UNDERWRITING AGREEMENT
September 19, 2000
Xxxxxxxxx Xxxxxxxx, Inc.
Banc of America Securities LLC
Xxxxxx Xxxxxx Partners LLC
Xxxxx, Xxxxxxxx & Xxxx, Inc.
as Representatives of the several Underwriters
c/x Xxxxxxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Elantec Semiconductor, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
SCHEDULE A (the "Underwriters") an aggregate of 1,520,000 shares of its Common
Stock, par value $0.01 per share (the "Common Shares"); and the stockholders of
the Company named in SCHEDULE B (collectively, the "Selling Stockholders")
severally propose to sell to the Underwriters an aggregate of 80,000 Common
Shares. The 1,520,000 Common Shares to be sold by the Company and the 80,000
Common Shares to be sold by the Selling Stockholders are collectively called the
"Firm Shares." In addition, the Company has granted to the Underwriters an
option to purchase up to an additional 240,000 Common Shares (the "Option
Shares") as provided in Section 2. 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"), Banc of America
Securities LLC, Xxxxxx Xxxxxx Partners LLC and Xxxxx, Xxxxxxxx & Xxxx, Inc. 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.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-43864), 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 all documents incorporated or
deemed to be incorporated by reference therein and any information deemed to be
a part thereof at the time of effectiveness pursuant to
1
Rule 430A or Rule 434 under the Securities Act or the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Exchange 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, including all documents incorporated or deemed to
be incorporated by reference therein (collectively, the "Incorporated
Documents") and any information deemed to be a part thereof at such time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act or the
Exchange Act is called the "Prospectus." 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"). All
references in this Agreement to financial statements and schedules and other
information which is "contained," "included" or "stated" in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement or
the Prospectus shall be deemed to mean and include the filing of any document
under the Exchange Act which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants 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,
the Company has not been informed that proceedings for such purpose have been
instituted or are pending and, to the best knowledge of the Company, no
proceeding for such purpose is 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
2
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 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
30th 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 which have not been described or filed as
required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has delivered
to the Representatives four 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 and paid for by the Underwriters pursuant
to this Agreement, will be validly issued, fully paid and nonassessable.
(f) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE SELLING STOCKHOLDERS. The
Common Shares to be purchased by the Underwriters from the Selling Stockholders,
when issued, were validly issued, fully paid and nonassessable.
3
(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 Agreement.
(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 or operations, 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. Deloitte & Touche LLP and Ernst & Young LLP,
who have expressed their opinions 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 and the Exchange 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 Consolidated Financial Data,"
"Capitalization," and "Selected Consolidated Financial Data" fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Registration Statement. No pro forma
financial information is required to be included in the Registration Statement
pursuant to Regulation S-X under the Securities Act.
(k) COMPANY'S ACCOUNTING SYSTEM. On a consolidated basis, the Company
and 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
4
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(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 SCHEDULE C, none of which qualify as a "significant
subsidiary," as defined in Regulation S-X under the Securities Act.
(m) INCORPORATION AND GOOD STANDING OF THE COMPANY. The Company has been
duly organized and is validly existing as a corporation, in good standing under
the laws of the State of Delaware with 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 in
those jurisdictions where the failure to be so qualified or to be in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(n) CAPITALIZATION OF THE SUBSIDIARIES. All the outstanding shares of
capital stock of each subsidiary of the Company 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.
(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.
(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" (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 were 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 other
than those accurately 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,
5
set forth and incorporated by reference in the Prospectus accurately and fairly
describes such plans, arrangements, options and rights.
(q) STOCK EXCHANGE LISTING. The Shares are registered pursuant to Section
12(g) of the Exchange Act and are listed on the Nasdaq National Market (the
"Nasdaq"), and the Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Shares under the
Exchange Act or delisting the Common Shares from the Nasdaq, nor has the Company
received any notification that the Commission or the National Association of
Securities Dealers, Inc. (together with its regulatory subsidiary NASD
Regulation, Inc., the "NASD") is contemplating terminating such registration or
listing.
(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 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 herein and in the Prospectus, (ii)
by the NASD, and (iii) by the federal and provincial laws of Canada.
(s) NON-CONTRAVENTION OF EXISTING INSTRUMENTS OR 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 material breach or violation, or imposition of any
lien, charge or encumbrance upon any property or assets of the Company pursuant
to, (i) the charter or by-laws of the Company, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the
Company is a party or bound or to which its property is subject or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of its
properties.
(t) NO DEFAULTS OR VIOLATIONS. The Company is not in violation or default
of (i) any provision of its charter or by-laws, (ii) the terms of any 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 any of its properties, 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. 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.
6
(v) ALL NECESSARY PERMITS, ETC. The Company and its subsidiaries 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 notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
(w) TITLE TO PROPERTIES. The Company and 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. 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 required
to be paid by any of them 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; the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a Material Adverse Change. There is no
claim being made against the Company regarding patents, patent
7
rights or licenses, inventions, collaborative research, trade secrets, know-how,
trademarks, service marks, trade names or copyrights. The Company and its
subsidiaries do not in the conduct of their business as now 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 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. 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 and
earthquakes, 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. Other than with respect to the St. Xxxx
Fire and Marine Insurance Company Policy No. TE09402535, neither of 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 the 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 principal suppliers, contractors or
distributors 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 executive officer and director of the
Company, each Selling Stockholder and each beneficial owner of one or more
percent of the outstanding issued share capital of the Company (collectively,
the "One Percent Stockholders") has agreed to sign an agreement substantially in
the form attached
8
hereto as EXHIBIT A (the "Lock-up Agreements"). The Company has provided to
counsel for the Underwriters a complete and accurate list of all securityholders
of the Company and the number and type of securities held by each
securityholder. The Company has provided to counsel for the Underwriters true,
accurate and complete copies of all of the Lock-up Agreements presently in
effect or effected hereby. The Company hereby represents and warrants and agrees
that during the 90 days following the date of the Prospectus (the "Lock-Up
Period"), the Company will not (i) release any of its executive officers,
directors, the Selling Stockholders or the One Percent Stockholders from any
market stand-off agreements currently existing or hereafter effected or (ii)
consent to the removal of any transfer-restrictive legend from any certificate
representing any Common Shares held by its executive officers, directors, the
Selling Stockholder or the One Percent Stockholders, 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 or any other
person required to be described in the Prospectus which have not been described
as required.
(gg) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. 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) ENVIRONMENTAL LAWS. The Company (i) is in compliance with all rules,
laws and regulations relating to the use, treatment, storage and disposal of
toxic substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, except where the failure to comply
would not result in a Material Adverse Change, (ii) has received no notice from
any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus, (iii) is not currently aware that it will be
required to make future material capital expenditures to comply with
Environmental Laws and (iv) does not own, lease or occupy property that has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, ET
SEQ.), or otherwise designated as a contaminated site under applicable state or
local law.
(ii) ERISA COMPLIANCE. The Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance in
all material respects with ERISA. "ERISA Affiliate" means, with respect to the
Company or a subsidiary, any member of any group of organizations described in
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations thereunder (the
"Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of
9
unfunded benefit liabilities" (as defined under ERISA). Neither the Company, its
subsidiaries nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan" established
or maintained by the Company, its subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
(jj) EXCHANGE ACT COMPLIANCE. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time the Registration Statement and
any amendments thereto become effective and at the First Closing Date and the
Second Closing Date, as the case may be, will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(kk) CONDITIONS FOR USE OF FORM S-3. The Company has satisfied the
conditions for the use of Form S-3, as set forth in the general instructions
thereto, with respect to the Registration Statement.
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 STOCKHOLDERS. Each Selling
Stockholder 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 Stockholder and is a
valid and binding agreement of such Selling Stockholder, 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.
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the (i) Custody
Agreement signed by such Selling Stockholder and ChaseMellon Shareholder
Services, L.L.C., as custodian (the "Custodian"), relating to the deposit of the
Shares to be sold by such Selling Stockholder (the "Custody Agreement") and (ii)
Power of Attorney appointing certain individuals named therein as such Selling
Stockholder'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 Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, 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
10
affecting the rights and remedies of creditors or by general equitable
principles. Each Selling Stockholder agrees that the Shares to be sold by such
Selling Stockholder 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 Stockholder
hereunder shall not be terminated, except as provided in this Agreement or in
the Custody Agreement, by any act of the Selling Stockholder, by operation of
law, by death or incapacity of such Selling Stockholder or by the occurrence of
any other event. If such Selling Stockholder should die or become incapacitated,
or in any other event should occur, before the delivery of the Shares to be sold
by such Selling Stockholder hereunder, the documents evidencing the Shares to be
sold by such Selling Stockholder 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 Stockholder is the lawful
owner of the Shares to be sold by such Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Shares, as provided herein, such
Selling Stockholder 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 Stockholder has, and on the
First Closing Date (as defined below) will have, good and valid title to all of
the Common Shares which may be sold by such Selling Stockholder pursuant to this
Agreement on such date and the legal right and power, and all authorizations and
approvals required by law to enter into this Agreement and its Custody Agreement
and Power of Attorney, to sell, transfer and deliver all of the Shares which may
be sold by such Selling Stockholder pursuant to this Agreement and to comply
with its other obligations hereunder and thereunder.
(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 Stockholder 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 Shares being sold by such
Selling Stockholder nor the consummation of any other of the transactions herein
contemplated by such Selling Stockholder or the fulfillment of the terms hereof
by such Selling Stockholder will conflict with, result in a breach or violation
of, or constitute a default under any law or the terms of any indenture or other
agreement or instrument to which such Selling Stockholder is party or bound, any
judgment, order or decree applicable to such Selling Stockholder or any court or
regulatory body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder.
(g) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling Stockholder does
not have any registration or other similar rights to have any equity or debt
securities
11
registered for sale by the Company under the Registration Statement or included
in the offering contemplated by this Agreement.
(h) NO PREEMPTIVE, CO-SALE OR OTHER RIGHTS. Such Selling Stockholder 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
Stockholders to the Underwriters pursuant to this Agreement; and such Selling
Stockholder 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 STOCKHOLDER IN THE PROSPECTUS. All
information furnished by or on behalf of such Selling Stockholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date and the Second Closing Date 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 Stockholder confirms as accurate the number of shares
of Company Shares set forth opposite such Selling Stockholder's name in the
Prospectus under the caption "Principal and Selling Stockholders" (both prior to
and after giving effect to the sale of the Shares).
(j) NO PRICE STABILIZATION OR MANIPULATION. Such Selling Stockholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(k) 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 by any of the Underwriters in
connection with the execution and delivery of this Agreement or the sale by the
Selling Stockholders of the Shares.
(l) DISTRIBUTION OF OFFERING MATERIALS BY THE SELLING STOCKHOLDERS. The
Selling Stockholders have 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 by such Selling Stockholder other than
a preliminary prospectus, the Prospectus or the Registration Statement.
(m) NO MATERIAL UNDISCLOSED INSIDE INFORMATION. Such Selling Stockholder is
not prompted to sell the Shares to be sold by such Selling Stockholder by any
information concerning the Company which is not set forth in the Registration
Statement and the Prospectus.
(n) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES. (i) Based on a
reading of the plain text of the Registration Statement, neither Xxxxx X.
Xxxxxxxxxx, Xx. nor Xxxxx X. Xxxxxxx, each a Selling Stockholder, has reason to
believe that the representations and warranties of the Company contained in
Section 1(A) hereof are not true and correct, (ii) each of Messrs. Xxxxxxxxxx
and Xxxxxxx is familiar with the
12
Registration Statement and the Prospectus and neither of them has knowledge of
any material fact, condition or information not disclosed in the Registration
Statement or the Prospectus which has had or may result in a Material Adverse
Change on the condition, financial or otherwise, or on the earnings, business or
operation, whether or not arising from transactions in the ordinary course of
business of the Company and its subsidiaries, considered as one entity, and
(iii) neither Xx. Xxxxxxxxxx nor Xx. Xxxxxxx is prompted to sell the Shares to
be sold by such Selling Stockholder 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 Stockholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) THE FIRM SHARES. Upon the terms herein set forth, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of 1,520,000
Firm Shares and (ii) the Selling Stockholders agree to sell to the several
Underwriters an aggregate of 80,000 Firm Shares, each Selling Stockholder
selling the number of Firm Shares set forth opposite such Selling Stockholder's
name on SCHEDULE B. 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 and the Selling Stockholders 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 and the Selling
Stockholders shall be $77.1875 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 Fenwick &
West LLP, Two Palo Alto Square, Palo Alto, California 94306 (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 than 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
"First 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 hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of
13
240,000 Option Shares from the Company 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 option granted hereunder
may be exercised at any time upon notice by the Representatives to the Company,
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 nor later
than five full business days after delivery of such notice of exercise. If any
Option Shares are to be purchased, 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. The Representatives may
cancel the option at any time prior to its expiration by giving written notice
of such cancellation to the Company.
(d) PUBLIC OFFERING OF THE SHARES. The Representatives hereby advise the
Company and the Selling Stockholders 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
Stockholders shall be made at the First Closing Date 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 Stockholder 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 Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement.
14
(f) DELIVERY OF THE SHARES. The Company and the Selling Stockholders 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 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
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 STOCKHOLDERS.
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 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 (ii) 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) SECURITIES ACT COMPLIANCE. The Company will advise the Representatives
promptly (i) when the Registration Statement or any post-effective amendment
thereto shall have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information and (iv) 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.
15
(c) 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.
(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT
MATTERS. The Company will comply with the Securities Act and the Exchange Act,
so as to permit the completion of the distribution of the Shares as contemplated
in this Agreement and the Prospectus. If during the period in which a prospectus
is required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the 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, 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 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.
(e) COPIES OF THE PROSPECTUS AND ANY AMENDMENTS AND SUPPLEMENTS THERETO.
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 request.
(f) INSURANCE. The Company shall obtain or maintain, as applicable,
Directors and Officers liability insurance in the minimum amount of $10 million
which shall apply to the offering contemplated hereby.
(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the thirty (30) day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price 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.
16
(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. As soon as practicable, 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
twelve 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
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
(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
described in the Prospectus so long as none of those shares may be transferred
by any of the Company's executive officers, directors, the Selling Stockholder
or the One Percent Stockholders, except as permitted under the terms of that
person's Lock-Up Agreement, and the Company shall enter stop transfer
instructions with its transfer agent and registrar against the transfer of any
such Common Shares by such people, (ii) 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, and (iii) in connection with the
Company's acquisition of a business or its assets, issue Common Shares or any
securities convertible into, or exchangeable for, Common Shares so long as none
of those shares or securities may be transferred and the Company shall enter
stop transfer instructions with its transfer agent and registrar. These
restrictions terminate after the close of trading of the Shares 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) as soon as
practicable 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, stockholders' 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
17
(iii) as soon as available, copies of any report or communication of the Company
mailed generally to holders of its capital stock.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder further
covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such Selling
Stockholder will not, during the Lock-Up Period, offer to sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to (collectively, a "Disposition") any Common Shares, any options or
warrants to purchase any Common Shares or any securities convertible into or
exchangeable for Common Shares (collectively, "Securities") 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) 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, (iii) with respect to sales or purchases of
Common Shares acquired on the open market after the date of this Agreement, or
(iv) with the prior written consent of Xxxxxxxxx Xxxxxxxx, Inc. Furthermore,
such Selling Stockholder 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 Stockholder 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 Stockholder is a non-United States
person) or Form W-9 (if the Selling Stockholder 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, Xx.
Xxxxxxxxxx or Xx. Xxxxxxx has knowledge of the occurrence of any event as a
result of which the Prospectus or the Registration Statement, in each case as
then amended or supplemented, would include an untrue statement of a material
fact or omit 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 Stockholder 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
Stockholders 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 Stockholders of their respective
covenants and other obligations hereunder, and to each of the following
additional conditions:
18
(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, any Selling Stockholder 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
any Incorporated Document or otherwise) shall have been complied with to the
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, or business 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.
(d) OPINION OF 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 Fenwick & West LLP 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 Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters.
Counsel rendering the opinion contained in EXHIBIT B may rely as to
questions of law not involving the laws of the United States, the State of
California or the State of Delaware upon opinions of local counsel, and as to
questions of fact upon representations or certificates of officers of the
Company, the Selling Stockholders 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 Fliesler, Dubb, Xxxxx & Xxxxxxx LLP, intellectual property
counsel for the Company substantially in the form of EXHIBIT C attached hereto.
19
(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 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
Deloitte & Touche LLP 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 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 Deloitte & Touche LLP 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 September 30
1999, and related consolidated statements of operations, shareholders' equity,
and cash flows for the twelve (12) months ended September 30, 1999, (iii) state
that Deloitte & Touche LLP 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 Deloitte & Touche LLP as described in SAS No. 71 on
the financial statements for each of the quarters in the seven quarter periods
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 Deloitte & Touche LLP
and you. In addition, you shall have received from the Company a letter from
Deloitte & Touche LLP and 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 September 30,
20
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 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 is in effect, the Company has not been informed that proceedings
for such purpose have been instituted or are pending and to the best
knowledge of the undersigned, no proceeding for such purpose is
contemplated or threatened by the Commission;
(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 and the Incorporated Documents, when such Incorporated
Documents became effective or were filed with the Commission, contained all
material information required to be included therein by the Securities Act
or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and in all material respects
conformed to the requirements of the Securities Act or the Exchange Act and
the applicable rules and regulations of the Commission thereunder, as the
case may be; (b) other than any untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use in the Registration
Statement or the Prospectus, the Registration Statement, 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 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, in light of the circumstances under which they were made, 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 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
21
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 Company and its
subsidiaries considered as one enterprise.
(i) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS 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 executive officer and director of the
Company, each Selling Stockholder 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 STOCKHOLDERS. You shall have
received on the First Closing Date and the Second Closing Date, as the case may
be, an opinion of Fenwick & West LLP, counsel for the Selling Stockholders
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, the State of California or the
State of Delaware upon opinions of local counsel and as to questions of fact
upon representations or certificates of the Selling Stockholders or officers of
the Selling Stockholders (when the Selling Stockholder 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 STOCKHOLDERS' CERTIFICATE. On each of the First Closing Date
and the Second Closing Date, as the case may be, the Representatives shall
received a written certificate executed by the Attorney-in-Fact of each Selling
Stockholder, dated as of such Closing Date, to the effect that:
(i) the representations, warranties and covenants of such Selling
Stockholder set forth in Section 1(B) of this Agreement are true and
correct with the same force and effect as though expressly made by such
Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder 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 STOCKHOLDERS' DOCUMENTS. At least three (3) business days prior
to the date hereof, the Company and the Selling Stockholders shall have
furnished for review by the Representatives copies of the Powers of Attorney and
Custody
22
Agreements executed by each of the Selling Stockholders 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, 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.
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 and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Option
Shares, 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 and the Selling Stockholders, jointly and severally, agree
to pay in such proportions as they may agree upon among themselves all costs,
fees and expenses incurred in connection with the performance of their
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 Company's counsel, independent public or certified public accountants and
other advisors, (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 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, (vii) the filing fees
incident to, and the reasonable fees and expenses of
23
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, (viii) the fees and expenses associated with including the Shares on the
Nasdaq, (ix) all costs and expenses incident to the travel and accommodation of
the Company's employees on the "roadshow," and (x) all other fees, costs and
expenses referred to in Item 14 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 Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their 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 Stockholders, (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 Stockholders to the Underwriters
hereunder (which taxes, if any, may be deducted by the Custodian under the
provisions of Section 2 of this Agreement).
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 Stockholders, 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 or the Selling
Stockholders to perform any agreement herein or to comply with any 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.
(1) Indemnification by the Company. The Company agrees 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
24
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
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform their respective obligations hereunder 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; 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
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 by the Representatives expressly for use in the Registration Statement,
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); 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. The indemnity agreement
set forth in this Section 7(a) shall be in addition to any liabilities that the
Company may otherwise have.
(2) Indemnification by the Selling Stockholders. Each of the Selling
Stockholders, severally and not jointly, agrees to indemnify and hold harmless
each
25
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, in the case of
subparagraphs (i) and (ii) of this Section 7(a)(2) to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or such Underwriter by such Selling
Stockholder, directly or through such Selling Stockholder's representatives,
specifically for use in the preparation thereof; or (iii) in whole or in part
upon any inaccuracy in the representations and warranties of such Selling
Stockholder contained herein; or (iv) in whole or in part upon any failure of
such Selling Stockholder to perform their respective obligations hereunder or
under law; or (v) 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) or (iv) above, provided
that such Selling Stockholder shall not be liable under this clause (v) 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
such Selling Stockholder by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); 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
26
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; PROVIDED, FURTHER, that the liability
of each Selling Stockholder under the foregoing indemnity agreement shall be
limited to the product of (1) the number of Shares sold by such Selling
Stockholder and (2) the public offering price of the Shares as set forth on the
cover page of the Prospectus minus the underwriting discount and commission per
Share 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
Selling Stockholders may otherwise have.
(b) Indemnification by the Underwriters. 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 Stockholders and each person, if any, who controls the Company or any
Selling Stockholder 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 Stockholder 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 Stockholders by the Representatives expressly for use therein; and to
reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Stockholder 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)(1) shall be in addition to any
liabilities that each Underwriter may otherwise have.
(c) INFORMATION PROVIDED BY THE UNDERWRITERS. Each of the Company and each
of the Selling Stockholders, 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 of the subsection titled "Dealers' Compensation," and (iii) in
the second paragraph of the subsection titled "Online Activities"; and the
Underwriters confirm that such statements are correct.
27
(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 will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 7 or to the extent it is not
prejudiced as a proximate result of such failure. 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; 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
28
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 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 Stockholder, 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 Stockholder, 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 Stockholder, 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) received by the Company or the Selling Stockholder,
as applicable, from the sale of the Shares sold by it 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 or the Selling Stockholders, as applicable, 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 Stockholder 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) no
Selling Stockholder shall
29
be required to contribute any amount in excess of the product of (1) the number
of Shares sold by such Selling Stockholder and (2) the public offering price of
the Shares as set forth on the cover page of the Prospectus minus the
underwriting discount and commission per Share as set forth on the cover page of
the Prospectus, 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 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 Stockholder
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 Stockholder 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) 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 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
30
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 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 Stockholders 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, 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, Delaware 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 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 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 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 Stockholders to any Underwriter, except that the
Company and the Selling Stockholders 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
31
Stockholders, 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 Stockholders 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 Stockholder, 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, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Company:
Elantec Semiconductor, Inc
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx, Vice President of Finance and Administration
and Chief Financial Officer
32
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to any Selling Stockholder, to its address as shown in SCHEDULE B, with a
copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
and, during the term of the Custody Agreement, with a copy to:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxxxx Xxxxxxxxx
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.
33
SECTION 14. 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 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.
SECTION 15. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO SELL AND
DELIVER COMMON SHARES.
If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Shares to be sold and delivered by such Selling
Stockholders at the First Closing Date pursuant to this Agreement, then the
Underwriters may at their option, by written notice from the Representatives to
the Company and the Selling Stockholders, either (i) terminate this Agreement
without any liability on the part of any Underwriter or, except as provided in
Sections 5, 6, and 7 hereof, the Company or the Selling Stockholders, or (ii)
purchase the shares which the Company and Selling Stockholders have agreed to
sell and deliver in accordance with the terms hereof. If one or more of the
Selling Stockholders shall fail to sell and deliver to the Underwriters the
Shares to be sold and delivered by such Selling Stockholders pursuant to this
Agreement at the First Closing Date or the Second Closing Date, then the
Underwriters shall have the right, by written notice from the Representatives to
the Company and the Selling Stockholders, to postpone the First Closing Date or
the Second Closing Date, as the case may be, but in no event for longer than
seven 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.
34
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 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.
35
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,
ELANTEC SEMICONDUCOR, INC.
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Xxxxxxx Xxxx
VICE PRESIDENT OF FINANCE AND
ADMINISTRATION AND
CHIEF FINANCIAL OFFICER
EACH AND EVERY SELLING STOCKHOLDER
By: /s/ Xxxxxxx Xxxx
---------------------------------------
ATTORNEY-IN-FACT FOR THE SELLING
STOCKHOLDERS 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.
BANC OF AMERICA SECURITIES LLC
XXXXXX XXXXXX PARTNERS LLC
XXXXX, XXXXXXXX & XXXX, INC.
On their behalf and on behalf of each of the several underwriters named in
SCHEDULE A hereto.
BY: XXXXXXXXX XXXXXXXX, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
AUTHORIZED SIGNATORY
S-1
SCHEDULE A
Number of
Firm Shares
To be
Underwriters Purchased
---------------------------------------------------------- ------------
Xxxxxxxxx Xxxxxxxx, Inc. ................................. 585,000
Banc of America Securities LLC ........................... 260,000
Xxxxxx Xxxxxx Partners LLC................................ 260,000
Xxxxx, Xxxxxxxx & Xxxx, Inc. ............................. 195,000
Branch, Xxxxxx & Company.................................. 100,000
XX Xxxxx Securities Corporation........................... 100,000
Sutro & Co. Incorporated.................................. 100,000
---------------------------------------------------------- ------------
Total............................................ 1,600,000
------------
------------
SCHEDULE B
Number of
Firm Shares
Selling Stockholders to be Sold
--------------------------------------------- -------------
Xxxxx X. Xxxxxxxxxx, Xx.
c/o Elantec Semiconductor, Inc.
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 .................. 20,000
Xxxxx X. Xxxxxxx
c/o Elantec Semiconductor, Inc.
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 .................. 20,000
Xxxxxxx Xxxxxx
c/o Elantec Semiconductor, Inc.
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 .................. 5,000
Xxxxxxx Xxxxxx TR FBO
Xxxxxx Family Trust
c/o Elantec Semiconductor, Inc.
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 .................. 10,000
Xxxx Xxxxx
c/o Elantec Semiconductor, Inc.
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 .................. 25,000
--------------------------------------------- -------------
Total............................... 80,000
-------------
-------------
SCHEDULE C
1. Elantec Semiconductor UK Limited
2. Elantec Semiconductor International Ltd.
3. Elantec Semiconductor Japan Kabushiki Kaisha
EXHIBIT A
LOCK-UP AGREEMENT
August 11, 2000
Xxxxxxxxx Xxxxxxxx, Inc.
Banc of America Securities LLC
Xxxxxx Xxxxxx Partners LLC
Xxxxx, Xxxxxxxx & Xxxx, Inc.
as Representatives of the several Underwriters
c/x Xxxxxxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: ELANTEC SEMICONDUCTOR, INC.
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
common stock ("Common Stock") of Elantec Semiconductor, Inc., a Delaware
corporation (the "Company"), 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") 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) 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, (iii) with respect to sales or purchases of
Common Stock acquired on the open market after the date of this Agreement or
(iv) with the prior written consent of Xxxxxxxxx Xxxxxxxx, Inc. The foregoing
restrictions will terminate on the close of trading of the Common Stock on the
90th day after (and including) the day the Common Stock sold in the Offering
commenced trading on the Nasdaq National Market (the
A-1
"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.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of 1933,
as amended, of any Common Stock or other Securities owned either of record or
beneficially by the undersigned, including any rights to receive notice of the
Offering.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned. In the event the Offering has not occurred on or before November
25, 2000, this Lock-Up Agreement shall be of no further force or effect.
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 State of Delaware;
(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 jurisdiction, if any, in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified or
be in good standing would not have a Material Adverse Effect. To such
counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than Elantec
Semiconductor UK Limited, Elantec Semiconductor International Ltd. and
Elantec Semiconductor Japan Kabushiki Kaisha;
(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 Shares offered by the
Selling Stockholders) outstanding prior to the issuance of the Shares have
been duly and validly issued and are fully paid and nonassessable, and will
not have been issued in violation of or subject to any preemptive right
arising under the certificate of incorporation or Delaware law, or, to such
counsel's knowledge, any co-sale right, right of first refusal or other
similar right;
(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 certificate of
incorporation or Delaware law, or, to such counsel's knowledge, any co-sale
right, right of first refusal or other similar right;
(vi) 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;
(vii) 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 (a) that the laws of the State of
New York are identical to the laws of the State of California and (b) 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
B-1
hereunder may be limited by applicable law and except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (whether relief is sought in a proceeding at law or in
equity);
(viii) The Registration Statement has become effective under the
Securities Act and the offer and sale of the Shares have been registered
under the Securities Act 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;
(ix) The Registration Statement and the Prospectus and each amendment
or supplement thereto (other than the financial statements and schedules,
related notes and other financial information included therein as to which
such counsel need express no opinion) as of their respective effective or
issue dates complied as to form in all material respects with the
requirements of the Securities Act; and each of the Incorporated Documents
and each amendment or supplement thereto (other than the financial
statements and schedules, related notes and other financial information
included therein as to which such counsel need express no opinion), as of
the date on which they were filed with the Commission, complied as to form
in all material respects with the requirements of the Exchange Act;
(x) the Common Shares have been registered under the Exchange Act and,
to such counsel's knowledge, no stop order suspending the effectiveness of
that registration has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Exchange Act;
(xi) The information in the Prospectus under the caption "Description
of Capital Stock" and "Risk Factors-Provisions of our certificate of
incorporation and bylaws or Delaware law may delay or prevent a change of
control of Elantec or changes in our management and therefore, depress the
trading price of our common stock," to the extent that such information
constitutes matters of law or legal conclusions, has been reviewed by such
counsel and is an accurate summary of such matters and conclusions in all
material respects; and the form of certificate evidencing the Common Stock
and filed as an exhibit to the Registration Statement complies with
Delaware law;
(xii) The description in the Registration Statement and the Prospectus
under the caption "Description of Capital Stock" of the charter and bylaws
of the Company and of statutes is an accurate description of such matters
in all material respects and presents the information required to be
presented by the Securities Act;
(xiii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement which are not described or referred to therein or in any
Incorporated Document or filed as required;
B-2
(xiv) 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 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 material
default under, (i) any 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 and which has been filed as an exhibit to the Registration Statement
or any Incorporated Document, or (ii) any applicable statute, rule or
regulation known to such counsel, or (iii) to such counsel's knowledge, any
order, writ or decree of any court, government or governmental agency or
body having jurisdiction over the Company, or over any of its properties or
operations;
(xv) To such counsel's knowledge, no consent, approval, authorization
or order of or qualification with any court, government or governmental
agency or body having jurisdiction over the Company or over any of its
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, (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 (as to
which such counsel need not express an opinion), (iii) such as may be
required by the NASD (as to which such counsel need not express an
opinion), and (iv) such as may be required under the federal or provincial
laws of Canada (as to which such counsel need not express an opinion);
(xvi) 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 or any Incorporated Document by the Securities
Act or by the Exchange Act or the applicable rules and regulations of the
Commission thereunder, other than described therein;
(xvii) To such counsel's knowledge, the Company is not presently (a)
in material violation of its charter or bylaws or (b) in material breach of
any order, writ or decree of any court or governmental agency or body
having jurisdiction over the Company, or over any of its properties or
operations. Such counsel shall also state that since the effective date of
the Company's initial public offering, such counsel has not advised the
Company that it may be in material breach of any applicable statute, rule
or regulation known to such counsel, which breach may result in a Material
Adverse Effect.
(xviii) To such counsel's knowledge, no holders of Common Shares or
other securities of the Company have registration rights with respect to
such securities.
(xix) The Company is not and, after giving effect to the offering and
the sale of the Shares and the immediate application of the proceeds
thereof as
B-3
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 are not passing upon and do not assume any responsibility for, nor
have they independently verified, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, no facts
have come to the attention of such counsel which caused them to believe that, at
the time the Registration Statement became effective, the Registration Statement
and any amendment or supplement thereto and any Incorporated Document, when such
documents became effective or were filed with the Commission (other than the
financial statements, schedules, related notes and other financial information
included therein, 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 on the date of the Prospectus and as of the First Closing Date or
the Second Closing Date, as the case may be, the Prospectus and any amendment or
supplement thereto and any Incorporated Document, as of its date of filing
(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.
Such counsel shall also state that the conditions for the use of Form S-3
set forth in the General Instructions thereto have been satisfied.
B-4
EXHIBIT C
MATTERS TO BE COVERED IN THE OPINION OF
INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY
September [__], 2000
Xxxxxxxxx Xxxxxxxx, Inc.
Banc of America Securities LLC
Xxxxxx Xxxxxx Partners LLC
Xxxxx, Xxxxxxxx & Xxxx, Inc.
As Representatives of the several Underwriters
c/x Xxxxxxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: PUBLIC OFFERING OF 1,600,000 SHARES OF COMMON STOCK
OF ELANTEC SEMICONDUCTOR, INC.
----------------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you as representatives (the
"Representatives") of the several Underwriters (defined below) pursuant to
Section 4(e) of the Underwriting Agreement dated September [__], 2000 (the
"Underwriting Agreement"), by and among Elantec Semiconductor, Inc., a Delaware
corporation (the "Company," which term includes the Company's subsidiaries for
purposes of this opinion), the selling stockholder and you, as the
Representatives of the several Underwriters named in SCHEDULE A to the
Underwriting Agreement (the "Underwriters").
We act as primary intellectual property counsel for the Company in
connection with the matters addressed in this letter and in such capacity we 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 (SEC file no.
333-43864) as amended though the date hereof (the "Registration Statement") and
the related prospectus (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 the "Intellectual Property") and in our opinion:
(i) The statements in the Prospectus under the captions "Risk
Factors--If we fail to protect our intellectual property our competitors could
market products with similar features, reducing demand for our product and
harming our operating results," "--From time to time we may from time to time be
subject to claims of infringement of other parties' proprietary rights, or
claims that our intellectual property
C-1
rights are invalid, which could result in significant expense and loss of
intellectual property rights" and "Business--Patents and Licenses," insofar as
such statements constitute matters of law, legal conclusions or summaries of
legal matters relating to the Intellectual Property, or descriptions of the
Company's Intellectual Property portfolio, accurately and fairly present and
summarize, in all material respects, the matters referred to therein.
(ii) The Company is listed in the records of the United States Patent
and Trademark Office (the "USPTO") as the sole holder of record of (a) each of
the patents listed on the attached SCHEDULE A (the "U.S. Patents") and (b) each
of the United States patent applications listed the attached SCHEDULE B (the
"U.S. Applications"). To our knowledge after due inquiry, no third party can
validly claim any ownership interest with respect to any U.S. Patent or U.S.
Application. Based on a certificate from the Company, no third party can validly
claim any lien with respect to any U.S. Patent or U.S. Application. There are no
material defects in form in the preparation or filing of the U.S. Applications.
The U.S. Applications are being actively pursued by the Company in due course.
There are no interference proceedings pending with respect to any U.S. Patent or
U.S. Application.
(iii) The Company is listed in the records of the appropriate foreign
offices as the sole holder of record of each of the foreign patents listed on
the attached SCHEDULE C (the "Foreign Patents"). To our knowledge after due
inquiry, no third party can validly claim any ownership interest with respect to
any Foreign Patent. Based on a certificate from the Company, no third party can
validly claim any lien with respect to any Foreign Patent.
(iv) Based on discussions with the applicable inventor prior to the
date hereof, there is no reason why any of the U.S. Patents or Foreign Patents
are not valid as issued. To our knowledge, there is no reason why any patent to
be issued as a result of any U.S. Application would not be valid or would not
afford the Company useful patent protection with respect thereto. To our
knowledge, the Company has complied with all regulations, procedures and
policies of the USPTO, including the duty of candor, in the prosecution of the
U.S. Patents and U.S. Applications. All material prior art of which we are aware
has been disclosed in accordance with federal laws and rules to the USPTO for
consideration with respect to the examination of the U.S. Patents and U.S.
Applications.
(v) Xxxx Xxxxx Corporation ( the "Licensor") is listed in the records
of the USPTO as the sole owner of record of the U.S. patent listed on the
attached SCHEDULE E (the "Licensor Patent"). The Company has a valid and
enforceable license to the Licensor Patent. The terms of the license are
sufficient to permit the Company to conduct its business as contemplated by the
Prospectus.
(vi) To our knowledge, the Company has not infringed (notwithstanding
prior allegations of infringement which have been settled), and is not
infringing, any valid patent claims of third parties.
(vii) No action, suit, claim or proceeding relating to or affecting the
Intellectual Property is pending or, to our knowledge, threatened against the
Company, no party has proposed a license, royalty or other contractual
arrangement in lieu of
C-2
asserting a potential infringement claim against the Company, and no party has
sought indemnification from the Company, except as set forth with particularity
on SCHEDULE G.
(viii) As of the date hereof, the Company has not asserted and, to our
knowledge, is not contemplating the assertion of, any claim of infringement
against any third party; and the Company has not proposed and, to our knowledge,
is not contemplating the proposal of, any license, royalty or other contractual
arrangement in lieu of asserting a potential infringement claim against any
third party.
In addition, we have reviewed the full Registration Statement and
Prospectus (including the documents incorporated therein by reference) and
participated in discussions with the Company, Company counsel, the underwriters
and underwriters counsel regarding the disclosure of Intellectual Property
matters therein and, although we are not passing upon and do 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), and any supplements or amendments thereto, on the basis of the
foregoing, nothing has come to our attention which would lead us to believe, and
we do not believe, that either the Registration Statement (including the
documents incorporated therein by reference) 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 (including the
documents incorporated therein by reference), as of its date or at the date of
this letter, 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 we express no belief as to the financial
statements or schedules or other financial or statistical data derived
therefrom, included or incorporated by reference in the Registration Statement
or the Prospectus or any amendments or supplements thereto).
Our use of the terms "known to us," "to our knowledge," or similar
phrases to qualify a statement in this opinion means that those attorneys in
this firm who have given substantive attention to the representation described
in the introductory paragraph of this opinion do not have current actual
knowledge that the statement is inaccurate. Such terms do not include any
knowledge of other attorneys within our firm (regardless of whether they have
represented or are representing the Company in connection with any other matter)
or any constructive or imputed notice of any matters or items of information.
Except as otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of the statement, and any limited
inquiry undertaken by us during the preparation of this opinion letter should
not be regarded as such an investigation. No inference as to our knowledge of
any matters bearing on the accuracy of any such statement should be drawn from
the fact of our representation of the Company in connection with this opinion
letter or in other matters.
We have delivered to your counsel, O'Melveny & Xxxxx LLP, copies of all
opinions and audit letter responses for each of the last three fiscal years of
the Company that we delivered at the Company's request to the Company, its
auditors or any other
C-3
parties with respect to any litigation or threatened litigation we are defending
or prosecuting for the Company with respect to its Intellectual Property.
Sincerely,
Fliesler, Dubb, Xxxxx & Xxxxxxx LLP
[Please supply draft schedules together with drafts of the opinion]
C-4
EXHIBIT D
MATTERS TO BE COVERED IN THE OPINION OF SELLING STOCKHOLDER COUNSEL
(i) This Agreement has been executed and delivered by or on behalf of,
and assuming (a) that the laws of the State of New York are identical to
the laws of the State of California and (b) due authorization, execution
and delivery by you, is a valid and binding agreement of, such Selling
Stockholder, 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 Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement and the Custody Agreement and its Power of Attorney will not, to
such counsel's knowledge, violate, result in a material breach of or
constitute a material default under the terms of (a) any agreement or
instrument to which such Selling Stockholder is a party or by which it is
bound, or (b) any judgment, order or decree applicable to such Selling
Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder;
(iii) Each of the Custody Agreement and Power of Attorney of such
Selling Stockholder has been executed and delivered by such Selling
Stockholder and, assuming that the laws of the State of New York are
identical to the laws of the State of California, is a valid and binding
agreement of such Selling Stockholder, 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;
(iv) Upon payment for and delivery of the Shares to be sold by such
Selling Stockholder in accordance with the terms of the Underwriting
Agreement and assuming the registration of the Shares in the names of the
Underwriters in the stock records of the Company as instructed by the
Company and the Underwriters, the Underwriters will be the owners of the
Shares sold by the Selling Stockholder, free and clear of any adverse
claim, provided that the Underwriters purchased the Shares in good faith
without notice of any adverse claim; and
(vi) To 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 Stockholder of the transactions contemplated in this Agreement,
except (i) such as have been obtained under the Securities Act, (ii) such
as may be required under state other securities or Blue Sky laws in
connection with the purchase and the distribution of the Common Shares by
the Underwriters (as to which such counsel need not
D-1
express an opinion), (iii) such as may be required from the NASD (as to
which such counsel need not express an opinion), and (iv) such as may be
required under the federal or provincial laws of Canada (as to which such
counsel need not express an opinion).
D-2
