EXHIBIT 1.1
Underwriting Agreement
[DATE]
Xxxxxxxxx Xxxxxxxx, Inc.
Xxxx Xxxxxxxx Incorporated
XX Xxxxx Securities Corporation
As Representatives of the several Underwriters
c/x Xxxxxxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Introductory. Synplicity, Inc., a California corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 4,300,000 shares (the "Firm
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Shares") of its Common Stock, no par value (the "Common Shares"). In addition,
the Company has granted to the Underwriters an option to purchase up to an
additional 445,000 Common Shares and the shareholders of the Company named in
Schedule B (the "Selling Shareholders") have jointly and severally granted to
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the Underwriters an option to purchase up to an additional 200,000 Common
Shares, each Selling Shareholder selling up to the amount set forth opposite
such Selling Shareholder's name in Schedule B, all as provided in Section 2.
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The additional 445,000 Common Shares to be sold by the Company and the
additional 200,000 Common Shares to be sold by the Selling Shareholders pursuant
to such option are collectively called the "Option Shares." The Firm Shares
and, if and to the extent such option is exercised, the Option Shares are
collectively called the "Shares." Xxxxxxxxx Xxxxxxxx, Inc. ("Xxxxxxxxx
Xxxxxxxx"), Xxxx Xxxxxxxx Incorporated and XX Xxxxx Securities Corporation have
agreed to act as representatives of the several Underwriters (in such capacity,
the "Representatives") in connection with the offering and sale of the Common
Shares.
As a part of the offering contemplated by this Agreement, Xxxxxxxxx
Xxxxxxxx and Xxxx Xxxxxxxx Incorporated have agreed to reserve out of the Shares
set forth opposite their names on the Schedule A to this Agreement, up to an
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aggregate of 215,000 Shares, for sale to the Company's employees, officers, and
directors and other parties associated with the Company (collectively,
"Participants"), as set forth in the Prospectus under the heading "Underwriting"
(the "Directed Share Program"). The Shares to be sold by Xxxxxxxxx Xxxxxxxx and
Xxxx Xxxxxxxx Incorporated pursuant to the Directed Share Program (the "Directed
Shares") will be sold by them pursuant to this Agreement at the public offering
price. Any Directed Shares not orally confirmed for purchase by any
Participants as of 7:00 a.m. New York time on the first day trading of the
shares commences will be offered to the public by Xxxxxxxxx Xxxxxxxx and Xxxx
Xxxxxxxx Incorporated as set forth in the Prospectus.
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The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-42146), which contains a form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus." Such registration statement, as amended,
including the financial statements, exhibits and schedules thereto, in the form
in which it was declared effective by the Commission under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is called the "Registration Statement." Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement," and from and after the date
and time of filing of the Rule 462(b) Registration Statement the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
Such prospectus, in the form first used by the Underwriters to confirm sales of
the Shares, is called the "Prospectus," which term shall be deemed to include
the "electronic Prospectus" provided by the Company for use in connection with
the offering of the Shares as contemplated by Section 3(A)(e) of this Agreement.
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a preliminary prospectus, the Prospectus, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with the Underwriters as follows:
Section 1. Representations and Warranties of the Company and the Selling
Shareholders.
A. Representations and Warranties of the Company and the Selling
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Shareholders. The Company and the Selling Shareholders hereby represent,
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warrant and covenant to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Shares. Each
of the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue
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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. Each
preliminary prospectus, as of its date, and the Prospectus, as amended or
supplemented, as of its date and at all subsequent times through the 30/th/ day
after the date hereof, did not and will 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. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions from
the Registration Statement, any Rule 462(b) Registration Statement, or any post-
effective amendment thereto, or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by the Representatives
expressly for use therein. There are no contracts or other documents required to
be described in the Prospectus or to be filed as exhibits to the Registration
Statement that have not been described or filed as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives one complete conformed copy of the Registration
Statement and of each consent and certificate of experts filed as a part
thereof, and conformed copies of the Registration Statement (without exhibits)
and preliminary prospectuses and the Prospectus, as amended or supplemented, in
such quantities and at such places as the Representatives have reasonably
requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution of
the Shares, any offering material in connection with the offering and sale of
the Shares other than a preliminary prospectus, the Prospectus or the
Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(e) Authorization of the Shares To Be Sold by the Company. The Shares to
be purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) Authorization of the Shares To Be Sold by the Selling Shareholders.
The Common Shares to be purchased by the Underwriters from the Selling
Shareholders, when issued, were validly issued, fully paid and nonassessable.
(g) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this
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Agreement, other than the Selling Shareholders with respect to the Shares
included in the Registration Statement, except for such rights as have been duly
waived.
(h) No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change" or a "Material
Adverse Effect"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(i) Independent Accountants. Ernst & Young LLP ("Ernst & Young"), who have
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent public or certified public
accountants as required by the Securities Act.
(j) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules
are required to be included in the Registration Statement. The financial data
set forth in the Prospectus under the captions "Summary--Summary Selected
Financial Data," "Selected Financial Data" and "Capitalization" fairly present
the information set forth therein on a basis consistent with that of the audited
financial statements contained in the Registration Statement.
(k) Company's Accounting System. The Company and each of its subsidiaries
maintain a system of 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 as applied in the United States 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
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existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(l) Subsidiaries of the Company. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
the subsidiaries listed in Exhibit 21.1 to the Registration Statement.
(m) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its subsidiaries has been duly organized and is validly
existing as a corporation or limited liability company, as the case may be, in
good standing under the laws of the jurisdiction in which it is organized with
full corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure to be
so qualified or be in good standing would not have a Material Adverse Effect.
(n) Capitalization of the Subsidiaries. All the outstanding shares of
capital stock of each subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise set forth
in the Prospectus, all outstanding shares of capital stock of the subsidiaries
are owned by the Company either directly or through wholly owned subsidiaries
free and clear of any security interests, claims, liens or encumbrances, except
for any directors' qualifying shares required to be held by the jurisdiction of
incorporation or organization of the subsidiary.
(o) No Prohibition on Subsidiaries from Paying Dividends or Making Other
Distributions. No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus or subject to the requirements of the laws of such subsidiary's
jurisdiction of incorporation or organization.
(p) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization," as of the date stated therein (other than
for subsequent issuances, if any, pursuant to employee benefit plans described
in the Prospectus or upon exercise of outstanding options or warrants described
in the Prospectus). The Common Shares (including the Shares) conform in all
material respects to the description thereof contained in the Prospectus. All of
the issued and outstanding Common Shares have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding Common Shares was
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those described in the Prospectus.
The description of the Company's stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted thereunder, set forth
in the Prospectus accurately and fairly describes such plans, arrangements,
options and rights.
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(q) Stock Exchange Listing. The Shares have been approved for inclusion on
the Nasdaq National Market, subject only to official notice of issuance.
(r) No Consents, Approvals or Authorizations Required. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein, except such as have been obtained or made under the
Securities Act and the Exchange Act and such as may be required (i) under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Shares by the Underwriters in the manner contemplated here
and in the Prospectus, (ii) by the National Association of Securities Dealers,
Inc. (together with its regulatory subsidiary, NASD Regulation, Inc., the
"NASD") and (iii) by the federal and provincial laws of Canada.
(s) Non-Contravention of Existing Instruments Agreements. Neither the
issue and sale of the Shares nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of
its subsidiaries, (ii) the terms of any material indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
properties.
(t) No Defaults or Violations. Neither the Company nor any subsidiary is
in violation or default of (i) any provision of its charter or by-laws, (ii) the
terms of any material indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is subject
or (iii) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or such subsidiary or any
of its properties, as applicable, except any such violation or default which
would not, singly or in the aggregate, result in a Material Adverse Change
except as otherwise disclosed in the Prospectus.
(u) No Actions, Suits or Proceedings. Except as otherwise disclosed in the
Prospectus, no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries or its or their property is pending or, to the best knowledge of
the Company, threatened that (i) could reasonably be expected to have a Material
Adverse Effect on the performance of this Agreement or the consummation of any
of the transactions contemplated hereby or (ii) could reasonably be expected to
result in a Material Adverse Effect.
(v) All Necessary Permits, Etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, and neither the Company nor any subsidiary
has received any
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notice of proceedings relating to the revocation or modification of, or non-
compliance with, any such certificate, authorization or permit, except in each
case for such certificates, authorizations and permits as which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
could not result in a Material Adverse Change.
(w) Title to Properties. The Company and each of its subsidiaries has good
and marketable title to all the properties and assets reflected as owned in the
financial statements referred to in Section 1(A)(i) above (or elsewhere in the
Prospectus), in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary. Assuming due and valid execution by the lessors,
the real property, improvements, equipment and personal property held under
lease by the Company or any subsidiary are held under valid and enforceable
leases, with such exceptions as are not material and do not materially interfere
with the use made or proposed to be made of such real property, improvements,
equipment or personal property by the Company or such subsidiary.
(x) Tax Law Compliance. The Company and its consolidated subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns,
or have properly requested extensions thereof, and have paid all taxes shown
thereon as due and, if due and payable, any related or similar assessment, fine
or penalty levied against any of them, except as may be being contested in good
faith and by appropriate proceedings. The Company has made adequate charges,
accruals and reserves in the applicable financial statements referred to in
Section 1(A)(i) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or
any of its consolidated subsidiaries has not been finally determined. The
Company is not aware of any tax deficiency that has been or might be asserted or
threatened against the Company that could result in a Material Adverse Change.
(y) Intellectual Property Rights. Each of the Company and its subsidiaries
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 that is not otherwise disclosed in the Prospectus;
except as otherwise disclosed 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 valid 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
have a Material Adverse Change. No claim is pending or, to the knowledge of the
Company, threatened, 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 and its
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subsidiaries do not in the conduct of their business as now 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 or any of its subsidiaries, which such infringement or conflict is
reasonably likely to result in a Material Adverse Change.
(z) No Transfer Taxes or Other Fees. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the shares.
(aa) Company Not an "Investment Company". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and after receipt of
payment for the Shares will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(bb) Insurance. Except as otherwise disclosed in the Prospectus, each of
the Company and its subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism, general liability and
Directors and Officers liability. The Company has no reason to believe that it
or any subsidiary will not be able (i) to renew its existing insurance coverage
as and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not result in a Material Adverse
Change. Neither the Company nor any subsidiary has been denied any insurance
coverage which it has sought or for which it has applied.
(cc) Labor Matters. To the best of Company's knowledge, no labor
disturbance by the employees of the Company or any of its subsidiaries exists or
is imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its strategic partners (as described in
the Prospectus), distributors or resellers that might be expected to result in a
Material Adverse Change.
(dd) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(ee) Lock-Up Agreements. Each officer and director of the company, each
Selling Shareholder and each beneficial owner of one or more percent of the
outstanding issued share capital of the Company has agreed to sign an agreement
substantially in the form attached hereto as Exhibit A (the "Lock-up
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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
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securityholder as of the date set forth therein. 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 and agrees that during the 180 days following the date
of the Prospectus (the "Lock-up Period"), the Company will not (i) release any
of its officers, directors or other securityholders from any market stand-off
agreements currently existing or hereafter effected or (ii) consent to the
removal of any transfer-restrictive legends from any certificate representing
any Common Shares (other than legends relating solely to California state law
restrictions, which may be removed), in each case without the prior written
consent of Xxxxxxxxx Xxxxxxxx.
(ff) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary and any
director or executive officer of the Company, any nominee for election as a
director, any beneficial owner of 5% or more of any class of the Company's
voting securities or any immediate family member of any of the foregoing that is
required to be described in the Prospectus that have not been described as
required.
(gg) No Unlawful Contributions or Other Payments. Except as otherwise
disclosed in the Prospectus, neither the Company nor any of its subsidiaries
nor, to the best of the Company's knowledge, any employee or agent of the
Company or any subsidiary, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in violation
of any law or of the character required to be disclosed in the Prospectus.
(hh) Consents Required in Connection with the Directed Share Program. No
consent, approval, authorization or order of, or qualification with, any
governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered except such as may be required (i) under
the blue sky laws of any jurisdiction, (ii) by the NASD and (iii) by the federal
and provincial laws of Canada.
(ii) No Improper Influence in Connection with the Directed Share Program.
The Company has not offered, or caused Xxxxxxxxx Xxxxxxxx to offer, Shares 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.
Any certificate signed by an officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
B. Representations and Warranties of the Selling Shareholders. Each
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Selling Shareholder, jointly and severally, represents, warrants and covenants
to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder, enforceable in
accordance with its
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terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(b) The Custody Agreement and Power of Attorney. Each of the (i) Custody
Agreement signed by such Selling Shareholder and Equiserve Trust Company, N.A.,
as custodian (the "Custodian"), relating to the deposit of the Shares to be sold
by such Selling Shareholder (the "Custody Agreement") and (ii) Power of Attorney
appointing certain individuals named therein as such Selling Shareholder's
attorneys-in-fact (each, an "Attorney-in-Fact") to the extent set forth therein
relating to the transactions contemplated hereby and by the Prospectus (the
"Power of Attorney"), of such Selling Shareholder has been duly authorized,
executed and delivered by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, enforceable in accordance with its terms,
except as rights to indemnification thereunder may be limited by applicable law
and except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles. Each
Selling Shareholder agrees that the Shares to be sold by such Selling
Shareholder on deposit with the Custodian are subject to the interests of the
Underwriters, that the arrangements made for such custody are to that extent
irrevocable, and that the obligations of such Selling Shareholder hereunder
shall not be terminated, except as provided in this Agreement or in the Custody
Agreement, by any act of the Selling Shareholder, by operation of law, by death
or incapacity of such Selling Shareholder or by the occurrence of any other
event. If such Selling Shareholder should die or become incapacitated, or if
any other event should occur, before the delivery of the Shares to be sold by
such Selling Shareholder hereunder, the documents evidencing the Shares to be
sold by such Selling Shareholder then on deposit with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not occurred,
regardless of whether or not the Custodian shall have received notice thereof.
(c) Title to Shares to be Sold. Such Selling Shareholder is the lawful
owner of the Shares to be sold by such Selling Shareholder hereunder, subject to
the rights of the Custodian, and upon sale and delivery of, and payment for,
such Shares, as provided herein, such Selling Shareholder will convey good and
marketable title to such Shares, free and clear of all liens, encumbrances,
equities and claims whatsoever.
(d) All Authorizations Obtained. Such Selling Shareholder has, and on the
Second Closing Date (as defined below) will have, good and valid title to all of
the Common Shares which may be sold by such Selling Shareholder pursuant to this
Agreement on such date and the legal right and power, and all authorizations and
approvals required by law (other than at the time of execution hereof, if the
Registration Statement has not been declared effective by the Commission and
such consents, approvals, authorizations or orders as may be necessary under
state or other blue sky laws) and under its organizational documents, if
applicable, to enter into this Agreement and its Custody Agreement and Power of
Attorney, to sell, transfer and deliver all the Shares which may be sold by such
Selling Shareholder pursuant to this Agreement and to comply with its other
obligations hereunder and thereunder.
10
(e) No Further Consents, Authorization or Approvals. No consent, approval,
authorization or order of any court or governmental agency or body is required
for the consummation by such Selling Shareholder of the transactions
contemplated herein, except such as may have been obtained under the Securities
Act and such as may be required under the federal and provincial securities laws
of Canada or the blue sky laws or any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters and such other
approvals as have been obtained.
(f) Non-Contravention. Neither the sale of the Securities being sold by
such Selling Shareholder nor the consummation of any other of the transactions
herein contemplated by such Selling Shareholder or the fulfillment of the terms
hereof by such Selling Shareholder will conflict with, result in a material
breach or violation of, or constitute a default under any law or the terms of
any material indenture or other agreement or instrument to which such Selling
Shareholder is party or bound, any judgment, order or decree applicable to such
Selling Shareholder or any court or regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder.
(g) No Registration or Other Similar Rights. Such Selling Shareholder does
not have any registration or other similar rights to have any equity or debt
securities registered for sale by the Company under the Registration Statement
or included in the offering contemplated by this Agreement, except for such
rights as are described in the Prospectus under "Shares Eligible for Future
Sale."
(h) No Preemptive, Co-sale or other Rights. Such Selling Shareholder does
not have, or has waived prior to the date hereof, any preemptive right, co-sale
right or right of first refusal or other similar right to purchase any of the
Shares that are to be sold by the Company or any of the other Selling
Shareholders to the Underwriters pursuant to this Agreement; and such Selling
Shareholder does not own any warrants, options or similar rights to acquire, and
does not have any right or arrangement to acquire, any capital stock, right,
warrants, options or other securities from the Company, other than those
described in the Registration Statement and the Prospectus.
(i) Disclosure Made by Such Selling Shareholder in the Prospectus. All
information furnished by or on behalf of such Selling Shareholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date and the Second Closing Date (as defined below) will be, true,
correct, and complete in all material respects, and does not, and on the First
Closing Date and the Second Closing Date will not, contain any untrue statement
of a material fact or omit to state any material fact necessary to make such
information not misleading. Such Selling Shareholder confirms as accurate the
number of Common Shares set forth opposite such Selling Shareholder's name in
the Prospectus under the caption "Principal and Selling Shareholders" (both
prior to and after giving effect to the sale of the Shares).
(j) No Price Stabilization or Manipulation. Such Selling Shareholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(k) Distribution of Offering Materials by the Selling Shareholders. Such
Selling Shareholder has not distributed and will not distribute, prior to the
later of the
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Second Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares by such Selling Shareholder other than a
preliminary prospectus, the Prospectus or the Registration Statement.
(l) Not Prompted to Sell by Material Non-Public Information. Such Selling
Shareholder is not prompted to sell the Shares to be sold by such Selling
Shareholder by any information concerning the Company which is not set forth in
the Registration Statement and the Prospectus.
Any certificate signed by or on behalf of any Selling Shareholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Shareholder to each
Underwriter as to the matters covered thereby.
Section 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. The Company agrees to issue and sell to the several
Underwriters the Firm Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company the respective number of
Firm Shares set forth opposite their names on Schedule A. The purchase price
----------
per Firm Share to be paid by the several Underwriters to the Company shall be
$[___] per share.
(b) The First Closing Date. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representatives at 6:00 a.m. San Francisco time, at the offices of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation ("Xxxxxx Xxxxxxx"), Palo
Alto, California (or at such other place and time as may be agreed upon among
the Representatives and the Company), (i) on the third (3rd) full business day
following the first day that Shares are traded, (ii) if this Agreement is
executed and delivered after 1:30 P.M., San Francisco time, the fourth (4th)
full business day following the day that this Agreement is executed and
delivered or (iii) at such other time and date not later that seven (7) full
business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "Closing
Date"; provided, however, that if the Company has not made available to the
-------- --------
Representatives copies of the Prospectus within the time provided in Section
2(g) and 3(e) hereof, the Representatives may, in their sole discretion,
postpone the Closing Date until no later than two (2) full business days
following delivery of copies of the Prospectus to the Representatives.
(c) The Option Shares; the Second Closing Date. In addition, on the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Company and the
Selling Shareholders hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of [___] Option Shares
from the Company and the Selling Shareholders at the purchase price per share to
be paid by the Underwriters for the Firm Shares. The option granted hereunder
is for use by the Underwriters solely in covering any over-allotments in
connection with the sale and distribution of the Firm Shares. The
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option granted hereunder is for use by the Underwriters solely in covering any
over-allotments in connection with the sale and distribution of the Firm Shares.
The option granted hereunder may be exercised at any time upon notice by the
Representatives to the Company and the Selling Shareholders, which notice may be
given at any time within 30 days from the date of this Agreement. The time and
date of delivery of the Option Shares, if subsequent to the First Closing Date,
is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three (3) nor later than five (5)
full business days after delivery of such notice of exercise. If any Option
Shares are to be purchased, (i) each Underwriter agrees, severally and not
jointly, to purchase the number of Option Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Option Shares to be purchased as the
number of Firm Shares set forth on Schedule A opposite the name of such
----------
Underwriter bears to the total number of Firm Shares and (ii) the Company and
each Selling Shareholder agree, severally and not jointly, to sell the number of
Option Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be sold as the number of Option Shares set forth in
Schedule B opposite the name of such Selling Shareholder (or, in the case of the
----------
Company, as the number of Option Shares to be sold by the Company as set forth
in the paragraph "Introductory" of this Agreement) bears to the total number of
Option Shares. The Representatives may cancel the option at any time prior to
its expiration by giving written notice of such cancellation to the Company and
the Selling Shareholders.
(d) Public Offering of the Shares. The Representatives hereby advise the
Company and the Selling Shareholders that the Underwriters intend to offer for
sale to the public, as described in the Prospectus, their respective portions of
the Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares to be sold by the
Company shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Shares to be sold by the Selling
Shareholders shall be made at the Second Closing Date (if applicable) by wire
transfer of immediately available funds to the order of the Custodian.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
Xxxxxxxxx Xxxxxxxx, individually and not as a Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Shares to
be purchased by any Underwriter whose funds shall not have been received by the
Representatives by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
Each Selling Shareholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Shares to be sold by such Selling Shareholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling
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Shareholder's obligations hereunder and (ii) the Custodian is authorized to
deduct for such payment any such amounts from the proceeds to such Selling
Shareholder hereunder and to hold such amounts for the account of such Selling
Shareholder with the Custodian under the Custody Agreement.
(f) Delivery of the Shares. The Company shall deliver, or cause to be
delivered a credit representing the Firm Shares to an account or accounts at The
Depository Trust Company as designated by the Representatives for the accounts
of the Representatives and the several Underwriters at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company and the
Selling Shareholders shall also deliver, or cause to be delivered a credit
representing the Option Shares to an account or accounts at The Depository Trust
Company as designated by the Representatives for the accounts of the
Representatives and the several Underwriters, at the First Closing Date or the
Second Closing Date, as the case may be, against the irrevocable release of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00 noon,
Pacific time, on the second business day following the date the Shares are
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered copies of the Prospectus in such quantities and at such
places as the Representatives shall request.
Section 3. Covenants of the Company and the Selling Shareholders.
A. Covenants of the Company. The Company further covenants and agrees
------------------------
with each Underwriter as follows:
(a) Registration Statement Matters. The Company will (i) use its best
efforts to cause a registration statement on Form 8-A (the "Form 8-A
Registration Statement") as required by the Exchange Act, to become effective
simultaneously with the Registration Statement, (ii) use its best efforts to
cause the Registration Statement to become effective or, if the procedure in
Rule 430A of the Securities Act is followed, to prepare and timely file with the
Commission under Rule 424(b) under the Securities Act 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 Securities Act and (iii) 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 Securities Act. If the Company elects to rely on Rule
462(b) under the Securities Act, the Company shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b) under
the Securities Act prior to the time confirmations are sent or given, as
specified by Rule 462(b)(2) under the Securities Act, and shall pay the
applicable fees in accordance with Rule 111 under the Securities Act.
(b) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. The Company will comply with the Securities Act and the Exchange Act,
and the rules and regulations of the Commission thereunder, so as to permit the
14
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 Representatives or counsel for 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 (an "Event"), 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, and furnish at its own
expense , unless such Event was caused solely by an act or omission of an
Underwriter in which case the Underwriters shall furnish at their expense, to
the Underwriters and to dealers, 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.
(c) Securities Act Compliance. The Company will advise the Representatives
promptly (i) when it receives notice that the Registration Statement or any
post-effective amendment thereto shall have become effective, (ii) of receipt of
any comments from the Commission, (iii) of receipt of any request from the
Commission for amendment of the Registration Statement or for supplement to the
Prospectus or for any additional information and (iv) of the receipt of
notification 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.
(d) Blue Sky Compliance. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both national
and foreign) 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 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.
(e) Copies of the Prospectus and any Amendments and Supplements Thereto;
Electronic Prospectus. The Company agrees to furnish the Representatives,
without charge, during the period beginning on the date hereof and ending on the
later of the First Closing Date or such date, as in the opinion of counsel for
the Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), as many copies of the Prospectus and any amendments and supplements
thereto (including any documents incorporated or deemed incorporated by
reference therein) as the Representatives may reasonably request. The Company
shall also cause to be prepared and delivered to any Underwriter upon request,
at the Company's expense, within one business day from the filing of the
Prospectus with the Commission (and again within one business day after
15
the filing of any amendment or supplement thereto with the Commission), an
"electronic Prospectus" to be used in connection with the offering and sale of
the Shares. As used herein, the term "electronic Prospectus" means a form of
Prospectus, and any amendment or supplement thereto, that meets each of the
following conditions: (i) it shall be encoded in a format, satisfactory to the
Representatives, that may be transmitted electronically over the internet or via
other online distribution to offerees and purchasers of the Shares; and (ii) it
shall disclose the same information as the paper Prospectus (or any amendment or
supplement thereto), except to the extent that graphic and image material
contained in the paper Prospectus (or such amendment or supplement) cannot be
presented in such electronic format, in which case such graphic and image
material shall be replaced in the electronic Prospectus with a fair and accurate
narrative description or tabular representation of such material, as
appropriate. The Company hereby consents to distribution of the electronic
Prospectus (including its posting on the internet) by any of the Underwriters or
their affiliates.
(f) Insurance. The Company shall (i) obtain Directors and Officers
liability insurance in the minimum amount of $10 million which shall apply to
the offering contemplated hereby and (ii) cause Xxxxxxxxx Xxxxxxxx to be added
as an additional insured to such policy in respect of the offering contemplated
hereby.
(g) Notice of Subsequent Events. If at any time during the ninety (90)
day period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in Xxxxxxxxx Xxxxxxxx' and Company counsel's reasonable opinion
the market price of the Company Shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from the Representatives advising the Company to the effect set forth
above, forthwith prepare, consult with the Representatives concerning the
substance of and disseminate a press release or other public statement,
reasonably satisfactory to the Representatives, responding to or commenting on
such rumor, publication or event.
(h) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(i) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Company Shares.
(j) Earnings Statement. No later than the 90th day following the end of
the fiscal quarter first occurring after the first anniversary of the
Registration Statement, the Company will make generally available to its
security holders and to the Representatives an earnings statement (which need
not be audited) covering a period of at least 12 months beginning after the
effective date of the Registration Statement that satisfies the provisions of
Section 11(a) of the Securities Act.
(k) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Exchange Act within the time periods required by the Exchange Act and the rules
of the Nasdaq National Market.
16
(l) Agreement Not to Offer or Sell Additional Securities. The Company will
not offer, sell or contract to sell, or otherwise dispose of or enter into any
transaction which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise by the Company or any affiliate of the Company
or any person in privity with the Company or any affiliate of the Company)
directly or indirectly, or announce the offering of, any other Common Shares or
any securities convertible into, or exchangeable for, Common Shares; provided,
--------
however, that the Company may (i) issue and sell Common Shares pursuant to any
-------
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and/or
described in the Prospectus so long as none of those shares may be transferred
and the Company shall enter stop transfer instructions with its transfer agent
and registrar against the transfer of any such Common Shares and (ii) the
Company may issue Common Shares issuable upon the conversion of securities or
the exercise of warrants outstanding at the date of the Prospectus and described
in the Prospectus. These restrictions terminate on the final day of the Lock-Up
Period.
(m) Future Reports to the Representatives. During the period of five years
hereafter the Company will furnish to the Representatives (i) within 90 days
after the end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such fiscal year
and statements of income, shareholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock.
(n) Directed Share Program. The Company (i) will comply with all
applicable securities and other applicable laws, rules and regulations in each
jurisdiction in which the Directed Shares are offered in connection with the
Directed Share Program, and (ii) will pay all reasonable fees and disbursements
of counsel incurred by the Underwriters in connection with the Directed Share
Program, not to exceed $15,000, and any stamp duties, similar taxes or duties or
other taxes, if any, incurred by the underwriters in connection with the
Directed Share Program.
B. Covenants of the Selling Shareholders. Each Selling Shareholder
-------------------------------------
further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such Selling
Shareholder will not, during the Lock-Up Period, make a disposition of
Securities (as defined in Exhibit A hereto) now owned or hereafter acquired
---------
directly by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise than (i) as a bona fide gift or
gifts, provided the donee or donees thereof agree in writing to be bound by this
restriction, (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 in writing to be bound by this restriction, and
provided further that any such transfer will not involve a disposition for
value, (iii) as a distribution to partners or shareholders of such person,
provided that the distributees thereof agree in writing to be bound by the terms
of this restriction, (iv) with respect to sales or purchases of Common
17
Stock acquired on the open market or (v) with the prior written consent of
Xxxxxxxxx Xxxxxxxx. For the purposes of this paragraph, "immediate family" will
mean any relationship by blood, marriage or adoption, not more remote than first
cousin. The foregoing restriction has been expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a disposition of
Securities during the Lock-Up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Furthermore, such Selling Shareholder also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Securities held by such Selling Shareholder except
in compliance with this restriction.
(b) Delivery of Forms W-8 and W-9. To deliver to the Representatives prior
to the First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Shareholder is a non-United States
person) or Form W-9 (if the Selling Shareholder is a United States Person).
(c) Notification of Untrue Statements, etc. If, at any time prior to the
date on which the distribution of the Common Shares as contemplated herein and
in the Prospectus has been completed, as determined by the Representatives, such
Selling Shareholder has knowledge that the Prospectus or the Registration
Statement, in each case as then amended or supplemented, includes an untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, such Selling Shareholder will promptly notify the Company
and the Representatives in writing.
Section 4. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for
the Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders set forth in Sections 1(A) and 1(B) hereof as of the date hereof
and as of the First Closing Date as though then made and, with respect to the
Option Shares, as of the Second Closing Date as though then made, to the timely
performance by the Company and the Selling Shareholders of their respective
covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) Compliance with Registration Requirements; No Stop Order; No Objection
from the NASD. The Registration Statement shall have become effective prior to
the execution of this Agreement, or at such later date as shall be consented to
in writing by you; and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the
18
satisfaction of Underwriters' Counsel; and the NASD shall have raised no
objection to the fairness and reasonableness of the underwriting terms and
arrangements.
(b) Corporate Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to Underwriters'
Counsel, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section.
(c) No Material Adverse Change. Subsequent to the execution and delivery
of this Agreement and prior to the First Closing Date, or the Second Closing
Date, as the case may be, there shall not have been any Material Adverse Change
in the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
which, in the Representatives' sole judgment, is material and adverse and that
makes it, in the Represenatives' sole judgment, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus.
(d) Opinion of Counsel for the Company. The Representatives shall have
received on the First Closing Date, or the Second Closing Date, as the case may
be, an opinion of Xxxxxx Xxxxxxx, counsel for the Company, substantially in the
form of Exhibit B attached hereto, dated the First Closing Date, or the Second
---------
Closing Date, addressed to the Representatives and with reproduced copies or
signed counterparts thereof for each of the Representatives.
Counsel rendering the opinion contained in Exhibit B may rely as to
---------
questions of law not involving the laws of the United States or the State of
California and upon opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company, the Selling
Shareholders or officers of the Selling Shareholders (when the Selling
Shareholder is not a natural person), and of government officials, in which case
their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(e) Opinion of Intellectual Property Counsel for the Company. You shall
have received on the First Closing Date, or the Second Closing Date, as the case
may be, an opinion of Blakely, Sokoloff, Xxxxxx & Zafman, intellectual property
counsel for the Company substantially in the form of Exhibit C attached hereto,
---------
dated the First Closing Date, or the Second Closing Date, as the case may be,
addressed to the Representatives and with reproduced copies or signed
counterparts thereof for each of the Representatives.
(f) Opinion of Counsel for the Underwriters. You shall have received on
the First Closing Date or the Second Closing Date, as the case may be, an
opinion of O'Melveny & Xxxxx LLP, counsel for the Underwriters, in form and
substance reasonably satisfactory to the Representatives, with respect to the
sufficiency of all corporate proceedings and other legal matters relating to
this Agreement and the
19
transactions contemplated hereby as the Representatives may reasonably require.
The Company shall have furnished to such counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.
(g) Accountants' Comfort Letter. You shall have received on the First
Closing Date and on the Second Closing Date, as the case may be, a letter from
Ernst & Young addressed to the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, confirming that they are independent
certified public accountants with respect to the Company within the meaning of
the Securities Act and the applicable published Rules and Regulations and based
upon the procedures described in such letter delivered to you concurrently with
the execution of this Agreement (herein called the "Original Letter"), but
carried out to a date not more than four (4) business days prior to the First
Closing Date or the Second Closing Date, as the case may be, (i) confirming, to
the extent true, that the statements and conclusions set forth in the Original
Letter are accurate as of the First Closing Date or the Second Closing Date, as
the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of such letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall not disclose any change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
which, in your sole judgment, is material and adverse and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public offering
of the Shares as contemplated by the Prospectus. The Original Letter from Ernst
& Young shall be addressed to or for the use of the Underwriters in form and
substance satisfactory to the Underwriters and shall (i) represent, to the
extent true, that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the applicable
published Rules and Regulations, (ii) set forth their opinion with respect to
their examination of the consolidated balance sheet of the Company as of
December 31, 1999 and related consolidated statements of operations,
shareholders' equity, and cash flows for the twelve (12) months ended December
31, 1999, (iii) state that Ernst & Young has performed the procedures set out in
Statement on Auditing Standards ("SAS") No. 71 for a review of interim financial
information and providing the report of Ernst & Young as described in SAS No. 71
on the financial statements for each of the quarters in the two-quarter period
ended June 30, 2000 (the "Quarterly Financial Statements"), (iv) state that in
the course of such review, nothing came to their attention that leads them to
believe that any material modifications need to be made to any of the Quarterly
Financial Statements in order for them to be in compliance with generally
accepted accounting principles consistently applied across the periods
presented, and (v) address other matters agreed upon by Ernst & Young and you.
In addition, you shall have received from Ernst & Young a letter addressed to
the Company and made available to you for the use of the Underwriters stating
that their review of the Company's system of internal accounting controls, to
the extent they deemed necessary in establishing the scope of their examination
of the Company's consolidated financial statements as of December 31, 1999, did
not disclose any weaknesses in internal controls that they considered to be
material weaknesses.
(h) Officers' Certificate. You shall have received on the First Closing
Date and the Second Closing Date, as the case may be, a certificate of the
Company, dated the First Closing Date or the Second Closing Date, as the case
may be, signed by the
20
Chief Executive Officer and Chief Financial Officer of the Company, to the
effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the First Closing
Date or the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the First Closing Date or
the Second Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;
(iii) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, (a) the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained all material information required to be
included therein by the Securities Act and in all material respects
conformed to the requirements of the Securities Act, (b) the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
did not and does not include 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 (c) since the effective
date of the Registration Statement, there has occurred no event required to
be set forth in an amended or supplemented Prospectus which has not been so
set forth; and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (a)
any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise, (b) any transaction that is
material to the Company and its subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of business, (c)
any obligation, direct or contingent, that is material to the Company and
its subsidiaries considered as one enterprise, incurred by the Company or
its subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding indebtedness
of the Company or any of its subsidiaries that is material to the Company
and its subsidiaries considered as one enterprise, (e) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company or any of its subsidiaries, or (f) any loss or damage (whether or
not insured) to the property of the Company or any of its subsidiaries
which has been sustained or will have been sustained which has a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise.
(i) Lock-up Agreement from Certain Shareholders of the Company. The
Company shall have obtained and delivered to you an agreement substantially in
the form of Exhibit A attached hereto from each officer and director of the
---------
Company, each
21
Selling Shareholder and each beneficial owner of one or more percent of the
outstanding issued share capital of the Company.
(j) Opinion of Counsel for the Selling Shareholders. You shall have
received on the Second Closing Date an opinion of Xxxxxx Xxxxxxx, counsel for
the Selling Shareholders, substantially in the form of Exhibit D hereto.
---------
In rendering such opinion, such counsel may rely as to questions of
law not involving the laws of the United States or State of California upon
opinions of local counsel and as to questions of fact upon representations or
certificates of the Selling Shareholders or officers of the Selling Shareholders
(when the Selling Shareholder is not a natural person), and of governmental
officials, in which case their opinion is to state that they are so relying and
that they have no knowledge of any material misstatement or inaccuracy of any
material misstatement or inaccuracy in any such opinion, representation or
certificate so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(k) Selling Shareholders' Certificate. On the Second Closing Date, the
Representatives shall have received a written certificate executed by the
Attorney-in-Fact of each Selling Shareholder, dated as of such Closing Date, to
the effect that:
(i) the representations, warranties and covenants of such Selling
Shareholder set forth in Sections 1(A) and 1(B) of this Agreement are true
and correct with the same force and effect as though expressly made by such
Selling Shareholder on and as of such Closing Date; and
(ii) such Selling Shareholder has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date.
(l) Selling Shareholders' Documents. At least three (3) business days
prior to the date hereof, the Company and the Selling Shareholders shall have
furnished for review by the Representatives copies of the Powers of Attorney and
Custody Agreements executed by each of the Selling Shareholders and such further
information, certificates and documents as the Representatives may reasonably
request.
(m) Stock Exchange Listing. The Shares shall have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
(n) Compliance with Prospectus Delivery Requirements. The Company shall
have complied with the provisions of Sections 2(g) and 3(e) hereof with respect
to the furnishing of Prospectuses.
(o) Additional Documents. On or before each of the First Closing Date and
the Second Closing Date, as the case may be, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
22
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Shares, with notice to the Company
and the Custodian at any time prior to the Second Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 5 (Payment of Expenses), Section 6 (Reimbursement of
Underwriters' Expenses), Section 7 (Indemnification and Contribution) and
Section 10 (Representations and Indemnities to Survive Delivery) shall at all
times be effective and shall survive such termination.
Section 5. Payment of Expenses.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of the Company's and the Selling Shareholders'
obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation (i) all expenses incident to the issuance
and delivery of the Shares (including all printing and engraving costs), (ii)
all fees and expenses of the registrar and transfer agent of the Common Shares,
(iii) all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Shares to the Underwriters, (iv) all fees and expenses
of the counsel to the Company, of counsel to the Selling Shareholders (in the
event that the Selling Shareholders engage counsel to the Company to act on
their behalf) and of the Company's independent public or certified public
accountants, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all costs and
expenses incurred by Underwriters counsel in connection with the Directed Share
Program (not to exceed $15,000), (vii) all filing fees, attorneys' fees and
expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Shares for offer and sale under the
state securities or blue sky laws or the provincial securities laws of Canada or
any other country, and, if requested by the Representatives, preparing and
printing a "Blue Sky Survey," an "International Blue Sky Survey" or other
memorandum, and any supplements thereto, advising the Underwriters of such
qualifications, registrations and exemptions, (viii) the filing fees incident
to, and the reasonable fees and expenses of counsel for the Underwriters in
connection with, the NASD review and approval of the Underwriters' participation
in the offering and distribution of the Common Shares, (ix) the fees and
expenses associated with including the Shares on the Nasdaq National Market, (x)
all costs and expenses incident to the travel and accommodation of the Company's
employees on the "roadshow," and (xi) all other fees, costs and expenses
referred to in Item 13 of Part II of the Registration Statement. Except as
provided in this Section 5, Section 6, and Section 7 hereof, the Underwriters
shall pay their own expenses, including the fees and disbursements of their
counsel. The Company further agrees with each Underwriter to pay (directly or by
reimbursement) all fees and expenses incident to the performance of the Selling
Shareholders' obligations under this Agreement which are not otherwise
specifically provided for herein, including but not limited to (a) fees and
expenses of counsel and other advisors for such Selling Shareholders (in the
event that the Selling Shareholders engage counsel to the Company to act on
their behalf), (b) fees and expenses of the Custodian and (c) expenses and taxes
incident to the sale and delivery of the Common Shares to be sold by such
Selling Shareholders to the
23
Underwriters hereunder (which taxes, if any, shall be paid by the Selling
Shareholders and may be deducted by the Custodian under the provisions of
Section 2 of this Agreement). In the event that the Selling Shareholders retain
counsel other than Company counsel to act on their behalf, as between the
Selling Shareholders and the Underwriters, the Selling Shareholders agree to pay
all fees and expenses of such counsel.
This Section 5 shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the Company,
on the one hand, and the Selling Shareholders, on the other hand.
Section 6. Reimbursement of Underwriters' Expenses.
If this Agreement is terminated by the Representatives pursuant to
Section 4, Section 8, Section 9 or Section 15, or if the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
of any refusal, inability or failure on the part of the Company to perform any
material agreement herein or to comply with any material provision hereof, the
Company agrees to reimburse the Representatives and the other Underwriters (or
such Underwriters as have terminated this Agreement with respect to themselves),
severally, upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Representatives and the Underwriters in connection
with the proposed purchase and the offering and sale of the Shares, including
but not limited to fees and disbursements of counsel, printing expenses, travel
and accommodation expenses, postage, facsimile and telephone charges.
Section 7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company and each of the
Selling Shareholders, jointly and severally, agree to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if any,
who controls any Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject, under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
or the Principal Selling Shareholders contained herein; or (iv) in whole or in
part upon any failure of the Company or the Principal Selling Shareholders to
perform their respective obligations hereunder
24
or under law; or (v) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials provided by the Company
or based upon written information furnished by or on behalf of the Company
including, without limitation, slides, videos, films or tape recordings, used in
connection with the marketing of the Shares, and including, without limitation,
statements communicated to securities analysts employed by the Underwriters,
unless such information or statement was used or made by the Representatives
without the Company's consent or knowledge in connection with the marketing of
the Shares; or (vi) any act or failure to act or 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 any matter covered by clause (i), (ii), (iii) (iv) or (v) above,
provided that the Company and the Selling Shareholders shall not be liable
--------
under this clause (vi) to the extent that a court of competent jurisdiction
shall have determined by a final judgment 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 bad faith or
willful misconduct; and to reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of counsel
chosen by Xxxxxxxxx Xxxxxxxx) as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
-------- -------
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, that such loss, claim, damage, liability or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company and the Selling
Shareholders by the Representatives expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), unless such information or statement was used or made by
the Representatives without Company or Selling Shareholder consent; and
provided, further, that with respect to any preliminary prospectus, the
-------- -------
foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or expense;
and provided, further, that the liability of each Selling Shareholder (a Selling
-------- -------
Shareholder comprised of husband and wife shall be deemed a single Selling
Shareholder) under the foregoing indemnity agreement shall be limited to an
amount equal to the initial public offering price of the Shares sold by such
Selling Shareholder, less the underwriting discount applicable to such shares,
as set forth on the cover page of the Prospectus. The indemnity agreement set
forth in this Section 7(a) shall be in addition to any liabilities that the
Company and the Selling Shareholders may otherwise have.
(b) Indemnification of the Company, its Directors and Officers and Selling
Shareholders. Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, the Selling Shareholders and each person, if
any, who controls
25
the Company or any Selling Shareholder within the meaning of the Securities Act
or the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, Selling
Shareholder or controlling person may become subject, under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company and the
Selling Shareholders by the Representatives expressly for use therein; and to
reimburse the Company, or any such director, officer, Selling Shareholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Shareholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The indemnity
agreement set forth in this Section 7(b) shall be in addition to any liabilities
that each Underwriter may otherwise have.
(c) Information Provided by the Underwriters. The Company and each of the
Selling Shareholders, and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, hereby acknowledges that
the only information that the Underwriters have furnished to the Company
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the statements set
forth in the Prospectus under the caption "Underwriting" as follows: (i) in the
table in the first paragraph, (ii) in the first, second and third sentences in
the subsection titled "Dealers' compensation," (iii) in the subsection titled
"Discretionary accounts," (iv) in the subsection titled "Directed share
program," and (v) in the second paragraph of the subsection titled "Online
activities;" and the Underwriters confirm that such statements are correct.
(d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
hereunder to the extent it is not materially prejudiced as a proximate result of
such failure and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party;
26
provided, however, if the defendants in any such action include both the
-------- -------
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party (Xxxxxxxxx Xxxxxxxx in the case of
Section 7(b) and Section 8), representing the indemnified parties who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 7(d) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 60 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes (i) an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(f) Contribution. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or
27
proceedings in respect thereof) then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect the relative benefits received by the
Company or the Selling Shareholder, as applicable, on the one hand and the
Underwriters on 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 or the Selling Shareholder, as applicable, 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 or the Selling
Shareholder, as applicable, on the one hand, and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds (before
deducting expenses but after deducting underwriting discounts and commissions)
received by the Company or the Selling Shareholder, as applicable, from the sale
of the Shares sold by the Company or the Selling Shareholder in the offering
bears to the total underwriting discounts and commissions received by the
Underwriters in connection with the sale of such Shares, in each case as
described in the Prospectus. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Shareholders 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, each Selling Shareholder and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
7(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 7(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 7(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) the
Selling Shareholders shall not be required to contribute more than the net
proceeds (before expenses) received by the Selling Shareholders from their sale
of Shares hereunder and (iii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 7(f) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) Timing of Any Payments of Indemnification. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses
28
are incurred, but in all cases, no later than forty-five (45) days of invoice to
the indemnifying party.
(h) Survival. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties 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, any Selling Shareholder
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, any
Selling Shareholder or any person controlling the Company, shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
(i) Indemnification for Directed Share Program. The Company agrees to
indemnify and hold harmless Xxxxxxxxx Xxxxxxxx and its affiliates and each
person, if any, who controls Xxxxxxxxx Xxxxxxxx or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act ("Xxxxxxxxx Xxxxxxxx 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) the failure of any participant to pay
for and accept delivery of Directed Shares that the participant has 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 willful misconduct of Xxxxxxxxx Xxxxxxxx
Entities. The indemnity agreement set forth in this Section 7(i) shall be in
addition to any liabilities that the Company may otherwise have.
(j) Acknowledgements of Parties. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Securities Act and the Exchange Act.
Section 8. Default of One or More of the Several Underwriters.
If, on the First Closing Date or the Second Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or refuse to
purchase Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite
29
their respective names on Schedule A bears to the aggregate number of Firm
----------
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as may be specified by the Representatives with the
consent of the non-defaulting Underwriters, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date. If, on the First Closing Date or the Second Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares and the aggregate number of Shares with respect to which such
default occurs exceeds 10% 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 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 5, and Section 7 shall at all times be
effective and shall survive such termination. In any such case either the
Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, but in no event for
longer than seven (7) days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 9. Termination of this Agreement.
This Agreement may be terminated by the Representatives by notice
given to the Company and the Selling Shareholders if (a) at any time after the
execution and delivery of this Agreement and prior to the First Closing Date (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the Nasdaq Stock Market, or trading
in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York or California authorities; (iii) there
shall have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective change in United States' or international political,
financial or economic conditions, as in the judgment of the Representatives is
material and adverse and makes it impracticable or inadvisable to market the
Common Shares in the manner and on the terms contemplated in the Prospectus or
to enforce contracts for the sale of securities; (iv) in the reasonable judgment
of the Representatives there shall have occurred any Material Adverse Change; or
(v) the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the reasonable judgment of
the Representatives may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured; or (b) in the case of any of the events specified in 9(a)(i)-(v),
such event singly or together with any other event, makes it, in your judgment,
impracticable or inadvisable to market the Common Shares in the manner and on
the terms contemplated in the Prospectus. Any termination pursuant to this
Section 9 shall be without liability on the part of (x) the Company or the
Selling Shareholders to any
30
Underwriter, except that the Company and the Selling Shareholders shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 5 and 6 hereof, (y) any Underwriter to the Company or any
person controlling the Company or the Selling Shareholders, or (z) of any party
hereto to any other party except that the provisions of Section 7 shall at all
times be effective and shall survive such termination.
Section 10. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties
and other statements of the Company or any person controlling the company, of
its officers, of the Selling Shareholders and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, or any Selling Shareholder, as the case may be, and will
survive delivery of and payment for the Shares sold hereunder and any
termination of this Agreement.
Section 11. Notices.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
Xxxxxxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
O'Melveny & Xxxxx LLP
Embarcadero Center West
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Company:
Synplicity, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
31
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
If to a Selling Shareholder, to its address as listed in Schedule B, with a
----------
copy, during the term of the Custody Agreement, to:
Equiserve Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 12. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 9
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7, and to their respective
successors, and personal representatives, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Shares as such from any of the Underwriters merely by reason of
such purchase.
Section 13. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
Section 14. Governing Law Provisions.
(a) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified
32
Courts"), and each party irrevocably submits to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of
any such court (a "Related Judgment"), as to which such jurisdiction is non-
exclusive) of such courts in any such suit, action or proceeding. Service of any
process, summons, notice or document by mail to such party's address set forth
above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum. Each party not located in the United States irrevocably
appoints CT Corporation System, which currently maintains a San Francisco office
at 00 Xxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of
America, as its agent to receive service of process or other legal summons for
purposes of any such suit, action or proceeding that may be instituted in any
state or federal court in the City and County of San Francisco.
(c) Waiver of Immunity. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
Section 15. Failure of One or More of the Selling Shareholders to Sell and
Deliver Common Shares.
If one or more of the Selling Shareholders shall fail to sell and
deliver to the Underwriters the Shares to be sold and delivered by such Selling
Shareholders pursuant to this Agreement at the Second Closing Date, then the
Company agrees to issue such number of Shares from the Company's account in
their stead and the Underwriters shall have the right, by written notice from
the Representatives to the Company and the Selling Shareholders, to postpone the
Second Closing Date, but in no event for longer than seven (7) days, in order
that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
Section 16. General Provisions.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. Section
33
headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
[The remainder of this page has been intentionally left blank.]
34
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Custodian the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
SYNPLICITY, INC.
By:________________________________________
Xxxxxx Xxxxxxx
President and CEO
EACH AND EVERY SELLING SHAREHOLDER
By:________________________________________
Attorney-in-fact for the Selling Shareholders
named in Schedule B hereto
----------
The foregoing Underwriting Agreement is hereby confirmed and accepted by the
Representatives as of the date first above written.
XXXXXXXXX XXXXXXXX, INC.
XXXX XXXXXXXX INCORPORATED
XX XXXXX SECURITIES CORPORATION
On their behalf and on behalf of each of the several underwriters named in
Schedule A hereto.
----------
By: XXXXXXXXX XXXXXXXX, INC.
By:_______________________________
Authorized Signatory
S-1
SCHEDULE A
Underwriters
------------
Number of Firm
Shares To be
Underwriter Purchased
---------------------------------------------------------------------------- --------------
Xxxxxxxxx Xxxxxxxx Inc. and Xxxxxxxxx Xxxxxxxx International Limited........ [___]
Xxxx Xxxxxxxx Incorporated.................................................. [___]
XX Xxxxx Securities Corporation............................................. [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
[___] ...................................................................... [___]
---------------------------------------------------------------------------- --------------
Total............................................................... 4,300,000
==============
Schedule A
SCHEDULE B
Selling Shareholders
--------------------
Number of Maximum Number
Firm Shares of Option Shares
Selling Shareholder to be Sold to be Sold
------------------------------------------------- ----------------- ------------------
Xxxxxxx Xxxxx and Xxxxxxx X. XxXxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 94086............................. 0 200,000
------------------------------------------------- ----------------- ------------------
Total....................................... 0 200,000
================= ==================
Schedule B
Exhibit A
Lock-Up Agreement
-----------------
Xxxxxxxxx Xxxxxxxx, Inc.
Xxxx Xxxxxxxx Incorporated
XX Xxxxx Securities Corporation
As Representatives of the several Underwriters
c/x Xxxxxxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Synplicity, Inc. (the "Company")
--------------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives (the "Representatives") of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters
are relying on the representations and agreements of the undersigned contained
in this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") (other than pursuant to
employee stock purchase plans and stock option plans existing on, or upon the
conversion or exchange of convertible or exchangeable securities outstanding as
of, the date of this Agreement), now owned or hereafter acquired directly by
such person or with respect to which such person has or hereafter acquires the
power of disposition, otherwise than (i) as a bona fide gift or gifts, provided
the donee or donees thereof agree in writing to be bound by this restriction,
(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 in writing to be bound by this restriction, and provided further that any
such transfer will not involve a disposition for value, (iii) as a distribution
to partners or shareholders of such person, provided that the distributees
thereof agree in writing to be bound by the terms of this restriction, (iv) with
respect to sales or purchases of Common Stock acquired on the open market or (v)
with the prior written consent of Xxxxxxxxx Xxxxxxxx, Inc. For the purposes of
this paragraph, "immediate family" will mean any relationship by blood, marriage
or adoption, not more remote than first cousin.
A-1
The foregoing restrictions will commence on the effective date of the
registration statement prepared in connection with the Offering and will
terminate on the later of the date that is (i) the close of trading of the
Common Stock on the 180/th/ day following the effective date of the registration
statement prepared in connection with the Offering or (ii) two trading days
after the Company's release of its fiscal 2000 earnings (the "Lock-Up" Period).
The foregoing restriction has been expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
included, relates to or derives any significant part of its value from
Securities. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or Securities held by the undersigned
except in compliance with the foregoing restrictions.
This Lock-Up Agreement is irrevocable and will be binding on the
undersigned and the respective successors, heirs, personal representatives, and
assigns of the undersigned. Nothing in this Lock-up Agreement shall constitute
an offer to sell or a solicitation of an offer to buy, and this Lock-Up
Agreement shall create no obligation to purchase Common Stock or Securities of
the Company.
Dated:_____________________________________
___________________________________________
Printed Name of Holder
By:________________________________________
Signature
___________________________________________
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
A-2
Exhibit B
Matters to be Covered in the Opinion of Company Counsel
-------------------------------------------------------
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation;
(ii) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus;
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each [list jurisdictions]. To such
counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21.1 to the Registration Statement;
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of the
dates stated therein, the issued and outstanding shares of capital stock of the
Company (including the Selling Shareholder Shares) outstanding prior to the
issuance of the Shares have been duly and validly issued and are fully paid and
nonassessable, and to such counsel's knowledge will not have been issued in
violation of or subject to any preemptive right arising under the articles of
incorporation or California General Corporation Law, or, to such counsel's
knowledge, any co-sale right, right of first refusal or other similar right of
which we are aware,
(v) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been duly
authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully paid
and nonassessable, and will not have been issued in violation of or subject to
any preemptive right arising under the articles of incorporation or California
General Corporation Law, or, to such counsel's knowledge, any co-sale right,
right of first refusal or other similar right, other than any registration
rights described in Opinion (xix) hereof.
(vii) The Company has the corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
issued and sold by it hereunder;
(viii) This Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and, assuming (i) that the laws of the State of New York are
identical to the laws of the State of California and (ii) due authorization,
execution and delivery by you, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
B-1
relating to or affecting creditors' rights generally or by general equitable
principles (whether relief is sought in a proceeding at law or in equity);
(ix) The Registration Statement has become effective under the Securities
Act and the offer and sale of the Shares have been validly registered under the
Securities Act and the applicable rules and regulations of the Commission
thereunder and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or threatened under the
Securities Act;
(x) The 8-A Registration Statement complied as to form in all material
respects with the requirements of the Exchange Act; the 8-A Registration
Statement has become effective under the Exchange Act; the Common Shares have
been validly registered under the Exchange Act and the applicable rules and
regulations of the Commission thereunder and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Form 8-A Registration Statement
has been issued and no proceedings for that purpose have been instituted or
threatened under the Exchange Act;
(xi) The Registration Statement and the Prospectus, and each amendment or
supplement thereto (other than the financial statements (including supporting
schedules) and financial data derived therefrom as to which such counsel need
express no opinion), as of the effective date of the Registration Statement,
complied as to form in all material respects with the requirements of the
Securities Act and the applicable Rules and Regulations;
(xii) The information in the Prospectus under the caption "Description of
Capital Stock," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is a fair summary of such
matters and conclusions; and the forms of certificates evidencing the Common
Stock and filed as exhibits to the Registration Statement comply with California
law;
(xiii) The description in the Registration Statement and the Prospectus of
the articles of incorporation charter and bylaws of the Company to be in effect
as of the First Closing Date and of statutes are accurate and fairly present the
information required to be presented by the Securities Act;
(xv) The performance of this Agreement and the consummation of the
transactions herein contemplated (other than performance of the Company's
indemnification obligations hereunder, concerning which no opinion need be
expressed) will not (a) result in any violation of the Company's charter
articles of incorporation or bylaws or (b) to such counsel's knowledge, result
in a material breach or violation of any of the terms and provisions of, or
constitute a default under, any material bond, debenture, note or other evidence
of indebtedness, or any lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument known to such
counsel to which the Company is a party or by which its properties are bound, or
any applicable statute, rule or regulation known to such counsel or, to such
counsel's knowledge, any order, writ or decree of any court, government or
governmental agency or body
B-2
having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations;
(xvi) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations is necessary in connection with the
consummation by the Company of the transactions herein contemplated, except
(i) such as have been obtained under the Securities Act and the Exchange
Act, (ii) such as may be required under state or other securities or Blue
Sky laws in connection with the purchase and the distribution of the Shares
by the Underwriters in the manner contemplated here and in the Prospectus,
and (iii) such as may be required by the NASD,
(xvii) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or any
of its subsidiaries of a character required to be disclosed in the
Registration Statement or the Prospectus by the Securities Act, other than
those described therein;
(xviii) To such counsel's knowledge, neither the Company nor any of
its subsidiaries is presently (a) in material violation of its respective
charter or bylaws, or (b) in material breach of any applicable statute,
rule or regulation known to such counsel or, to such counsel's knowledge,
any order, writ or decree of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations; and
(xix) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Shares or other
securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights known to such counsel to registration of Common Shares or other
securities, because of the filing of the Registration Statement by the
Company, have, with respect to the offering contemplated thereby, 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 or have included securities in the Registration Statement
pursuant to the exercise of and in full satisfaction of such rights.
(xx) The Company is not and, after giving effect to the offering
and the sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the First Closing Date or Second Closing Date, as the
B-3
case may be, the Registration Statement and any amendment or supplement thereto
(other than the financial statements including supporting schedules and other
financial and statistical information derived therefrom, as to which such
counsel need express no comment) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or at the First Closing
Date or the Second Closing Date, as the case may be, the Registration Statement,
the Prospectus and any amendment or supplement thereto (except as aforesaid)
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
B-4
Exhibit C
Matters to be Covered in the Opinion of
Intellectual Property Counsel for the Company
---------------------------------------------
References to the Prospectus in this Exhibit C include any supplements
---------
thereto at the Closing Date.
Such counsel shall state that they act as intellectual property
counsel for the Company (which term includes the Company's subsidiaries for
purposes of this opinion) and in such capacity are familiar with the technology
used by the Company in its business and the manner of its use thereof and have
read the Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to the
Company's patents, patent rights or licenses, trademarks or trademark rights,
service marks, copyrights, maskwork rights, collaborative research, licenses or
royalty arrangements or agreements, trade secrets, know-how or proprietary
techniques, including processes and substances, or other proprietary information
or materials (collectively "Intellectual Property") and in their opinion:
(i) The statements in the Prospectus under the captions "Risk
Factors--Risks Related to Our Products' Dependence on Intellectual Property" and
"Business--Technology and Development--Proprietary Rights," insofar as such
statements constitute matters of law, legal conclusions or summaries of legal
matters relating to Intellectual Property, or descriptions of the Company's
Intellectual Property, have been reviewed by such counsel and fairly present and
summarize, in all material respects, the matters referred to therein.
(ii) Such counsel knows of no material action, suit, claim or
proceeding relating to or affecting the Intellectual Property which is pending
or threatened against the Company.
(iii) The Company is listed in the records of the United States
Patent and Trademark Office as the holder of record of each of the patent
applications listed on a schedule to such opinion (the "Patent Applications").
To the knowledge of such counsel, there are no claims of third parties to any
ownership interest or lien with respect to any of the Patents Applications. Such
counsel is not aware of any material defect in form in the preparation or filing
of the Patent Applications on behalf of the Company. To the knowledge of such
counsel, the Patent Applications are being pursued by the Company.
(iv) The Company is listed in the records of the appropriate foreign
offices as the sole holder of record of each of the foreign patents applications
listed on a schedule to such opinion (the "Foreign Applications"). Such counsel
knows of no claims of third parties to any ownership interest or lien with
respect to any of the Foreign Applications. Such counsel is not aware of any
material defect of form in the preparation or filing of the Foreign Applications
on behalf of the Company. To the knowledge of such counsel, the Foreign
Applications are being pursued by the Company; and
C-1
(v) Such counsel has no knowledge of any reason why any patent to be
issued as a result of any Patent Application or Foreign Application would not be
valid or would not afford the Company useful patent protection with respect
thereto.
In addition, such counsel shall state that they have reviewed the
Registration Statement and Prospectus and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of any statements contained in the Registration Statement or the
Prospectus (other than as specified above), on the basis of the foregoing,
nothing has come to their attention which would lead them to believe that either
the Registration Statement or any amendments thereto, at the time the
Registration Statement or such amendments became effective, contained an untrue
statement of a material fact regarding the Company's Intellectual Property or
omitted to state a material fact regarding the Company's Intellectual Property
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date or at the Closing Date,
contained an untrue statement of a material fact regarding the Company's
Intellectual Property or omitted to state a material fact regarding the
Company's Intellectual Property necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief as to
the financial statements or schedules or other financial or statistical data
derived therefrom, included in the Registration Statement or the Prospectus or
any amendments or supplements thereto).
C-2
Exhibit D
Matters to be Covered in the Opinion of Selling Shareholder Counsel
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(i) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of, and is a valid and binding agreement of,
such Selling Shareholder, enforceable in accordance with its terms, except
as rights to indemnification thereunder may be limited by applicable law
and except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
(ii) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of Attorney
will not contravene or conflict with, result in a breach of, or constitute
a default under, the charter or by-laws, partnership agreement, trust
agreement or other organization documents, as the case may be, of such
Selling Shareholder, or, to the best of such counsel's knowledge, violate,
result in a breach of or constitute a default under the terms of any other
agreement or instrument to which such Selling Shareholder is a party or by
which it is bound, or any judgment, order or decree applicable to such
Selling Shareholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder.
(iii) Such Selling Shareholder is the sole registered owner of the
Common Shares which may be sold by such Selling Shareholder under the
Underwriting Agreement and has the legal right and power, and all
authorization and approvals required under its organizational documents, if
applicable, to enter into the Underwriting Agreement and its Custody
Agreement and its Power of Attorney, to sell, transfer and deliver all of
the Common Shares which may be sold by such Selling Shareholder under the
Underwriting Agreement and to comply with its other obligations under the
Underwriting Agreement, its Custody Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of such
Selling Shareholder has been duly authorized, executed and delivered by
such Selling Shareholder and is a valid and binding agreement of such
Selling Shareholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(v) Upon delivery of and payment for the Shares as contemplated in
the Underwriting Agreement, each Assuming that the Underwriters will
receive valid, marketable title to the Shares purchased from such Selling
Shareholder free of any adverse claim, assuming such Underwriter purchases
the such Shares which are sold by such Selling Shareholder pursuant to the
Underwriting Agreement for value, in good faith and without notice of any
adverse claims, as defined in the Uniform Commercial Code of the State of
California.
D-1
(vi) To the best of such counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with, any court
or governmental authority or agency, is required for the consummation by
such Selling Shareholder of the transactions contemplated in the
Underwriting Agreement, except (i) such as have been obtained under the
Securities Act and the Exchange Act, (ii) such as may be required under
state or other securities or Blue Sky laws in connection with the purchase
and the distribution of the Shares by the Underwriters in the manner
contemplated here and in the Prospectus, and (iii) such as may be required
by the NASD.
D-2
