EXHIBIT 1.1
SUNRISE TELECOM INCORPORATED
4,000,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
DRAFT May __, 2000
CHASE SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP., as representatives
of the several Underwriters named in Schedule I hereto
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Sunrise Telecom Incorporated, a Delaware corporation (herein called the
"Company"), proposes to issue and sell 3,800,000 shares of its authorized but
unissued Common Stock, $0.001 par value (herein called the "Common Stock"), and
the stockholders of the Company named in Schedule II hereto (herein collectively
called the "Selling Securityholders") propose to sell an aggregate of 200,000
shares of Common Stock of the Company (said 4,000,000 shares of Common Stock
being herein called the "Underwritten Stock"). The Selling Securityholders
propose to grant to the Underwriters (as hereinafter defined) an option to
purchase up to 600,000 additional shares of Common Stock (herein called the
"Option Stock" and with the Underwritten Stock herein collectively called the
"Stock"). The Common Stock is more fully described in the Registration
Statement and the Prospectus hereinafter mentioned.
The Company and the Selling Securityholders, including Xxxx X.X. Xxxxx,
Xxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx (collectively, the "Founders"),
severally hereby confirm the agreements made with respect to the purchase of the
Stock by the several underwriters, for whom you are acting, named in Schedule I
hereto (herein collectively called the "Underwriters," which term shall also
include any underwriter purchasing Stock pursuant to Section 3(b) hereof). You
represent and warrant that you have been authorized by each of the other
Underwriters to enter into this Agreement on its behalf and to act for it in the
manner herein provided.
_________________________
/1/ Plus an option to purchase from the Selling Securityholders up to
600,000 additional shares to cover over-allotments.
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1. Registration Statement. The Company has filed with the Securities and
Exchange Commission (herein called the "Commission") a registration statement on
Form S-1 (No. 333-32070), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
"Securities Act") of the Stock. Copies of such registration statement and of
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission (herein called "Rule 430A")) heretofore filed by the Company with the
Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, all exhibits and financial statements, all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a "Rule
462(b) registration statement"), and, in the event of any amendment thereto
after the effective date of such registration statement (herein called the
"Effective Date"), shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended (including any Rule 462(b)
registration statement). The term Prospectus as used in this Agreement shall
mean the prospectus, relating to the Stock first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
Preliminary Prospectus as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it becomes
effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
2. Representations and Warranties of the Company and the Founders
(a) Each of the Company and the Founders hereby represents and warrants as
follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and as being
conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned
or leased or the nature of the business transacted by it makes
qualification necessary, except where the failure to be so qualified would
not have, either individually or in the aggregate, a material adverse
effect
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on the business, properties, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole (herein called a
"Material Adverse Effect").
(iii) All of the outstanding capital stock of each subsidiary of the
Company is owned, directly or indirectly, by the Company, free and clear of
any security interest, claim, lien, limitation on voting rights or
encumbrance; and all such securities have been duly authorized and validly
issued, are fully paid and nonassessable and were not issued in violation
of any preemptive or similar rights.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not occurred any
Material Adverse Effect, in the business, properties, financial condition
or results of operations of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of
business, neither the Company nor any of its subsidiaries has entered into
any material transaction not referred to in the Registration Statement and
the Prospectus.
(v) The Registration Statement and the Prospectus comply, and on
the Closing Date (as hereinafter defined) and the Option Closing Date (as
hereinafter defined), as the case may be, the Prospectus will comply, in
all material respects, with the provisions of the Securities Act and the
rules and regulations of the Commission thereunder; on the Effective Date,
the Registration Statement did not contain any untrue statement of a
material fact and did not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not and, on the
Closing Date and the Option Closing Date, as the case may be, will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
subparagraph (v) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the Prospectus.
(vi) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance or sale of the Stock or prevents or suspends the use
of the Prospectus; no injunction, restraining order or order of any nature
by a federal, state or foreign court of competent jurisdiction has been
issued that prevents the issuance of the Stock, prevents or suspends the
sale of the Stock in any jurisdiction or that could adversely affect the
consummation of the transactions contemplated by this Agreement or the
Prospectus; and every request from any securities authority or agency of
any jurisdiction for additional information has been complied with in the
all material respects.
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(vii) The outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-
assessable; the Stock is duly and validly authorized, is (or in the case of
shares of the Stock to be sold by the Company, will be, when issued and
sold to the Underwriters as provided herein) duly and validly issued, fully
paid and non-assessable; and no preemptive, co-sale, registration right,
right of first refusal or other similar rights of stockholders exists with
respect to any of the Stock or the issue and sale thereof. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the transfer and sale of the Stock to be sold
by the Selling Securityholders or the issuance and sale of the Stock as
contemplated hereby. There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or
liens related to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of, or other ownership interest in,
the Company, except as disclosed in the Prospectus.
(viii) The information set forth under the heading "Capitalization"
in the Prospectus is true and correct in all material respects. All of the
Stock conforms in all material respects to the description thereof
contained in the Registration Statement. The form of certificates for the
Stock conforms to the legal requirements of the State of Delaware.
(ix) The financial statements of the Company and Sunrise Telecom
Xxx.Xxx Division S.r.l. ("Xxx.Xxx"), together with the related notes as set
forth in the Registration Statement, present fairly the financial position
and the results of operations and cash flows of each of the Company and its
subsidiaries on a consolidated basis and of Xxx.Xxx, in each case, at the
indicated dates and for the indicated periods. Such financial statements
have been prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of results for such periods
have been made. The financial data set forth in the Prospectus under the
headings "Summary -- Summary Consolidated Financial Information,"
"Capitalization," "Selected Consolidated Financial Data" and "Unaudited Pro
Forma Consolidated Condensed Financial Statements" present fairly the
information set forth therein on a basis consistent with that of the
audited financial statements of the Company and its subsidiaries on a
consolidated basis included in the Prospectus.
(x) KPMG LLP and KPMG S.p.A., each of whom have certified certain
of the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required by
the Securities Act and the rules and regulations of the Commission
thereunder.
(xi) There is no action, suit, claim, proceeding or investigation
pending or, to the knowledge of the Company, any of its subsidiaries and
the Founders, threatened against the Company or any of their respective
directors, officers or properties before any court or administrative agency
or otherwise, which if determined adversely to the Company could reasonably
be expected to result, either individually or in the aggregate,
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in any Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby; and there are no agreements, contracts,
leases or documents of the Company or any of its subsidiaries of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement by the Securities Act or the rules and regulations of the
Commission thereunder which have not been accurately described in all
material respects or referred to in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement. The
contracts so described in the Registration Statement and the Prospectus and
the Master Agreement dated as of January 7, 2000 for the Purchase of
Products Between SBC Operations, Inc. and Sunrise Telecom Incorporated are
in full force and effect on the date hereof, and neither the Company nor
any of its subsidiaries nor, to the best of the Company's, any of its
subsidiaries' or the Founders' knowledge, any other party, is in breach of
or default under any of such contracts where such breach of default, either
singly or in the aggregate, would have a Material Adverse Effect.
(xii) Each of the Company and its subsidiaries has good and
marketable title to all of the properties and assets as described in the
Registration Statement or as reflected in the financial statements filed
with the Commission as part of the Registration Statement as being owned by
them, free and clear of any lien, mortgage, pledge, charge or encumbrance
of any kind except those reflected in such financial statements or as
described in the Registration Statement. All leases to which the Company
and any of its subsidiaries are a party are valid and binding obligations
of the Company and any of its subsidiaries, respectively, and no default by
the Company or any of its subsidiaries has occurred or is continuing
thereunder which could reasonably be expected to result in a Material
Adverse Effect; and the Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which they are a party as
lessee.
(xiii) Each of the Company and Xxx.Xxx has timely filed all federal,
state, local and foreign income tax returns, as the case may be, which have
been required to be filed and have paid all taxes required by said returns
and all assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith except
where the failure to file such returns and pay such taxes would not result,
either individually or in the aggregate, in a Material Adverse Effect. All
tax liabilities (including those being contested in good faith) for the
periods covered by the financial statements of the Company and Xxx.Xxx that
are included in the Registration Statement have been adequately accounted
for or described in such financial statements. The Company has made
adequate charges, accruals and reserves in the financial statements of the
Company and its subsidiaries on a consolidated basis included in the
Prospectus in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the
Company or any of its subsidiaries has not been finally determined.
(xiv) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without
limitation, the corporate power and
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authority to issue, sell and deliver the Stock as provided herein and the
power to effect the "Use of Proceeds" as described in the Prospectus.
(xv) This Agreement has been duly authorized, executed and
delivered by the Company and has been executed and delivered by the Selling
Securityholders and is a valid and binding agreement of the Company and, to
the Company's knowledge, the Selling Securityholders, enforceable against
them in accordance with its terms except insofar as indemnification and
contribution provisions may be limited by applicable law or equitable
principles and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
(xvi) Neither the Company nor any of its subsidiaries is, nor with
the giving of notice or lapse of time or both will be, (A) in violation of
its certificate of incorporation or bylaws or equivalent organizational
documents, (B) in default under an agreement, mortgage, lease, contract,
indenture or other instrument or obligation to which it is a party or by
which it, or any of its properties, is bound or subject or (C) in violation
of any federal, state, local or foreign law, statute, ordinance, rule,
regulation, requirement, judgment or court decree applicable to the
Company, its subsidiaries or any of their assets or properties (whether
owned or leased) other than, in the case of clause (B) and (C), any default
or violation that could not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect or
adversely affect the sale of the Stock pursuant hereto.
(xvii) None of (A) the execution, delivery or performance by the
Company of this Agreement, (B) the issuance or sale of the Stock and (C)
the consummation by the Company of the transactions contemplated hereby
violate, conflict with or constitute a breach of any of the terms or
provisions of, or default under (or an event that with notice or the lapse
of time, or both, would constitute a default), or require consent which has
not been obtained under, or result in the imposition of a lien on any
properties of the Company or any of its subsidiaries, or an acceleration of
any indebtedness of the Company or any of its subsidiaries pursuant to (1)
the certificate of incorporation, bylaws or equivalent organizational
documents of the Company or any of its subsidiaries, (2) any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or its subsidiaries or their properties is or may be
bound or subject, (3) any statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their assets or properties or
(4) any judgment, order or decree of any court of governmental agency or
authority having jurisdiction over the Company or any of its subsidiaries
or any of their assets or properties, except in the case of clauses (2),
(3) and (4) for such violations, conflicts, breaches, defaults, consents,
impositions of liens or accelerations that would not result, either
individually or in the aggregate, in a Material Adverse Effect or which are
disclosed in the Prospectus.
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(xviii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company and the Selling Securityholders of this Agreement and the
consummation of the transactions hereby contemplated (except such
additional steps as may be required by the National Association of
Securities Dealers, Inc. (herein called the "NASD") or such additional
steps as may be necessary to qualify the Stock for public offering by the
Underwriters under state securities or blue sky laws) has been obtained or
made and is in full force and effect.
(xix) The Company and its subsidiaries are operating in compliance
with all federal, state, local and foreign statutes, laws, regulations,
ordinances or court decrees applicable to its businesses and operations,
except where any such non-compliance would not result, either individually
or in the aggregate, in a Material Adverse Effect. Neither the Company nor
any of its subsidiaries has violated any such statutes, laws, regulations,
ordinances or decrees, except for such violations as in the aggregate would
not result in any Material Adverse Effect. No labor disturbance by the
employees of the Company or any of its subsidiaries exists or, to the
Company's knowledge, is imminent. No collective bargaining agreement exists
with any of the Company's or its subsidiaries' employees and, to the best
of the Company's, any of its subsidiaries' and the Founders' knowledge, no
such agreement is imminent except to the extent disclosed in the
Prospectus. There are no hazardous or toxic substances or wastes, and no
pollutants or contaminants, that are present at any location in conditions
or under circumstances that would result in liability to the Company or any
of its subsidiaries, or that would result in the Company or any of its
subsidiaries incurring costs, or that would otherwise affect the results of
the business or operations of the Company or any of its subsidiaries, in a
way that might be expected to result, either individually or in the
aggregate, in a Material Adverse Effect.
(xx) The Company is in compliance in all material respects with
all currently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company has any liability; the Company has
not incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretation thereunder
(herein called the "Code"); and each "pension plan" for which the Company
has any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, that could reasonably be expected
to cause the loss of such qualification.
(xxi) The Company and its subsidiaries hold all material licenses,
certificates and permits from governmental authorities and third parties
that are necessary to the conduct of its businesses and as contemplated by
the Prospectus.
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(xxii) Except where the failure to do so would not result in a
Material Adverse Effect, the Company and its subsidiaries own, possess or
have the right to use all issued and pending patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable designs, software and other computer
programs, computer codes, proprietary or confidential information,
software, systems or procedures), trademarks, copyrights and trade names,
technical data and other information (herein collectively called
"Intellectual Property") that are necessary to conduct its business as
described in the Registration Statement and the Prospectus. Neither the
Company nor any of its subsidiaries has received any notice of, and has no
knowledge of, any infringement of or conflict with any rights of the
Company or any of its subsidiaries by others with respect to any
Intellectual Property which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received any
notice of, and has no knowledge of, any infringement of or conflict with
any rights of others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries is aware of the granting of any patent
rights to third parties or the filing of any patent applications by third
parties or any other rights of third parties to any Intellectual Property
owned by the Company and its subsidiaries, the violation of which could
result in a Material Adverse Effect.
(xxiii) The Company is not and, after giving effect to the offering
and sales of the Stock and the application of the net proceeds thereof as
described in the Prospectus, will not be an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(xxiv) Each of the Company and its subsidiaries are insured by
recognized, financially sound institutions with policies in such amounts
and with such deductibles and covering such risks as are customary for
similarly situated businesses including, but not limited to policies
covering real and personal property owned or leased by the Company and any
of its subsidiaries against theft, damage, destruction and acts of
vandalism.
(xxv) The statements in the Prospectus under the heading "Certain
Transactions" set forth all existing agreements, arrangements,
understandings or transactions or proposed agreements, arrangements,
understandings or transactions between or among the Company or any of its
subsidiaries, on the one hand, and any officer, director or stockholder of
the Company or with any partner, affiliate or associate of any of the
foregoing persons or entities, on the other hand, required to be set forth
or described thereunder pursuant to the Securities Act and the rules and
regulations of the Commission thereunder.
(xxvi) Neither the Company nor any of its subsidiaries has at any
time since its inception (A) made any unlawful contribution to any
candidate for foreign office, failed
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to disclose fully any contribution in violation of applicable law or
violated the Foreign Corrupt Practices Act of 1977, as amended, or (B) made
any payment to any federal or state governmental officer or official or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(xxvii) Neither the Company nor any of its subsidiaries nor the
Founders has distributed and will not distribute prior to the later of (A)
the Closing Date or the Option Closing Date, as the case may be, and (B)
the completion of the distribution of the Stock, any offering material in
connection with the offering and sale of the Stock other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Securities Act.
(xxviii) The Company has not incurred any liability for any finder's
fees or similar payments in connection with the transactions contemplated
hereby other than to the Underwriters.
(xxix) The minute books of the Company have been made available to
the Representatives and their counsel and contain a complete summary of all
meetings and actions of the directors, stockholders, audit committee,
compensation committee and any other committee of the Board of Directors of
the Company, respectively, since the date of its incorporation in the State
of California, and reflect all transactions referred to in such minutes
accurately.
(xxx) There are no agreements between the Company and any former
officer of the Company relating to the payment of severance or other
compensation.
(xxxi) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
(xxxii) The Stock to be sold by the Selling Securityholders and the
Company has been authorized for listing by the Nasdaq National Market upon
official notice of issuance; and the Company has taken no action designed
to, or likely to have the effect of, delisting the Common Stock from
Nasdaq, nor has the Company received any notification that Nasdaq is
contemplating terminating such listing.
(xxxiii) The Company has not taken, directly or indirectly, any
action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of the Common Stock to facilitate
the sale or resale of the Stock.
(b) Each of the Selling Securityholders hereby represents and warrants as
follows:
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(i) Such Selling Securityholder has good and marketable title to
all the shares of Stock to be sold by such Selling Securityholder
hereunder, free and clear of all liens, encumbrances, equities, security
interests and claims whatsoever, with full right and authority to deliver
the same hereunder, subject, in the case of each Selling Securityholder, to
the rights of American Securities Transfer & Trust, Inc., as Custodian
(herein called the "Custodian"), and that upon the delivery of and payment
for such shares of the Stock hereunder, the several Underwriters will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever.
(ii) Certificates in negotiable form for the shares of the Stock to
be sold by such Selling Securityholder have been placed in custody under a
Custody Agreement for delivery under this Agreement with the Custodian;
such Selling Securityholder specifically agrees that the shares of the
Stock represented by the certificates so held in custody for such Selling
Securityholder are subject to the interests of the several Underwriters and
the Company, that the arrangements made by such Selling Securityholder for
such custody, including the Power of Attorney provided for in such Custody
Agreement, are to that extent irrevocable, and that the obligations of such
Selling Securityholder shall not be terminated by any act of such Selling
Securityholder or by operation of law, whether by the death or incapacity
of such Selling Securityholder (or, in the case of a Selling Securityholder
that is not an individual, the dissolution or liquidation of such Selling
Securityholder) or the occurrence of any other event; if any such death,
incapacity, dissolution, liquidation or other such event should occur
before the delivery of such shares of the Stock hereunder, certificates for
such shares of the Stock shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death,
incapacity, dissolution, liquidation or other event had not occurred,
regardless of whether the Custodian shall have received notice of such
death, incapacity, dissolution, liquidation or other event.
(iii) Such Selling Securityholder has full right, power and authority
to enter into this Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of this Agreement, the
Power of Attorney and the Custody Agreement by such Selling Securityholder
and the consummation by such Selling Securityholder of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of the provisions of the constituent documents of such Selling
Securityholder, if any, or any of the terms or provisions of which such
Selling Securityholder is a party or by which such Selling Securityholder
is bound or to which any of the property or assets of such Selling
Securityholder is subject, nor will such actions result in any violation of
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over such Selling Securityholder or the
property or assets of such Selling Securityholder; and, except for the
registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under applicable state securities laws in connection with the
purchase and distribution of the Stocks by the Underwriters, to such
Selling Stockholder's knowledge, no consent, approval, authorization or
order of, or
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filing or registration with, any such court or governmental agency or body
is required for the execution, delivery and performance of this Agreement,
the Power of Attorney or the Custody Agreement by such Selling
Securityholder and the consummation by such Selling Securityholder of the
transactions contemplated hereby.
(iv) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Securityholder and is a valid and binding
agreement of such Selling Securityholder, enforceable in accordance with
its terms against such Selling Securityholder except insofar as
indemnification and contribution provisions may be limited by applicable
law or equitable principles and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or affecting creditors' rights generally or by general equitable
principles.
(v) Such Selling Securityholder has not distributed and will not
distribute prior to the later of (a) the Closing Date or the Option Closing
Date, as the case may be, and (b) completion of the distribution of the
Stock, any offering documents or related material in connection with the
offering and sale of the Stock other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
(vi) The information in the Prospectus, including under the heading
"Principal and Selling Stockholders," which specifically relates to such
Selling Securityholder does not, and will not on the Closing Date or on the
Option Closing Date, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(vii) Such Selling Securityholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Stock.
3. Purchase of the Stock by the Underwriters.
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
3,800,000 shares of the Underwritten Stock to the several Underwriters, each
Selling Securityholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Securityholders and purchased by the several Underwriters shall
be $___ per share. The obligation of each Underwriter to the Company and each
of the Selling Securityholders shall be to purchase from the Company and the
Selling Securityholders that number of shares of the Underwritten Stock
12
which represents the same proportion of the total number of shares of the
Underwritten Stock to be sold by each of the Company and the Selling
Securityholders pursuant to this Agreement as the number of shares of the
Underwritten Stock set forth opposite the name of such Underwriter in Schedule I
hereto represents of the total number of shares of the Underwritten Stock to be
purchased by all Underwriters pursuant to this Agreement, as adjusted by you in
such manner as you deem advisable to avoid fractional shares. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8 or 9 hereof) to purchase and pay for
the number of shares of the Stock agreed to be purchased by such Underwriter or
Underwriters, the Company or the Selling Securityholders shall immediately give
notice thereof to you, and the non-defaulting Underwriters shall have the right
within 24 hours after the receipt by you of such notice to purchase, or procure
one or more other Underwriters to purchase, in such proportions as may be agreed
upon between you and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-
defaulting Underwriters fail so to make such arrangements with respect to all
such shares and portion, the number of shares of the Stock which each non-
defaulting Underwriter is otherwise obligated to purchase under this Agreement
shall be automatically increased on a pro rata basis to absorb the remaining
shares and portion which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Securityholders shall have the right, within 24 hours
next succeeding the 24-hour period above referred to, to make arrangements with
other underwriters or purchasers satisfactory to you for purchase of such shares
and portion on the terms herein set forth. In any such case, either you or the
Company and the Selling Securityholders shall have the right to postpone the
Closing Date determined as provided in Section 5 hereof for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
said Section 5 in order that any necessary changes in the Registration
Statement, the Prospectus or any other documents or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company and the Selling
Securityholders shall make arrangements within the 24-hour periods stated above
for the purchase of all the shares of the Stock which the defaulting Underwriter
or Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company
or the Selling Securityholders to any non-defaulting Underwriter and without any
liability on the part of any non-defaulting Underwriter to the Company or the
Selling Securityholders. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any
13
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Selling
Securityholders grant an option to the several Underwriters to purchase,
severally and not jointly, up to 600,000 shares in the aggregate of the Option
Stock from the Selling Securityholders at the same price per share as the
Underwriters shall pay for the Underwritten Stock. Said option may be exercised
only to cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the thirtieth day after the date of this Agreement upon
written or telegraphic notice by you to the Company setting forth the aggregate
number of shares of the Option Stock as to which the several Underwriters are
exercising the option. Delivery of certificates for the shares of Option Stock,
and payment therefor, shall be made as provided in Section 5 hereof. The number
of shares of the Option Stock to be purchased by each Underwriter shall be the
same percentage of the total number of shares of the Option Stock to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Stock, as adjusted by you in such manner as you deem advisable to
avoid fractional shares.
4. Offering by Underwriters.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the fifth and tenth paragraphs under
"Underwriting" in the Registration Statement, any Preliminary Prospectus and the
Prospectus relating to the Stock filed by the Company (insofar as such
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf of
the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
5. Delivery of and Payment for the Stock.
(a) Delivery of certificates for the shares of the Underwritten Stock and
the Option Stock (if the option granted by Section 3(c) hereof shall have been
exercised not later than 7:00 a.m., San Francisco time, on the date two business
days preceding the Closing Date), and payment therefor, shall be made at the
office of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, San Francisco, California, at 7:00
a.m., San Francisco time, on the fourth business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such fourth business day, as shall be agreed upon in writing by the
Company, the Selling Securityholders and you. The date and hour of such
delivery and payment (which may be postponed as provided in Section 3(b) hereof)
are herein called the "Closing Date."
14
(b) If the option granted by Section 3(c) hereof shall be exercised after
7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx
LLP, San Francisco, California, at 7:00 a.m., San Francisco time, on the third
business day after the exercise of such option. The date and hour of such
delivery and payment are herein called the "Option Closing Date."
(c) Payment for the Stock purchased from the Company shall be made to the
Company or its order, and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by one or more certified or official bank check or
checks in same day funds or, if you so elect, by wire transfer of immediately
available funds to an account specified in writing by the Company or the
Custodian, as the case may be. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco on the business day prior to the Closing
Date or, in the case of the Option Stock, by 3:00 p.m., New York time, on the
business day preceding the date of purchase. If you so elect, delivery of the
Stock may be made through fast transfer to the accounts at The Depository Trust
Company designated by you.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter.
Any such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. Further Agreements of the Company and the Selling Securityholders.
Each of the Company and the Selling Securityholders respectively covenants and
agrees as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A and
(ii) not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act and the rules and regulations of
the Commission thereunder.
(b) The Company will promptly notify each Underwriter in the event of (i)
the request by the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop
15
order suspending the effectiveness of the Registration Statement, (iii) the
institution or notice of intended institution of any action or proceeding for
that purpose, (iv) the receipt by the Company of any notification with respect
to the suspension of the qualification of the Stock for sale in any jurisdiction
or (v) the receipt by it of notice of the initiation or threatening of any
proceeding for such purpose. The Company and the Selling Securityholders will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each post-
effective amendment, if any, to the Registration Statement (together with, in
each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or a dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus so that it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statement contained in the Prospectus in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
not misleading, the Company will forthwith prepare and file with the Commission
a supplement to the Prospectus or an amended prospectus so that the Prospectus
as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the
initial public offering of the Stock by the Underwriters and during such period,
the Underwriters shall propose to vary the terms of offering thereof by reason
of changes in general market conditions or otherwise, you will advise the
Company in writing of the proposed variation, and, if in the opinion either of
counsel for the Company or of counsel for the Underwriters such proposed
variation requires that the Prospectus be supplemented or amended, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Stock may be sold
by the several Underwriters to use the Prospectus, as from time to time amended
or supplemented, in connection with the sale
16
of the Stock in accordance with the applicable provisions of the Securities Act
and the applicable rules and regulations of the Commission thereunder for such
period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time
to time, prepare and file such statements, reports and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its securityholders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company and the Selling Securityholders jointly and severally
agree to pay all costs and expenses incident to the performance of their
obligations under this Agreement, including all costs and expenses incident to
(i) the preparation, printing and filing with the Commission and the NASD of the
Registration Statement, any Preliminary Prospectus and the Prospectus, (ii) the
furnishing to the Underwriters of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this Section 6 to be so
furnished, (iii) the printing of this Agreement and related documents delivered
to the Underwriters, (iv) the preparation, printing and filing of all
supplements and amendments to the Prospectus referred to in paragraph (d) of
this Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees. The Selling Securityholders will pay any transfer taxes incident to the
transfer to the Underwriters of the shares the Stock being sold by the Selling
Securityholders.
(j) The Company and the Selling Securityholders jointly and severally
agree to reimburse you, for the account of the several Underwriters, for blue
sky fees and related disbursements (including counsel fees and disbursements and
cost of printing memoranda for the
17
Underwriters) paid by or for the account of the Underwriters or their counsel in
qualifying the Stock under state securities or blue sky laws and in the review
of the offering by the NASD.
(k) The provisions of paragraphs (i) and (j) of this Section are intended
to relieve the Underwriters from the payment of the expenses and costs which the
Company and the Selling Securityholders hereby agree to pay and shall not affect
any agreement which the Company and the Selling Securityholders may make, or may
have made, for the sharing of any such expenses and costs.
(l) The Company hereby agrees that, without the prior written consent of
Chase Securities Inc. on behalf of the Underwriters, the Company or such Selling
Securityholder, as the case may be, will not, for a period of 180 days following
the commencement of the public offering of the Stock by the Underwriters,
directly or indirectly, (i) sell, offer, contract to sell, make any short sale,
pledge, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences or ownership of Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Stock to be sold to the
Underwriters pursuant to this Agreement, (B) shares of Common Stock issued by
the Company upon the exercise of options granted under the stock option plans of
the Company (the "Option Plans") in the Preliminary Prospectus, and (C) options
to purchase Common Stock granted under the Option Plans.
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(n) The Company will comply with the Securities Act, the Securities
Exchange Act of 1934, as amended (herein called the "Exchange Act") and the
rules and regulations of the Commission thereunder so as to permit the
completion of the distribution of the Stock as contemplated by this Agreement
and the Prospectus.
(o) The Company is familiar with the Investment Company Act of 1940, as
amended, (herein called the "Investment Company Act") and has in the past
conducted its affairs, and will in the future conduct its affairs, in such a
manner to ensure that the Company was not and will not be an "investment
company" within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder.
18
(p) The Company shall apply the net proceeds of its sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds."
(q) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, registrar (which may be the same
entity as the transfer agent) for its Common Stock.
7. Indemnification and Contribution.
(a) Subject to the provisions of paragraph (f) of this Section 7, the
Company and the Selling Securityholders jointly and severally agree to indemnify
and hold harmless each Underwriter and each person (including each partner or
officer thereof) who controls any Underwriter within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise, and the Company and the Selling Securityholders jointly and
severally agree to reimburse each such Underwriter and controlling person for
any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement), or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that (1) the indemnity agreements of the Company and the Selling Securityholders
contained in this paragraph (a) shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any Underwriter
for use in any Preliminary Prospectus or the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto, (2) the
indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Stock which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the
19
Company with paragraph (c) of Section 6 hereof, and (3) each Selling
Securityholder (other than the Founders) shall only be liable under this
paragraph with respect to (A) information pertaining to such Selling
Securityholder furnished by or on behalf of such Selling Securityholder
expressly for use in any Preliminary Prospectus or the Registration Statement or
the Prospectus or any such amendment thereof or supplement thereto or (B) facts
that would constitute a breach of any representation or warranty of such Selling
Securityholder set forth in Section 2(b) hereof. The indemnity agreements of the
Company and the Selling Securityholders contained in this paragraph (a) and the
representations and warranties of the Company and the Selling Securityholders
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and the Selling Securityholders from and against any
and all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement) or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of such indemnifying
Underwriter for use in the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. The indemnity agreement of each
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and (b) of
this Section 7 agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against, it in respect of which indemnity may be
20
sought on account of any indemnity agreement contained in such paragraphs, it
will promptly give written notice (herein called the "Notice") of such service
or notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if the party to whom such
Notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which the Notice would have related and was prejudiced by the
failure to give the Notice, but the omission so to notify such indemnifying
party or parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of such
indemnity agreement. Any indemnifying party shall be entitled at its own expense
to participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party shall
be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the "Notice of Defense") to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under paragraph (a) or (b) of
this Section 7, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 7 (i) in such proportion as
is
21
appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Stock 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 each indemnifying party in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Securityholders on the one hand and the Underwriters on the other shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Stock received by the Company and the Selling
Securityholders and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by each indemnifying party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparing to defend or defending against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Securityholders will, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20
22
of the Exchange Act is a party to such claim, action, suit or proceeding) unless
such settlement, compromise or consent includes an unconditional release of such
Underwriter and each such controlling person from all liability arising out of
such claim, action, suit or proceeding.
(f) The liability of each Selling Securityholder under such Selling
Securityholder's representations and warranties contained in paragraph (a) and
(b) of Section 2 hereof and under the indemnity and reimbursement agreements
contained in the provisions of this Section 7 and Section 11 hereof shall be
limited to an amount equal to the initial public offering price of the stock
sold by such Selling Securityholder to the Underwriters. The Company and the
Selling Securityholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
8. Termination. This Agreement may be terminated by you at any time prior
to the Closing Date by giving written notice to the Company and the Selling
Securityholders if after the date of this Agreement trading in the Common Stock
shall have been suspended, or if there shall have occurred (i) the engagement in
hostilities or an escalation of major hostilities by the United States or the
declaration of war or a national emergency by the United States on or after the
date hereof, (ii) any outbreak of hostilities or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, calamity, crisis or change in economic or political conditions
in the financial markets of the United States would, in the Underwriters'
reasonable judgment, make the offering or delivery of the Stock impracticable,
(iii) suspension of trading in securities generally or a material adverse
decline in value of securities generally on the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York state
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company or the Selling
Securityholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Securityholders; provided, however, that in the event of
any such termination the Company and the Selling Securityholders agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
9. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed
23
hereunder at or prior to the Closing Date or the Option Closing Date, as the
case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The Prospectus shall have been printed and copies distributed to the
Underwriters not later than 10:00 a.m., New York City time, on the second
business day following the date of this Agreement or at such later date and time
as to which the Underwriters may agree.
(c) The legality and sufficiency of the sale of the Stock hereunder and the
validity and form of the certificates representing the Stock, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the Prospectus (except as to the financial
statements contained therein), shall have been approved at or prior to the
Closing Date by Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Underwriters.
(d) You shall have received from Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP,
counsel for the Company and the Selling Securityholders, an opinion addressed to
the Underwriters and dated the Closing Date, covering the matters set forth in
Annex A hereto, from Xxxxxx Xxxx & Priest LLP, intellectual property counsel for
the Company, an opinion dated the Closing Date and covering the matters set
forth in Annex B hereto, from Xxxxxxxx and Xxxxxxxx and Crew LLP, patent counsel
for the Company, an opinion addressed to the Underwriters and dated the Closing
Date and covering the matters set forth in Annex C hereto, from the general
counsel of the Company, an opinion addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex D hereto, and from Barozzi
Disertori Manzato & Xxxxxxx, counsel to Sunrise Telecom Xxx.Xxx Division S.r.l.
and dated the Closing Date, covering the matters set forth in Annex E hereto;
and if Option Stock is purchased at any date after the Closing Date, additional
opinions from such counsel, addressed to the Underwriters and dated the Option
Closing Date, confirming that the statements expressed as of the Closing Date in
such opinions remain valid as of such later date.
(e) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any Material Adverse Effect whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has entered
into any material transaction not referred to in the Registration Statement in
the form in which it originally became effective and the Prospectus contained
therein, (iv) neither the Company nor any of its subsidiaries has any material
24
contingent obligations which are not disclosed in the Registration Statement and
the Prospectus, (v) there are not any pending or known threatened legal
proceedings to which the Company or any of its subsidiaries is a party or of
which property of the Company or any of its subsidiaries is the subject which
are material and which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any franchises, contracts, leases or other
documents which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, (vii) the representations and
warranties of the Company and the Selling Securityholders herein are true and
correct in all material respects as of the Closing Date and the Option Closing
Date, as the case may be, and (viii) there has not been any material change in
the market for securities in general or in political, financial or economic
conditions from those reasonably foreseeable as to render it impracticable in
your reasonable judgment to make a public offering of the Stock or a material
adverse change in market levels for securities in general (or those of companies
in particular) or financial or economic conditions which render it inadvisable
to proceed with such offering
(f) You shall have received on the Closing Date and the Option Closing
Date, as the case may be, a certificate, dated the Closing Date or Option
Closing Date, as the case may be, and signed by the President and the Chief
Financial Officer of the Company, stating that the respective signers of said
certificate have carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein and
any supplements or amendments thereto, and that the statements included in
clauses (i) through (viii) of paragraph (e) of this Section 9 are true and
correct.
(g) You shall have received from KPMG LLP letters addressed to the
Underwriters and dated the date hereof, the Closing Date and the Option Closing
Date, as the case may be, in each case, in form and substance satisfactory to
the Underwriters (i) confirming that they are independent public accountants
with respect to the Company within the meaning of the Securities Act and the
rules and regulations of the Commission thereunder; (ii) containing statements
and information of the type ordinarily included in auditors' "comfort letters"
to underwriters with respect to financial statements and certain information of
the Company and its subsidiaries contained in the Registration Statement and the
Prospectus; (iii) with respect to the letters delivered on the Closing Date or
the Option Closing Date, as the case may be, based upon the procedures described
in its letter delivered to you concurrently with the execution of this Agreement
(herein called the "Original Letter"), but carried out to a date not more than
three business days prior to the Closing Date or the Option Closing Date, as the
case may be, (A) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing Date
and the Option Closing Date, as the case may be, and (B) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information; and (iv) address other matters agreed upon by KPMG LLP and you. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company or
any of its subsidiaries which, in your sole judgment, makes it impractical or
inadvisable to proceed with the public offering of the Stock or the purchase of
the Option Stock as contemplated by the Prospectus.
25
(h) You shall have been furnished evidence in usual written or telegraphic
form from the appropriate authorities of the several jurisdictions, or other
evidence satisfactory to you, of the qualification referred to in paragraph (f)
of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold by the
Company, including all Selling Securityholders, shall have been duly authorized
for listing by the Nasdaq National Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received from all
directors and officers and beneficial holders of more than 1% of the oustanding
shares of common stock and any options or similar rights to purchase common
stock, stockholders agreements, in the form of Annex F attached hereto, which
shall be reasonably satisfactory to Chase Securities Inc.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Underwriters, shall be reasonably satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall be
without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company or the
Selling Securityholders to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
10. Conditions of the Obligation of the Company and the Selling
Securityholders. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Securityholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Securityholders; provided, however, that in the event of any such termination
the
26
Company and the Selling Securityholders jointly and severally agree to indemnify
and hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof.
11. Reimbursement of Certain Expenses. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company and the Selling Securityholders hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Chase Securities Inc., Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, with a copy, which shall not constitute notice,
to Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: Xxxx X. Xxxxxxx, Esq.; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, 00 Xxxxx Xxxx Xxxxxxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000 , Attention: Xxxxx X. Xxxxxxxx, with a copy to Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, Old Federal Reserve Bank Building, 000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, Attention: Xxxx X. Xxxxxx; and if to
the Selling Securityholders, shall be mailed, telegraphed or delivered to the
Selling Securityholders in care of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, at Old
Federal Reserve Bank Building, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx,
00000, Attention: Xxxx X. Xxxxxx. All notices given by telegraph shall be
promptly confirmed by letter.
14. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any
27
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or the Selling Securityholders or
their respective directors or officers, and (c) delivery and payment for the
Stock under this Agreement; provided, however, that if this Agreement is
terminated prior to the Closing Date, the provisions of paragraphs (l) and (m)
of Section 6 hereof shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
28
Please sign and return to the Company and to the Selling Securityholders in
care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholders and the several Underwriters in accordance with its terms.
Very truly yours,
SUNRISE TELECOM INCORPORATED
By ___________________________
Name:
Title:
SELLING SECURITYHOLDERS:
By __________________________
Attorney-in-Fact
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CHASE SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
By __________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
29
SCHEDULE I
UNDERWRITERS
Underwriters Number of Shares to be Purchased
------------ --------------------------------
Chase Securities Inc..........................
Banc of America Securities LLC................
CIBC World Markets Corp.......................
_____
Total.......................................
_____
30
SCHEDULE II
SELLING SECURITYHOLDERS
Underwritten Stock
------------------
Name of Selling Securityholders Number of Shares to be Sold
------------------------------- ---------------------------
Xxxxxxxx Family Trust U/T/A dtd. 3/26/91 6,000
Calafia Group 15,080
Xxxxx Xxx & Xxxxx Xx Xxxx Xxxxx 15,080
Xxxxxx Xxxxxxx 15,080
Xxxx-Xxx Xx 15,080
Xxxx Xxxxxxx 15,080
Xxxxxxxx Family Trust U/T/A dtd. 4/9/82 15,080
Xxxxx Xxxx Xxxxxxx & Xxxxx Xxxxxxx 15,080
Ko-Xxx Xxxxx Tam 15,080
Xxxxxxxx Family Trust U/T/A dtd. 3/21/96 1,865
Meng-Shan & Pohwa Xxxx Xxx 15,080
Xxxxxx & Xxxxxxxx Xxxxxxxx 15,080
Xxxxxxx Xxxxxx 15,080
Xxxxxxx & Xxxx Xxxxxxxxx 15,080
Xxxxxxx Xxxxxx 6,000
-------
Total........................... 200,000
=======
Option Stock
------------
Xxxx Xxx-Xxxx Xxxxx 250,000
Xxxx X. Xxxxxxxx 228,240
Xxxxxx X. Xxxxxxxx 121,760
-------
Total........................... 600,000
=======
ANNEX A
Matters to be Covered in the Opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
Counsel for the Company and the Selling Securityholders
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified as a foreign corporation and in good standing
in each jurisdiction in which its ownership or leasing of property requires such
qualification except where the failure to be so qualified would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, and
has full corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus;
(ii) Based solely on certificates obtained from the Secretary of State of
the State of Georgia, Hukk Engineering, Inc. is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified as a foreign corporation and in good standing
in each jurisdiction in which its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, properties, condition, financial or
otherwise, or results of operations of the Company and its subsidiaries, taken
as a whole.
(iii) All of the shares of capital stock of the Company outstanding prior
to the issuance of the Stock to be issued and sold by the Company pursuant to
the Underwriting Agreement have been duly authorized and validly issued, are
fully paid and nonassessable and have not been issued in violation of preemptive
rights or, to our knowledge, any other contractual rights to subscribe for or to
purchase shares of capital stock of the Company.
(iv) The Stock to be issued by the Company pursuant to the terms of the
Underwriting Agreement are duly authorized and will be, when duly countersigned
by the Company's transfer agent and registrar and upon issuance and delivery
against payment therefor in accordance with the terms of the Underwriting
Agreement, validly issued, fully paid and nonassessable, and free of any
preemptive rights or, to our knowledge, other contractual rights to subscribe
for or to purchase such Shares.
(v) the Registration Statement has become effective under the Securities
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or contemplated by the Commission;
(vi) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations of the Commission thereunder;
(vii) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to such counsel) and
11(c) of Form S-1 is to such counsel's
A-2
knowledge accurately and adequately set forth therein in all material respects
or no response is required with respect to such Items, and, to such counsel's
knowledge, the description of the Company's stock option plan and the options
granted and which may be granted thereunder and the options granted otherwise
than under such plan set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to said plan and options to
the extent required by the Securities Act and the rules and regulations of the
Commission thereunder;
(viii) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(ix) the Company has the corporate power and authority to enter into the
Underwriting Agreement and to issue, sell and deliver to the Underwriters the
Stock to be issued and sold thereunder; and the Underwriting Agreement has been
duly authorized, executed and delivered by the Company;
(x) based solely upon the representations made by the Selling Security
holders in the Underwriting Agreement, which such counsel has no reason to
believe are incorrect, the Underwriting Agreement has been duly executed and
delivered by or on behalf of the Selling Securityholders and the Custody
Agreement between the Selling Securityholders and American Securities Transfer &
Trust, Inc., as Custodian, and the Power of Attorney referred to in such Custody
Agreement have been duly executed and delivered by the several Selling
Securityholders;
(xi) the execution and delivery of the Underwriting Agreement and the
issue and sale by the Company of the shares of Stock sold by the Company as
contemplated by the Underwriting Agreement will not conflict with, or result in
a breach of, (A) the Certificate of Incorporation or Bylaws of the Company, (B)
any agreement, lease, contract, indenture or other instrument or obligation
known to such counsel to which the Company or any of its subsidiaries is a
party, (C) any applicable federal securities, Delaware Corporation or California
law or regulation or (D) so far as is known to such counsel, any order, writ,
injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(xii) to such counsel's knowledge, no holders of securities of the
Company have rights to the registration of shares of Common Stock, or other
securities, if any, because of the filing of the Registration Statement by the
Company;
(xiii) insofar as factual matters with respect to the stock to be sold by
the Selling Securityholders are concerned, based solely upon certificates of the
Selling Securityholders, the accuracy of which such counsel have no reason to
question, good and marketable title to the shares of Stock sold by the Selling
Securityholders under the Underwriting Agreement, free and clear of all liens,
encumbrances, equities, security interests and claims, has been transferred to
the Underwriters who have severally purchased such shares of Stock under the
Underwriting
A-3
Agreement, assuming for the purpose of this opinion that the Underwriters
purchased the same in good faith without notice of any adverse claims;
(xiv) insofar as factual matters with respect to the stock to be sold by
the Selling Securityholders are concerned, based solely upon certificates of the
Selling Securityholders, the accuracy of which such counsel have no reason to
question, no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated by the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the Underwriters;
(xv) the Company is not, and upon receipt and pending application of the
net proceeds from the sale of Stock to be sold by the Company in the manner
described in the Prospectus will not be, an "investment company" within the
meaning of such term under the Investment Company Act and the rules and
regulations of the Commission thereunder;
(xvi) the information in the Prospectus under the headings "Management --
Benefit Plans" and "Description of Capital Stock," to the extent that such
information constitutes matters of law or legal conclusions, has been reviewed
by such counsel and is an accurate summary in all material respects of such
matters and conclusions; and the form of certificate evidencing Common Stock and
filed as an exhibit to the Registration Statement complies with the Delaware
General Corporation Law;
(xvii) In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that, such
counsel has participated in conferences with the underwriters' representatives
and with representatives of the Company and its accountants concerning the
Registration Statement and the Prospectus and have considered the matters
required to be stated therein and the statements contained therein, although
such counsel has not independently verified the accuracy, completeness or
fairness of such statements. Based upon and subject to the foregoing, such
counsel advises the underwriters supplementally as a matter of fact and not
opinion that nothing has come to such counsel's attention to cause them to
believe that the Registration Statement, as of its effective date, 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, at the time it was first filed with the Commission
pursuant to Rule 424(b) under the Securities Act or as of the Closing Date (or
the Option Closing Date), contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel has not been requested to and does not make any comment in
this paragraph with respect to the financial statements and other financial and
statistical information contained in the Registration Statement or the
Prospectus).
In addition, such counsel shall state that, with respect to the opinions in
numbered paragraphs (viii) and (ix), Xxxxxxx Xxxxxxx & Xxxxxxxx, as counsel for
the Underwriters may rely on the opinion of such counsel, for the purpose of
rendering its opinion letter to the Underwriters.
A-4
__________________________________
Counsel rendering the foregoing opinions may rely as to questions of law
not involving the laws of the United States or of the State of California or the
State of Delaware, upon opinions of local counsel satisfactory in form and scope
to counsel for the Underwriters. Copies of any opinions so relied upon shall be
delivered to the Representatives and to counsel for the Underwriters and the
foregoing opinion shall also state that counsel knows of no reason the
Underwriters are not entitled to rely upon the opinions of such local counsel.
ANNEX B
Matters to be Covered in the Opinion of Xxxxxx Xxxx & Priest LLP,
Intellectual Property Counsel for the Company
April ___, 2000
CHASE SECURITIES INC.
BANK OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP., as
representatives of the Several Underwriters
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Re: Sunrise Telecom Incorporated Public Offering of
Shares of Common Stock
Registration Statement No. 333-32070
------------------------------------
Ladies and Gentlemen:
Reference is made to that certain Underwriting Agreement ("Underwriting
Agreement"), dated ___________, by and among you as representatives of the
Several Underwriters (as such term is defined in the Underwriting Agreement),
Sunrise Telecom Incorporated, a Delaware corporation (the "Company"), and
stockholders of the Company. Pursuant to the Underwriting Agreement, among
other things, the Company and the named stockholders each propose to sell a
certain number of shares of the Company's common stock to the Underwriters, and
the Underwriters propose, in turn, to sell such shares to the public pursuant to
a registration statement filed by the Company with and declared effective by the
Securities and Exchange Commission. Section 9(d) of the Underwriting Agreement,
among other things, requires the Company to furnish to the Underwriters a letter
of this firm relating to its representation of the Company in certain
intellectual property matters. With the Company's consent and at its
instruction, we furnish this letter to you as representatives of the Several
Underwriters pursuant to Section 9(d) of the Underwriting Agreement. We have
acted as counsel for the Company solely with respect to the matters referred to
in this letter. We did not participate in the negotiation or drafting of the
Underwriting Agreement, or in the preparation of the above referenced
Registration Statement, the prospectus included therein, or any of the
agreements relating to the underwritten offering contemplated by such
Registration Statement. We have reviewed certain sections of the Registration
Statement and the prospectus included therein, as described below, solely for
the purpose of rendering this letter, and have not conducted any other
investigation, other than as expressly stated herein. Unless otherwise defined
herein, all capitalized terms shall have the same meanings as are ascribed
thereto in the Underwriting Agreement.
B-2
Our representation of the Company has been limited solely to certain
specific intellectual property matters. Furthermore, our representation has
been limited to the Company, itself only, and did not include matters for any of
the Company's subsidiaries; consequently, we express no opinions or beliefs
regarding any matter with respect to any of the Company's subsidiaries. Our
representation has included assisting the Company with trademark acquisition as
well as trademark and patent enforcement. We have not represented the Company
with respect to any other intellectual property matter, including, without
limitation, matters relating to copyrights or trade secrets. We are familiar
only with those of the Company's patents and trademarks with respect to which we
have provided legal advice to the Company as described herein, and the Company's
offensive and defensive enforcement efforts with respect to such patents and
trademarks. Any statement expressed herein is necessarily limited solely to
those areas of the Company's intellectual property with which we are familiar.
In rendering the advice provided below, we have examined, among other
things, the original or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement on Form S-1, as amended (No. 333-
32070), and the prospectus included therein only with respect to information
relating to the Company's patents and trademarks set forth under the captions
"Intellectual Property Risks" and "Intellectual Property and Proprietary
Technology".
We also have made such legal and factual examinations and inquiries as we
have deemed advisable or necessary for the purpose of rendering this letter. In
addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company, certificates and
statements of public officials and other documents as we have deemed advisable
or necessary for the purpose of rendering this letter. As to questions of fact
material to our advice and not within our knowledge, we have relied upon
representations and warranties of the Company contained in the Underwriting
Agreement, and representations and statements of officers of the Company.
We have also relied on oral advice from the Company's counsel that the
Registration Statement we have examined, including the prospectus included
therein, was declared effective on __________ and that such Registration
Statement and prospectus have not been amended or supplemented since such date.
In making such examinations and inquiries, we have assumed (i) the
genuineness of all signatures, (ii) the authenticity and completeness of all
documents submitted to us as originals, (iii) the conformity to original
documents of all documents submitted to us as copies, (iv) the documents
submitted to us represent the most current versions thereof unless otherwise
specified, and (v) the authority of all persons signing documents examined by
us, and (vi) the identity and capacity of all individuals acting or purporting
to act as public officials.
As used in this letter, the phrase "to our knowledge" or the phrase "known
to us" means only actual current knowledge of those attorneys in this firm who
have rendered legal services in connection with the representation described in
the first and second paragraphs of this opinion letter. Except to the extent
expressly set forth herein, we have not undertaken any separate investigation
whatsoever to determine the existence or absence of any facts, and any limited
B-3
inquiry undertaken by us during such representation should not be regarded as
such an investigation. No inference as to our knowledge or the existence or
absence of any fact should be drawn from our representation of the Company or
the rendering of the advice set forth below. In particular, we were not present
at and did not participate in any conferences between the Company and its
representatives and representatives of the Underwriters at which the contents of
the above referenced Registration Statement and the prospectus included therein,
were discussed.
The nature and extent of our engagement by the Company as described above
would not necessarily be adequate to bring to our attention all matters which
could be deemed material or to enable us to make a valid assessment of the
materiality of such matters as were brought to our attention.
Based upon the foregoing and subject to the qualifications, assumptions,
limitations and exceptions set forth herein, we wish to advise you that:
(1) Although we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or prospectus, we, only with respect to information contained therein
relating to the Company's trademark acquisition or trademark and patent
information set forth under the caption "Intellectual Property Risks" and
"Intellectual Property and Proprietary technology" (A) have no reason to believe
that the Registration Statement and the prospectus included therein at the time
the Registration Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (B) have no
reason to believe that the prospectus, as of its date, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that we express no belief with respect to
any financial or statistical data included in the Registration Statement or the
prospectus included therein.
(2) The only pending legal or governmental proceedings relating to
trademarks or patents for which we have been engaged to render services to the
Company are the following:
(a) In July, 1997, the Company initiated a patent infringement action
against a competitor styled as Sunrise Telecom, Inc. v Electrodata, Inc., United
States District Court, Case No. C-9720666 RMW. In August, 1999, the Company
tried that case to a favorable conclusion. The matter has since been appealed,
in a matter identified as Sunrise Telecom, Inc. v Electrodata, Inc., Xxxx Xx.
00-0000, Xxxxxx Xxxxxx Court of Appeals for the Federal Circuit, Appeal from DCT
No. 97-CV20666. That appeal is currently pending.
(b) The Company has eleven trademark applications pending with the
U.S. Patent and Trademark Office and eight pending foreign trademark
applications at varying stages of prosecution. Four of the pending applications
were initially opposed by a third party, however the Company and third party
have effectuated a settlement of all issues regarding the aforementioned pending
applications.
B-4
(3) As of the date of this letter the Company has not informed us, and we
are not otherwise aware, of any notice to the Company of infringement or other
violation of any trademark or patent right of a third party.
We express no opinion or belief (i) as to how the Company's patents or
trademarks affect the business now being or proposed to be conducted by the
Company, or (ii) as to whether the Company has or does not have patents or
trademarks necessary to conduct the business it is now conducting or any
business that it proposes to conduct, or (iii) concerning the ultimate outcome
of any of the matters or proceedings described above with respect to which we
are representing the Company.
The statements set forth above are limited to solely to the federal laws of
the United States of America and the laws of the State of California.
This letter is solely for the benefit of the addresses hereof and is not to
be quoted in whole or in part, summarized or otherwise referred to, nor is it to
be filed with or applied to or relied upon by any governmental agency or other
person without the written consent of this firm. This letter is as of the date
hereof. We specifically disclaim any responsibility to update or supplement
this letter to reflect any facts which may hereafter come to our attention or
any changes in statutes or regulations or court decisions which may hereafter
occur.
Very truly yours,
XXXXXX XXXX & PRIEST LLP
ANNEX C
Matters to be Covered in the Opinion of Xxxxxxxx and Xxxxxxxx and Crew LLP
Patent Counsel for the Company
[To Come]
ANNEX D
Matters to be Covered in the Opinion of General Counsel of the Company
Such counsel shall state that such counsel has participated in conferences
with officials and other representatives of the Company, the Representatives and
Underwriters' counsel at which such conferences the contents of the Registration
Statement and Prospectus and related matters were discussed, and although they
have not verified the accuracy or completeness of the statements contained in
the Registration Statement or Prospectus, nothing has come to the attention of
such counsel which caused such counsel to believe that the Registration
Statement (other than the financial statements including supporting schedules
and financial statements derived therefrom, as to which such counsel need
express no opinion), at the Effective Date and at all times subsequent thereto
up to and on the Closing Date and on the Option Closing Date, as the case may
be, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus (except as aforesaid) at the
Closing Date and at the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
ANNEX E
Matters to be Covered in the Opinion of __________
Counsel to Sunrise Telecom Xxx.Xxx Division S.r.l.
1. General
We act as Italian counsel to Sunrise Telecom Xxx.Xxx Division S.r.l.
(herein called "Xxx.Xxx")
We have been asked to provide this legal opinion regarding the duly
incorporation and the legal existence and good standing under the Italian
law of each of the Companies.
2. Documents
For the purposes of this legal opinion, we have examined the following
documents:
(i) the Articles of Incorporation and the By-Laws of Xxx.Xxx;
(ii) the corporate books and records of Xxx.Xxx;
(iii) the certificates of good standing ("visura camarale") of Xxx.Xxx;
(iv) such other documents as we have deemed necessary or appropriate for
the purpose of this opinion.
3. Assumptions
For the purposes of this opinion, we have assumed that the authenticity of
all documents submitted to us as originals and the conformity to authentic
original documents of all documents submitted to us as certified, conformed
or photostatic copies.
4. Opinion
Subject to, and based on, the foregoing paragraphs of this letter, we are
of the opinion that, under Italian law, as in force and construed at the
date hereof:
c. Xxx.Xxx is an Italian joint stock company, duly incorporated,
validly existing and in good standing under the laws of Italy; and
d. Xxx.Xxx has the corporate power and authority to carry on the
business described in its Article of Incorporation.
5. Qualifications and Limitations
The opinion contained herein is subject to the following qualifications and
limitations.
E-2
a. No opinion is expressed as to the laws of any jurisdictions other
than Italy;
b. this opinion speaks as of its date, is subject to applicable
insolvency, bankruptcy, moratorium or other similar laws affecting
creditors rights in general;
c. this opinion has been delivered solely for your benefit.
Accordingly, it may not be quoted, filed with any governmental
authority or other regulatory agency or otherwise circulated or
utilized for any other purpose without our prior written consent.
ANNEX F
Form of Lock-Up Agreement
Chase Securities Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
As Representatives of the
Several Underwriters
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned is a shareholder of Sunrise Telecom, Inc. (the "Company") and
wishes to facilitate the public offering (the "Offering") of common stock of the
Company ("Common Stock") pursuant to a Registration Statement on Form S-1 (the
"Registration Statement") to be transmitted for filing with the Securities and
Exchange Commission on or about March 3, 2000.
In consideration of the foregoing, and in order to induce you to act as
underwriters in the Offering, the undersigned hereby irrevocably agrees that it
will not, directly or indirectly, sell, offer, contract to sell, transfer the
economic risk of ownership in, make any short sale, pledge or otherwise dispose
of any shares of Common Stock or any securities convertible into or exchangeable
or exercisable for or any other rights to purchase or acquire Common Stock,
without the prior written consent of Chase Securities Inc., for a period of 180
days from the effective date of the Registration Statement.
Notwithstanding the foregoing, if the undersigned is an individual, he or she
may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for the Company's Common Stock (i) either during his
or her lifetime or on death by will or intestacy to his or her immediate family
or to a trust the beneficiaries of which are exclusively the undersigned and/or
a member or members of his or her immediate family; provided, however, that
prior to any such transfer each transferee shall execute an agreement,
satisfactory to Chase Securities Inc., pursuant to which each transferee shall
agree to receive and hold such shares of Common Stock, or securities convertible
into or exchangeable or exercisable for the Common Stock, subject to the
provisions hereof, and there shall be no further transfer except in accordance
with the provisions hereof, (ii) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound by the restrictions set forth herein,
(iii) to the Underwriters pursuant to the Underwriting Agreement, (iv) in
connection with the reincoproration of the Company in the State of Delaware or
(v) in transactions relating to shares of Common Stock acquired by the
undersigned in open market transactions after the completion of the Offering.
For the purposes of this paragraph, "immediate family" shall mean spouse, lineal
descendant, father, mother, brother, or sister of the transferor.
F-2
The undersigned hereby waives any rights of the undersigned to sell shares of
Common Stock or any other security issued by the Company pursuant to the
Registration Statement, and acknowledges and agrees that for a period of 180
days from the effective date of the Registration Statement the undersigned has
no right to require the Company to register under the Securities Act of 1933, as
amended, such Common Stock or other securities issued by the Company and
beneficially owned by the undersigned.
The undersigned understands that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns. The undersigned agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of Comon Stock or other securities of the Company held by
the undersigned except in compliance with this agreement.
Very truly yours,
Dated: __________________________
Signature
__________________________
Printed Name and Title
