Exhibit 1.1
MONOLITHIC SYSTEM TECHNOLOGY, INC.
5,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
November __, 2000
X.X. Xxxxxx Securities Inc.
Wit SoundView
As Representatives of several underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
MONOLITHIC SYSTEM TECHNOLOGY, INC., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters listed in Schedule I
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives") an aggregate of 5,000,000 shares of Common Stock, par value
$0.01 per share, of the Company (the "Underwritten Shares") and, for the sole
purpose of covering over-allotments in connection with the sale of the
Underwritten Shares, at the option of the Underwriters, up to an additional
750,000 shares of Common Stock of the Company (the "Option Shares"). The
Underwritten Shares and the Option Shares are herein referred to as the
"Shares". The shares of Common Stock of the Company to be outstanding after
giving effect to the sale of the Shares are herein referred to as the "Stock".
The Stock, including the Shares, will have attached thereto rights (the
"Rights") to purchase units equal to one one-hundredth of a share of the
Company's Series AA preferred stock, par value $0.01 per share, for each
outstanding share of Stock outstanding on [ ]. The Rights are to be issued
pursuant to a Rights Agreement (the "Rights Agreement") dated as of [___]
between the Company and Xxxxx Fargo
Shareowner Services. As part of the offering contemplated by this Agreement,
X.X. Xxxxxx Securities Inc. (the "Designated Underwriter") has agreed to
reserve out of the Underwritten Shares purchased by it under this Agreement,
up to 350,000 shares, for sale to the Company's directors, officers,
employees and other parties associated with the Company (collectively,
"Participants"), as set forth in the Prospectus (as defined herein) under the
heading "Underwriting" (the "Directed Share Program"). The Underwritten
Shares to be sold by the Designated Underwriter pursuant to the Directed
Share Program (the "Directed Shares") will be sold by the Designated
Underwriter pursuant to this Agreement at the public offering price. Any
Directed Shares not orally confirmed for purchase by a Participant by the end
of the business day on which this Agreement is executed will be offered to
the public by the Underwriters as set forth in the Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares and Rights. The
registration statement as amended at the time when it shall become effective
including information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement" and the prospectus
in the form first used to confirm sales of Shares is referred to in this
Agreement as the "Prospectus." If the Company has filed an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share of
$__________ (the "Purchase Price").
In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as hereinafter provided, and the Underwriters on the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company up to an aggregate of 750,000 Option Shares at the
Purchase Price, for the sole purpose of covering over-allotments (if any) in the
sale of Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
number of Underwritten Shares set forth opposite the name of such Underwriter in
Schedule I hereto
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(or such number increased as set forth in Section 9 hereof) bears to the
aggregate number of Underwritten Shares being purchased from the Company by
the several Underwriters, subject, however, to such adjustments to eliminate
any fractional Shares as the Representatives in their sole discretion shall
make.
The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as to
which the option is being exercised and the date and time when the Option Shares
are to be delivered and paid for which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing
Date nor later than the tenth full Business Day (as hereinafter defined) after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Any such notice shall be given at
least two Business Days prior to the date and time of delivery specified
therein.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives
in the case of the Underwritten Shares, on __________, 19__, or at such other
time on the same or such other date, not later than the fifth Business Day
thereafter, as the Representatives and the Company may agree upon in writing or,
in the case of the Option Shares, on the date and time specified by the
Representatives in the written notice of the Underwriters' election to purchase
such Option Shares. The time and date of such payment for the Underwritten
Shares is referred to herein as the "Closing Date" and the time and date for
such payment for the Option Shares, if other than the Closing Date, are herein
referred to as the "Additional Closing Date." As used herein, the term "Business
Day" means any day other than a day on which banks are permitted or required to
be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of X.X. Xxxxxx Securities Inc. set forth above not
later than 10:00 A.M., San Francisco time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
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4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information relating
to any Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been instituted
or, to the knowledge of the Company, threatened by the Commission; and the
Registration Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply, or will
comply, as the case may be, in all material respects with the Securities Act and
do not and will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional Closing Date, as
the case may be, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided that
these representations and warranties shall not apply to any statements or
omissions in the Registration Statement or the Prospectus made in reliance upon
and in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use therein;
(c) the financial statements, and the related notes thereto, included
in the Registration Statement and the Prospectus present fairly the financial
position of the Company as of the dates indicated and the results of their
operations and cash flows at the specified dates and for the periods specified;
said financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
disclosed therein, and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein; and the
pro forma financial information, and the related notes thereto, included in the
Registration Statement and the Prospectus has been prepared in accordance with
the applicable requirements of the Securities Act and is based upon good faith
estimates and assumptions believed by the Company to be reasonable;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in the
capital
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stock or long-term debt of the Company, or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus; and except as
set forth or contemplated in the Prospectus the Company has not entered into
any transaction or agreement (whether or not in the ordinary course of
business) material to the Company;
(e) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has been
duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company;
(f) the Company does not own or control, directly or indirectly, any
corporation, association or other entity;
(g) this Agreement has been duly authorized, executed and delivered by
the Company;
(h) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock conforms as to legal matters to the
description thereof set forth in the Prospectus, and all of the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, are fully-paid and non-assessable and are not subject to any pre-emptive
or similar rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Company, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any such rights,
warrants or options;
(i) the Shares have been duly authorized, and, when issued and
delivered to and paid for by the Underwriters in accordance with the terms of
this Agreement, will be duly issued and will be fully paid and non-assessable
and will conform to the descriptions thereof in the Prospectus; and the issuance
of the Shares is not subject to any preemptive or similar rights;
(j) the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the Company
and, when issued upon issuance of the Shares, will be validly issued, and the
Series AA preferred stock has been duly authorized by the Company and validly
reserved for issuance upon the exercise in accordance with the terms of the
Rights Agreement, will be validly issued, fully paid and non-assessable;
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(k) the Company is not, nor with the giving of notice or lapse of time
or both would it be, in violation of or in default under, its Certificate of
Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which it or any of its properties is bound, except for violations and defaults
which individually and in the aggregate are not material to the Company; the
issue and sale of the Shares and the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated herein 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, loan agreement or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will any such action result in
any violation of the provisions of the Certificate of Incorporation or the
By-Laws of the Company or any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its properties; and no consent, approval, authorization,
order, license, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky Laws in connection
with the purchase and distribution of the Shares by the Underwriters;
(l) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its properties or to which the Company is
or may be a party or to which any property of the Company is or may be the
subject which, if determined adversely to the Company, could individually or
in the aggregate have, or reasonably be expected to have, a material adverse
effect on the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company, and,
to the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(m) the Company has good and marketable title to all items of real
property and good and marketable title to all personal property reflected in the
financial statements, included in the Registration Statement or otherwise
described in the Registration Statement, in each case free and clear of all
liens, encumbrances and defects except such as are described or referred to in
the Prospectus or such as do not materially affect the value of such property;
and any real property and buildings held under lease by the Company are held by
it under valid, existing and enforceable leases with such exceptions as are not
material;
(n) no relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required by the Securities
Act to be described in the Registration Statement and the Prospectus which is
not so described;
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(o) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and sale
of the Shares;
(p) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(q) the Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business
with the Government of Cuba or with any person or affiliate located in Cuba;
(r) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company, are independent public accountants as required by the
Securities Act;
(s) the Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and have paid all taxes shown
thereon and all assessments received by them to the extent that such taxes have
become due and are not being contested in good faith; and, except as disclosed
in the Registration Statement and the Prospectus, to the Company's knowledge,
there is no tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company;
(t) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock;
(u) the Company owns, possesses or has obtained all material licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof, and
the Company has not received any actual notice of any proceeding relating to
revocation or modification of any such material license, permit, certificate,
consent, order, approval or other authorization, except as described in the
Registration Statement and the Prospectus; and the Company is in compliance with
all laws and regulations relating to the conduct of its business as conducted as
of the date hereof, other than any laws or regulations the violation of which is
not likely to have a material adverse effect on the Company;
(v) there are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company which are likely to
have a material adverse effect on the Company;
(w) the Company is in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health
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and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws") except where such
noncompliance with Environmental Laws would not, singly or in the aggregate,
have a material adverse effect on the Company;
(x) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, ("ERISA") that
is maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its affiliates
has been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended, ("Code"). No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code has occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption. For each such plan which is
subject to the funding rules of Section 412 of the Code or Section 302 of ERISA
no "accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the assets of
each such plan (excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions;
(y) the Common Stock has been approved for inclusion on the Nasdaq
National Market, subject only to official notice of issuance;
(z) except as disclosed in the Prospectus, the Company owns or
possesses adequate rights to use all patents, patent rights or licenses,
inventions, collaborative research agreements, trade secrets, know-how,
trademarks, service marks, trade names and copyrights which are necessary to
conduct its businesses as described in the Registration Statement and
Prospectus; the expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not result in a
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of operations of
the Company, otherwise than as set forth or contemplated in the Prospectus; the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might result in a material adverse change in the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company, otherwise than as
set forth or contemplated in the Prospectus. Except as disclosed in the
Prospectus, there is no claim being made against the Company regarding patents,
patent rights or licenses, inventions, collaborative research, trade secrets,
know-how, trademarks, service marks, trade names or copyrights. The Company does
not in the conduct of its business as now
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or proposed to be conducted as described in the Prospectus infringe or
conflict with any right or patent of any third party, or any discovery,
invention, product or process which is the subject of a patent application
filed by any third party, known to the Company, which such infringement or
conflict is reasonably likely to result in a material adverse change in or
affecting the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company; and
(aa) each officer and director of the Company and each beneficial
owner of capital of the Company listed on EXHIBIT A has agreed to sign an
agreement substantially in the form attached hereto as EXHIBIT B (the "Lock-up
Agreements"). The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
Lock-up Agreements presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers, directors
or other stockholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of X.X. Xxxxxx Securities
Inc.
(bb) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and (ii) no authorization, approval, consent, license, order, registration or
qualification of or with any government, governmental instrumentality or court,
other than such as have been obtained, is necessary under the securities law and
regulations of foreign jurisdictions in which the Directed Shares are offered
outside the United States.
(cc) The Company has not offered, or caused the Underwriters to offer,
any offered Securities to any person pursuant to the Directed Share Program with
the specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
5. The Company covenants and agrees with each of the several Underwriters
as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act and to furnish copies of the
Prospectus to the Underwriters in New York City prior to 10:00 a.m., New York
City time, on the Business Day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request;
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(b) to deliver, at the expense of the Company, to the Representatives
five signed copies of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement (as originally filed)
and each amendment thereto, in each case without exhibits and, during the period
mentioned in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as the
Representatives may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the Registration
Statement becomes effective, to furnish to the Representatives a copy of the
proposed amendment or supplement for review and not to file any such proposed
amendment or supplement to which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm such advice
in writing (i) when the Registration Statement has become effective, (ii) when
any amendment to the Registration Statement has been filed or becomes effective,
(iii) when any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof, (iv)of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional information, (v)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus or the Prospectus or the initiation or threatening
of any proceeding for that purpose, (vi) of the occurrence of any event, within
the period referenced in paragraph (e) below, as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, and (vii) of the receipt by the
Company of any notification with respect to any suspension of the qualification
of the Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and to use its best efforts to
prevent the issuance of any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or of any
order suspending any such qualification of the shares, or notification of any
such order thereof and, if issued, to obtain as soon as possible the withdrawal
thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any 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 is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if it is necessary to amend or supplement the Prospectus to comply with law,
forthwith to prepare, file with the Commission and furnish, at the expense of
the Company, to the Underwriters and to the dealers (whose names and addresses
the Representatives will furnish to the Company) to which Shares may have been
sold by the Representatives on
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behalf of the Underwriters and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; PROVIDED that the Company
shall not be required to qualify as a foreign corporation or file a general
consent to service of process in any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a period
of at least twelve months beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration Statement, which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange;
(i) for a period of 180 days after the date of the initial public
offering of the Shares not to (i) offer, pledge, announce the intention to sell,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any shares of Stock or
any securities convertible into or exercisable or exchangeable for Stock or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Stock or such other securities, in cash or otherwise without the prior
written consent of the Representatives, other than the Shares to be sold
hereunder and any shares of Stock of the Company issued upon the exercise of
options granted under existing employee stock option or stock purchase plans;
(j) to use the net proceeds received by the Company from the sale of
the Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds;"
(k) to use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
(the "Nasdaq National Market");
(l) to file with the Commission such reports on Form SR as may be
required by Rule 463 under the Securities Act;
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(m) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations hereunder,
including without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance, execution and delivery of
the Shares, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or qualification of
the Shares under the laws of such jurisdictions as the Representatives may
designate (including fees of counsel for the Underwriters and its
disbursements), (iv) in connection with the listing of the Shares on the Nasdaq
National Market, (v) related to the filing with, and clearance of the offering
by, the National Association of Securities Dealers, Inc., (vi) in connection
with the printing (including word processing and duplication costs) and delivery
of this Agreement, the Preliminary and Supplemental Blue Sky Memoranda and the
furnishing to the Underwriters and dealers of copies of the Registration
Statement and the Prospectus, including mailing and shipping, as herein
provided, (vii) any expenses incurred by the Company in connection with a "road
show" presentation to potential investors, (viii) the cost of preparing stock
certificates and (ix) the cost and charges of any transfer agent and any
registrar;
(n) in connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of the effectiveness of the Registration Statement.
The Designated Underwriter will notify the Company as to which Participants will
need to be so restricted. The Company will direct the transfer agent to place
stop transfer restrictions upon such securities for such period of time;
(o) the Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Shares Program and
stamp duties, similar taxes or duties or other taxes, if any, incurred by the
underwriters in connection with the Directed Share Program; and
(p) furthermore, the Company covenants with the Underwriters that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company of its obligations hereunder and
to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act, such
post-effective amendment shall have become effective) not later than 2:00 P.M.,
San
12
Francisco time, on the date hereof; and no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
shall be in effect, and no proceedings for such purpose shall be pending
before or threatened by the Commission; the Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the Securities
Act and in accordance with Section 5(a) hereof; and all requests by the
Commission for additional information shall have been complied with to the
satisfaction of the Representatives;
(b) the representations and warranties of the Company contained herein
are true and correct on and as of the Closing Date or the Additional Closing
Date, as the case may be, as if made on and as of the Closing Date or the
Additional Closing Date, as the case may be, and the Company shall have complied
with all agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date or the Additional Closing Date, as the
case may be;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Additional Closing Date, as the case may be,
there shall not have occurred any downgrading, nor shall any notice have been
given of (i) any downgrading, (ii) any intended or potential downgrading or
(iii) any review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus, the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated in
the Prospectus; and the Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus;
(e) the Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of an
executive officer of the Company, with specific knowledge about the Company's
financial matters, satisfactory to the Representatives to the effect set forth
in subsections (a) through (d) (with respect to the respective representations,
warranties, agreements and conditions of the Company) of this Section and to the
further effect that there has not occurred any material adverse change, or any
development involving a prospective material adverse
13
change, in or affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company from that set forth or contemplated in the Registration Statement;
(f) McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP, counsel for the Company,
shall have furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure to
be so qualified or in good standing would not have a material adverse effect on
the Company;
(iii) to the knowledge of such counsel, the Company does not own
or control, directly or indirectly, any corporation, association or other
entity;
(iv) other than as set forth or contemplated in the Prospectus,
to the knowledge of such counsel, there are no legal or governmental
investigations, actions, suits or proceedings pending or, to such counsel's
knowledge, threatened against or affecting the Company or any of its properties
or to which the Company is or may be a party or to which any property of the
Company is or may be the subject which, if determined adversely to the Company,
could individually or in the aggregate have, or reasonably be expected to have,
a material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of operations of
the Company; to such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and such
counsel does not know of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement that are not described or
filed as required;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(vii) the shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, fully paid and non-assessable;
14
(viii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when delivered to and paid for the Underwriters
in accordance with the terms of this Agreement, will be validly issued, fully
paid and non-assessable and the issuance of the Shares is not subject to any
preemptive or similar rights;
(ix) the statements in the Prospectus under "Business--Strategic
Relationships," "Business--Licensed Technology and Stand-alone Products,"
"Business--Facilities," "Taxation," "Description of Capital Stock" and "Shares
Eligible for Future Sales", and in the Registration Statement in Items 14 and
15, insofar as such statements constitute a summary of the terms of the Stock,
legal matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such terms, legal matters, documents or
proceedings;
(x) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements thereto (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and believes that (other than the
financial statements and related schedules therein, as to which such counsel
need express no belief) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that the Prospectus, as amended or supplemented, if applicable,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(xi) the issue and sale of the Shares being delivered on the
Closing Date or the Additional Closing Date, as the case may be, and the
performance by the Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein 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, loan agreement or other agreement
or instrument known to such counsel to which the Company is a party or by which
the Company is bound or to which any of the property or assets of the Company is
subject, nor will any such action result in any violation of the provisions of
the Certificate of Incorporation or the By-Laws of the Company or any applicable
law or statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its properties;
nothing has come to such counsel's attention that would lead such counsel to
believe that the Company is not, nor with the giving of notice or lapse of time
or both would it be, in violation of or in default under, its Certificate of
Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which the
Company is a party or by which it or any of its respective properties is bound,
except for violations and defaults which individually and in the aggregate are
not material to the Company;
15
(xii) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental agency or
body is required for the issue and sale of the Shares or the consummation of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or qualifications as
have been obtained under the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters;
(xiii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act;
(xiv) the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the Company
and, when issued upon issuance of the Shares, will be validly issued, and the
Series AA preferred stock has been duly authorized by the Company and validly
reserved for issuance upon the exercise of the Rights and, when issued upon such
exercise in accordance with the terms of the rights Agreement, will be validly
issued, fully paid and non-assessable;
(xv) to the knowledge of such counsel, the Company owns,
possesses or has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations and
all courts and other tribunals, domestic or foreign, necessary to own or lease,
as the case may be, and to operate its properties and to carry on its business
as conducted as of the date hereof, and the Company has not received any actual
notice of any proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other authorization,
except as described in the Registration Statement and the Prospectus; and the
Company is in compliance with all laws and regulations relating to the conduct
of its business as conducted as of the date of the Prospectus; and
(xvi) to the knowledge of such counsel, the Company has good and
marketable title to all real property and good and marketable title to all
personal property reflected in the financial statements included in the
Registration Statement or otherwise described in the Registration Statement, in
each case free and clear of all liens, encumbrances and defects except such as
are described or referred to in the Prospectus or such as do not materially
affect the value of such property; and any real property and buildings held
under lease by the Company are held by them under valid, existing and
enforceable leases with such exceptions as are not material.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of California and Delaware, to the extent such counsel deems proper
and to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the
16
Underwriters' counsel, familiar with the applicable laws; (B) as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and certificates or other written
statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered in
subparagraph (x) above counsel may state their opinion and belief is based
upon their participation in the preparation of the Registration Statement and
the Prospectus and any amendment or supplement thereto and review and
discussion of the contents thereof but is without independent check or
verification except as specified.
The opinion of McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP described above shall
be rendered to the Underwriters at the request of the company and shall so state
therein.
(g) Skjerven, Morrill, XxxXxxxxxx, Xxxxxxxx & Xxxxx LLP, patent
counsel for the Company, and Xxxxx, Xxxxxxx & Xxxxx, patent counsel for the
Company, each shall have furnished to the Representatives their written opinion,
dated the Closing Date or the Additional Closing Date, as the case may be, in
form and substance satisfactory to the Representatives, to the effect that:
(i) to such counsel's knowledge, the Company owns all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, maskworks, copyrights, licenses, inventions, trade secrets and
rights 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 ownership rights of the
Company with respect to the foregoing;
(ii) such counsel has not filed any patent applications that such
counsel believes to be unpatentable in view of any material fact of which such
counsel was aware at the time of filing. Such counsel is not aware of any
material fact with respect to the patent applications of the Company presently
on file for which such counsel is prosecuting attorney of record that such
counsel knows would render such patents when issued invalid or unenforceable;
(iii) such counsel is not aware of any legal actions, claims or
proceedings pending or threatened against the Company alleging that the Company
has infringed or currently is infringing or otherwise violating any patents
rights, trademarks, service marks, trade name rights, maskworks, copyrights,
licenses, inventions, trade secrets and similar rights owned by any other person
or entity or alleging that any of the Company's patents are not valid and
enforceable;
(iv) such counsel has reviewed the descriptions of patents and
patent applications under the captions "Risk Factors - Our existing patents
might not provide us with sufficient protection of our intellectual property,
and our patent applications might not result in the issuance of patents, either
of which could reduce the
17
value of our core technology and harm our business.," "Risk Factors - We
might not be able to protect and enforce our intellectual property rights,
which could impair our ability to compete and reduce the value of our
technology.," "Risk Factors - Any claim that our products or technology
infringe third-party intellectual property rights could increase our costs of
operation and distract management and could result in expensive settlement
costs or the discontinuance of our technology licensing or product
offerings." and "Business - Intellectual Property" : in the Registration
Statement and Prospectus, and, to the extent they constitute matters of law
or legal conclusions, these descriptions are true and correct in all material
respects and fairly present the patent situation of the Company; and
(v) nothing has come to such counsel's attention that causes
it to believe that, as of the date the Registration Statement became
effective and as of the date of such opinion, the statements set forth under
the captions "Risk Factors - Our existing patents might not provide us with
sufficient protection of our intellectual property, and our patent
applications might not result in the issuance of patents, either of which
could reduce the value of our core technology and harm our business.," "Risk
Factors - We might not be able to protect and enforce our intellectual
property rights, which could impair our ability to compete and reduce the
value of our technology.," "Risk Factors - Any claim that our products or
technology infringe third-party intellectual property rights could increase
our costs of operation and distract management and could result in expensive
settlement costs or the discontinuance of our technology licensing or product
offerings." and "Business - Intellectual Property" in the Registration
Statement and Prospectus contain any untrue statement of material fact or
omit to state a material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(h) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing Date,
as the case may be, PricewaterhouseCoopers LLP shall have furnished to the
Representatives letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to the Representatives, containing statements and
information of the type customarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
(i) the Representatives shall have received on and as of the Closing
Date or Additional Closing Date, as the case may be, an opinion of Xxxxxxxx &
Xxxxxxxx LLP, counsel to the Underwriters, with respect to the due authorization
and valid issuance of the Shares, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(j) the Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for listing on the
Nasdaq National Market, subject to official notice of issuance;
18
(k) on or prior to the Closing Date or Additional Closing Date, as the
case may be, the Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request; and
(l) the "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and directors
of the Company relating to sales and certain other dispositions of shares of
Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date or Additional
Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter, each
affiliate of any Underwriter which assists such Underwriter in the distribution
of the Shares and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein.
The Company agrees to indemnify and hold harmless the Designated
Underwriter and each person, if any, who controls the Designated Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (the "Designated Entities"), from and against any and all
losses, claims, damages and liabilities (including without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase; or (iii) related to, arising out of or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
the Designated Entities.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the
19
Securities Act and Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation,
the legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the three
preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel and
participate in such proceeding, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters, each affiliate of any Underwriter which
assists such Underwriter in the distribution of the Shares and such control
persons of Underwriters shall be designated in writing by X.X. Xxxxxx Securities
Inc. and any such separate firm for the Company, its directors, its officers who
sign the Registration Statement and such control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person 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 Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the Indemnifying
20
Person agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such Indemnifying Person of the aforesaid
request and (ii) such Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that such Indemnifying Person will not be so
liable for such settlement if the Indemnifying Person gives written notice to
the Indemnified Person that it is disputing in good faith some or all of the
amount requested with an explanation, and pays any undisputed amount within
the 30 day period specified above. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person
is or could have been a party and indemnity could have been sought hereunder
by such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first, second or third
paragraphs of this Section 7 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and the commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Shares. The relative fault of the Company
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters 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 contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above,
21
any legal or other expenses incurred by such Indemnified Person in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number
of Shares set forth opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 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
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange or the National Association of Securities
Dealers, Inc. (ii) trading of any securities of or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State or California
authorities, or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in the judgment of the Representatives, is material and adverse and which, in
the judgment of the Representatives, makes it impracticable to market the Shares
being delivered at the Closing Date or the Additional Closing Date, as the case
may be, on the terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any
post-effective amendment) by the Commission.
22
If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-tenth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Shares are not made within 36 hours after such
default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Shares, the Additional Closing Date), but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of its counsel)
reasonably incurred by the Underwriter in connection with this Agreement or the
offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, each affiliate of any Underwriter which assists such
Underwriter in the distribution of the Shares, any controlling persons referred
to herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any
23
provision herein contained. No purchaser of Shares from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by X.X. Xxxxxx Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
X.X. Xxxxxx Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (telefax:______); Attention: Syndicate Department. Notices to the
Company shall be given to it at ____________, _____________, ____________,
(telefax:________); Attention: ____________.
13. This Agreement may be signed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
24
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
MONOLITHIC SYSTEM TECHNOLOGY, INC.
By: ______________________________
Title:
Accepted: _________, 2000
X.X. XXXXXX SECURITIES INC.
WIT SOUNDVIEW
Acting severally on behalf of themselves
and the several Underwriters listed in
Schedule I hereto.
By: X.X. XXXXXX SECURITIES INC.
Acting on behalf of itself and the several
Underwriters listed in Schedule I hereto.
By: _____________________________________
Title:
25
SCHEDULE I
UNDERWRITER NUMBER OF SHARES TO BE
PURCHASED
X.X. Xxxxxx Securities Inc. .......................
Wit SoundView .....................................
=========================
TOTAL
26
EXHIBIT A
[BENEFICIAL OWNERS]
27
EXHIBIT B
MONOLITHIC SYSTEMS TECHNOLOGY, INC.
LOCK-UP AGREEMENT
MAY __, 2000
X.X. Xxxxxx Securities Inc.
Wit SoundView
[As representatives of several Underwriters
listed in Schedule I of the Underwriting Agreement]
c/o X. X. Xxxxxx & Co.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Re: MONOLITHIC SYSTEMS TECHNOLOGY, INC. - LOCK-UP AGREEMENT
Ladies and Gentlemen:
The undersigned understands that you, as the representative, propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") with
Monolithic Systems Technology, Inc., a California corporation (the "Company"),
providing for the public offering (the "Public Offering") by the several
Underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), of the Common Stock of the Company (the "Shares"). Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Shares, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the undersigned hereby
agrees that, without the prior written consent of X.X. Xxxxxx Securities Inc. on
behalf of the Underwriters, the undersigned will not, for a period of 180 days
after the date of the final prospectus relating to the Public Offering (the
"Prospectus"), (i) offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of Stock or any
securities convertible into or exercisable or exchangeable for Stock (including
without limitation, Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and
Exchange Commission and securities which may be issued upon exercise of a stock
option or warrant) or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Stock, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without the prior written
consent of X.X. Xxxxxx Securities Inc. on behalf of the Underwriters, it will
not, for a period of 180 days after the date of the Prospectus, make any demand
for or exercise any right with respect to, the registration of any Stock or any
security convertible into or exercisable or exchangeable for Stock.
The foregoing restriction is expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of
the undersigned's Stock even if such Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put or call option) with respect to any
of the undersigned's Stock or with respect to any security that includes,
relates to, or derives any significant part of its value from such Stock.
Notwithstanding the foregoing, the undersigned may transfer the
undersigned's Stock (i) as a BONA FIDE gift or gifts, provided that the donee or
donees thereof agree to be bound in writing by the restrictions set forth
herein, or (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value. For purposes of this Lock-Up Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. In addition, notwithstanding the foregoing, (a) if the
undersigned is a corporation, the corporation may transfer the capital stock of
the Company to any wholly-owned subsidiary of such corporation, or (b) if the
undersigned is a partnership, the undersigned may transfer its Stock to its
respective partners; PROVIDED, HOWEVER, that in any such case, it shall be a
condition to the transfer that the transferee execute an agreement stating that
the transferee is receiving and holding such capital stock subject to the
provisions of this Lock-Up Agreement and there shall be no further transfer of
such capital stock except in accordance with this Lock-Up Agreement, and
provided further that any such transfer shall not involve a disposition for
value. The undersigned now has, and, except as contemplated above, for the
duration of this Lock-Up Agreement will have, good and marketable title to the
undersigned's Stock, free and clear of all liens, encumbrances, and claims
whatsoever.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-up Agreement,
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-up Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof
which survive termination) shall terminate or be terminated prior to payment
for and delivery of the Common Stock to be sold thereunder, the undersigned
shall be released from all obligations of this Lock-up Agreement.
The undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Lock-up Agreement.
This Lock-up Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of laws
principles thereof.
Very truly yours,
-------------------------------
Exact Name of Shareholder
-------------------------------
Authorized Signature
-------------------------------
Title
Accepted as of the date first set forth above:
X.X. Xxxxxx Securities Inc.
Wit SoundView
Acting severally on behalf of themselves and the several Underwriters
listed in Schedule I hereto.
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
