights in existence to purchase or acquire from the Company or any
subsidiary of the Company any shares of the capital stock of the Company or
any subsidiary of the Company. The Company has an authorized and
outstanding capitalization as set forth in the Registration Statement and
the Prospectus.
(x) The Company and each of its subsidiaries holds, and is
operating in compliance in all material respects with, all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or self-regulatory body
required for the conduct of its business, except where the failure to so
comply would not have a material adverse effect upon the business,
condition (financial or otherwise) or properties of the Company and its
subsidiaries, taken as a whole, and all such franchises, grants,
authorizations, licenses, permits, easements, consents, certifications and
orders are valid and in full force and effect; and the Company and each of
its subsidiaries is in compliance in all respects with all applicable
federal, state, local and foreign laws, regulations, orders and decrees
except where the failure to so comply would not have a material adverse
effect upon the business, condition (financial or otherwise) or properties
of the Company and its subsidiaries, taken as a whole.
(xi) The Company and its subsidiaries have good and marketable
title to all property described in the Registration Statement and the
Prospectus as being owned by them, in each case free and clear of all
liens, claims, security interests or other encumbrances except such as are
described in the Registration Statement and the Prospectus; the property
held under lease by the Company and its subsidiaries is held by them under
valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect
with the conduct of the business of the Company or its subsidiaries; the
Company and each of its subsidiaries owns or possesses all patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the
business of the Company and its subsidiaries as currently carried on and as
described in the Registration Statement and the Prospectus; except as
stated in the Registration Statement and the Prospectus, to the best of the
Company's knowledge, no name which the Company or any of its subsidiaries
uses and no other aspect of the business of the Company or any of its
subsidiaries will involve or give rise to any infringement of, or license
or similar fees for, any patents, patent applications, trademarks, service
marks, tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets or other similar rights of
others material to the business or prospects of the Company and its
subsidiaries, taken as a whole, and neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement or fee.
(xii) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in breach of or otherwise
in default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan agreement
or any other material contract, lease or other instrument to which it is
subject or by which any of them may be bound, or to which any of the
material property or assets of the Company or any of its subsidiaries is
subject.
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(xiii) The Company and its subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to be
filed and are not in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto, other
than any which the Company or any of its subsidiaries is contesting in good
faith.
(xiv) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering
and sale of the Securities other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Act to be distributed by the
Company.
(xv) The Securities have been approved for listing on the
Nasdaq National Market and, on the date the Registration Statement became
or becomes effective, the Company's Registration Statement on Form 8-A or
other applicable form under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), became or will become effective.
(xvi) Other than the subsidiaries of the Company listed in
Exhibit 21 to the Registration Statement, the Company owns no capital stock
or other equity or ownership or proprietary interest in any corporation,
partnership, association, trust or other entity.
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xviii) Each of the Company and its subsidiaries (A) is in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) has received all permits, licenses
or other approvals required of it under applicable Environmental Laws to
conduct its business and (C) is in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the aggregate, have
a material adverse effect on the business, properties, financial condition
or results of operations of the Company and its subsidiaries, taken as a
whole.
(xix) The Company is not, and upon receipt and pending
application of the net proceeds from the sale of the Stock to be sold by
the Company in the manner described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company Act of 1940, as
amended.
(xx) Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect. The Company has not been refused any insurance coverage
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sought or applied for; and the Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and 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 materially
and adversely affect the condition (financial or otherwise), earnings,
operations or business of the Company and its subsidiaries taken as a
whole.
(xxi) Neither the Company nor any of its subsidiaries has at
any time during the last five (5) years in any jurisdiction (i) made any
unlawful contribution to any candidate for office, or failed to disclose
fully any contribution in violation of law, or (ii) made any payment to any
governmental officer or official, or other person charged with similar
public or quasi-public duties other than payments required or permitted by
the laws of the United States.
(xxii) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(b) The Selling Stockholder represents and warrants to, and agrees
with, the several Underwriters as follows:
(i) The Selling Stockholder is the record and beneficial
owner of, and has, and on the First Closing Date and/or the Second Closing
Date (as hereinafter defined), as the case may be, will have, good and
marketable title to the Securities to be sold by the Selling Stockholder,
free and clear of any adverse claims, all restrictions on transferability,
legends, proxies or other encumbrances other than under the Shareholders'
Agreement dated March 30, 1994, as amended (the "Shareholders' Agreement");
and upon delivery of and payment for such Securities hereunder, the several
Underwriters will acquire good and marketable title thereto, free and clear
of any adverse claims and obtain control thereto. The Selling Stockholder
is selling the Securities to be sold by the Selling Stockholder for the
Selling Stockholder's own account and is not selling such Securities,
directly or indirectly, for the benefit of the Company, and no part of the
proceeds of such sale received by the Selling Stockholder will inure,
either directly or indirectly, to the benefit of the Company.
(ii) The Selling Stockholder has duly authorized, executed and
delivered a Letter of Transmittal and Custody Agreement ("Custody
Agreement"), which Custody Agreement is a valid and binding obligation of
such Selling Stockholder, to [___________________________________________],
as Custodian (the "Custodian"); pursuant to the Custody Agreement the
Selling Stockholder has placed or caused to be placed in custody with the
Custodian, for delivery under this Agreement, the certificates representing
the Securities to be sold by the Selling Stockholder; and such certificates
were duly and properly endorsed in blank for transfer, or were accompanied
by all documents duly and properly executed that are necessary to validate
the transfer of title thereto, to the Underwriters, free of any legend,
restriction on transferability, proxy, lien or claim, whatsoever.
(iii) The Selling Stockholder has the power and authority to
enter into this Agreement and to sell, transfer and deliver the Securities
to be sold by the Selling Stockholder; and such Selling Stockholder has
duly authorized, executed and delivered to [_____________________________],
and [______________________________], as attorneys-in-fact (the "Attorneys-
in-Fact"), an irrevocable power of attorney (a "Power of Attorney")
authorizing and directing the Attorneys-in-Fact, or either of them, to
effect the sale and delivery of the Securities being sold by the Selling
Stockholder and to execute and deliver, on such Selling Stockholder's
behalf, this Agreement and any other document that they
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or any of them may deem necessary or desirable in connection with the
transactions contemplated hereby and thereby.
(iv) This Agreement, the Custody Agreement and the Power of
Attorney have each been duly authorized, executed and delivered by or on
behalf of the Selling Stockholder and each constitutes a valid and binding
agreement of the Selling Stockholder, enforceable in accordance with its
terms, except as rights to indemnity hereunder or thereunder may be limited
by bankruptcy, insolvency, reorganization or laws affecting the rights of
creditors generally and subject to general principles of equity. The
execution and delivery of this Agreement, the Custody Agreement and the
Power of Attorney and the performance of the terms hereof and thereof and
the consummation of the transactions herein and therein contemplated will
not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any agreement or instrument to which the
Selling Stockholder is a party or by which the Selling Stockholder is
bound, or any law, regulation, order or decree applicable to the Selling
Stockholder; no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Custody
Agreement and the Power of Attorney or for the consummation of the
transactions contemplated hereby and thereby, including the sale of the
Securities being sold by the Selling Stockholder, except such as may be
required under the Act, applicable state securities laws or blue sky laws
and by the NASD.
(v) The Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary Prospectus
or the Prospectus or other materials permitted by the Act to be distributed
by the Selling Stockholder.
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, are made in reliance on, and in
conformity with, written information furnished to the Company by or on
behalf of the Selling Stockholder specifically for use in the preparation
thereof, each such part of such Preliminary Prospectus and the Registration
Statement did, and each such part of the Prospectus and any amendments or
supplements to the Registration Statement or Prospectus (including any term
sheet meeting the requirements of Rule 434 of the Rules and Regulations)
will, when they become effective or are filed with the Commission, as the
case may be, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and conform in all material respects
to the requirements of the Act and the Rules and Regulations. The Company
and the Underwriters acknowledge that the statements relating to such
Selling Stockholder under the headings "Principal and Selling
Stockholders," "Certain Transactions--Transactions with Fargo and
Universal," "--Engage Transactions," and "Description of Capital
Stock--Registration Rights" constitute the only information furnished in
writing by or on behalf of the Selling Stockholder for inclusion in the
Registration Statement or any Prospectus.
(vii) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.
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(viii) The sale of the Securities by the Selling Stockholder
pursuant hereto is not prompted by any adverse information concerning the
Company which is not set forth in the Registration Statement and
Prospectus.
(ix) Although the Selling Stockholder has not independently
verified the accuracy or completeness of the information contained therein
(other than the information regarding the Selling Stockholder or its
affiliates set forth under the captions "Management," "Principal and
Selling Stockholders" and "Certain Transactions--Transactions with Fargo
and Universal," "--Engage Transactions," and "Description of Capital Stock-
-Registration Rights"), nothing has come to the attention of the Selling
Stockholder that would lead such Selling Stockholder to believe that (A)
upon the effectiveness of the Registration Statement, 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 in order
to make the statements therein not misleading or (B) as of the date of the
Prospectus, the Prospectus contained and, on the Closing Date, contains any
untrue statement of a material fact or omitted or omits to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters at the closing shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby; any certificate signed by or on behalf of the
Selling Stockholder as such and delivered to you or to counsel for the
Underwriters at the closing shall be deemed a representation and warranty of the
Selling Stockholder to each Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
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(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell 6,250,000 Firm Shares to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm Share
shall be $____ per share. In making this Agreement, each Underwriter is
contracting severally and not jointly; except as provided in paragraph (c) of
this Section 3 and in Section 8 hereof, the agreement of each Underwriter is to
purchase only the respective number of Firm Shares specified in Schedule I.
The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by wire transfer of immediately available funds payable to the order of
the Company, at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be
mutually acceptable, at 9:00 a.m., Minneapolis time, on the third full business
day (or, if the Firm Shares are priced as contemplated by Rule 15c6-1(c) of the
Exchange Act, after 4:30 p.m., Washington, D.C. time, the fourth full business
day) following the date hereof, or at such other time as you and the Company
determine, such time and date of delivery being herein referred to as the "First
Closing Date." The Firm Shares, in definitive form and in such denominations
and registered in such names as you may request upon at least two business days'
prior notice to the Company, will be made available for checking and packaging
at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower,
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000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be
mutually acceptable, at least one business day prior to the First Closing Date.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Selling Stockholder hereby grants to the several Underwriters an option to
purchase all or any portion of the Option Shares at the same purchase price as
the Firm Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the effective date of this Agreement upon notice (confirmed in
writing) by the Representatives to the Company and the Selling Stockholder
setting forth the aggregate number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in which the
certificates for the Option Shares are to be registered and the date and time,
as determined by you, when the Option Shares are to be delivered, such time and
date being herein referred to as the "Second Closing" and "Second Closing Date,"
respectively; provided, however, that the Second Closing Date shall not be
earlier than the First Closing Date nor earlier than the second business day
after the date on which the option shall have been exercised. The number of
Option Shares to be purchased by each Underwriter shall be the same percentage
of the total number of Option Shares to be purchased by the several Underwriters
as the number of Firm Shares to be purchased by such Underwriter is of the total
number of Firm Shares to be purchased by the several Underwriters, as adjusted
by the Representatives in such manner as the Representatives deem advisable to
avoid fractional shares. No Option Shares shall be sold and delivered unless
the Firm Shares previously have been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Custodian to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by wire transfer of immediately available funds payable to the order of
the Selling Stockholder at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx
Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as
may be mutually acceptable at 9:00 a.m., Minneapolis time, on the Second Closing
Date. The Option Shares in definitive form and in such denominations and
registered in such names as you have set forth in your notice of option
exercise, will be made available for checking and packaging at the office of
Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx, or such other location as may be mutually acceptable, at least one
business day prior to the Second Closing Date.
(c) It is understood that you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company, on behalf of any Underwriter for the Securities to
be purchased by such Underwriter. Any such payment by you shall not relieve any
such Underwriter of any of its obligations hereunder. Nothing herein contained
shall constitute any of the Underwriters an unincorporated association or
partner with the Company.
4. Covenants.
---------
(a) The Company covenants and agrees with the several Underwriters as
follows:
(i) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts
to cause the Registration Statement and any post-effective amendments
thereto to become effective as promptly as possible; the Company will
notify you promptly of the time when the Registration Statement or any
post-effective amendment to the Registration Statement has become effective
or any supplement to the Prospectus has been filed and of any request by
the Commission for any amendment or supplement to the Registration
Statement
-10-
or the Prospectus or additional information; if the Company has elected to
rely on Rule 430A of the Rules and Regulations, the Company will file a
Prospectus containing the information omitted therefrom pursuant to such
Rule 430A with the Commission within the time period required by, and
otherwise in accordance with the provisions of, Rules 424(b) and 430A of
the Rules and Regulations; the Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements to
the Registration Statement or the Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the
Securities by the Underwriters; and the Company will provide you with a
copy of any amendment or supplement to the Registration Statement or the
Prospectus a reasonable time prior to the filing and will discuss in good
faith any reasonable comments or objections you may have regarding such
amendment or supplement.
(ii) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceeding for any such purpose; and the Company will
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such a stop order should be issued.
(iii) Within the time during which a prospectus relating to the
Securities is required to be delivered under the Act, the Company will
comply as far as it is able with all requirements imposed upon it by the
Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance
of sales of or dealings in the Securities as contemplated by the provisions
hereof and the Prospectus. If during such period any event occurs as a
result of which the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the Act,
the Company will promptly notify you and will amend the Registration
Statement or supplement the Prospectus (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.
(iv) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long
as required for the distribution of the Securities, except that the Company
shall not be required in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process in any
state.
(v) The Company will furnish to the Underwriters copies of the
Registration Statement (three of which will be signed and will include all
exhibits), each Preliminary Prospectus, the Prospectus, and all amendments
and supplements to such documents, in each case as soon as available and in
such quantities as you may from time to time reasonably request.
(vi) During a period of five years commencing with the date
hereof, the Company will furnish to the Representatives, and to each
Underwriter who may so request in writing, copies of all periodic and
special reports furnished to the stockholders of the Company and all
information, documents and reports filed with the Commission, the National
Association of Securities Dealers, Inc. (the "NASD"), the Nasdaq National
Market or any securities exchange or similar organization.
-11-
(vii) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than 15 months
after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a 12-month period beginning
after the effective date of the Registration Statement that shall satisfy
the provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(viii) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming
effective under the provisions of Section 9(a) hereof or is terminated,
will pay or cause to be paid (i) all expenses (including transfer taxes
allocated to the respective transferees) incurred in connection with the
delivery to the Underwriters of the Securities, (ii) all expenses and fees
(including, without limitation, fees and expenses of the Company's
accountants and counsel but, except as otherwise provided below, not
including fees of the Underwriters' counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the Registration
Statement (including the financial statements therein and all amendments,
schedules, and exhibits thereto), the Securities, each Preliminary
Prospectus, the Prospectus, and any amendment thereof or supplement
thereto, and the printing, duplication, delivery, and shipping of this
Agreement and other underwriting documents, including Blue Sky Memoranda,
(iii) all filing fees and reasonable fees and disbursements of the
Underwriters' counsel incurred in connection with the qualification of the
Securities for offering and sale by the Underwriters or by dealers under
the securities or blue sky laws of the states and other jurisdictions which
you shall designate in accordance with Section 4(a)(iv) hereof, (iv) the
fees and expenses of any transfer agent or registrar, (v) the filing fees
incurred in connection with any required review by the NASD of the terms of
the sale of the Securities, (vi) listing fees, if any, and (vii) all other
costs and expenses incident to the performance of its obligations hereunder
that are not otherwise specifically provided for herein. If the sale of
the Securities provided for herein is not consummated by reason of action
by the Company pursuant to Section 9(a) hereof which prevents this
Agreement from becoming effective, or by reason of any failure, refusal or
inability on the part of the Company or Selling Stockholder to perform any
agreement on its or their part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be
fulfilled by the Company or the Selling Stockholder is not fulfilled, the
Company will reimburse the several Underwriters for all reasonable out-of-
pocket disbursements (including reasonable fees and disbursements of
counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company shall
not in any event be liable to any of the Underwriters for loss of
anticipated profits from the transactions covered by this Agreement.
(ix) The Company will apply the net proceeds from the sale of
the Securities to be sold by it hereunder for the purposes set forth in the
Prospectus and will file such reports with the Commission with respect to
the sale of the Securities and the application of the proceeds therefrom as
may be required in accordance with Rule 463 of the Rules and Regulations.
(x) The Company will not, without your prior written consent,
offer for sale, sell, contract to sell, grant any option for the sale of or
otherwise issue or dispose of any Common Stock or any securities
convertible into or exchangeable for, or any options or rights to purchase
or acquire, Common Stock, for a period of 180 days after the commencement
of the public offering of the Securities by the Underwriters except (i) to
the Underwriters pursuant to this Agreement, (ii) upon the exercise of
outstanding stock options described in the Registration Statement and the
Prospectus, (iii) for the grant of stock options in the ordinary course of
business pursuant to the Company's 1997
-12-
Stock Incentive Plan described in the Registration Statement and the
Prospectus and (iv) for the issuance of shares pursuant to the Company's
Employee Stock Purchase Plan described in the Registration Statement and
the Prospectus. The Company will impose a stop-transfer order with respect
to such shares, options, or shares issued upon the exercise of such options
held by a holder in the event that a holder attempts to sell, offer,
dispose or otherwise transfer any such shares or options during the 180 day
period after the commencements of the public offering of the Securities by
the Underwriters and without the prior written consent of Xxxxx Xxxxxxx
Inc. (which consent may be withheld at the sole discretion of Xxxxx Xxxxxxx
Inc.).
(xi) The Company either has caused to be delivered to you or
will cause to be delivered to you prior to the effective date of the
Registration Statement a letter from each of the Company's directors,
officers, holders of more than [98%] of the shares of the Company's Common
Stock and holders of options or warrants or other rights to purchase more
than [98%] of the shares of Common Stock stating that such person agrees
that he, she or it will not, without your prior written consent, offer for
sale, sell, pledge, contract to sell or otherwise dispose of any shares of
Common Stock or options or warrants or rights to purchase Common Stock for
a period of 180 days after commencement of the public offering of the
Securities by the Underwriters, subject to such exceptions as the Company
and you may mutually agree.
(xii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities, and has not effected any sales of Common
Stock which are required to be disclosed in response to Item 701 of
Regulation S-K under the Act which have not been so disclosed in the
Registration Statement.
(xiii) The Company will not incur any liability for any finder's
or broker's fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(b) The Selling Stockholder covenants and agrees with the several
Underwriters as follows:
(i) Except as otherwise agreed to by the Company and the
Selling Stockholder, the Selling Stockholder will pay all taxes, if any, on
the transfer and sale, respectively, of the Securities being sold by the
Selling Stockholder and the fees of the Selling Stockholder's counsel. In
addition, the Selling Stockholder agrees to reimburse the Company for any
reimbursement made by the Company to the Underwriters pursuant to Section
4(a)(viii) hereof to the extent such reimbursement resulted from the
failure or refusal on the part of the Selling Stockholder to comply under
the terms or fulfill any of the conditions of this Agreement.
(ii) If this Agreement shall be terminated by the Underwriters
because of any failure, refusal or inability on the part of the Selling
Stockholder to perform any agreement on the Selling Stockholder's part to
be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Selling Stockholder
is not fulfilled, the Selling Stockholder agrees to reimburse the several
Underwriters for all out-of-pocket disbursements (including fees and
disbursements of counsel for the Underwriters) incurred by the Underwriters
in connection with their investigation, preparing to market and marketing
the Securities or in
-13-
contemplation of performing their obligations hereunder. The Selling
Stockholder shall not in any event be liable to any of the Underwriters for
loss of anticipated profits from the transactions covered by this
Agreement.
(iii) The Securities to be sold by the Selling Stockholder,
represented by the certificates on deposit with the Custodian pursuant to
the Custody Agreement of the Selling Stockholder, are subject to the
interest of the several Underwriters; the arrangements made for such
custody are, except as specifically provided in the Custody Agreement,
irrevocable; and the obligations of the Selling Stockholder hereunder shall
not be terminated, except as provided in this Agreement or in the Custody
Agreement, by any act of the Selling Stockholder, by operation of law,
whereby the liquidation, dissolution or merger of the Selling Stockholder,
or by the occurrence of any other event. If the Selling Stockholder should
liquidate, dissolve or be a party to a merger or if any other such event
should occur before the delivery of the Securities hereunder, certificates
for the Securities deposited with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as
if such liquidation, dissolution, merger or other event had not occurred,
whether or not the Custodian shall have received notice thereof.
(iv) The Selling Stockholder will not, without your prior
written consent, offer for sale, sell, contract to sell, grant any option
for the sale of or otherwise dispose of any Common Stock or any securities
convertible into or exchangeable for, or any options or rights to purchase
or acquire, Common Stock, except to the Underwriters pursuant to this
Agreement, for a period of 180 days after the commencement of the public
offering of the Securities by the Underwriters.
(v) The Selling Stockholder will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities,
and has not effected any sales of Common Stock which, if effected by the
Company, would be required to be disclosed in response to Item 701 of
Regulation S-K.
(vi) The Selling Stockholder shall immediately notify you if
the Selling Stockholder becomes aware of any change in information relating
to the Selling Stockholder stated in the Prospectus or any supplement
thereto, which results in the Prospectus (as supplemented) including an
untrue statement of a material fact or omitting to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and the Second Closing Date (as if
made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company and the Selling Stockholder contained
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., Minneapolis time, on the date of this Agreement, or such later
time and date as you, as Representatives of the several Underwriters, shall
approve and all filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereof shall have
been issued; no proceedings for the issuance of such an order
-14-
shall have been initiated or threatened; and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your reasonable
satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto, contains an untrue statement of fact which, in your reasonable opinion,
is material, or omits to state a fact which, in your reasonable opinion, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries shall have
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transaction, or declared or paid any dividends or made
any distribution of any kind with respect to its capital stock; and there shall
not have been any change in the capital stock (other than a change in the number
of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries, or any material adverse change or any
development reasonably likely to involve a prospective material adverse change
(whether or not arising in the ordinary course of business), in the general
affairs, condition (financial or otherwise), business, key personnel, property,
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, that, in your reasonable judgment, makes it
impractical or inadvisable to offer or deliver the Securities on the terms and
in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of Xxxxxxxxx Xxxxx
Xxxxxxx & Xxxxx, a Professional Corporation, counsel for the Company, dated such
Closing Date and addressed to you, to the effect that:
(i) Each of the Company and its material subsidiaries has been
duly organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of the Company
and its material subsidiaries has full corporate power and authority to own
its properties and conduct its business as currently being carried on and
as described in the Registration Statement and the Prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which it owns or leases real property or in which
the conduct of its business makes such qualification necessary and in which
the failure to so qualify would have a material adverse effect upon the
business, condition (financial or otherwise) or properties of the Company
and its subsidiaries, taken as a whole.
(ii) The capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock." All of the issued and outstanding
shares of the capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. All outstanding
shares of the Company's capital stock and all outstanding options to
purchase the Company's capital stock were issued in compliance in all
material respects with the registration and qualification requirements of
all applicable federal and state securities laws. The Securities to be
issued and sold by the Company hereunder have been duly authorized and,
when issued, delivered and paid for in accordance with the terms of this
Agreement, will have been validly issued and will be fully paid and
nonassessable, and the holders thereof will not be subject to personal
liability by reason of being such holders. Except
-15-
as otherwise stated in the Registration Statement and the Prospectus, there
are no preemptive rights or other rights to subscribe for or to purchase,
or any restriction upon the voting or transfer of, any shares of Common
Stock pursuant to the Company's charter, by-laws or any agreement or other
instrument known to such counsel to which the Company is a party or by
which the Company is bound (other than agreements that terminate effective
upon the offering contemplated by this Agreement). To the best of such
counsel's knowledge, neither the filing of the Registration Statement nor
the offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights for or relating to the registration of any shares
of Common Stock or other securities of the Company, except such rights as
have been duly and validly waived.
(iii) All of the issued and outstanding shares of capital stock
of each of the Company's material subsidiaries have been duly and validly
authorized and issued and are fully paid and nonassessable, and, to the
best of such counsel's knowledge, except as otherwise described in the
Registration Statement and the Prospectus and except for directors'
qualifying shares, the Company owns of record and, to the best of such
counsel's knowledge, beneficially, free and clear of any security
interests, claims, liens, proxies, equities or other encumbrances, all of
the issued and outstanding shares of such stock. To the best of such
counsel's knowledge, except as described in the Registration Statement and
the Prospectus, there are no options, warrants, agreements, contracts or
other rights in existence to purchase or acquire from the Company or any
material subsidiary any shares of the capital stock of the Company or any
material subsidiary of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
such counsel, threatened by the Commission.
(v) The descriptions in the Registration Statement and the
Prospectus under the captions "Use of Proceeds," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity
and Capital Resources," "Business--Legal Proceedings," "Certain
Transactions" and "Description of Capital Stock" of statutes, legal and
governmental proceedings, contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel does
not know of any statutes or legal or governmental proceedings required to
be described in the Prospectus that are not described as required, or of
any contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or included as exhibits to the
Registration Statement that are not described or included as required.
(vi) The Company has full corporate power and authority to
enter into this Agreement, and this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid, legal and
binding obligation of the Company enforceable in accordance with its terms
(except as rights to indemnity or contribution hereunder may be limited by
federal or state securities laws and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles of
equity); the execution, delivery and performance of this Agreement by the
Company will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, rule or
regulation, any agreement or instrument known to such counsel to which the
Company or any of its material subsidiaries is a party or by which the
Company or any of its material subsidiaries is bound or to which any of its
or their respective property is subject, the Company's charter or by-laws,
or any order or decree known to such counsel of any court or governmental
agency
-16-
or body having jurisdiction over the Company or any of its material
subsidiaries or any of its or their respective properties; and no consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company, including the issuance or
sale of the Securities by the Company, except such as may be required under
the Act or state securities laws.
(vii) The statements (A) in the Prospectus under the captions
"Risk Factors--Protection of Proprietary Rights," "Risk Factors--Control by
Directors and Officers," "Risk Factors--Shares Eligible for Future Sale,"
"Risk Factors--Anti-Takeover Effects; Delaware Law and Certain Charter and
Bylaw Provisions; Preferred Stock," "Management," "Certain Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future Sale" [other
sections may be added, as appropriate] and (B) in the Registration
Statement in Items 14 and 15, insofar as such statements constitute
summaries of the legal matters or documents referred to therein, fairly
present the information called for with respect to such legal matters and
documents and fairly summarize the matters referred to therein.
(viii) To the best of such counsel's knowledge, the Company and
each of its material subsidiaries holds all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and
orders of any governmental or self-regulatory body required for the conduct
of its business and where the failure to hold such franchises, grants,
authorizations, permits, easements, consents, certificates or orders would
be reasonably likely to have a material adverse effect upon the business,
condition (financial or otherwise) or properties of the Company and its
subsidiaries, taken as a whole; and all such franchises, grants,
authorizations, licenses, permits, easements, consents, certifications and
orders are valid and in full force and effect.
(ix) The statements in the Prospectus under the caption
"Business--Legal Proceedings" fairly summarize the legal matters, documents
and proceedings referred to therein.
(x) To such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding or claim by others (A) challenging
the validity or scope of any copyrights held by or licensed to the Company
or any of its subsidiaries or (B) asserting that any intellectual property
right is infringed by the activities of the Company or any of its
subsidiaries or by the design, development, manufacture, use or sale of any
of the products of the Company or any of its subsidiaries, or other items
made and used according to the copyrights held by or licensed to the
Company or any of its subsidiaries, where the effect of any such action,
suit, proceeding or claim, if adversely determined, would have a material
adverse effect upon the business condition (financial or otherwise) or
properties of the Company and its subsidiaries taken as a whole.
(xi) To the best of such counsel's knowledge, neither the
Company nor any of its material subsidiaries is in violation of its
respective charter or by-laws. To the best of such counsel's knowledge,
neither the Company nor any of its material subsidiaries is in breach of or
otherwise in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note, indenture,
loan agreement or any other material contract, lease or other instrument to
which it is subject or by which any of them may be bound, or to which any
of the material property or assets of the Company or any of its material
subsidiaries is subject.
-17-
(xii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto, comply as to form in all material
respects with the requirements of the Act and the Rules and Regulations.
Such counsel shall also state that, on the basis of conferences with
officers of the Company, examination of documents referred to in the
Registration Statement and the Prospectus and such other procedures as such
counsel deemed appropriate, nothing has come to the attention of such counsel
that causes such counsel to believe that the Registration Statement or any
amendment thereof, at the time the Registration Statement became effective and
as of such Closing 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 Prospectus (as of its
date and as of such Closing Date), as amended or supplemented, includes any
untrue statement of material fact 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; it being understood that such counsel need express no
opinion as to the financial statements or financial or statistical data derived
therefrom included in any of the documents mentioned in this clause.
In rendering such opinion such counsel may rely (i) as to matters of
law other than California, Delaware and federal law, upon the opinion or
opinions of local counsel provided that the extent of such reliance is specified
in such opinion and that such counsel shall state that such opinion or opinions
of local counsel are satisfactory to them and that they believe they and you are
justified in relying thereon and (ii) as to matters of fact, to the extent such
counsel deems reasonable upon certificates of officers of the Company and its
subsidiaries provided that the extent of such reliance is specified in such
opinion.
(e) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of Xxxxxx Xxxxxx &
Xxxxx LLP, counsel for the Selling Stockholder, dated such Closing Date and
addressed to you, to the effect that:
(i) The Underwriting Agreement has been duly authorized,
executed and delivered by or on behalf of, and is a valid and binding
agreement of, the Selling Stockholder, enforceable in accordance with its
terms, except as rights to indemnification and contribution thereunder may
be limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
(ii) The execution and delivery by or on behalf of the Selling
Stockholder of, and the performance by the Selling Stockholder of its
obligations under, the Underwriting Agreement and its Custody Agreement and
its Power of Attorney will not (a) contravene or conflict with, result in a
breach of, or constitute a default under, the charter or by-laws,
partnership agreement, trust agreement or other organizational documents,
as the case may be, of the Selling Stockholder, or, (b) violate or
contravene any provision of applicable law or regulation known to be
applicable to the Selling Stockholder, or (c) violate, result in a breach
of or constitute a default under the terms of any other material agreement
or instrument known to such counsel and to which the Selling Stockholder is
a party or by which it is bound, or (d) violate, result in breach of or
constitute a default under any judgment, order or decree known to such
counsel and applicable to the Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over the Selling Stockholder.
-18-
(iii) To the best of such counsel's knowledge, the Selling
Stockholder has good and valid title of Securities which may be sold by the
Selling Stockholder under the Underwriting Agreement and has the legal
right and power, and all authorizations and approvals required under its
charter and by-laws, partnership agreement, trust agreement or other
organizational documents, as the case may be, to enter into the
Underwriting Agreement and its Custody Agreement and its Power of Attorney,
to sell, transfer and deliver all of the Securities which may sold by the
Selling Stockholder pursuant to the Underwriting Agreement and to comply
with its other obligations pursuant to the Underwriting Agreement, its
Custody Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of the
Selling Stockholder has been duly authorized, executed and delivered by or
on behalf of the Selling Stockholder and is a valid and binding agreement
of the Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification and contribution thereunder may be
limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
(v) Upon delivery of and payment for the Option Shares to be
sold by the Selling Stockholder as provided in the Underwriting Agreement
and upon registration of the Optional Shares in the names of the
Underwriters (or their nominees) in the stock records of the Company, the
Underwriters will be the owners of the Option Shares, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or other adverse
claim, security interests, liens, equities and other encumbrances, provided
that the Underwriters are purchasing the Option Shares in good faith and
without notice of any adverse claim.
(vi) To counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with, any court
or governmental authority or agency, is required for the consummation by
the Selling Stockholder of the transactions contemplated in the
Underwriting Agreement, except as required under the Securities Act,
applicable state securities or blue sky laws, and from the NASD (as to
which such counsel need express no opinion).
(f) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, such opinion or opinions from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the
several Underwriters, dated such Closing Date and addressed to you, with respect
to the formation of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and other related matters as you
reasonably may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(g) On each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of Xxxxxx Xxxxxxxx LLP, dated such
Closing Date and addressed to you, confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualifications of accountants under Rule
2-01 of Regulation S-X of the Commission, and stating, as of the date of such
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of such
letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently
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with the execution of this Agreement, and the effect of the letter so to be
delivered on such Closing Date shall be to confirm the conclusions and findings
set forth in such prior letter.
(h) On each Closing Date, there shall have been furnished to you, as
Representatives of the Underwriters, a certificate, dated such Closing Date and
addressed to you, signed by the chief executive officer and by the chief
financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at and as
of such 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 such Closing Date;
(ii) No stop order or other order suspending the effectiveness
of the Registration Statement or any amendment thereof or the qualification of
the Securities for offering or sale has been issued, and no proceeding for
that purpose has been instituted or, to the best of their knowledge, is
contemplated by the Commission or any state or regulatory body; and
(iii) The signers of said certificate have carefully examined
the Registration Statement and the Prospectus, and any amendments thereof or
supplements thereto, and (A) such documents contain all statements and
information required to be included therein, the Registration Statement, or
any amendment thereof, does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Prospectus,
as amended or supplemented, does not include any untrue statement of material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (B) since the effective date of the Registration Statement there
has occurred no event required to be set forth in an amended or supplemented
prospectus which has not been so set forth, (C) subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered into any
material transactions, not in the ordinary course of business, or declared or
paid any dividends or made any distribution of any kind with respect to its
capital stock, and except as disclosed in the Prospectus, there has not been
any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants described in the Registration
Statement and the Prospectus), or any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible securities
or other rights to purchase the capital stock, of the Company, or any of its
subsidiaries, or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the ordinary
course of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole, and (D)
except as stated in the Registration Statement and the Prospectus, there is
not pending, or, to the knowledge of the Company, threatened or contemplated,
any action, suit or proceeding to which the Company or any of its subsidiaries
is a party before or by any court or governmental agency, authority or body,
or any arbitrator, which might result in any material adverse change in the
condition (financial or otherwise), business, prospects or results of
operations of the Company and its subsidiaries, taken as a whole.
(i) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, a certificate or certificates,
dated such Closing Date and addressed to you, signed by the Selling Stockholder
to the effect that the representations and warranties of the Selling Stockholder
contained in this
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Agreement are true and correct as if made at and as of such
Closing Date, and that the Selling Stockholder has complied with all the
agreements and satisfied all the conditions on the Selling Stockholder's part to
be performed or satisfied at or prior to such Closing Date.
(j) The Company shall have furnished to you and counsel for the
Underwriters such additional documents, certificates and evidence as you or they
may have reasonably requested.
(k) The Securities shall have been duly authorized for listing by the
Nasdaq National Market upon official notice of issuance.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and counsel for the Underwriters. The Company will
furnish you with such conformed copies of such opinions, certificates, letters
and other documents as you shall reasonably request.
6. Indemnification and Contribution.
--------------------------------
(a) The Company and the Selling Stockholder, jointly and severally, agree
to indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise (including in settlement of any litigation
if such settlement is effected with the written consent of the Company and/or
the Selling Stockholder, as the case may be), insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, including the information deemed to be
a part of the Registration Statement at the time of effectiveness pursuant to
Rule 430A, if applicable, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by it in connection with investigating or defending against such loss, claim,
damage, liability or action; provided, however, that neither the Company nor the
Selling Stockholder shall be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by you, or by any Underwriter
through you, specifically for use in the preparation thereof; provided further,
that in no event shall the Selling Stockholder be liable under the provisions of
this Section 6 for any amounts in excess of the product obtained by multiplying
(x) the number of Option Shares, if any, sold by the Selling Shareholder
pursuant to this Agreement by (y) the price per share set forth in Section 3(a)
of this Agreement (the "Liability Limit"); and provided further, that the
foregoing indemnity agreement with respect to any Preliminary Prospectus will
not inure to the benefit of any Underwriter, or any person controlling such
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares if a copy of the Prospectus (as amended or
supplemented if the Company shall have furnished to the Underwriters any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.
-21-
In addition to their other obligations under this Section 6(a), the Company
and the Selling Stockholder, jointly and severally, agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 6(a), they will
reimburse each Underwriter on a monthly basis for all reasonable legal fees or
other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Company's and/or the Selling Stockholder's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction,
subject, in the case of the Selling Stockholder, to the Liability Limit. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter that received such payment shall promptly return it to
the party or parties that made such payment, together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by the Bank of America N.T. & S.A. (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30 days of a
request for reimbursement shall bear interest at the Prime Rate from the date of
such request. This indemnity agreement shall be in addition to any liabilities
which the Company and the Selling Stockholder may otherwise have.
In making a claim for indemnification or for contribution under this
Section 6 (including, without limitation, under the immediately preceding
paragraph) and subject to the further provisions of this paragraph, the
Underwriters may proceed against either (i) both the Company and the Selling
Stockholder jointly or (ii) the Company only, but may not proceed solely against
the Selling Stockholder. Notwithstanding anything in this Agreement to the
contrary, no claim for indemnification shall be made against the Selling
Stockholder pursuant to this Agreement until a claim shall first have been made
against the Company by an Underwriter and either (i) the Company shall have
refused to pay any portion of the amount claimed or (ii) ninety (90) days shall
have elapsed from the date of such claim against the Company, and, in either
case, the Selling Stockholder shall not be responsible for any such
indemnification or contribution that exceeds that proportion of aggregate
losses, claims, damages, liabilities or expenses indemnified or contributed
against as is equal to the proportion of the total number of Option Shares sold
hereunder by the Selling Stockholder to the total number of shares of Common
Stock sold hereunder (the "Pro Rata Portion") except as set forth below. In the
event that the indemnified parties are entitled to seek indemnity or
contribution hereunder against any loss, liability, claim, damage and expense
incurred as contemplated by this Section 6, including, without limitation,
against a final judgment from a trial court then, as a precondition to the
obligation of the Selling Stockholder to provide indemnification or contribution
in excess of the Selling Stockholder's Pro Rata Portion, the indemnified parties
shall first obtain a final judgment from a trial court that such indemnified
parties are entitled to indemnity or contribution under this Agreement with
respect to such loss, liability, claim, damage or expense (the "Final Judgment")
from the Company and the Selling Stockholder and shall seek to satisfy such
Final Judgment in full from the Company by making a written demand upon the
Company for such satisfaction. Only in the event that such Final Judgment shall
remain unsatisfied in whole or part 30 days following the date of receipt by the
Company of such demand shall any party entitled to indemnification hereunder
have the right to take action to satisfy such Final Judgment by making demand
directly on the Selling Stockholder (but only if and to the extent (a) the
Company has not already satisfied such Final Judgment, whether by settlement,
release or otherwise and (b) of the Liability Limit). The Underwriters shall,
however, be relieved of their obligation to first obtain a Final Judgment, to
seek to obtain payment from the Company with respect to such Final Judgment or,
having sought such payment, to wait such 30 days after failure by the Company to
immediately satisfy any such Final Judgment if (w) the Company files a petition
for relief under the United States Bankruptcy Code (the "Bankruptcy Code") and
such order remains unstayed and in effect for 60 days, (x) an order for relief
is entered against the Company in an involuntary case under
-22-
the Bankruptcy Code and such other remains unstayed and in effect for 60 days,
(y) the Company makes an assignment for the benefit of its creditors, or (z) any
court order or approves the appointment of a receiver or custodian for the
Company or a substantial portion of its assets and such order remains unstayed
and in effect for 60 days.
(b) Each Underwriter severally will indemnify and hold harmless the Company
and the Selling Stockholder against any losses, claims, damages or liabilities
to which the Company and the Selling Stockholder may become subject, under the
Act or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Underwriter), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by you, or by such
Underwriter through you, specifically for use in the preparation thereof, and
will reimburse the Company and the Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or the Selling Stockholder in
connection with investigating or defending against any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability that it may have to any
indemnified party. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the sole judgment of the Representatives, it is advisable for the
Underwriters to be represented as a group by separate counsel, the
Representatives shall have the right to employ a single counsel to represent the
Representatives and all Underwriters who may be subject to liability arising
from any claim in respect of which indemnity may be sought by the Underwriters
under subsection (a) of this Section 6, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Underwriters as incurred (in accordance with the
provisions of the second paragraph in subsection (a) above). An indemnifying
party shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Stockholder on the one hand and the Underwriters on the other from
the offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable
-23-
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Stockholder on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholder bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Stockholder or the Underwriters and the parties' relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) the Selling Stockholder shall not be
required to contribute any amounts in excess of the product obtained by
multiplying (x) the number of Option Shares sold by the Selling Shareholder
pursuant to this Agreement by (y) the price per share set forth in Section 3(a)
of this Agreement. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company and the Selling Stockholder under this
Section 6 shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 6
shall be in addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company (including any person who, with his consent, is named in
the Registration Statement as about to become a director of the Company), to
each officer of the Company who has signed the Registration Statement and to
each person, if any, who controls the Company or the Selling Stockholder within
the meaning of the Act.
(f) Neither the provisions of this Section 6, nor anything else in this
Agreement, shall affect any agreement between the Company and the Selling
Stockholder (or its employees) with respect to indemnity or contribution
including, without limitation, the Shareholders' Agreement. The Company
acknowledges that the registration of the Option Shares is pursuant to the
Selling Stockholder's exercise of its rights pursuant to Section 3.1 of the
Shareholders' Agreement.
-24-
7. Representations and Agreements to Survive Delivery. All representations,
--------------------------------------------------
warranties, and agreements of the Company and the Selling Stockholder herein or
in certificates delivered pursuant hereto, and the agreements of the several
Underwriters, the Company and the Selling Stockholder contained in Section 6
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
thereof, or the Company or any of its officers, directors, or controlling
persons or the Selling Stockholder, or any controlling person thereof and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. Substitution of Underwriters.
----------------------------
(a) If any Underwriter or Underwriters shall fail to take up and pay for
the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule I hereto,
the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule I hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters shall fail to take up and pay for
the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased aggregates more than
10% of the total amount of Firm Shares set forth in Schedule I hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section
4(a)(viii), Section 4(b)(ii) and Section 6 hereof) nor shall any Underwriter
(other than an Underwriter who shall have failed, otherwise than for some reason
permitted under this Agreement, to purchase the amount of Firm Shares agreed by
such Underwriter to be purchased hereunder) be under any liability to the
Company (except to the extent provided in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased by the non-
defaulting Underwriters or by any other party or parties, the Representatives or
the Company shall have the right to postpone the First Closing Date for not more
than seven business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used herein, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 8.
9. Effective Date of this Agreement and Termination.
------------------------------------------------
(a) This Agreement shall become effective at 10:00 a.m., Minneapolis time,
on the first full business day following the effective date of the Registration
Statement, or at such earlier time after the effective time of the Registration
Statement as you in your discretion shall first release the Securities for sale
to the public; provided, that if the Registration Statement is effective at the
time this Agreement is executed, this Agreement shall become effective at such
time as you in your discretion shall first release the Securities for sale to
the public. For the purpose of this Section, the Securities shall be deemed to
have been released for sale to the public upon release by you of the publication
of a newspaper advertisement relating thereto or upon release by you of telexes
offering the Securities for sale to securities dealers, whichever shall first
occur. By giving notice as hereinafter specified before the time this Agreement
becomes effective, you, as Representatives of the several Underwriters, or the
Company may prevent this Agreement from becoming effective without
-25-
liability of any party to any other party, except that the provisions of Section
4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at all times be
effective.
(b) You, as Representatives of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time at or prior to the First Closing Date, and the option referred to in
Section 3(b), if exercised, may be cancelled at any time prior to the Second
Closing Date, if (i) the Company shall have failed, refused or been unable, at
or prior to such Closing Date, to perform any material agreement on its part to
be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange and the American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange or the American Stock Exchange, by such Exchange or by order of the
Commission or any other governmental authority having jurisdiction, (v) a
banking moratorium shall have been declared by Federal, New York or California
authorities, or (vi) there has occurred any material adverse change in the
financial markets in the United States or an outbreak of major hostilities (or
an escalation thereof) in which the United States is involved, a declaration of
war by Congress, any other substantial national or international calamity or any
other event or occurrence of a similar character shall have occurred since the
execution of this Agreement that, in your judgment, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any party to any
other party except that the provisions of Section 4(a)(viii), Section 4(b)(ii)
and Section 6 hereof shall at all times be effective.
(c) If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section, the Company and an
Attorney-in-Fact, on behalf of the Selling Stockholder, shall be notified
promptly by you by telephone or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, you and an Attorney-
in-Fact, on behalf of the Selling Stockholder, shall be notified by the Company
by telephone or telegram, confirmed by letter.
10. Default by the Company. If the Company shall fail at the First Closing
----------------------
Date to sell and deliver the number of Securities which it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party.
No action taken pursuant to this Section shall relieve the Company so
defaulting from liability, if any, in respect of such default.
11. Information Furnished by Underwriters. The statements set forth in the
-------------------------------------
last paragraph of the cover page and under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the written information
furnished by or on behalf of the Underwriters referred to in Section 2 and
Section 6 hereof.
12. Notices. Except as otherwise provided herein, all communications
-------
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to the Representatives c/o Xxxxx Xxxxxxx
Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxxx; except that notices
given to an Underwriter pursuant to Section 6 hereof shall be sent to such
Underwriter at the address stated in the Underwriters' Questionnaire furnished
by such Underwriter in connection with this offering; if to the Company, shall
be mailed, delivered by facsimile or delivered to it at 00000 Xxx Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxxxxx X. Xxxxxxxxxx, with a copy to
Stradling, Yocca, Xxxxxxx & Xxxxx, a Professional Corporation, 000 Xxxxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: X.X.
Xxxxxx; if to the Selling Stockholder, at 000 Xxxxxxxxx Xxxx
-00-
Xxxxx, Xxxxxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: General Counsel, with a copy
to Xxxxxx, Xxxxxx & Xxxxx LLP, 000 X. Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000-0000, Attention: Xxxx X. Xxxxxx, or in each case to such other
address as the person to be notified may have requested in writing. All notices
given by facsimile shall be promptly confirmed by mailed copy. Any party to this
Agreement may change such address for notices by sending to the parties to this
Agreement written notice of a new address for such purpose.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
----------------------------------------
the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the several Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Minnesota.
-27-
Please sign and return to the Company the enclosed duplicates of this letter
whereupon this letter will become a binding agreement among the Company, the
Selling Stockholder and the several Underwriters in accordance with its terms.
Very truly yours,
INTERPLAY PRODUCTIONS
By: __________________________________
Xxxxx Xxxxx,
Chairman of the Board of Directors
and Chief Executive Officer
UNIVERSAL STUDIOS, INC.
By: __________________________________
Confirmed as of the date first
above mentioned, on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
XXXXX XXXXXXX INC.
By:___________________________
Managing Director
-28-
SCHEDULE I
Number of
Underwriter Firm Shares (1)
----------- ---------------
Xxxxx Xxxxxxx Inc.
Bear Xxxxxxx & Co. Inc.
UBS Securities LLC
----------
Total.........................................
==========
_________________
(1) The Underwriters may purchase up to an additional __________ Option Shares,
to the extent the option described in Section 3 of the Agreement is
exercised, in the proportions and in the manner described in the Agreement.
