ATARI, INC.
27,000,000 Shares
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
September [18], 2003
ATARI, INC.
UNDERWRITING AGREEMENT
September 18, 2003
UBS Securities LLC
Xxxxxx Xxxxxxx Xxxxxx, Inc.
SoundView Technology Corporation
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Atari, Inc., a Delaware corporation (the "Company"), proposes to issue and
sell to the underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as representative(s), an aggregate of
9,000,000 shares of common stock, $0.01 par value (the "Common Stock"), of the
Company, and Infogrames Entertainment, S.A., a corporation organized under the
laws of France (the "Selling Stockholder") proposes to sell to the Underwriters
an aggregate of 18,000,000 shares of Common Stock (such shares, with the
9,000,000 shares proposed to be sold by the Company, the "Firm Shares"). In
addition, solely for the purpose of covering over-allotments, the Company and
the Selling Stockholder propose to grant to the Underwriters the option to
purchase up to an additional aggregate of 4,050,000 shares of Common Stock (the
"Additional Shares"), with the Company and the Selling Stockholder selling up to
the number of Additional Shares set forth on Schedule B hereto. The Firm Shares
and the Additional Shares are hereinafter collectively sometimes referred to as
the "Shares." The Shares are described in the Prospectus which is referred to
below.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively,
the "Act"), with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-2 (File No. 333-107819) including a prospectus,
relating to the Shares, which incorporates by reference documents which the
Company has filed in accordance with the provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (collectively,
the "Exchange Act"). The Company has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses and
the
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documents incorporated by reference therein (each such preliminary prospectus,
including the documents incorporated therein by reference, being herein called a
"Preliminary Prospectus") relating to the Shares. Except where the context
otherwise requires, the registration statement, as amended when it became or
becomes effective, including all documents filed as a part thereof or
incorporated by reference therein, and including any information contained in a
prospectus subsequently filed with the Commission pursuant to Rule 424(b) under
the Act and deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430(A) under the Act and also including any
registration statement filed pursuant to Rule 462(b) under the Act, is herein
called the "Registration Statement," and the prospectus, including all documents
incorporated therein by reference, in the form filed by the Company with the
Commission pursuant to Rule 424(b) under the Act on or before the second
business day after the date hereof (or such earlier time as may be required
under the Act) or, if no such filing is required, the form of final prospectus
included in the Registration Statement at the time it became effective, is
herein called the "Prospectus." As used herein, "business day" shall mean a day
on which the NASDAQ National Market (the "NASDAQ") is open for trading.
The Company, the Selling Stockholder and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell, and the Selling Stockholder agrees to sell, severally and not
jointly, to the respective Underwriters and each of the Underwriters, severally
and not jointly, agrees to purchase from the Company and the Selling
Stockholder, as applicable, the respective number of Firm Shares to be sold by
the Company and the Selling Stockholder, respectively, set forth opposite the
name of such Underwriter in Schedule A attached hereto, subject to adjustment in
accordance with Section 9 hereof, in each case at a purchase price of $______
per Share. The Company and the Selling Stockholder are each advised by you that
the Underwriters intend (i) to make a public offering of their respective
portions of the Firm Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the Firm
Shares upon the terms set forth in the Prospectus. You may from time to time
increase or decrease the public offering price after the initial public offering
to such extent as you may determine.
In addition, the Company and the Selling Stockholder hereby grant to the
several Underwriters the option to purchase, and upon the basis of the
representations and warranties and subject to the terms and conditions herein
set forth, the Underwriters shall have the right to purchase, severally and not
jointly, from the Company and the Selling Stockholder, ratably in accordance
with the number of Firm Shares to be purchased by each of them, all or a portion
of the Additional Shares as may be necessary to cover over-allotments made in
connection with the offering of the Firm Shares, at the same purchase price per
share to be
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paid by the Underwriters to the Company and the Selling Stockholder for the Firm
Shares; provided, however, that in the event that the exercise of the option by
the Underwriters results in the purchase of less than all of the Additional
Shares, such exercise or exercises shall be satisfied in the manner set forth on
Schedule B attached hereto. This option may be exercised by UBS Securities LLC
("UBS") on behalf of the several Underwriters at any time and from time to time
on or before the thirtieth day following the date of the Prospectus, by written
notice to the Company and the Selling Stockholder. Such notice shall set forth
the aggregate number of Additional Shares as to which the option is being
exercised, and the date and time when the Additional Shares are to be delivered
(such date and time being herein referred to as the "additional time of
purchase"); provided, however, that the additional time of purchase shall not be
earlier than the time of purchase (as defined below) nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the tenth business day after the date on which the option shall have
been exercised. The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule A hereto bears to the total
number of Firm Shares (subject, in each case, to such adjustment as you may
determine to eliminate fractional shares), subject to adjustment in accordance
with Section 9 hereof.
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made to the Company and the Selling Stockholder by Federal Funds wire
transfer, against delivery of the certificates for the Firm Shares to you
through the facilities of The Depository Trust Company ("DTC") for the
respective accounts of the Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York City time, on _______________, 2003 (unless another time
shall be agreed to by you and the Company and the Selling Stockholder or unless
postponed in accordance with the provisions of Section 9 hereof). The time at
which such payment and delivery are to be made is hereinafter sometimes called
"the time of purchase." Electronic transfer of the Firm Shares shall be made to
you at the time of purchase in such names and in such denominations as you shall
specify.
Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as the
payment for the Firm Shares. Electronic transfer of the Additional Shares shall
be made to you at the additional time of purchase in such names and in such
denominations as you shall specify.
Deliveries of the documents described in Section 7 hereof with respect to
the purchase of the Shares shall be made at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, P.C., 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, at
9:00 A.M., New York City time, on the date of the closing of the purchase of the
Firm Shares or the Additional Shares, as the case may be.
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3. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has been declared effective under
the Act; no stop order of the Commission preventing or suspending the use of any
Preliminary Prospectus or the effectiveness of the Registration Statement has
been issued and no proceedings for such purpose have been instituted or, to the
Company's knowledge after due inquiry, are contemplated by the Commission; each
Preliminary Prospectus, at the time of filing thereof, complied in all material
respects with the requirements of the Act and the last Preliminary Prospectus
distributed in connection with the offering of the Shares did not, as of its
date, and does 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 light of the circumstances under which they were made,
not misleading; the Registration Statement complied when it became effective,
complies and will comply, at the time of purchase and any additional time of
purchase, in all material respects with the requirements of the Act and the
Prospectus will comply, as of its date and at the time of purchase and any
additional times of purchase, in all material respects with the requirements of
the Act and any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement have been and will be so
described or filed; the conditions to the use of Form S-2 have been satisfied;
the Registration Statement did not when it became effective, does not and will
not, at the time of purchase and any additional time of purchase, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading and
the Prospectus will not, as of its date and at the time of purchase and any
additional time of purchase, 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 light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no warranty or
representation with respect to any statement contained in the last Preliminary
Prospectus, the Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning an Underwriter and furnished in writing
by or on behalf of such Underwriter through you to the Company expressly for use
in the last Preliminary Prospectus, the Registration Statement or the
Prospectus; the documents incorporated by reference in the Preliminary
Prospectus, the Registration Statement and the Prospectus, at the time they
became effective or were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and the Company has
not distributed and will not distribute any offering material in connection with
the offering or sale of the Shares other than the Registration Statement, the
then most recent Preliminary Prospectus and the Prospectus;
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(b) as of the date of this Agreement, the Company has an authorized
and outstanding capitalization as set forth in the section of the Registration
Statement and the Prospectus entitled "Capitalization" and, as of the time of
purchase and the additional time of purchase, as the case may be, the Company
shall have an authorized and outstanding capitalization as set forth in the
section of the Registration Statement and the Prospectus entitled
"Capitalization" (subject, in each case, to the issuance of shares of Common
Stock upon exercise of stock options and warrants disclosed as outstanding in
the Registration Statement and the Prospectus and grant of options under
existing stock option plans described in the Registration Statement and the
Prospectus); all of the issued and outstanding shares of capital stock,
including the Common Stock, of the Company have been duly authorized and validly
issued and are fully paid and non-assessable, have been issued in compliance
with all U.S. federal and state securities laws and were not issued in violation
of any preemptive right, resale right, right of first refusal or similar right;
(c) Prior to the time of purchase, (X) the Company will have
executed, delivered, and entered into the Agreement Regarding Satisfaction of
Debt and License Amendment (the "Infogrames Agreement") between the Company, the
Selling Stockholder and California U.S. Holdings, Inc. ("CUSH"), dated September
16, 2003, in the form previously provided to the Underwriters and each of the
transactions contemplated therein shall have been duly and validly authorized
and consummated as described in the Registration Statement and the Prospectus,
including but not limited to (i) the transfer to the Selling Stockholder of
$_____________ that is owed to the Company by Atari Interactive, Inc. and
$________ that is owed to the Company by Atari Australia, Ltd. in satisfaction
of an equal amount of the Company's indebtedness to the Selling Stockholder, and
(ii) the issuance by the Company to the Selling Stockholder and CUSH of an
aggregate of ____________ shares of the Company's Common Stock, valued at the
public offering price shown on the cover page of the Prospectus, in satisfaction
of the remaining $____________ of the Company's aggregate indebtedness to the
Selling Stockholder and CUSH, such shares to be duly authorized, validly issued,
fully-paid and non-assessable and (Y) the license to the Company of the "Atari"
name and Atari logo, as provided in that certain Amended Trademark License
Agreement between the Company and the Selling Stockholder (or a subsidiary of
the Selling Stockholder) (the "License Extension Agreement"), dated September 4,
2003, shall have been extended in accordance therewith and as described in the
Registration Statement and the Prospectus. The Infogrames Agreement, the License
Extension Agreement and any other documents delivered in connection therewith
are collectively herein called the "Recapitalization Agreements" and the
transactions in connection with such Recapitalization Agreements are
collectively herein called the "Recapitalization;"
(d) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its properties and
conduct its business as
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described in the Registration Statement and the Prospectus, to execute and
deliver this Agreement and the Recapitalization Agreements and to issue, sell
and deliver the Shares as contemplated herein;
(e) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, financial condition, results of operation or prospects
of the Company and the Subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect");
(f) the Company has no subsidiaries (as defined in the Act) other
than Reflections Interactive Ltd. ("Reflections"), Atari PTY Limited, GT
Interactive Software Limited, GT Interactive Software France S.A.R.L., GT
Interactive Software GmbH, GT Interactive Software Value GmbH, and FormGen, Inc.
(collectively, the "Subsidiaries"); the Company has no significant subsidiaries
(as defined in Rule 1-02 of Regulation S-X) other than Reflections, and the
Subsidiaries other than Reflections, taken together in the aggregate, would not
constitute a significant subsidiary (as defined in Rule 1-02 of Regulation S-X);
the Company owns all of the issued and outstanding capital stock of each of the
Subsidiaries; other than the capital stock of the Subsidiaries, the Company does
not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity (other than shares
of money market funds or similar securities); complete and correct copies of the
certificates of incorporation and the by-laws of the Company and Reflections and
all amendments thereto have been delivered to you, and except as set forth in
the exhibits to the Registration Statement no changes therein will be made
subsequent to the date hereof and prior to the time of purchase or, if later,
the additional time of purchase; Reflections has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus; Reflections is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate, have
a Material Adverse Effect; all of the outstanding shares of capital stock of
Reflections have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company subject to no security interest,
other encumbrance or adverse claims (except that the Company has pledged
approximately 65% of its holdings in Reflections to General Electric Capital
Corporation ("GECC")); and no options, warrants or
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other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership
interests in Reflections are outstanding;
(g) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued, fully paid and non-assessable and free of statutory and
contractual preemptive rights, resale rights, rights of first refusal and
similar rights;
(h) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus and the certificates for the Shares
are in due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(i) this Agreement and the Recapitalization Agreements have been
duly authorized, executed and delivered by the Company, and each of the
Recapitalization Agreements is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms (except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the enforcement of
creditors' rights generally and (ii) principles of law relating to the
availability of specific performance, injunctive relief or other equitable
remedies);
(j) neither the Company nor Reflections is in breach or violation of
or in default under (nor has any event occurred which with notice, lapse of time
or both would result in any breach or violation of, constitute a default under
or give the holder of any indebtedness (or a person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all or a
part of such indebtedness under) its respective charter or by-laws (or similar
organizational documents), or any indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company or Reflections is
a party or by which any of them or any of their properties may be bound or
affected, and the execution, delivery and performance of this Agreement and the
Recapitalization Agreements, the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, result in any breach or violation of or constitute a default
under (nor constitute any event which with notice, lapse of time or both would
result in any breach or violation of or constitute a default under) the charter
or by-laws (or similar organizational documents) of the Company or Reflections,
or any indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company or Reflections is a party or by
which any of them or any of their respective properties may be bound or
affected, or any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or Reflections;
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(k) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency is required in connection with the issuance and
sale of the Shares, the consummation by the Company of the transactions
contemplated hereby or the Recapitalization, other than registration of the
Shares under the Act, which has been or will be effected, and any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters or under the rules and
regulations of the NASD;
(l) except as set forth in the Registration Statement and the
Prospectus, (i) no person has the right, contractual or otherwise, to cause the
Company to issue or sell to it any shares of Common Stock or shares of any other
capital stock or other equity interests of the Company, (ii) no person has any
preemptive rights, resale rights, rights of first refusal or other rights to
purchase any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, and (iii) no person has the right to act
as an underwriter or as a financial advisor to the Company in connection with
the offer and sale of the Shares, in the case of each of the foregoing clauses
(i), (ii) and (iii), whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby or
otherwise; no person has the right, contractual or otherwise, to cause the
Company to register under the Act any shares of Common Stock or shares of any
other capital stock or other equity interests of the Company, or to include any
such shares or interests in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby or
otherwise, except where the failure by the Company to honor such right would not
result in a Material Adverse Effect or affect the Company's ability to
consummate the transactions contemplated by this Agreement; to the Company's
knowledge, any party that is not an affiliate of the Company (as such term is
defined in Rule 144(a) of the Act) holding such right may sell its shares
subject to such right without registration under the Act pursuant to Rule 144(k)
thereof;
(m) each of the Company and Reflections has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any U.S. federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and approvals
from other persons, in order to conduct its respective business; neither the
Company nor Reflections is in violation of, or in default under, or has received
notice of any proceedings relating to revocation or modification of, any such
license, authorization, consent or approval or any U.S. federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company or Reflections, except where such violation, default, revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect;
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(n) all legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
have been so described or filed as required;
(o) except as disclosed in the Registration Statement and the
Prospectus, there are no actions, suits, claims, investigations or proceedings
pending or threatened or, to the Company's knowledge after due inquiry,
contemplated to which the Company or Reflections or any of their respective
directors or officers is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, before or by any U.S.
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency, except any such action, suit, claim, investigation or
proceeding which would not result in a judgment, decree or order having,
individually or in the aggregate, a Material Adverse Effect or preventing
consummation of the transactions contemplated hereby or the Recapitalization;
(p) Deloitte & Touche LLP, whose report on the consolidated
financial statements of the Company and the Subsidiaries is filed with the
Commission as part of the Registration Statement and the Prospectus, are
independent public accountants as required by the Act;
(q) the audited financial statements included in the Registration
Statement and the Prospectus, together with the related notes and schedules,
present fairly the consolidated financial position of the Company and the
Subsidiaries as of the dates indicated and the consolidated results of
operations and cash flows of the Company and the Subsidiaries for the periods
specified and have been prepared in compliance with the requirements of the Act
and in conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved; any pro forma financial statements
or data included in the Registration Statement and the Prospectus comply with
the requirements of Regulation S-X under the Act and the assumptions used in the
preparation of such pro forma financial statements and data are reasonable, the
pro forma adjustments used therein are appropriate to give effect to the
transactions or circumstances described therein and the pro forma adjustments
have been properly applied to the historical amounts in the compilation of those
statements and data; the other financial and statistical data set forth in the
Registration Statement and the Prospectus are accurately presented and prepared
on a basis consistent with the financial statements and books and records of the
Company; there are no financial statements (historical or pro forma) that are
required to be included in the Registration Statement and the Prospectus that
are not included as required; and the Company and the Subsidiaries do not have
any material liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration Statement and
the Prospectus;
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(r) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and except as disclosed
in the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development involving a prospective material
adverse change, in the business, properties, management, financial condition or
results of operations of the Company and the Subsidiaries taken as a whole, (ii)
any transaction which is material to the Company and the Subsidiaries taken as a
whole, (iii) any obligation, direct or contingent (including any off-balance
sheet obligations), incurred by the Company or the Subsidiaries, which is
material to the Company and the Subsidiaries taken as a whole, (iv) any change
in the capital stock or outstanding indebtedness of the Company or Reflections
(other than as a result of accrual of interest on indebtedness indicated as
outstanding in the Registration Statement and the Prospectus or exercise or
conversion of exercisable or convertible securities indicated as outstanding in
the Registration Statement and the Prospectus) or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company;
(s) the Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement"), in the form set forth as Exhibit A hereto, of
each of its directors and officers and the Selling Stockholder;
(t) the Company is not and, after giving effect to the offering and
sale of the Shares, 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 (the "Investment Company Act");
(u) the Company and Reflections has good and marketable title to all
property (real and personal) described the Registration Statement and in the
Prospectus as being owned by each of them, free and clear of all liens, claims,
security interests or other encumbrances (except for those assets pledged to
GECC and the Selling Stockholder pursuant to security agreements filed as
exhibits to the Registration Statement); all the property described in the
Registration Statement and the Prospectus as being held under lease by the
Company or Reflections is held by them under valid, subsisting and enforceable
leases;
(v) except as disclosed in the Registration Statement and the
Prospectus, the Company and Reflections own, or have obtained valid and
enforceable licenses for, or other rights to use, the inventions, patent
applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights, trade secrets and other proprietary information
described in the Registration Statement and the Prospectus as being owned or
licensed by them or which are necessary for the conduct of their respective
businesses, except where the failure to own, license or have such rights would
not, individually or in the aggregate, have a Material Adverse Effect
(collectively, "Intellectual Property"), (i) there are no third parties who have
or, to the best of the Company's knowledge after due inquiry, will be able to
establish rights to any Intellectual Property, except for the ownership rights
of the owners of
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the Intellectual Property which is licensed to the Company or rights granted by
owners of the Intellectual Property to which the Company does not hold exclusive
rights to other persons; (ii) there is, to the best of the Company's knowledge,
no infringement by third parties of any Intellectual Property; (iii) there is no
pending or, to the best of the Company's knowledge, threatened, action, suit,
proceeding or claim by others challenging the Company's rights in or to any
Intellectual Property, and the Company is unaware of any facts which could form
a reasonable basis for any such claim; (iv) there is no pending or, to the best
of the Company's knowledge, threatened, action, suit, proceeding or claim by
others challenging the validity or scope of any Intellectual Property, and the
Company is unaware of any facts which could form a reasonable basis for any such
claim; (v) there is no pending or, to the best of the Company's knowledge,
threatened, action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others, and the Company is unaware of any facts
which could form a reasonable basis for any such claim; (vi) there is no patent
or patent application that contains claims that interfere with the issued or
pending claims of any of the Intellectual Property; and (vii) there is no prior
art of which the Company is aware that may render any patent application owned
by the Company of the Intellectual Property unpatentable that has not been
disclosed to the U.S. Patent and Trademark Office;
(w) neither the Company nor Reflections is engaged in any unfair
labor practice; except for matters which would not, individually or in the
aggregate, have a Material Adverse Effect, (i) there is (A) no unfair labor
practice complaint pending or, to the best of the Company's knowledge after due
inquiry, threatened against the Company or Reflections before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending or, to the best of the
Company's knowledge, threatened, (B) no strike, labor dispute, slowdown or
stoppage pending or, to the best of the Company's knowledge after due inquiry,
threatened against the Company or Reflections and (C) no union representation
dispute currently existing concerning the employees of the Company or
Reflections, and (ii) to the best of the Company's knowledge after due inquiry,
(A) no union organizing activities are currently taking place concerning the
employees of the Company or Reflections and (B) there has been no violation of
any federal, state, local or foreign law relating to discrimination in the
hiring, promotion or pay of employees, any applicable wage or hour laws or any
provision of the Employee Retirement Income Security Act of 1974 ("ERISA") or
the rules and regulations promulgated thereunder concerning the employees of the
Company or Reflections;
(x) the Company and Reflections and their properties, assets and
operations are in compliance with, and the Company and Reflections hold all
permits, authorizations and approvals required under, Environmental Laws (as
defined below), except to the extent that failure to so comply or to hold such
permits, authorizations or approvals would not, individually or in the
aggregate, have a Material Adverse Effect; there are no past,
-13-
present or, to the Company's knowledge after due inquiry, reasonably anticipated
future events, conditions, circumstances, activities, practices, actions,
omissions or plans that could reasonably be expected to give rise to any
material costs or liabilities to the Company or Reflections under, or to
interfere with or prevent compliance by the Company or Reflections with,
Environmental Laws; except as would not, individually or in the aggregate, have
a Material Adverse Effect, neither the Company nor Reflections (i) is the
subject of any investigation, (ii) has received any notice or claim, (iii) is a
party to or affected by any pending or threatened action, suit or proceeding,
(iv) is bound by any judgment, decree or order or (v) has entered into any
agreement, in each case relating to any alleged violation of any Environmental
Law or any actual or alleged release or threatened release or cleanup at any
location of any Hazardous Materials (as defined below) (as used herein,
"Environmental Law" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, decree, judgment, injunction, permit,
license, authorization or other binding requirement, or common law, relating to
health, safety or the protection, cleanup or restoration of the environment or
natural resources, including those relating to the distribution, processing,
generation, treatment, storage, disposal, transportation, other handling or
release or threatened release of Hazardous Materials, and "Hazardous Materials"
means any material (including, without limitation, pollutants, contaminants,
hazardous or toxic substances or wastes) that is regulated by or may give rise
to liability under any Environmental Law);
(y) in the ordinary course of their business, the Company and
Reflections periodically review whether there are any Environmental Laws that
affect their business, operations and properties and, if necessary, evaluate
potential costs and liabilities (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties or compliance
with the Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties);
(z) all tax returns required to be filed by the Company and
Reflections have been filed, and all taxes and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax or penalties applicable thereto due or claimed to be
due from such entities, have been paid, other than those being contested in good
faith and for which adequate reserves have been provided;
(aa) the Company and Reflections maintains such insurance covering
its properties, operations, personnel and businesses as the Company deems
adequate; such insurance insures against losses and risks to an extent which is
adequate in accordance with customary industry practice to protect the Company
and Reflections and their businesses; all such insurance is fully in force on
the date hereof and will be fully in force at the time of purchase and any
additional time of purchase;
(bb) neither the Company nor Reflections has sustained since the
date of the last audited financial statements included in the Registration
Statement and the Prospectus
-14-
any loss or interference with its respective business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree;
(cc) the Company has not sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or
agreements referred to or described in, or filed as an exhibit to, the
Registration Statement, and no such termination or non-renewal has been
threatened by the Company or, to the Company's knowledge after due inquiry, any
other party to any such contract or agreement;
(dd) the Company and Reflections maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(ee) the Company has established and maintains disclosure controls
and procedures (as such term is defined in Rules 13a-14 and 15d-14 under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's Chief Executive Officer and its
Chief Financial Officer by others within those entities, and such disclosure
controls and procedures are effective to perform the functions for which they
were established; the Company's auditors and the Audit Committee of the Board of
Directors have been advised of: (i) any significant deficiencies in the design
or operation of internal controls which could adversely affect the Company's
ability to record, process, summarize, and report financial data; and (ii) any
fraud, whether or not material, that involves management or other employees who
have a role in the Company's internal controls; any material weaknesses in
internal controls have been identified for the Company's auditors; and since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses;
(ff) the Company has provided you true, correct, and complete copies
of all documentation pertaining to any extension of credit in the form of a
personal loan made, directly or indirectly, by the Company to any director or
executive officer of the Company, or to any family member or affiliate of any
director or executive officer of the Company; and since July 30, 2002, the
Company has not, directly or indirectly, including through any subsidiary: (i)
extended credit, arranged to extend credit, or renewed any extension of credit,
-15-
in the form of a personal loan, to or for any director or executive officer of
the Company, or to or for any family member or affiliate of any director or
executive officer of the Company; or (ii) made any material modification,
including any renewal thereof, to any term of any personal loan to any director
or executive officer of the Company, or any family member or affiliate of any
director or executive officer, which loan was outstanding on July 30, 2002;
(gg) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources to the
extent required;
(hh) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge after due inquiry, any employee or agent of the Company or
the Subsidiaries has made any payment of funds of the Company or the
Subsidiaries or received or retained any funds in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Registration Statement or the Prospectus;
(ii) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any of their respective directors, officers, affiliates or
controlling persons has taken, directly or indirectly, any action designed, or
which has constituted or might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares;
(jj) the Company is in compliance with all presently applicable
provisions of the Sarbanes Oxley Act of 2002 (the "Sarbanes Oxley Act") and is
actively taking steps to ensure that it will be in compliance with other
applicable provisions of the Sarbanes Oxley Act upon the effectiveness of such
provisions; and
(kk) to the Company's knowledge after due inquiry, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater securityholders, except as set
forth in the Registration Statement and the Prospectus.
In addition, any certificate signed by any officer of the Company or any
of the Subsidiaries and delivered to the Underwriters or counsel for the
Underwriters in connection with the offering of the Shares shall be deemed to be
a representation and warranty by the Company or Subsidiary, as the case may be,
as to matters covered thereby, to each Underwriter.
-16-
4. Representations and Warranties of the Selling Stockholder. The Selling
Stockholder represents and warrants to and agrees with each of the Underwriters
that:
(a) To the knowledge of the Selling Stockholder, each Preliminary
Prospectus, at the time of filing thereof, complied in all material respects
with the requirements of the Act and the last Preliminary Prospectus distributed
in connection with the offering of the Shares did not, as of its date, and does
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 light of the circumstances under which they were made, not misleading; the
Registration Statement complied when it became effective, complies and will
comply, at the time of purchase and any additional time of purchase, in all
material respects with the requirements of the Act and the Prospectus will
comply, as of its date and at the time of purchase and any additional times of
purchase, in all material respects with the requirements of the Act and any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement have been and will be so described or
filed; the conditions to the use of Form S-2 have been satisfied; the
Registration Statement did not when it became effective, does not and will not,
at the time of purchase and any additional time of purchase, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
the Prospectus will not, as of its date and at the time of purchase and any
additional time of purchase, 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 light of the circumstances under which they were
made, not misleading; provided, however, that the Selling Stockholder makes no
warranty or representation with respect to any statement contained in the last
Preliminary Prospectus, the Registration Statement or the Prospectus in reliance
upon and in conformity with information concerning an Underwriter and furnished
in writing by or on behalf of such Underwriter through you to the Company or the
Selling Stockholder expressly for use in the last Preliminary Prospectus, the
Registration Statement or the Prospectus; the documents incorporated by
reference in the Preliminary Prospectus, the Registration Statement and the
Prospectus, at the time they became effective or were filed with the Commission,
complied in all material respects with the requirements of the Exchange Act and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and the Selling Stockholder has not distributed and will not
distribute any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the then most recent Preliminary
Prospectus and the Prospectus;
(b) Prior to the time of purchase, the Selling Stockholder and CUSH
will have executed, delivered, and entered into the Recapitalization Agreements,
in the form
-17-
previously provided to the Underwriters, and each of the transactions
contemplated therein shall have been duly and validly authorized and consummated
as described in the Registration Statement and the Prospectus, including but not
limited to (i) the transfer to the Selling Stockholder of $_____________ that is
owed to the Company by Atari Interactive, Inc. and $___ that is owed to the
Company by Atari Australia, Ltd. in satisfaction of an equal amount of the
Company's indebtedness to the Selling Stockholder, (ii) the issuance by the
Company to the Selling Stockholder and CUSH of an aggregate of ____________
shares of the Company's Common Stock, valued at the public offering price stated
on the cover page of the prospectus, in satisfaction of the remaining
$____________ of the Company's aggregate indebtedness to the Selling Stockholder
and CUSH, and (iii) the extension of the license to the Company of the "Atari"
name and Atari logo, as provided in the License Extension Agreement, in
accordance therewith and as described in the Registration Statement and the
Prospectus;
(C) [INTENTIONALLY OMITTED.]
(d) this Agreement, that certain Custody Agreement by and among
American Stock Transfer & Trust Company, as custodian, and the Selling
Stockholder (the "Custody Agreement") and the Recapitalization Agreements have
been (or, with respect to the Custody Agreement, will be prior to the time of
purchase) duly authorized, executed and delivered by the Selling Stockholder
(and its subsidiaries, if applicable), and each of the Recapitalization
Agreements and Custody Agreement is (or, with respect to the Custody Agreement,
will be prior to the time of purchase) a legal, valid and binding agreement of
the Selling Stockholder (and its subsidiaries, if applicable) enforceable
against the Selling Stockholder (and its subsidiaries, if applicable) in
accordance with their respective terms (except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the enforcement of creditors' rights generally and
(ii) laws relating to the availability of specific performance, injunctive
relief or other equitable remedies);
(e) the Selling Stockholder is not in breach or violation of or in
default under (nor has any event occurred which with notice, lapse of time or
both would result in any breach or violation of, constitute a default under or
give the holder of any indebtedness (or a person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) its charter or by-laws, or any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of indebtedness,
or any license, lease, contract or other agreement or instrument to which the
Selling Stockholder is a party or by which it or any of its properties may be
bound or affected, and the execution, delivery and performance of this
Agreement, the Custody Agreement and the Recapitalization Agreements, the sale
of the Shares and the consummation of the transactions contemplated hereby and
thereby will not conflict with, result in any breach or violation of or
constitute a
-18-
default under (nor constitute any event which with notice, lapse of time or both
would result in any breach or violation of or constitute a default under) the
charter or by-laws of the Selling Stockholder, or any indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of indebtedness, or
any license, lease, contract or other agreement or instrument (each, a
"Contract") to which the Selling Stockholder is a party or by which its or any
of its properties may be bound or affected, or any U.S. federal, state, local or
foreign law, regulation or rule or any decree, judgment or order (each, a "Law")
applicable to the Selling Stockholder;
(f) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency is required in connection with the sale of the
Shares to be sold by the Selling Stockholder hereunder and, to the knowledge of
the Selling Stockholder, the issuance and sale of the Shares to be sold by the
Company hereunder, the consummation by the Selling Stockholder, and to the
knowledge of the Selling Stockholder, the Company or any of the Subsidiaries, of
the transactions contemplated hereby or the Recapitalization, other than
registration of the Shares under the Act, which has been or will be effected,
and any necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the Underwriters
or under the rules and regulations of the NASD;
(g) except as set forth in the Registration Statement and the
Prospectus, (i) no person has any preemptive rights, resale rights, rights of
first refusal or other rights to purchase any shares of Common Stock to be sold
by the Selling Stockholder hereunder, and (ii) no person has the right to act as
an underwriter or as a financial advisor to the Selling Stockholder in
connection with the offer and sale of the Shares to be sold by the Selling
Stockholder hereunder, in the case of each of the foregoing clauses (i) and
(ii), whether as a result of the filing or effectiveness of the Registration
Statement or the sale of the Shares as contemplated thereby or otherwise; no
person has the right, contractual or otherwise, to cause the Company to register
under the Act any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, or to include any such shares or
interests in the Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the Registration Statement
or the sale of the Shares as contemplated thereby or otherwise, except where the
failure by the Company to honor such right would not result in a Material
Adverse Effect or affect the Company's ability to consummate the transactions
contemplated by this Agreement;
(h) to the knowledge of the Selling Stockholder, all affiliate
transactions required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have been
so described or filed as required;
(i) except as disclosed in the Registration Statement and
Prospectus, there are no actions, suits, claims, investigations or proceedings
pending or threatened or, to the
-19-
Selling Stockholder's knowledge after due inquiry, contemplated to which the
Selling Stockholder or any of its directors or officers is or would be a party
or of which any of their respective properties is or would be subject at law or
in equity, before or by any U.S. federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency, except any such
action, suit, claim, investigation or proceeding which would not result in a
judgment, decree or order having, individually or in the aggregate, a Material
Adverse Effect or preventing consummation of the transactions contemplated
hereby or the Recapitalization;
(j) to the knowledge of the Selling Stockholder, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been (i) any material adverse change, or any
development involving a prospective material adverse change, in the business,
properties, management, financial condition or results of operations of the
Company and the Subsidiaries taken as a whole, (ii) any transaction which is
material to the Company and the Subsidiaries taken as a whole, (iii) any
obligation, direct or contingent (including any off-balance sheet obligations),
incurred by the Company or the Subsidiaries, which is material to the Company
and the Subsidiaries taken as a whole, (iv) any change in the capital stock or
outstanding indebtedness of the Company or the Subsidiaries or (v) any dividend
or distribution of any kind declared, paid or made on the capital stock of the
Company;
(k) the Selling Stockholder has executed and delivered a Lock-Up
Agreement to the Company in the form set forth as Exhibit A hereto;
(l) neither the Selling Stockholder nor, to the Selling
Stockholder's knowledge, any of its directors, officers, affiliates or
controlling persons has taken or will take, directly or indirectly, any action
designed, or which has constituted or might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares;
(m) there are no affiliations or associations between the Selling
Stockholder and any member of the NASD;
(n) the Selling Stockholder or a subsidiary of the Selling
Stockholder now is, and the Selling Stockholder at the time of delivery of such
Shares (at the time of purchase or additional time of purchase, as applicable)
will be, the lawful owner of the number of Shares to be sold by the Selling
Stockholder pursuant to this Agreement and has or, at the time of delivery
thereof, will have valid and marketable title to such Shares, and upon delivery
of and payment for such Shares, the Underwriters will acquire valid and
marketable title to such Shares free and clear of any claim, lien, encumbrance,
security interest, community property right, restriction on transfer or other
defect in title;
-20-
(o) the Selling Stockholder has or at the time of delivery of
such Shares (at the time of purchase or additional time of purchase, as
applicable) will have, full legal right, power and capacity, and any approval
required by law (other than those imposed by the Act and the securities or blue
sky laws of certain jurisdictions), to sell, assign, transfer and deliver such
Shares in the manner provided in this Agreement, the Registration Statement and
the Prospectus;
(p) [INTENTIONALLY OMITTED];
(q) when the Registration Statement becomes effective and at
all times subsequent thereto through the latest of the time of purchase,
additional time of purchase or the termination of the offering of the Shares,
the Registration Statement and the Prospectus, and including any documents
incorporated by reference therein, any supplements or amendments thereto, as
such relate to the Selling Stockholder, will 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 not misleading; and
(r) 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 the
Common Stock to facilitate the sale or resale of the Shares or the issuance of
the shares of the Company's Common Stock to the Selling Stockholder pursuant to
the Recapitalization.
5. Certain Covenants.
(a) The Company agrees:
(i) to furnish such information as may be required
and otherwise to cooperate in qualifying the Shares for
offering and sale under the securities or blue sky laws of
such states or other jurisdictions as you may designate and to
maintain such qualifications in effect so long as you may
request for the distribution of the Shares; provided that the
Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the
laws of any such jurisdiction (except service of process with
respect to the offering and sale of the Shares); and to
promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose;
(ii) to make available to the Underwriters in New
York City, as soon as practicable after the Registration
Statement becomes effective, and thereafter from time to time
to furnish to the Underwriters, as many copies of
-21-
the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the
Registration Statement) as the Underwriters may request for
the purposes contemplated by the Act; in case any Underwriter
is required to deliver a prospectus after the nine-month
period referred to in Section 10(a)(3) of the Act in
connection with the sale of the Shares, the Company will
prepare, at its expense, promptly upon request such amendment
or amendments to the Registration Statement and the Prospectus
as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Act;
(iii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or
any post-effective amendment thereto to be declared effective
before the Shares may be sold, the Company will endeavor to
cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and the
Company will advise you promptly and, if requested by you,
will confirm such advice in writing, (i) when the Registration
Statement and any such post-effective amendment thereto has
become effective, and (ii) if Rule 430A under the Act is used,
when the Prospectus is filed with the Commission pursuant to
Rule 424(b) under the Act (which the Company agrees to file in
a timely manner under such Rule);
(iv) to advise you promptly, confirming such advice
in writing, of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or
for additional information with respect thereto, or of notice
of institution of proceedings for, or the entry of a stop
order, suspending the effectiveness of the Registration
Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to
use its best efforts to obtain the lifting or removal of such
order as soon as possible; to advise you promptly of any
proposal to amend or supplement the Registration Statement or
the Prospectus, including by filing any documents that would
be incorporated therein by reference, and to provide you and
Underwriters' counsel copies of any such documents for review
and comment a reasonable amount of time prior to any proposed
filing and to file no such amendment or supplement to which
you shall reasonably object in writing;
(v) subject to Section 5(a)(iv) hereof, to file
promptly all reports and any definitive proxy or information
statement required to be filed by the Company with the
Commission in order to comply with the Exchange Act
-22-
subsequent to the date of the Prospectus and for so long as
the delivery of a prospectus is required in connection with
the offering or sale of the Shares; and to provide you with a
copy of such reports and statements and other documents to be
filed by the Company pursuant to Section 13, 14 or 15(d) of
the Exchange Act during such period a reasonable amount of
time prior to any proposed filing, and to promptly notify you
of such filing;
(vi) if necessary or appropriate, to file a
registration statement pursuant to Rule 462(b) under the Act;
(vii) to advise the Underwriters promptly of the
happening of any event within the time during which a
prospectus relating to the Shares is required to be delivered
under the Act which could require the making of any change in
the Prospectus then being used so that the Prospectus would
not include an 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
are made, not misleading, and, during such time, subject to
Section 5(a)(iv) hereof, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such
amendments or supplements to such Prospectus as may be
necessary to reflect any such change;
(viii) to make generally available to the Company's
security holders, and to deliver to you, an earnings statement
of the Company (which will satisfy the provisions of Section
11(a) of the Act) covering a period of twelve months beginning
after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act) as soon as is reasonably
practicable after the termination of such twelve-month period
but not later than November 30, 2004;
(ix) to furnish to the Company's stockholders as soon
as practicable after the end of each fiscal year an annual
report (including a consolidated balance sheet and statements
of income, shareholders' equity and cash flow of the Company
and the Subsidiaries for such fiscal year, accompanied by a
copy of the certificate or report thereon of nationally
recognized independent certified public accountants);
(x) to furnish to you four copies of the Registration
Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto and
documents incorporated by reference therein) and sufficient
copies of the foregoing (other than exhibits) for distribution
of a copy to each of the other Underwriters;
-23-
(xi) to furnish to you promptly and, upon request, to
each of the other Underwriters for a period of three years
from the date of this Agreement (i) copies of any reports,
proxy statements, or other communications which the Company
shall send to its stockholders or shall from time to time
publish or publicly disseminate, (ii) copies of all annual,
quarterly and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may
be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which
any class of securities of the Company is listed, and (iv)
such other information as you may reasonably request regarding
the Company or the Subsidiaries;
(xii) to furnish to you as early as practicable prior
to the time of purchase and any additional time of purchase,
as the case may be, but not later than two business days prior
thereto, a copy of the latest available unaudited interim and
monthly consolidated financial statements, if any, of the
Company and the Subsidiaries which have been read by the
Company's independent certified public accountants, as stated
in their letter to be furnished pursuant to Section 7(b)
hereof;
(xiii) to apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of
proceeds" in the Prospectus;
(xiv) to pay all costs, expenses, fees and taxes in
connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the
Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and
shipment), (ii) the registration, issue, sale and delivery of
the Shares including any stock or transfer taxes and stamp or
similar duties payable upon the sale, issuance or delivery of
the Shares to the Underwriters, (iii) the producing, word
processing and/or printing of this Agreement, any Agreement
Among Underwriters, the Recapitalization Agreements, the
Custody Agreement, any dealer agreements, any Powers of
Attorney and any closing documents (including compilations
thereof) and the reproduction and/or printing and furnishing
of copies of each thereof to the Underwriters and (except
closing documents) to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering
and sale under state or foreign laws and the determination of
their eligibility for investment under state or foreign law as
aforesaid (including the legal fees and filing fees and other
disbursements of counsel for the Underwriters) and the
printing and furnishing of copies of any blue sky surveys or
legal investment surveys to the Underwriters and to dealers,
(v) any listing of the Shares on any
-24-
securities exchange or qualification of the Shares for
quotation on NASDAQ and any registration thereof under the
Exchange Act, (vi) any filing for review of the public
offering of the Shares by the NASD, including the legal fees
and filing fees and other disbursements of counsel to the
Underwriters, (vii) the fees and disbursements of any transfer
agent or registrar for the Shares, (viii) the costs and
expenses of the Company relating to presentations or meetings
undertaken in connection with the marketing of the offering
and sale of the Shares to prospective investors and the
Underwriters' sales forces, including, without limitation,
expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged
with the consent of the Company in connection with the road
show presentations, travel, lodging and other expenses
incurred by the officers of the Company and any such
consultants, and the cost of any aircraft chartered with the
consent of the Company in connection with the road show, and
(ix) the performance of the Company's other obligations
hereunder;
(xv) not to sell, offer to sell, contract or agree to
sell, hypothecate, pledge, grant any option to purchase or
otherwise dispose of or agree to dispose of, directly or
indirectly, any Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock or warrants or
other rights to purchase Common Stock or any other securities
of the Company that are substantially similar to Common Stock,
or file or cause to be declared effective a registration
statement under the Act relating to the offer and sale of any
shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock or other rights
to purchase Common Stock or any other securities of the
Company that are substantially similar to Common Stock for a
period of 120 days after the date hereof (the "Lock-Up
Period"), without the prior written consent of UBS, except for
(i) the registration of the Shares and the sales to the
Underwriters pursuant to this Agreement, (ii) issuances of
Common Stock upon the exercise of options or warrants
disclosed as outstanding in the Registration Statement and the
Prospectus, and (iii) the issuance of employee stock options
not exercisable during the Lock-Up Period pursuant to stock
option plans described in the Registration Statement and the
Prospectus or included as exhibits to the Registration
Statement;
(xvi) to use its best efforts to cause the Common
Stock to be listed for quotation on NASDAQ;
(xvii) to maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a
registrar for the Common Stock; and
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(xviii) maintain such controls and other procedures,
including, without limitation, those necessary to enable the
Company's Chief Executive Officer and Chief Financial Officer
to make the certifications required by Sections 302 and 906 of
the Sarbanes Oxley Act and the applicable regulations
thereunder, that are designed to ensure that information
required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the Commission's rules and forms, including,
without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company's management,
including its chief executive officer and chief financial
officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure and to ensure that material information relating to
the Company is made known to them by others within those
entities, particularly during the period in which such
periodic reports are being prepared.
(b) The Selling Stockholder agrees:
(i) to furnish such information as may be required
and otherwise to cooperate in qualifying the Shares being sold
by the Selling Stockholder for offering and sale under the
securities or blue sky laws of such states or other
jurisdictions as you may designate and to maintain such
qualifications in effect so long as you may request for the
distribution of such Shares; provided that the Selling
Stockholder shall not be required to qualify as a foreign
corporation or to consent to the service of process under the
laws of any such jurisdiction (except service of process with
respect to the offering and sale of the Shares); and to
promptly advise you of the receipt by the Selling Stockholder
of any notification with respect to the suspension of the
qualification of such Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose;
(ii) to advise you promptly, confirming such advice
in writing, of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or
for additional information with respect thereto, or of notice
of institution of proceedings for, or the entry of a stop
order, suspending the effectiveness of the Registration
Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to
use its best efforts or cause the Company to use its best
efforts to obtain the lifting or removal of such order as soon
as possible; to
-26-
advise you promptly of any proposal to amend or supplement the
Registration Statement or the Prospectus, including by filing
any documents that would be incorporated therein by reference,
and to provide or cause the Company to provide you and
Underwriters' counsel copies of any such documents for review
and comment a reasonable amount of time prior to any proposed
filing and to cause the Company not to file any such amendment
or supplement to which you shall reasonably object in writing;
(iii) to advise the Underwriters promptly of the
happening of any event with respect to the Selling Stockholder
that occurs within the time during which a prospectus relating
to the Shares is required to be delivered under the Act which
could require the making of any change in the Prospectus then
being used so that the Prospectus would not include an 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 are made, not misleading, and,
during such time, subject to Section 5(b)(ii) hereof, to
prepare and furnish, at the Selling Stockholder's expense, to
the Underwriters promptly such amendments or supplements to
such Prospectus as may be necessary to reflect any such
change;
(iv) to abide by the terms of the Lock-Up Agreement
executed by the Selling Stockholder;
(v) promptly provide notice to the Company and you in
the event there is any change to the information noted in the
Registration Statement or the Prospectus pertaining to the
Selling Stockholder; and
(vi) if necessary, cause its subsidiary to transfer a
number of shares of Common Stock to it prior to the time of
purchase or additional time of purchase, as applicable,
sufficient to enable the Selling Stockholder to satisfy its
obligations to sell the Shares contemplated to be sold
pursuant to this agreement by the Selling Stockholder.
6. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the fifth paragraph of Section 9 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
shall, in addition to paying the amounts described in Section 5(a)(xiv) hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
7. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on
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the part of the Company on the date hereof, at the time of purchase and, if
applicable, at the additional time of purchase, the performance by the Company
of its obligations hereunder and to the following additional conditions
precedent:
(a) The Company shall furnish to you at the time of purchase
and, if applicable, at the additional time of purchase, an opinion of Xxxxxxxx
Chance US, LLP, counsel for the Company, addressed to the Underwriters, and
dated the time of purchase or the additional time of purchase, as the case may
be, with reproduced copies for each of the other Underwriters and in form and
substance satisfactory to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for
the Underwriters, stating that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with full corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the Registration Statement and
the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated herein;
(ii) [INTENTIONALLY OMITTED];
(iii) the Company is duly qualified to do business as
a foreign corporation and is in good standing in each
jurisdiction in which the ownership or leasing of its
properties or the conduct of its business as described in the
Registration Statement and the Prospectus requires such
qualification, except where we have been advised by the
Company that the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a
Material Adverse Effect;
(iv) this Agreement and the Recapitalization
Agreements have been duly authorized, executed and delivered
by the Company and each of the Recapitalization Agreements is
a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its
respective terms (except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the enforcement of
creditors' rights generally and (ii) principles of law or
equity relating to the availability of specific performance,
injunctive relief or other equitable remedies);
(v) the Shares have been duly authorized and, when
issued and delivered by the Company in accordance with the
Agreement against payment of the consideration set forth in
the Agreement will be, validly issued, fully paid and
non-assessable;
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(vi) the Company has an authorized and outstanding
capitalization as set forth in the Registration Statement and
the Prospectus; all of the issued and outstanding shares of
capital stock of the Company have been duly authorized and
validly issued, are fully paid and non-assessable and are free
of statutory preemptive rights and, to the best of such
counsel's knowledge, contractual preemptive rights, resale
rights, rights of first refusal and similar rights; the Shares
are free of statutory preemptive rights and, to the best of
such counsel's knowledge, contractual preemptive rights,
resale rights, rights of first refusal and similar rights; the
certificates for the Shares are in due and proper form and the
holders of the Shares will not be subject to personal
liability by reason of being such holders;
(vii) [INTENTIONALLY OMITTED];
(viii) the capital stock of the Company, including
the Shares, conforms in all material respects to the
description thereof contained in the Registration Statement
and the Prospectus;
(ix) (A) the Registration Statement and the
Prospectus (except as to the financial statements and
schedules and other financial data contained therein and for
statistical information derived from such financial
statements, supporting schedules and other financial data, as
to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the
Act; (B) the conditions to the use of Form S-2 have been
satisfied; and (C) the documents incorporated by reference in
the Registration Statement and the Prospectus, at the time
they became effective or were filed with the Commission,
complied as to form in all material respects with the
requirements of the Exchange Act (except as to the financial
statements and schedules and other financial data contained
therein and for statistical information derived from such
financial statements, supporting schedules and other financial
data, as to which such counsel need express no opinion);
(x) the Registration Statement is 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 proceedings for that purpose
have been instituted or are pending or, to the best of such
counsel's knowledge, threatened by the Commission, and any
required filing of the Prospectus and any supplement thereto
pursuant to Rule 424 under the Act has been made in the manner
and within the time period required by such Rule 424;
-29-
(xi) no approval, authorization, consent or order of
or filing with any U.S. federal, state or local governmental
or regulatory commission, board, body, authority or agency is
required in connection with the issuance and sale of the
Shares being sold by the Company and consummation by the
Company of the transactions contemplated hereby or by the
Recapitalization Agreements other than registration of the
Shares under the Act (except such counsel need express no
opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriters);
(xii) the execution, delivery and performance of this
Agreement and the Recapitalization Agreements by the Company,
the issuance and sale of the Shares by the Company and the
consummation by the Company of the transactions contemplated
hereby and by the Recapitalization Agreements do not and will
not conflict with, result in any breach or violation of or
constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach
or violation of or constitute a default under) the charter or
by-laws of the Company, or any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other
agreement or instrument of which such counsel is aware and to
which the Company is a party or by which it or its properties
may be bound or affected, or any U.S. federal, state or local
law, regulation or rule or any decree, judgment or order
applicable to the Company;
(xiii) to the best of such counsel's knowledge, the
Company is not in breach or violation of or in default under
(nor has any event occurred which with notice, lapse of time,
or both would result in any breach or violation of, or
constitute a default under or give the holder of any
indebtedness (or a person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of
all or a part of such indebtedness under) its charter or
by-laws, or any indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to
which the Company is a party or by which it or its properties
may be bound or affected that is described or referred to in
the Registration Statement and the Prospectus or filed as an
exhibit to the Registration Statement, or any U.S. federal,
state or local law, regulation or rule or any decree, judgment
or order applicable to the Company;
(xiv) all affiliate transactions, off-balance sheet
transactions, contracts, licenses, agreements, leases or other
documents of which such counsel is aware that are of a
character that requires them to be described in the
-30-
Registration Statement or the Prospectus or to be filed as an
Exhibit to the Registration statement have been so described
or filed;
(xv) all actions, suits, claims, investigations or
proceedings of which such counsel is aware that are pending,
threatened or contemplated relating to the Recapitalization or
to which the Company or any of its Subsidiaries or any of
their respective directors or officers is or would be a party
or to which any of their respective properties is or would be
subject at law or in equity, before any U.S. federal, state,
local or foreign governmental or regulatory commission, board,
body, authority or agency which are required to be described
in the Registration Statement or the Prospectus are so
described;
(xvi) the Company is not and, after giving effect to
the offering and sale of the Shares, will not be an
"investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the
Investment Company Act;
(xvii) the information in the Registration Statement
and the Prospectus under the headings "Business -- Legal
proceedings" and "Description of capital stock," insofar as
such statements constitute a summary of documents or matters
of law, and those statements in the Registration Statement and
the Prospectus that are descriptions of contracts, agreements
or other legal documents or of legal proceedings, or refer to
statements of law or legal conclusions, are accurate in all
material respects and fairly summarize the information
required to be shown; and
(xviii) except as set forth in the Registration
Statement and the Prospectus, no person has the right,
pursuant to the terms of any contract, agreement or other
instrument described in or filed as an exhibit to the
Registration Statement or otherwise known to such counsel, to
cause the Company to register under the Act any shares of
Common Stock or shares of any other capital stock or other
equity interest of the Company, or to include any such shares
or interest in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the
Shares as contemplated thereby or otherwise, except with
respect to shares which may be sold without registration
pursuant to Rule 144(k) of the Act and shares issuable upon
exercise of warrants to purchase 71,400 shares (which the
Company has informed such counsel are subject to registration
rights but for which such applicable registration rights
agreements have not been reviewed by such counsel) which do
not require the cash payment of an exercise price upon
conversion and, when issued, may be sold without registrations
pursuant to Rule 144(k) of the
-31-
Act; such 71,400 shares subject to warrants includes 5,400
shares subject to a warrant for which the applicable warrant
agreement has not been reviewed by such counsel but for which
such counsel has been informed by the Company does not require
the cash payment of an exercise price upon conversion.
In addition, such counsel shall state that such counsel has
participated in conferences with officers, employees and other representatives
of the Company, representatives of the independent public accountants of the
Company and representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus were discussed and, although such
counsel has not independently verified and is not passing upon and does not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
and to the extent stated in subparagraphs (vi), (viii), (xiv), (xv) and (xvii)
above), on the basis of the foregoing nothing has come to the attention of such
counsel that causes them to believe that the Registration Statement or any
amendment thereto at the time such Registration Statement or amendment became
effective contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus or any supplement thereto at the
date of such Prospectus or such supplement, and at the time of purchase or the
additional time of purchase, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief with respect to the financial
statements, supporting schedules and other financial data, or to statistical
information derived from such financial statements, supporting schedules and
other financial data, included in the Registration Statement or the Prospectus).
(b) You shall have received from Deloitte & Touche LLP comfort
letters dated, respectively, the date of this Agreement, the time of purchase
and, if applicable, the additional time of purchase, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by UBS.
(c) You shall have received at the time of purchase and, if
applicable, at the additional time of purchase, the favorable opinion of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, in a form
reasonably acceptable to you.
(d) No Prospectus or amendment or supplement to the
Registration Statement or the Prospectus, including documents deemed to be
incorporated by reference therein, shall have been filed to which you reasonably
object in writing.
(e) The Registration Statement shall become effective not
later than 5:30 P.M. New York City time, on the date of this Agreement and, if
Rule 430A under the Act is
-32-
used, the Prospectus shall have been filed with the Commission pursuant to Rule
424(b) under the Act at or before 5:30 P.M., New York City time, on the second
full business day after the date of this Agreement and any registration
statement pursuant to Rule 462(b) under the Act required in connection with the
offering and sale of the Shares shall have been filed and become effective no
later than 10:00 p.m., New York City time, on the date of this Agreement.
(f) Prior to the time of purchase, and, if applicable, the
additional time of purchase, (i) no stop order with respect to the effectiveness
of the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto shall 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 not misleading; and
(iii) the Prospectus and all amendments or supplements thereto shall 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 are made, not misleading.
(g) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may be, no
material adverse change or any development involving a prospective material
adverse change in the business, properties, management, financial condition or
results of operations of the Company and the Subsidiaries taken as a whole shall
occur or become known.
(h) The Company will, at the time of purchase and, if
applicable, at the additional time of purchase, deliver to you a certificate of
its Chief Executive Officer and its Chief Financial Officer in the form attached
as Exhibit B hereto.
(i) You shall have received signed Lock-up Agreements referred
to in Section 3(s) hereof.
(j) The Company shall have furnished to you such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the time of purchase and,
if applicable, the additional time of purchase, as you may reasonably request.
(k) The Shares shall have been approved for quotation on
NASDAQ, subject only to notice of issuance at or prior to the time of purchase
or the additional time of purchase, as the case may be.
(l) The NASD shall not have raised an objection to the
fairness and reasonableness of the indemnity terms and arrangements.
-33-
(m) The Underwriters shall have received at the time of
purchase and, if applicable, at the additional time of purchase, a certificate,
dated as of each such date, as applicable, and signed by the Selling
Stockholder, to the effect that the representations and warranties of the
Selling Stockholder contained in this Agreement are true and correct as of such
date, and that the Selling Stockholder has complied in all material respects
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before such date.
(n) On the date hereof, the Company and the Selling
Stockholder shall have furnished for review by the Underwriters copies of the
Custody Agreement executed or to be executed by the Selling Stockholder and such
further information, certificates and documents as the Representative may
reasonably request.
(o) As of each Closing, as applicable, the Underwriters and
counsel for the Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
(p) The Selling Stockholder shall furnish to you at each
Closing in which Shares are sold by the Selling Stockholder, an opinion of
Xxxxxxxx Xxxxxxxxx, its general counsel, addressed to the Underwriters, and
dated as of such Closing, with reproduced copies for each of the other
Underwriters, and in form and substance satisfactory to Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, P.C., counsel for the Underwriters, stating that:
(i) this Agreement and the Recapitalization
Agreements have been duly authorized, executed and delivered
by the Selling Stockholder and each of the Recapitalization
Agreements is a legal, valid and binding agreement of the
Selling Stockholder enforceable against the Selling
Stockholder in accordance with their respective terms (except
as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting the enforcement of creditors' rights
generally and (ii) principles of law relating to the
availability of specific performance, injunctive relief or
other equitable remedies);
(ii) no approval, authorization, consent or order of
or filing with any federal, state or local governmental or
regulatory commission, board, body, authority or agency is
required in connection with the sale of the Shares by the
Selling Stockholder hereunder and consummation by the Selling
Stockholder of the transactions contemplated hereby or by the
Recapitalization Agreements other than registration of the
Shares under the Act (except such
-34-
counsel need express no opinion as to any necessary
qualification under the state securities or blue sky laws of
the various jurisdictions in which the Shares are being
offered by the Underwriters);
(iii) the execution, delivery and performance of this
Agreement and the Recapitalization Agreements by the Selling
Stockholder, the sale of the Shares to be sold by the Selling
Stockholder pursuant to this Agreement and the consummation by
the Selling Stockholder of the transactions contemplated
hereby and by the Recapitalization Agreements do not and will
not conflict with, result in any breach or violation of or
constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach
or violation of or constitute a default under) the
organizational documents of the Selling Stockholder, or any
indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license,
lease, contract or other agreement or instrument to which the
Selling Stockholder is a party or by which it or any of its
properties may be bound or affected, or any federal, state,
local or foreign law, regulation or rule, or any decree,
judgment or order applicable to the Selling Stockholder;
(iv) delivery of certificates for the Shares by the
Selling Stockholder pursuant hereto will pass valid and
marketable title thereto to the Underwriters, free and clear
of any claim, lien, encumbrance, security interest, community
property right, restriction on transfer or other defect in
title; and
(v) to the best of such counsel's knowledge, the
statements in the Prospectus under the caption "Principal
stockholders and selling stockholder," insofar as such
statements constitute a summary of the matters referred to
therein and relate to the Selling Stockholder, present fairly
the information called for with respect to such matters.
(q) The Company shall furnish to you at the time of purchase
and, if applicable, at the additional time of purchase, an opinion of Xxxxxxxxx
& Xxxxx LLP, addressed to the Underwriters, and dated the time of purchase or
the additional time of purchase, as the case may be, with reproduced copies for
each of the other Underwriters and in form and substance satisfactory to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for the Underwriters, stating that:
(i) Reflections has been duly incorporated as a
private limited company and is validly existing under the
Companies Xxx 0000 and has been in continuous existence since
the date of its incorporation and has the requisite corporate
power and authority to own, lease and operate properties and
to
-35-
conduct its business as described in the Registration
Statement and the Prospectus;
(ii) all of the outstanding shares of capital stock
of Reflections have been duly authorised and validly issued,
are fully paid and, except as otherwise stated in the
Registration Statement and the Prospectus, are owned by
Reflections, there is not with the statutory registers of
Reflections any evidence of there being outstanding any
security interest, other encumbrance or adverse claims over
the issued shares in Reflections and such counsel has no
knowledge of any other such security interests, other
encumbrances or adverse claims (except that the Company has
pledged approximately 65% of its share holding in Reflections
to GECC); and to such counsel's knowledge, no options,
warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation
into shares of capital stock or ownership interests in
Reflections are outstanding;
(iii) to such counsel's knowledge, Reflections is not
in breach or violation of, or in default under, its
organizational documents; and
(iv) to such counsel's knowledge, there are no
actions, suits, claims, investigations or proceedings pending
or threatened to which Reflections or any of its directors or
officers is or would be a party (and, in the case of its
officers and directors, affecting Reflections) before or by
any United Kingdom governmental or regulatory commission,
board, body, authority or agency (in each case carrying the
force of the law).
(r) The Company and the Selling Stockholder shall have
executed, delivered, and entered into the Recapitalization Agreements and the
Recapitalization shall have been consummated as described in the Registration
Statement and the Prospectus.
8. Effective Date of Agreement; Termination. This Agreement shall
become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of UBS or any group of Underwriters
(which may include UBS) which has agreed to purchase in the aggregate at least
50% of the Firm Shares, if (x) since the time of execution of this Agreement or
the earlier respective dates as of which information is given in the
Registration Statement and the Prospectus, there has been any material adverse
change or any development involving a prospective material adverse change in the
business, properties, management, financial condition or results of operations
of the Company and the
-36-
Subsidiaries taken as a whole, which would, in UBS' judgment or in the judgment
of such group of Underwriters, make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares on the terms and in the
manner contemplated in the Registration Statement and the Prospectus, or (y)
since of execution of this Agreement, there shall have occurred: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on the
NASDAQ; (iii) a general moratorium on commercial banking activities declared by
either U.S. federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States; (iv) an outbreak or escalation of hostilities or acts of terrorism
involving the United States or a declaration by the United States of a national
emergency or war; or (v) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere,
if the effect of any such event specified in clause (iv) or (v) in UBS' judgment
or in the judgment of such group of Underwriters makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus, or (z) since the time of execution of this Agreement, there shall
have occurred any downgrading, or any notice or announcement shall have been
given or made of (i) any intended or potential downgrading or (ii) any watch,
review or possible change that does not indicate an affirmation or improvement
in the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization," as that term is defined
in Rule 436(g)(2) under the Act.
If UBS or any group of Underwriters elects to terminate this Agreement
as provided in this Section 8, the Company, the Selling Stockholder and each
other Underwriter shall be notified promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company or the
Selling Stockholder shall be unable to comply with any of the terms of this
Agreement, the Company or the Selling Stockholder, as the case may be, shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 5(n), 6 and 10 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 10 hereof) or to one another hereunder.
9. Increase in Underwriters' Commitments. Subject to Sections 8 and 9
hereof, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for a
failure of a condition set forth in Section 8 hereof or a reason sufficient to
justify the termination of this Agreement under the provisions of Section 9
hereof) and if the number of Firm Shares which all Underwriters so defaulting
-37-
shall have agreed but failed to take up and pay for does not exceed 10% of the
total number of Firm Shares, the non-defaulting Underwriters shall take up and
pay for (in addition to the aggregate number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriters in
such amount or amounts as you may designate with the consent of each Underwriter
so designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, each of the Company and the Selling Stockholder agrees with the
non-defaulting Underwriters that it will not sell any Firm Shares hereunder
unless all of the Firm Shares are purchased by the Underwriters (or by
substituted Underwriters selected by you with the approval of the Company or
selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and the
Prospectus and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 9 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Firm Shares which the defaulting Underwriter
or Underwriters agreed to purchase exceeds 10% of the total number of Firm
Shares which all Underwriters agreed to purchase hereunder, and if neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
five business day period stated above for the purchase of all the Firm Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall terminate without further act or deed and without any
liability on the part of the Company or the Selling Stockholder to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company or the Selling Stockholder. Nothing in
this paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Indemnity and Contribution.
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(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus (the term Prospectus for the purpose of this Section
10 being deemed to include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), or arises out of or is
based upon any omission or alleged omission to state a material fact required to
be stated in either such Registration Statement or such Prospectus or necessary
to make the statements made therein not misleading, except insofar as any such
loss, damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in and
in conformity with information concerning such Underwriter furnished in writing
by or on behalf of such Underwriter through you to the Company expressly for use
in such Registration Statement or such Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in connection
with such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading, (ii) any
untrue statement or alleged untrue statement made by the Company in Section 3
hereof or the failure by the Company to perform when and as required by any
agreement or covenant contained herein, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or on
behalf of the Company including, without limitation, slides, videos, films or
tape recordings used in connection with the marketing of the Shares.
The Selling Stockholder agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement made by the Selling Stockholder in Section 4 hereof or the failure by
the Selling Stockholder to perform when and as required by any agreement or
covenant contained herein, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
-39-
information concerning such Underwriter furnished in writing by or on behalf of
such Underwriter to the Company expressly for use in such Registration Statement
or such Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in such Registration Statement or such Prospectus or necessary to
make such information not misleading. Notwithstanding the foregoing or anything
else to the contrary in this Section 10, (i) in the event that, with respect to
any loss, damage, expense, liability or claim, both the indemnification by the
Selling Stockholder pursuant to this paragraph and the indemnification by the
Company pursuant to the preceding paragraph are applicable, any such
indemnification obligation shall first be satisfied by the Company pursuant to
the preceding paragraph; provided, however, that to the extent the Company
cannot satisfy such indemnification obligation after the exercise of reasonable
efforts by the indemnified parties to recover such indemnification obligation
from the Company for at least 90 days, such indemnification obligation shall be
satisfied by the Selling Stockholder, and (ii) in no event shall the liability
of the Selling Stockholder for indemnification under this Section 10 exceed
$100,000,000.
If any action, suit or proceeding (each, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company or the Selling Stockholder pursuant to the foregoing
paragraphs, such Underwriter or such person shall promptly notify the Company or
the Selling Stockholder, as the case may be, in writing of the institution of
such Proceeding and the Company or the Selling Stockholder, as applicable, shall
assume the defense of such Proceeding, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all fees and
expenses; provided, however, that the omission to so notify the Company or the
Selling Stockholder shall not relieve the Company or the Selling Stockholder, as
the case may be, from any liability which the Company or the Selling Stockholder
may have to any Underwriter or any such person or otherwise. Such Underwriter or
such person shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
Underwriter or of such person unless the employment of such counsel shall have
been authorized in writing by the Company or the Selling Stockholder, as the
case may be, in connection with the defense of such Proceeding or the Company or
the Selling Stockholder, as the case may be, shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to the
Company or the Selling Stockholder (in which case the Company or the Selling
Stockholder shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by the Company or the Selling Stockholder, as the
case may be, and paid as incurred (it being understood, however, that the
Company or the Selling Stockholder shall not be liable for the expenses of more
than one separate counsel (in addition
-40-
to any local counsel) in any one Proceeding or series of related Proceedings in
the same jurisdiction representing all the indemnified parties who are parties
to such Proceeding). The Company or the Selling Stockholder, as applicable,
shall not be liable for any settlement of any Proceeding effected without its
written consent but if settled with the written consent of the Company or the
Selling Stockholder, as applicable, the Company or the Selling Stockholder, as
applicable, agrees to indemnify and hold harmless any Underwriter and any such
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel under the circumstances contemplated by the
second sentence of this paragraph, then the indemnifying party agrees that it
shall be liable for any settlement of any Proceeding effected without its
written consent if (i) such settlement is entered into more than 60 business
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have fully reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, the Selling Stockholder and their respective directors and
officers, and any person who controls the Company or the Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and the successors and assigns of all of the foregoing persons, from and against
any loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or the Selling
Stockholder or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
concerning such Underwriter furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not
misleading.
-41-
If any Proceeding is brought against the Company, the Selling Stockholder
or any such person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, the Selling
Stockholder or such person shall promptly notify such Underwriter in writing of
the institution of such Proceeding and such Underwriter shall assume the defense
of such Proceeding, including the employment of counsel reasonably satisfactory
to such indemnified party and payment of all fees and expenses; provided,
however, that the omission to so notify such Underwriter shall not relieve such
Underwriter from any liability which such Underwriter may have to the Company or
the Selling Stockholder or any such person or otherwise. The Company, the
Selling Stockholder or such person shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company, the Selling Stockholder or such person, as
applicable, unless the employment of such counsel shall have been authorized in
writing by such Underwriter in connection with the defense of such Proceeding or
such Underwriter shall not have, within a reasonable period of time in light of
the circumstances, employed counsel to defend such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company, the Selling Stockholder and any such person from and
against any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such
-42-
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 10 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 10 or insufficient to hold an indemnified party harmless in respect of
any losses, damages, expenses, liabilities or claims referred to therein, then
each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Selling Stockholder and the
Underwriters from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable 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, the Selling Stockholder and of
the Underwriters in connection with the statements or omissions which resulted
in such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Stockholder and the Underwriters shall be deemed to be in
the same respective proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Stockholder and the total underwriting discounts
and commissions received by the Underwriters, bear to the aggregate public
offering price of the Shares. The relative fault of the Company, the Selling
Stockholder and of the Underwriters shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information supplied by
the Company, the Selling Stockholder or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, damages, expenses, liabilities and claims referred to in
this subsection shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating, preparing to
defend or defending any Proceeding. Notwithstanding the foregoing to the
contrary, the liability of the Selling Stockholder for contribution under this
paragraph shall not exceed $100,000,000.
(d) The Company, the Selling Stockholder and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
10 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in subsection (c)
above. Notwithstanding the provisions of this Section 10, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by such Underwriter and distributed to
the public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement
-43-
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 10 are several in proportion to their respective underwriting
commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 10 and the covenants, warranties and representations of the Company and
the Selling Stockholder contained in this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, its partners, directors or officers or any person (including each
partner, officer or director of such person) who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, the Selling Stockholder, their respective directors or
officers or any person who controls the Company or the Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and shall survive any termination of this Agreement or the issuance and delivery
of the Shares. The Company, the Selling Stockholder and each Underwriter agree
promptly to notify each other of the commencement of any Proceeding against it
and, in the case of the Company and the Selling Stockholder, against any of
their officers or directors in connection with the issuance and sale of the
Shares, or in connection with the Registration Statement or the Prospectus.
11. Information Furnished by the Underwriters. The statements set forth in
the last paragraph on the cover page of the Prospectus and the statements set
forth in the fourth paragraph under the section "Underwriting", the section
"Underwriting -- Price stabilization, short positions", the section
"Underwriting -- Over-allotment option" and the first paragraph under the
heading "Underwriting -- Commissions and discounts" and the names of the
respective underwriters contained on the cover page and the information in the
table following the first paragraph under the heading "Underwriting" in the
Prospectus constitute the only information furnished by or on behalf of the
Underwriters as such information is referred to in Sections 3 and 10 hereof.
12. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000, Attention:
Syndicate Department and, if to the Company, shall be sufficient in all respects
if delivered or sent to the Company at the offices of the Company at 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Company Secretary, and if to the Selling
Stockholder, shall be sufficient in all respects if delivered or sent to the
Selling Stockholder at the offices of the Selling Stockholder at 1 Place
Verazzano, 69252 Xxxx Xxxxx 00 Xxxxxx, Attention: General Counsel.
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13. GOVERNING LAW; CONSTRUCTION. THIS AGREEMENT AND ANY CLAIM,
COUNTERCLAIM OR DISPUTE OF ANY KIND OR NATURE WHATSOEVER ARISING OUT OF OR IN
ANY WAY RELATING TO THIS AGREEMENT ("CLAIM"), DIRECTLY OR INDIRECTLY, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. THE SECTION HEADINGS IN THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF
CONVENIENCE OF REFERENCE AND ARE NOT A PART OF THIS AGREEMENT.
14. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and each party consents
to the jurisdiction of such courts and personal service with respect thereto.
The Company and the Selling Stockholder hereby consent to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in any way
relating to this Agreement is brought by any third party against UBS or any
indemnified party. Each of UBS, the Selling Stockholder and the Company (on its
behalf and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise) in
any way arising out of or relating to this Agreement. Each party agrees that a
final judgment in any such action, proceeding or counterclaim brought in any
such court shall be conclusive and binding upon such party and may be enforced
in any other courts to the jurisdiction of which such party is or may be
subject, by suit upon such judgment.
15. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Selling Stockholder and the
Company and to the extent provided in Section 10 hereof the controlling persons,
partners, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
16. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
17. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Company, the Selling Stockholder and their successors and
assigns and any successor or assign of any substantial portion of the Company's,
the Selling Stockholder's and any of the Underwriters' respective businesses
and/or assets.
18. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG, is
not a bank and is separate from any affiliated bank, including any U.S. branch
or agency of UBS
-45-
AG. Because UBS is a separately incorporated entity, it is solely responsible
for its own contractual obligations and commitments, including obligations with
respect to sales and purchases of securities. Securities sold, offered or
recommended by UBS are not deposits, are not insured by the Federal Deposit
Insurance Corporation, are not guaranteed by a branch or agency, and are not
otherwise an obligation or responsibility of a branch or agency.
-46-
If the foregoing correctly sets forth the understanding between the
Company, the Selling Stockholder and the several Underwriters, please so
indicate in the space provided below for that purpose, whereupon this agreement
and your acceptance shall constitute a binding agreement between the Company,
the Selling Stockholder and the Underwriters, severally.
Very truly yours,
COMPANY:
Atari, Inc.
By:
-------------------------
Name:
Title:
SELLING STOCKHOLDER:
Infogrames Entertainment, S.A.
By:
-------------------------
Name:
Title:
Accepted and agreed to as of the date first above written, on behalf of itself
and the other several Underwriters named in Schedule A
UBS SECURITIES LLC
XXXXXX XXXXXXX XXXXXX, INC.
SOUNDVIEW TECHNOLOGY CORPORATION
By: UBS SECURITIES LLC
By:
--------------------------------
Name:
Title:
-47-
By: UBS SECURITIES LLC
By:
--------------------------------
Name:
Title:
SCHEDULE A
Number of Number of
Firm Shares - Firm Shares --
Underwriter Company Selling Stockholder
------------- -------------------
UBS SECURITIES LLC
XXXXXX XXXXXXX XXXXXX, INC.
SOUNDVIEW TECHNOLOGY CORPORATION
[OTHER UNDERWRITERS]
--------
========
SCHEDULE B
ALLOCATION OF OVERALLOTMENT OPTION
3,276,596 shares, first, by the Selling Stockholder; 773,404 shares,
second, by the Company.
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
Atari, Inc.
Common Stock
($0.01 Par Value)
[Date]
UBS Securities LLC
As Representative of the several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in connection with
the proposed Underwriting Agreement (the "Underwriting Agreement") to be entered
into by Atari, Inc. (the "Company") and you, as Representative of the several
Underwriters named therein, with respect to the public offering (the "Offering")
of Common Stock, par value $0.01 per share, of the Company (the "Common Stock").
In order to induce you to enter into the Underwriting Agreement, the
undersigned agrees that for a period of 120 days after the date of the final
prospectus relating to the Offering the undersigned will not, without the prior
written consent of UBS, (i) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or
agree to dispose of, directly or indirectly, or file (or participate in the
filing of) a registration statement with the Securities and Exchange Commission
(the "Commission") in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder with respect to, any
Common Stock of the Company or any securities convertible into or exercisable or
exchangeable for Common Stock, or warrants or other rights to purchase Common
Stock, (ii) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the
-2-
economic consequences of ownership of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock, whether any such transaction is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise, or
(iii) publicly announce an intention to effect any transaction specified in
clause (i) or (ii). The foregoing sentence shall not apply to (a) the
registration of or sale to the Underwriters of any Common Stock pursuant to the
Offering and the Underwriting Agreement, (b) bona fide gifts, provided the
recipient thereof agrees in writing with the Underwriters to be bound by the
terms of this Lock-Up Letter Agreement or (c) dispositions to any trust for the
direct or indirect benefit of the undersigned and/or the immediate family of the
undersigned, provided that such trust agrees in writing with the Underwriters to
be bound by the terms of this Lock-Up Letter Agreement.
In addition, the undersigned hereby waives any rights the undersigned may
have to require registration of Common Stock in connection with the filing of a
registration statement relating to the Offering. The undersigned further agrees
that, for a period of 120 days after the date of the final prospectus relating
to the Offering, the undersigned will not, without the prior written consent of
UBS, make any demand for, or exercise any right with respect to, the
registration of Common Stock of the Company or any securities convertible into
or exercisable or exchangeable for Common Stock, or warrants or other rights to
purchase Common Stock.
If (i) the Company notifies you in writing that it does not intend to
proceed with the Offering, (ii) the registration statement filed with the
Securities and Exchange Commission with respect to the Offering is withdrawn or
(iii) for any reason the Underwriting Agreement shall be terminated prior to the
time of purchase (as defined in the Underwriting Agreement), this Lock-Up Letter
Agreement shall be terminated and the undersigned shall be released from its
obligations hereunder.
Yours very truly,
----------------------
Name:
-3-
Exhibit B
Officers' Certificate
I have reviewed the Registration Statement and the Prospectus.
The representations and warranties of the Company as set forth in this
Agreement are true and correct as of the time of purchase and, if applicable,
the additional time of purchase.
The Company has performed all of its obligations under this Agreement as
are to be performed at or before the time of purchase and at or before the
additional time of purchase, as the case may be.
The conditions set forth in paragraphs (f) and (g) of Section 7 of this
Agreement have been met.
The financial statements and other financial information included in the
Registration Statement and the Prospectus fairly present in all material
respects the financial condition, results of operations, and cash flows of the
Company as of, and for, the periods presented in the Registration Statement