2,250,000 Shares
Ditech Communications Corporation
Common Stock
($0.001 Par Value)
EQUITY UNDERWRITING AGREEMENT
September __, 1999
Deutsche Bank Securities Inc.
BancBoston Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx & Xxxxx LLC
As Representatives of the
Several Underwriters
c/o Deutsche Bank Securities Inc.
0 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Ditech Communications Corporation, a Delaware corporation (the "Company")
and certain Stockholders of the Company named in Part A of Schedule II hereto
(the "Selling Stockholders"), propose to sell to the several underwriters (the
"Underwriters") named in Schedule I hereto for whom you are acting as
representatives (the "Representatives") an aggregate of 2,250,000 shares of the
Company's Common Stock, $0.001 par value (the "Firm Shares"). The respective
amounts of the Firm Shares to be so purchased by the several Underwriters are
set forth opposite their names in Schedule I hereto. The Selling Stockholders
also propose to sell at the Underwriters' option an aggregate of up to 337,500
additional shares of the Company's Common Stock (the "Option Shares") as set
forth below in Part B of Schedule II hereto. The Company and the Selling
Stockholders are sometimes referred to herein as the "Sellers".
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and the
Option Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLING
STOCKHOLDERS.
(a) The Company represents and warrants to each of the
Underwriters as follows:
(i) A registration statement on Form S-1 (File No. 333-
_______) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses (meeting the
requirements of the Rules and Regulations) contained therein and the
exhibits, financial statements and schedules, as finally amended and revised,
have heretofore been delivered by the Company to you. Such registration
statement, as amended at the time it became effective together with any
registration statement filed by the Company pursuant to Rule 462(b) of the
Act, herein referred to as the "Registration Statement," which shall be
deemed to include all information omitted therefrom in reliance upon Rule
430A and contained in the Prospectus referred to below, has become effective
under the Act and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. "Prospectus" means the form
of prospectus first filed with the Commission pursuant to Rule 424(b). Each
preliminary prospectus included in the Registration Statement prior to the
time it becomes effective is herein referred to as a "Preliminary
Prospectus." Any reference herein to the Registration Statement, any
Preliminary Prospectus or to the Prospectus shall be deemed to refer to and
include any supplements or amendments thereto, filed with the Commission
after the date of filing of the Prospectus under Rules 424(b) or 430A, and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement and the
Prospectus. The reincorporation of the Company from a California corporation
into a Delaware corporation (the "Merger") was duly and properly authorized
and the Agreement and Plan of Merger between Ditech Corporation, a California
corporation, and Ditech Merger Corporation, a Delaware corporation was duly
filed in each of the States of California and Delaware in accordance with the
Delaware and California corporation laws, the successor Company succeeded to
all rights, privileges and obligations of the predecessor company, and the
offer and sale of the securities issued in connection with the Merger were in
compliance with the applicable federal and state securities laws. The Company
has no subsidiaries. The 1997 restructuring of the Company's California
predecessor described in the Prospectus, and all redemptions of securities,
mergers and asset sales occurring in connection with the restructuring, the
redemptions of all prior securities of the Company (and its predecessors in
California), including redemption of the Series C Preferred Stock of the
Company's California predecessor prior to the closing of its initial public
offering and redemption of the Series A Preferred Stock of
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the Company's California predecessor simultaneously with the closing of its
initial public offering, and the reincorporation of the Company's California
predecessor in Delaware ("Prior Transactions") have been duly authorized and
were executed in compliance with the applicable federal and state securities
law. The Prior Transactions did not result in any material adverse change in
the earnings, business, management, properties, assets, rights, operations or
condition (financial or otherwise) of the Company and its predecessors or
prospects of the Company as described in the Prospectus ("Material Adverse
Effect") or cause the Company and its predecessors to incur any liability,
tax or adverse accounting treatment except as disclosed in the Prospectus.
The Company is duly qualified to transact business in all jurisdictions in
which the conduct of its business requires such qualification except for
those jurisdictions in which the failure to so qualify has not had a Material
Adverse Effect.
(iii) The outstanding shares of Common Stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable and have been issued in compliance with all applicable
securities laws. The Shares have been duly authorized and when issued and
paid for as contemplated herein will be validly issued, fully paid and
non-assessable. No preemptive rights of stockholders, or other rights to
subscribe to, exist with respect to any of the Shares or the issue and sale
thereof. Neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or relating
to the registration or purchase of any shares of Common Stock. All prior
securities of the Company (and its predecessors in California) have been duly
authorized and validly issued, are fully paid and nonassessable, and were
issued in compliance with the applicable federal and state securities laws.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Shares
conform to the description thereof contained in the Registration Statement.
The form of certificates for the Shares conforms to the requirements of the
Delaware General Corporate Law.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements
thereto will contain, all statements which are required to be stated therein
by, and will conform in all material respects to, the requirements of the Act
and the Rules and Regulations. The Registration Statement does not contain,
and will not contain, any untrue statement of a material fact and do not
omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading and the Prospectus
and any amendments and supplements thereto as filed with the Commission under
Rule 424(b) under the Act do not contain, and will not contain, any untrue
statement of material fact, and do not omit, and will not omit, to state any
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; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from
the Registration Statement or the Prospectus, or any such amendment or
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supplement, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives, specifically for use in the preparation thereof.
(vi) The financial statements of the Company, together with
related notes and schedules as set forth in the Registration Statement,
present fairly the financial position and the results of operations and cash
flows of the Company, at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such periods
have been made. The summary financial and statistical data included in the
Registration Statement and Prospectus present fairly the information shown
therein and such data have been compiled on a basis consistent with the
financial statements presented therein and the books and records of the
Company. The pro forma financial statements and other pro forma financial
information included in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(vii) PriceWaterhouseCoopers LLP, who 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
Act and the Rules and Regulations.
(viii) Except as disclosed in the Registration Statement
and Prospectus, there is no action, suit, claim or proceeding pending or, to
the knowledge of the Company, threatened against the Company before any court
or administrative agency or otherwise which if determined adversely to the
Company might result in any Material Adverse Effect or to prevent the
consummation of the transactions contemplated hereby.
(ix) The Company has good and marketable title to all of
the properties and assets reflected in the financial statements or as
described in the Registration Statement, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements or as described in the Registration Statement and
Prospectus, a document filed as an exhibit to the Registration Statement or
which are not material in amount. The Company occupies its leased properties
under valid and binding leases conforming in all material respects to the
description thereof set forth in the Registration Statement and Prospectus.
(x) The Company has filed all Federal, State, local and
foreign tax returns which have been required to be filed and has paid all
taxes indicated by said returns and all assessments received by it or any of
them to the extent that such taxes have become due. All tax liabilities have
been adequately provided for in the financial statements of the Company (as
described in the Registration Statement and Prospectus), and the Company does
not know of any
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actual or proposed additional material tax assessments that if assessed would
have a Material Adverse Effect.
(xi) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented,
there has not been any Material Adverse Effect or, to the Company's
knowledge, any development involving a prospective Material Adverse Effect,
whether or not occurring in the ordinary course of business, and there has
not been any material transaction entered into or any material transaction
that is reasonably likely of being entered into by the Company and required
to be disclosed in the Prospectus, other than transactions in the ordinary
course of business and changes and transactions described in the Registration
Statement, as it may be amended or supplemented. The Company has no material
contingent obligations which are not disclosed in the Company's financial
statements which are included in the Registration Statement.
(xii) The Company neither is nor, with the giving of
notice or lapse of time or both, will be, in violation of or in default under
its Certificate of Incorporation or By-Laws or under any material agreement,
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 and which default is
reasonably likely to have a Material Adverse Effect. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other material
agreement or instrument to which the Company is a party, or of the
Certificate of Incorporation or By-Laws of the Company or any order, rule or
regulation applicable to the Company of any court or of any regulatory body
or administrative agency or other governmental body.
(xiii) 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 of this Agreement and the consummation of the
transactions herein contemplated (except such additional steps as may be
required by the Commission, the National Association of Securities Dealers,
Inc. (the "NASD") or such additional steps as may be necessary to qualify the
Shares 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. None of
the offerings by the Company of its securities before or during this offering
of the Shares is part of this offering of the Shares or part of a single plan
of financing together with this offering of the Shares.
(xiv) The Company holds all material licenses,
certificates and permits from governmental authorities which are necessary to
the conduct of its business except where the failure to hold such would not
have a Material Adverse Effect. Except as specifically disclosed in the
Prospectus, the Company has sufficient trademarks, trade names, patents,
patent rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted and to the Company's
knowledge as proposed to be conducted. The Company has not infringed any
trade names, patents, patent rights, mask works, copyrights, license, trade
secret or other similar right of others. No claim has been made against the
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Company regarding trademark, trade name, patent, mask work, copyright,
license, trade secret or other infringement which could have a Material
Adverse Effect. The Company knows of no material infringement by others of
patents, patent rights, trade names, trademarks or copyrights owned by or
licensed to the Company.
(xv) Neither the Company, nor to the Company's knowledge,
any of its affiliates, has taken or may take, 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 Common Stock to facilitate the sale or resale
of the Shares. The Company acknowledges that the Underwriters may engage in
passive market making transactions in the Shares on The Nasdaq National
Market in accordance with Rule 10b-6A under the Exchange Act of 1934, as
amended.
(xvi) The Company is not an "investment company" within
the meaning of such term under the Investment Company Act of 1940, (as
amended, the "1940 Act") and the rules and regulations of the Commission
thereunder.
(xvii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xviii) The Company carries, or is covered by, insurance
in such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for companies
engaged in similar industries.
(xix) The Company is in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined
in ERISA) for which the Company would have 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 interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have 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, which would cause the loss of such qualification.
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(xx) To the Company's knowledge, there are no affiliations
or associations between any member of the NASD and any of the Company's
officers, directors or 5% or greater securityholders, except as set forth in
the Registration Statement and Prospectus.
(xxi) Neither the Agreement and Plan of Merger dated as of
April 21, 1999 between the Company and Ditech Corporation, a California
corporation, nor the exchange of shares consummated in connection therewith
contravened, conflicted with or resulted in a material violation or breach
of, or resulted in a material default under, any provisions of any material
agreement or contract of the Company or its predecessor California
corporations, except for (i) any contravention, conflict, violation, breach
or default which could not reasonably be expected to result in a Material
Adverse Effect or which was waived or consented to; (ii) gave any person the
right to (a) declare a default or exercise any remedy under any such
agreement or contract, except where any such default or exercise of a remedy
could not reasonably be expected to result in a Material Adverse Effect on
the Company, (b) accelerate the maturity or performance of any such agreement
or contract, except where such acceleration could not reasonably be expected
to result in a Material Adverse Effect on the Company, or (c) cancel,
terminate or modify any such contract, except where any such cancellation,
termination or modification could not reasonably be expected to result in a
Material Adverse Effect on the Company; or (iii) result in the imposition or
creation of any encumbrance upon or with respect to any of the shares of
capital stock or the assets of the Company, except where such encumbrance
would not result in a Material Adverse Effect on the Company.
(xxii) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus
(xxiii) All holders of a material portion of the
securities of the Company and its Subsidiaries having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have waived such rights
or such rights have expired by reason of lapse of time following notification
of the Company's intent to file the Registration Statement.
(xxiv) This Agreement has been duly authorized, executed
and delivered by the Company and has been duly executed and delivered by the
Selling Stockholders and constitutes a valid and binding obligation of each
of them enforceable in accordance with its terms except as rights to
indemnity and contribution hereunder may be limited as a matter of applicable
public policy or by applicable laws and except as the enforcement hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally, or by general equitable
principles.
(xxv) The Shares are listed on the Nasdaq National Market
subject to notice of listing.
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(xxvi) Except as disclosed to the Underwriters, the
Company is not (nor did it permit any of its officers, directors, agents,
representatives or affiliates to) directly or indirectly, other than as
described in the Prospectus, taking any of the following actions: (A)
solicit, entertain, encourage, initiate or participate in any proposals, or
conduct discussions with or engage in negotiations, relating to, (B) provide
information with respect to it relating to, or otherwise cooperate with,
facilitate or encourage any effort or attempt with regard to, (C) enter into
an agreement providing for, or (D) make or authorize any statement,
recommendation or solicitation in support of, any possible acquisition of the
Company (whether by merger, purchase of assets, tender offer or otherwise),
or any material portion of its or their capital stock or assets or any equity
interest in the Company
(xxvii) The Company's Common Stock is duly and validly
registered pursuant to the requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
(xxviii) The Company's Common Stock is listed on the
Nasdaq National Market.
(xxix) The Company has not at any time (A) made any
unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (B) made any payment
to any federal or state governmental office 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.
(xxx) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
(xxxi) The Company has duly filed on a timely basis with
the Commission all reports, registration statements, and other documents
required by the Act, the Exchange Act, or the rules and regulations of the
Commission promulgated pursuant to the Act or the Exchange Act. All of such
reports, registration statements and other documents, when they were filed
with the Commission, conformed in all material respects to the requirements
of the Act, the Exchange Act or the rules and regulations of the Commission
promulgated pursuant to the Act or the Exchange Act, as appropriate. None of
such reports, registration statements or other documents 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.
(b) The Selling Stockholders severally but not jointly
represent and warrant as follows:
(i) Such Selling Stockholder now has and at the Option
Closing Date (as such date is hereinafter defined) will have good and
marketable title to the Shares to be sold by such Selling Stockholder, free
and clear of any liens, encumbrances, equities and claims, and
8
full right, power and authority to effect the sale and delivery of such
Shares; and upon the delivery of, against payment for, such Shares, as
applicable, pursuant to this Agreement, the Underwriters will acquire good
and marketable title thereto, free and clear of any liens, encumbrances,
equities and claims.
(ii) Such Selling Stockholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney, and
the Custodian Agreement referred to below and to perform its obligations
under such agreements. The execution and delivery of this Agreement and the
consummation by such Selling Stockholder of the transactions herein
contemplated and the fulfillment by such Selling Stockholder of the terms
hereof will not require any consent, approval, authorization, or other order
of any court, regulatory body, administrative agency or other governmental
body (except as may be required under the Act, National Association of
Securities Dealers, Inc. (the "NASD") rules or state securities laws or Blue
Sky laws) and will not result in a breach of any of the terms and provisions
of, or constitute a default under, organizational documents as such Selling
Stockholder, if not an individual, or any indenture, mortgage, deed of trust
or other material agreement or instrument to which such Selling Stockholder
is a party, or of any order, rule or regulation applicable to such Selling
Stockholder of any court or of any regulatory body or administrative agency
or other governmental body having jurisdiction.
(iii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action 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 the Common Stock of the Company
and, other than as permitted by the Act, the Selling Stockholder will not
distribute any prospectus or other offering material in connection with the
offering of the Shares.
(iv) Without having undertaken to determine independently
the accuracy or completeness of either the representations and warranties of
the Company contained herein or the information contained in the Registration
Statement, such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1 are
not true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Registration Statement which has adversely affected or may adversely affect
the business of the Company or any of the Subsidiaries; and the sale of the
Shares by such Selling Stockholder pursuant hereto is not prompted by any
material information concerning the Company which is not set forth in the
Registration Statement. The information pertaining to such Selling
Stockholder under the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
(v) Neither such Selling Stockholder nor any of such
Selling Stockholder's affiliated directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, or has any other association (within the meaning of Article I, Section
l(m) of the by-laws of the NASD) or affiliation with, any member firm of the
NASD.
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(vi) Certificates in negotiable form for the total number
of the Shares to be sold hereunder by the Selling Stockholders have been
placed in custody with U.S. Stock Transfer Corporation, as custodian (the
"Custodian") pursuant to the Custodian Agreement executed by each Selling
Stockholder for delivery of any Shares to be sold hereunder by the Selling
Stockholders. Each of the Selling Stockholders specifically agrees that any
Shares represented by the certificates held in custody for the Selling
Stockholders under the Custodian Agreement are subject to the interests of
the Underwriters hereunder, that the arrangements made by the Selling
Stockholders for such custody are to that extent irrevocable, and that the
obligations of the Selling Stockholders hereunder shall not be terminable by
any act or deed of the Selling Stockholders (or by any other person, firm or
corporation including the Company, the Custodian or the Underwriters) or by
operation of law (including the death of an individual Selling Stockholder or
the dissolution of a corporate Selling Stockholder) or by the occurrence of
any other event or events, except as set forth in the Custodian Agreement. If
any such event should occur prior to the delivery to the Underwriters of the
Firm Shares or Option Shares hereunder, certificates for the Firm Shares or
Options Shares, as applicable, shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such event
has not occurred. The Custodian is authorized to receive and acknowledge
receipt of the proceeds of sale of the Firm Shares or Option Shares held by
it against delivery of such Firm Shares or Option Shares.
(vii) This Agreement has been duly executed and delivered
by the Selling Stockholders and constitutes a valid and binding obligation of
each of them enforceable in accordance with its terms except as rights to
indemnity and contribution hereunder may be limited as a matter of applicable
public policy or by applicable laws and except as the enforcement hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally, or by general equitable
principals.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
and the Selling Stockholders agree to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a price of $[__]
per share, the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be
made in same day funds by wire transfer to the account of the Company at Bank
of Boston, N.A., 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 (numbered 804-85586)
and to an account designated by the Custodian for the Selling Stockholders
against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such payment and delivery are to be
made through the facilities of the offices of Deutsche Bank Securities Inc.,
0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 at 10:00 a.m., Eastern Standard
time, on the third business day after the date of this Agreement, if this
Agreement is executed and delivered after 4:30 p.m. Eastern Standard time on
the third business day after the date of this Agreement, on the fourth
business day after the date of this Agreement, or
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at such other time and date not later than five business days thereafter as
you and the Company shall agree upon, such time and date being herein
referred to as the "Closing Date." (As used herein, "business day" means a
day on which the New York Stock Exchange is open for trading and on which
banks in New York are open for business and are not permitted by law or
executive order to be closed.) The certificates for the Firm Shares will be
delivered in such denominations and in such registrations as the
Representatives requests in writing not later than the second full business
day prior to the Closing Date, and will be made available for inspection by
the Representatives at least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, the Company and the Selling Stockholders hereby grant an option to
the several Underwriters to purchase the Option Shares at the price per share
as set forth in the first paragraph of this Section 2. The option granted
hereby may be exercised in whole or in part by giving written notice (i) at
any time before the Closing Date and (ii) only once thereafter within 30 days
after the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company and the Selling Stockholders setting forth the
number of Option Shares as to which the several Underwriters are exercising
the option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to be
delivered. The time and date at which certificates for Option Shares are to
be delivered shall be determined by the Representatives but shall not be
earlier than three nor later than ten full business days after the exercise
of such option, nor in any event prior to the Closing Date (such time and
date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the
notice of exercise shall set the Closing Date as the Option Closing Date. The
number of Option Shares to be purchased by each Underwriter shall be in the
same proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to the total
number of Firm Shares being purchased, adjusted by you in such manner as to
avoid fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the
Firm Shares by the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the Selling
Stockholders. To the extent, if any, that the option is exercised, payment
for the Option Shares shall be made on the Option Closing Date in same day
funds to the order of the Company for the Option Shares to be sold by it and
to the order of the Custodian for the Option Shares to be sold by the Selling
Stockholders against delivery of certificates therefor at the offices of
Deutsche Bank Securities Inc., 0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000
d) If on the Option Closing Date, any Selling Stockholder
fails to sell the Option Shares which such Selling Stockholder has agreed to
sell on such date as set forth in Part B of Schedule II hereto, the Company
agrees that it will sell or arrange for the sale of that number of shares of
Common Stock to the Underwriters which represent the Option Shares which such
Selling Stockholder has failed to so sell, as set forth in Schedule II
thereto, or such lesser number as may be requested by the Representatives.
11
3. OFFERING OF THE SHARES BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the public
offering price set forth in the Prospectus. The Representatives may from time to
time thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules and
Regulations is followed, to prepare and timely file with the Commission under
Rule 424(b) of the Rules and Regulations a Prospectus in a form approved by the
Representatives containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations, (B) not file any amendment to the Registration Statement
or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(b) The Company will advise the Representatives promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have become
effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in endeavoring
to qualify the Shares for sale under the securities laws of such jurisdictions
as the Representatives may reasonably have designated in writing and will make
such applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The
12
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 the Representatives may
reasonably request for distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(e) The Company will comply with the Act and the Rules and Regulations,
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and the Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
the Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(f) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earning statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earning statement shall satisfy the requirements of Section
11(a) of the Act and Rule 158 of the Rules and Regulations and will advise you
in writing when such statement has been so made available.
(g) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus. The
Company will, for a period of five years from the Closing Date, deliver to the
Representatives copies of annual reports and copies of all other documents,
reports and
13
information furnished by the Company to its stockholders or filed
with any securities exchange pursuant to the requirements of such exchange or
with the Commission pursuant to the Act or the Securities Exchange Act of 1934,
as amended. The Company will deliver to the Representatives similar reports with
respect to significant subsidiaries, as that term is defined in the Rules and
Regulations, which are not consolidated in the Company's financial statements.
(h) No offering, sale, short sale or other disposition of any shares of
Common Stock of the Company or other securities convertible into or exchangeable
or exercisable for shares of Common Stock or derivative of Common Stock (or
agreement for such) will be made for a period of 90 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than hereunder and
Common Stock issued by the Company pursuant to a stock option or purchase plan
described in the Prospectus or with the prior written consent of Deutsche Bank
Securities Inc..
(i) The Company has caused each officer, director and all
securityholders of the Company to furnish to you, on or prior to the date of
this agreement, a letter or letters, in form and substance satisfactory to the
Underwriters, pursuant to which each such person shall agree not to offer, sell,
sell short or otherwise dispose of any shares of Common Stock of the Company or
other capital stock of the Company, or any other securities convertible,
exchangeable or exercisable for Common Shares or derivative of Common Shares
owned by such person or request the registration for the offer or sale of any of
the foregoing (or as to which such person has the right to direct the
disposition of) for a period of 90 days after the date of this Agreement,
directly or indirectly, except with the prior written consent of Deutsche Bank
Securities Inc. ("Lockup Agreements") except as the Company has specifically
advised you in writing at the signing of this Agreement that the Company has not
obtained such Lockup Agreement, and you have acknowledged such in writing.
(j) The Company shall apply the net proceeds of its sale of the Shares
as set forth in the Prospectus and shall file such reports with the Commission
with respect to the sale of the Shares and the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the Act.
(k) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company to register as an investment company under the Investment
Company Act (the "1940 Act").
(l) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Common
Stock.
(m) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(n) The Selling Stockholders covenant and agree with the several
Underwriters that:
14
(i) No offering, sale, short sale or other disposition of any
shares of Common Stock or other capital stock of the Company or other
securities convertible, exchangeable or exercisable for Common Stock or
derivative of Common Stock owned by such Selling Stockholder or request the
registration for the offer or sale of any of the foregoing (or as to which
such Selling Stockholder has the right to direct the disposition of) will be
made for a period of 90 days after the date of this Agreement, directly or
indirectly, by such Selling Stockholder otherwise than hereunder or with the
prior written consent of Deutsche Bank Securities Inc.
(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act
of 1983 with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or at the Closing Date
or Option Closing Date, as applicable, a properly completed and executed
United States Treasury Department Form W-8 or W-9 (or other applicable form
or statement specified by Treasury Department regulations in lieu thereof).
(iii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the stabilization
or manipulation of the price of Common Stock,.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company and to the
extent required by the Amended and Restated Registration Agreement, dated as of
March [ ], 1999, by and among the Company and the other parties thereto (the
"Registration Agreement"), the fees and disbursements of counsel to the Selling
Stockholders; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, this Agreement, the Underwriters' Selling Memorandum, the
Underwriters' Invitation Letter, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including reasonable legal fees and disbursements) incident to
securing any required review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Shares; the Listing Fee of the
Nasdaq National Market; and the expenses, including the reasonable fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under State securities or Blue Sky laws. To the
extent, if at all, that any of the Selling Stockholders engage special legal
counsel to represent them in connection with this offering of the Shares, the
fees and expenses of such counsel shall be borne by such Selling Stockholders to
the extent the Company is not required to bear such expenses pursuant to the
Registration Agreement. Any transfer taxes imposed on the sale of the Shares to
the several Underwriters will be paid by the Sellers pro rata. The Company
agrees to pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed shares of the Common Stock by the Underwriters to employees and
15
persons having business relationships with the Company and its Subsidiaries.
The Sellers shall not, however, be required to pay for any of the
Underwriters expenses (other than those related to qualification under NASD
regulation and State securities or Blue Sky laws) except that, if this
Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the
Reprsentatives pursuant to Section 11 hereof, or by reason of any failure,
refusal or inability on the part of the Company or the Selling Stockholders
to perform any undertaking or satisfy any condition of this Agreement or to
comply with any of the terms hereof on their part to be performed, unless
such failure to satisfy said condition or to comply with said terms be due to
the default or omission of any Underwriter, then the Company shall reimburse
the several Underwriters for reasonable out-of-pocket expenses, including
reasonable fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares
or in contemplation of performing their obligations hereunder; but the
Company and the Selling Stockholders shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares
on the Closing Date and the Option Shares, if any, on the Option Closing Date
are subject to the accuracy, as of the Closing Date or the Option Closing Date,
as the case may be, of the representations and warranties of the Company and the
Selling Stockholders contained herein, and to the performance by the Company and
the Selling Stockholders of their covenants and obligations hereunder and to the
following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or the Selling Stockholders, shall be
contemplated by the Commission and no injunction, restraining order, or order of
any nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinions of Xxxxxx Godward LLP
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters set forth in Attachment A hereto.
In rendering such opinion Xxxxxx Godward LLP may rely as to matters
governed by the laws of states other than California, Delaware or Federal laws
on local counsel in such jurisdictions, provided that in each case Xxxxxx
Godward LLP shall state that they believe that
16
they and the Underwriters are justified in relying on such other counsel. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement, at
the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and
as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and
as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Xxxxxx
Godward LLP may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(c) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, legal opinions from Flehr Xxxxxxx Test
Xxxxxxxxx & Xxxxxxx LLP dated the Closing Date or the Option Closing Date, as
the case may be, with respect to certain intellectual property matters, which
collectively shall opine to the effect that:
(i) The Company owns all patents described in the Prospectus as
being owned by it or necessary for the conduct of its business, and such
counsel is not aware of any claim to the contrary or any challenge by any
other person to the rights of the Company with respect to the foregoing.
(ii) Such counsel is not aware of any legal actions, claims or
proceedings pending or threatened against the Company alleging that the Company
is infringing or otherwise violating any patents or trade secrets owned by
others other than those identified in the Prospectus.
(iii) Such counsel has reviewed the descriptions of patents and
patent applications under the captions "Risk Factors--Our ability to compete
successfully will depend, in part, on our ability to protect our intellectual
property rights, which may not be able to protect", "Risk Factors--Our
products employ technology that may infringe on the proprietary rights of
third parties, which may expose us to litigation" and "Business--Patents and
Intellectual Property" in the Registration Statement and Prospectus, and, to
the extent they constitute matters of law or legal conclusions, these
descriptions are accurate and fairly and completely present the patent
situation of the Company.
(iv) Such counsel is aware of nothing that causes such counsel to
believe that, as of the date that the Registration Statement became effective
and as of the date of such opinion, the description of patents and patent
applications under the captions "Risk Factors--Our ability to compete
successfully will depend, in part, on our ability to protect our intellectual
property rights, which may not be able to protect", "Risk Factors--Our products
17
employ technology that may infringe on the proprietary rights of third parties,
which may expose us to litigation" and "Business--Patents and Intellectual
Property" in the Registration Statement and Prospectus contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading, including without limitation, any
undisclosed material issue with respect to the subsequent validity or
enforceability of such patent or patent issuing from any such pending patent
application.
(d) The Representatives shall have received from Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, counsel for the Underwriters, an opinion dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Underwriters substantially to the effect specified in subparagraphs (vi) and
(vii) of Paragraph (b) of this Section 6, and that the Company is a duly
organized and validly existing corporation under the laws of the State of
Delaware. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact, necessary in
order to make the statements, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as to
financial statements, related notes, schedules and other financial or
statistical information therein). With respect to such statement, Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(e) The Representatives shall have received at or prior to the Closing
Date from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the State
securities or Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(f) The Representatives shall have received, on each of the dates
hereof, the Closing Date and the Option Closing Date, as the case may be, a
letter dated the date hereof, the Closing Date or the Option Closing Date, as
the case may be, in form and substance satisfactory to you, of
PriceWaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating that in their opinion the financial
statements and schedules examined by them and included in the Registration
Statement comply in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations; and
containing such other statements and information as is ordinarily included in
accountants'
18
"comfort letters" to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(g) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates executed
by the Chief Executive Officer and the Chief Financial Officer on behalf of the
Company to the effect that, as of the Closing Date or the Option Closing Date,
as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registrations
Statement has been issued, and to his knowledge, no proceedings for such
purpose have been taken or are, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or
the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the
Registration Statement were true and correct in all material respects, and
such Registration Statement and Prospectus did not omit 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, and since the effective date of the Registration Statement,
no event has occurred which should have been set forth in a supplement to or
an amendment of the Prospectus which has not been so set forth in such
supplement or amendment; and
(v) Since the respective dates as of which information is given
in the Registration Statement and Prospectus, there has not been to his
knowledge, any material adverse change that would have a Material Adverse
Effect, whether or not arising in the ordinary course of business.
(h) The Representatives shall have received a certificate, dated as of
the Closing Date or Option Closing Date, as the case may be, signed by or on
behalf of each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder in this Agreement are
true and correct, as if made at and as of such Closing Date or Option Closing
Date, as the case may be, and such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on his or its part to be performed
or satisfied prior to such Closing Date or Option Closing Date, as the case may
be.
(i) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and
19
warranties, covenants and conditions contained herein as the Representatives
may reasonably have requested.
(j) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq National Market.
(k) The Lockup Agreements described in Section 4(j) are in full force
and effect.
(l) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, an opinion from Xxxxxx Godward LLP and
certain other counsel for each Selling Stockholder, dated the Closing Date or
the Option Closing Date, as the case may be, addressed to the Underwriters to
the effect that:
(i) This Agreement has been duly authorized and executed and
delivered on behalf of the Selling Stockholder.
(ii) The Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than as required by state
securities and Blue Sky laws as to which such counsel need express no
opinion), to sell, assign, transfer and deliver the portion of the Shares to
be sold by such Selling Stockholder.
(iii) The Custodian Agreement and the Power of Attorney
executed and delivered by each Selling Stockholder is valid and binding.
(iv) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the uniform Commercial Code) have acquired
good and marketable title to the Shares being sold by each Selling
Stockholder on the Closing Date, and the Option Closing Date, as the case may
be, free and clear of all liens, encumbrances, equities and claims.
(v) In rendering such opinion, such counsel may rely as to
matters governed by the laws of states other than California, the corporate
laws of Delaware or federal securities laws on local counsel in such
jurisdictions, provided that in each case such counsel shall state that they
believe that they and the underwriters are justified in relying on such other
counsel.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Representatives and to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
20
In such event, Selling Stockholders, Company and the Underwriters shall
not be under any obligation to each other (except to the extent provided in
Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(i) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter
or any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
under which they were made, or (iii) any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares or
the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (PROVIDED, that the
Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct); provided, however, that
(1) the indemnity agreements of the Company contained in this Section 8(a)(i)
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 or (2) the indemnity agreement
contained in this Section 8(a)(i) 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 shares which are 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 Common 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).
21
(ii) to reimburse each Underwriter and each such controlling person
upon demand for any legal or other out-of-pocket expenses reasonably incurred by
such Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a party to any
action or proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and other
expenses pursuant to this subparagraph, the Underwriters will promptly return
all sums that had been advanced pursuant hereto. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) The Selling Stockholders severally and not jointly agree to
indemnify the Underwriters and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or controlling person may become subject
under the Act or otherwise to the same extent as indemnity is provided by the
Company pursuant to Section 8(a) above. In no event, however, shall the
liability of any Selling Stockholder for indemnification and contribution under
this Section 8 exceed the proceeds received by such Selling Stockholder from the
Underwriters in the offering of the Shares. This indemnity obligation will be in
addition to any liability which the Company may otherwise have.
(c) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders, and each person, if
any, who controls the Company or the Selling Stockholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling Stockholders or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, Selling Stockholders or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this
22
Section 8, such person (the "indemnified party") shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party")
in writing. No indemnification provided for in Section 8(a) or (d) shall be
available to any party who shall fail to give notice as provided in this
Section 8(e) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the 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 the provisions of Section 8(a) or (b). In case
any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party or indemnified parties and shall pay
as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of one counsel retained by the
indemnified parties in the event (i) the indemnifying parties and the
indemnified parties shall have mutually agreed to the retention of such
counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying parties and the indemnified
parties and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying parties shall have failed to assume the defense and
employ counsel acceptable to the indemnified parties within a reasonable
period of time after notice of commencement of the action. It is understood
that the indemnifying parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one separate firm for all such indemnified
parties. Such firm shall be designated in writing by you in the case of
parties indemnified pursuant to Section 8(a) and by the Company in the case
of parties indemnified pursuant to Section 8(b). The indemnifying parties
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying parties agree to indemnify the
indemnified parties from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (d) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on
23
the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, (or actions or proceedings in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the Selling Stockholders bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Compny and the Selling Stockholders on the one
hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(f) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(f). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(f) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (f), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter, (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation and (iii) no Selling Stockholder shall be required to
contribute any amount in excess of the proceeds received by such Selling
Stockholder in the offering of the Shares. The Underwriters' obligations in this
Section 8(f) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by
24
the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 8 and the representations and warranties
of the Company set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or any persons controlling the Company, (ii) acceptance
of any Shares and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Selling
Stockholder, you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company or a Selling
Stockholder such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Stockholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Stockholders
except to the extent provided in Section 8 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 9, the Closing
Date or Option Closing Date, as the case may be, may be postponed for such
period, not exceeding seven days, as you, as Representatives, may determine in
order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES.
25
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Deutsche Bank Securities
Inc., 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
attention: Xxxx Xxxxxxxxxx; with a copy to Deutsche Bank Securities Inc., One
Bankers Trust Plaza, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
General Counsel; if to the Company, to
Xxxx Xxxxxxx
Ditech Communications Corporation
000 X. Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
and if the Selling Stockholders, to
-----------------------------
-----------------------------
-----------------------------
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company as
follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has been any Material Adverse
Effect, whether or not arising in the ordinary course of business, (ii) any
outbreak or escalation of hostilities or declaration of war or national
emergency or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets of
the United States would, in your reasonable judgment, make it impracticable to
market the Shares or to enforce contracts for the sale of the Shares, or (iii)
suspension of trading in securities generally on the New York Stock Exchange or
the American Stock Exchange or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such Exchange,
(iv) the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects or may materially and adversely
affect the business or operations of the Company, (v) declaration of a banking
moratorium by United States or New York State authorities, (vi) the suspension
of trading of the Company's Common Stock by the Commission on the Nasdaq
National Market or (viii) the taking of any action by any governmental body or
agency in respect of its monetary or fiscal affairs which in your reasonable
opinion has a material adverse effect on the securities markets in the United
States; or
26
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholders and the Underwriters acknowledge
and agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the Registration
Statement consists of the information set forth in the last paragraph on the
front cover page (insofar as such information relates to the Underwriters),
legends required by Item 502(d) of Regulation S-K under the Act and the
information under the caption "Underwriting" in the Prospectus.
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 investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
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 Maryland.
27
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.
Very truly yours,
DITECH COMMUNICATIONS CORPORATION
By
-------------------------------------
SELLING STOCKHOLDERS
LISTED ON SCHEDULE II
By
-------------------------------------
The foregoing Underwriting is hereby confirmed and accepted as of the
date first above written.
DEUTSCHE BANK SECURITIES INC.
----------------------------------------
As Representatives of the several
Underwriters listed on Schedule I
By: Deutsche Bank Securities Inc.
By:
-------------------------------------
Authorized Officer
28
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares to
Underwriter be Purchased
----------- ------------
TOTAL ==========
SCHEDULE II
PART A
SELLING STOCKHOLDERS
PART B
SCHEDULE OF OPTION SHARES
Maximum Number of Percentage of
Option Shares to Total Number of
Name of Seller be Sold Option Shares
-------------- ----------------- ---------------
ATTACHMENT A
1. The Company is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the Prospectus
and, to our knowledge, has no subsidiaries. The Company is duly qualified as
a foreign corporation to conduct its business and is in good standing in
California, Minnesota and Texas.
2. The execution and delivery of the Agreement and Plan of Merger dated
as of April 21, 1999 (the "Merger Agreement") between Ditech Corporation, a
California corporation ("Ditech California"), and Ditech Merger Corporation,
a Delaware corporation ("Ditech Delaware"), was duly authorized by all
necessary corporate action on the part of each of Ditech California and
Ditech Delaware. Each of Ditech California and Ditech Delaware had all
necessary corporate power and authority to execute and deliver the Merger
Agreement, to file the Merger Agreement with the Secretary of State of
California and the Secretary of State of Delaware, and to consummate the
merger contemplated by the Merger Agreement. At the time of execution and
filing, the Merger Agreement constituted a valid and binding obligation of
each of Ditech California and Ditech Delaware, enforceable in accordance with
its terms, except as enforceability might have been limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
equity principles and to limitations on availability of equitable relief. The
merger became effective on April 21, 1999. The execution and delivery of the
Merger Agreement by Ditech California and Ditech Delaware and the
consummation of the merger contemplated therein did not violate or give any
person a right to cancel, terminate or modify any agreement or instrument
filed as an exhibit to the Registration Statement.
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3. The Company had authorized and outstanding capital stock as set forth
under the caption "Capitalization" in the Prospectus as of the date set forth
therein; the outstanding shares of the Company's Common Stock, including the
Shares to be sold by the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; the Shares conform to
the description thereof contained in the Prospectus under the caption
"Description of Capital Stock"; certificates for the Common Stock of the
Company in the form filed as exhibits to the Registration Statement, are in
due and proper form under Delaware law; the Shares to be sold by the Company
have been duly authorized and, when issued and delivered by the Company and
paid for in accordance with the terms of the Underwriting Agreement, will be
validly issued, fully paid and non-assessable. No preemptive rights of
stockholders exist in the Certificate of Incorporation, Bylaws and, to our
knowledge, any agreement or instrument to which the Company is a party or by
which it is bound with respect to any of the Shares or the issue or sale
thereof.
4. Except as described in or contemplated by the Prospectus, to our
knowledge, (a) there are no outstanding securities of the Company convertible
or exchangeable into or evidencing the right to or subscribe for any shares
of capital stock of the Company, and (b) there are no outstanding or
authorized options, warrants or rights of any character obligating the
Company to issue any shares of its capital stock or any securities
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of such stock; and except as described in the
Prospectus, to our knowledge no holder of any securities of the Company or
any other person has the right, which has not been satisfied or effectively
waived, (i) to cause the Company to sell or otherwise issue to them, or
permit them to underwrite the sale of, any of the Shares or the right to have
any shares of Common Stock or other securities of the Company included in the
Registration Statement, or (ii) to require registration under the Act of any
shares of Common Stock or other securities of the Company.
5. The statements under the captions "Management -- Limitation on
Directors' and Officers' Liability," "Management -- Benefit Plans," "Certain
Transactions," "Description of Capital Stock" and "Shares Eligible for Future
Sale" in the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, fairly summarize the
information called for with respect to such documents and matters to the
extent required under the Act and the Rules and Regulations.
6. We have received oral confirmation from the staff of the Commission
that the Registration Statement has become effective under the Act and, to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued or is pending before or overtly threatened by the
Commission.
7. At the time it became effective and as of the date hereof, the
Registration Statement and the Prospectus complied as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations thereunder (except for the financial statements, related
schedules, other financial information and statistical information derived
therefrom included in the Registration Statement and Prospectus, as to which
we express no opinion).
-4-
8. To our knowledge, there are no contracts or documents required to be
filed as exhibits to the Registration Statement or described in the
Registration Statement or the Prospectus which are not filed or described as
required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized to the extent
required by the Act and the Rules and Regulations.
9. To our knowledge, there are no material legal or governmental
proceedings pending or overtly threatened against the Company required to be
disclosed in the Prospectus except as disclosed therein.
10. The execution and delivery of the Underwriting Agreement and the
consummation of the transactions therein contemplated (other than the
indemnification and contribution obligations of the Company thereunder, as to
which we express no opinion) do not and will not conflict with, or result in
a breach of, any of the terms or provisions of, or constitute a default
under, the Certificate of Incorporation or By-Laws of the Company, or any
agreement or instrument filed as an exhibit to the Registration Statement.
11. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
12. No approval, consent, order, authorization, designation, declaration
or filing by or with any regulatory, administrative or other governmental
body is necessary in connection with the execution and delivery of the
Underwriting Agreement and the consummation of the transactions therein
contemplated (other than as may be required by the NASD or as required by
State securities and Blue Sky laws as to which such counsel need express no
opinion) except such as have been obtained or made.
13. The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by the Underwriting Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
14. The execution and delivery of the Agreement and Plan of Merger dated
as of April 2, 1997 (the "ACP Merger Agreement") between Ditech Corporation,
a California corporation ("Old Ditech California"), and Automated Call
Processing Corporation, Inc., a California corporation ("ACP"), was duly
authorized by all necessary corporate action on the part of each of Old
Ditech California and ACP. Each of Old Ditech California and ACP had all
necessary corporate power and authority to execute and deliver the ACP Merger
Agreement, to file the ACP Merger Agreement with the Secretary of State of
California, and to consummate the merger contemplated by the ACP Merger
Agreement. The merger became effective on April 2, 1997.
15. All of the shares of Series C Preferred Stock of the Company
outstanding on April 29, 1999, and Series A Preferred Stock outstanding prior
to the Closing, have been redeemed in
-5-
accordance with the Delaware General Corporation Law and the terms of the
Company's Certificate of Incorporation.
* * * * *
In the course of the preparation of the Registration Statement and the
Prospectus, we have participated in discussions and conferences with officers of
the Company, representatives of its independent public accountants,
representatives of the Underwriters and their counsel during which contents of
the Registration Statement and the Prospectus were discussed, and while we have
not independently verified, are not passing upon and assume no responsibility
for the accuracy, completeness or fairness of the Registration Statement or
Prospectus, we advise you that no facts have come to our attention which would
lead us 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, as of its date and as of the date
hereof, 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 the light of the circumstances under
which they were made, not misleading (except for the financial statements,
related schedules, other financial information and statistical information
derived therefrom included in the Registration Statement and Prospectus, as to
which we express no view).
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