EXHIBIT 1.1
4,500,000 SHARES
DIGITAL THEATER SYSTEMS, INC.
COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
November ___, 2003
XX XXXXX SECURITIES CORPORATION
XXXXXXX XXXXX & COMPANY
XXXXXX XXXXXX PARTNERS LLC
U.S. BANCORP XXXXX XXXXXXX, INC.
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Digital Theater Systems, Inc., a Delaware corporation (the
"Company") proposes to issue and sell 1,500,000 shares (the "Company Firm
Stock") of the Company's Common Stock, $0.0001 par value (the "Common Stock"),
and the selling stockholders named in Schedule B hereto (the "Selling
Stockholders") propose to sell 3,000,000 shares of Common Stock (the "Selling
Stockholder Firm Stock"), pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"). The Company Firm Stock and the Selling Stockholder Firm Stock
so proposed to be sold are collectively referred to herein as the "Firm Stock".
The Company also proposes to sell to the Underwriters, upon the terms and
subject to the conditions set forth in Section 3 hereof, up to an additional
675,000 shares of Common Stock (the "Optional Stock"). The Firm Stock and the
Optional Stock are hereinafter collectively referred to as the "Stock". XX Xxxxx
Securities Corporation ("XX Xxxxx"), Xxxxxxx Xxxxx & Company, Xxxxxx Xxxxxx
Partners LLC and U.S. Bancorp Xxxxx Xxxxxxx, Inc. are acting as representatives
of the several Underwriters and in such capacity are hereinafter referred to as
the "Representatives."
2. (I) Representations and Warranties of the Company and the Principal Selling
Stockholders. The Company and, solely with respect to the representations and
warranties set forth in Sections 2(I)(b), (c), (d), (e), (f), (g), (h), (m),
(t), (u) and (h)(h), the Selling Stockholders identified in Schedule B hereto as
the "Principal Selling Stockholders" (collectively, the "Principal Selling
Stockholders"), represent and warrant to, and agree with, the several
Underwriters as follows, provided, however, that the representations and
warranties of each of the Principal Selling Stockholders set forth in this
Section 2(I) shall be made only as to such Principal Selling Stockholder's
knowledge:
(a) A registration statement on Form S-1 File No. 333-110120 (the "Initial
Registration Statement") in respect of the Stock has been filed with the
Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto,
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each in the form heretofore delivered to you for each of the other
Underwriters, and, excluding exhibits thereto, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Securities Act") and the rules
and regulations (the "Rules and Regulations") of the Commission
promulgated thereunder, which became effective upon filing, no other
document with respect to the Initial Registration Statement has heretofore
been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the Rules and Regulations is hereinafter called a
"Preliminary Prospectus"); the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including
all exhibits thereto and including the information contained in the form
of final prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act and deemed by virtue of Rule 430A under the
Securities Act to be part of the Initial Registration Statement at the
time it was declared effective, each as amended at the time such part of
the Initial Registration Statement became effective or such part of the
Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statements"; and such final prospectus, in the form first filed pursuant
to Rule 424(b) under the Securities Act, is hereinafter called the
"Prospectus." No document has been or will be prepared or distributed in
reliance on Rule 434 under the Securities Act. No order preventing or
suspending the use of any Preliminary Prospectus has been issued by the
Commission.
(b) The Initial Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any amendments or
supplements to either of the Registration Statements or the Prospectus,
when they become effective or are filed with the Commission, as the case
may be, will conform) in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as
of the applicable effective date (as to the Registration Statements and
any amendment or supplement thereto) and as of the applicable filing date
(as to the Prospectus and any amendment or supplement thereto) contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
provided, however, that the foregoing representations and warranties shall
not apply to information contained in or omitted from the Registration
Statements or the Prospectus or any such amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to
the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in Section 14)
have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing
as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all corporate power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure
to so qualify or have such power or authority would not have, singularly
or in the aggregate, a material adverse effect on the condition (financial
or otherwise), results of operations, business or prospects of the Company
and its subsidiaries taken as a whole (a "Material Adverse Effect").
(d) This Agreement has been duly authorized executed and delivered by the
Company.
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(e) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof contained in
the Prospectus.
(f) The Company has an authorized capital stock as set forth in the
Prospectus. All of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus. None of the outstanding shares of Common Stock 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
other than such rights that have been waived. 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 as set forth in the Prospectus.
(g) All the outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and, except to the extent set forth in the Prospectus or
pursuant to liens set forth in that certain Revolving Credit Agreement,
dated as of October 24, 1997, between the Company and Imperial Bank
(Comerica), as amended, are owned by the Company directly or indirectly
through one or more wholly-owned subsidiaries, free and clear of any
claim, lien, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party. The Company owns or
controls, directly or indirectly, only the following corporations,
associations or other entities: DTS Consumer Products, Inc., a Delaware
corporation; DTS Entertainment, LLC, a Delaware limited liability company;
Digital Theater Systems (UK) Limited, a United Kingdom private limited
company; DTS (BVI) Limited, a British Virgin Islands limited liability
company; DTS (Asia) Limited, a Hong Kong limited liability company; DTS
China Holding Limited, a British Virgin Islands limited liability company;
DTS China Licensing (Hong Kong) Limited, a Hong Kong limited liability
company; and Guangzhou DTS Digital Theater Systems Co., a wholly foreign
owned entity registered in the People's Republic of China.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
(ii) result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries or (iii) result in any violation
of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets, except any
conflicts, breaches or violations with respect to (i), (ii) and/or (iii)
which, singularly or in the aggregate, would not have a Material Adverse
Effect.
(i) Except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under the Exchange Act and applicable state or foreign
securities laws, the National Association of Securities Dealers, Inc. and
the Nasdaq National Market in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
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(j) The Company has taken all necessary actions to ensure that it is in
compliance with all applicable provisions of the Xxxxxxxx-Xxxxx Act of
2002 (the "Xxxxxxxx-Xxxxx Act") that are in effect and is actively taking
steps to ensure that it will be in compliance with other applicable
provisions of the Xxxxxxxx-Xxxxx Act not currently in effect upon the
effectiveness of such provisions.
(k) The Company has taken all necessary actions to ensure that it is in
compliance with all applicable corporate governance requirements set forth
in the Nasdaq National Market System ("Nasdaq") Marketplace Rules that are
in effect and is actively taking steps to ensure that it will be in
compliance with other applicable corporate governance requirements set
forth in the Nasdaq Marketplace Rules not currently in effect upon and at
all times after the effectiveness of such requirements.
(l) PricewaterhouseCoopers LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the
Registration Statements and the Prospectus, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(m) The financial statements, together with the related notes and
schedules, included in the Prospectus and in each Registration Statement
fairly present the financial position and the results of operations and
changes in financial position of the Company and its consolidated
subsidiaries at the respective dates or for the respective periods therein
specified. Such statements and related notes and schedules have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the
Prospectus. The financial statements, together with the related notes and
schedules, included in the Prospectus comply in all material respects with
the Securities Act and the Rules and Regulations thereunder. No other
financial statements or supporting schedules or exhibits are required by
the Securities Act or the Rules and Regulations thereunder to be included
in the Prospectus.
(n) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, there has not been any change in the capital stock
(other than issuances of options in the ordinary course of business and
pursuant to the Plans disclosed in the Prospectus or the issuance of
Common Stock upon the exercise of outstanding options and warrants) or
long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth
or contemplated in the Prospectus.
(o) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject which, singularly or in the
aggregate, if determined adversely to the Company or any of its
subsidiaries, might have a Material Adverse Effect or would prevent or
adversely affect the ability of the Company to perform its obligations
under this Agreement; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by any governmental authorities
or threatened by others.
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(p) Neither the Company nor any of its subsidiaries (i) is in violation of
its charter or by-laws, (ii) is in default in any respect, and no event
has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject except any violations or defaults with respect to (i), (ii)
and/or (iii) which, singularly or in the aggregate, would not have a
Material Adverse Effect.
(q) The Company and each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate local, state, federal or
foreign regulatory agencies or bodies which are necessary or desirable for
the ownership of their respective properties or the conduct of their
respective businesses as described in the Prospectus except where any
failures to possess or make the same, singularly or in the aggregate,
would not have a Material Adverse Effect, and the Company has not received
notification of any revocation or modification of any such license,
authorization or permit and has no reason to believe that any such
license, certificate, authorization or permit will not be renewed.
(r) Neither the Company nor any of its subsidiaries is or, after giving
effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus will become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended and
the rules and regulations of the Commission thereunder.
(s) Neither the Company nor any of its officers, directors or, to the
Company's knowledge, affiliates, has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the
price of any security of the Company, or which caused or resulted in, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.
(t) The Company and its subsidiaries own or possess the right to use all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Prospectus as being owned or possessed
by them and own or possess the right to use all intellectual property
necessary for the conduct of their respective businesses, and the Company
is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and its subsidiaries with respect to
the foregoing. The Company's business as now conducted and as proposed to
be conducted does not and will not infringe or conflict with any patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses or other intellectual property or franchise right of any person.
Except as described in the Prospectus, no claim has been made or is likely
to be made against the Company alleging the infringement by the Company of
any patent, trademark, service xxxx, trade name, copyright, trade secret,
license in or other intellectual property right or franchise right of any
person.
(u) The Company and each of its subsidiaries have good and marketable
title in fee simple to, or have valid rights to lease or otherwise use,
all items of real or personal property which are material to the business
of the Company and its subsidiaries taken as a whole, in each case free
and clear of all liens, encumbrances, claims and defects that may result
in a Material Adverse Effect, except such liens set forth in that certain
Revolving Credit Agreement, dated as of October 24, 1997, between the
Company and Imperial Bank (Comerica), as amended.
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(v) No labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the best of the Company's knowledge, is
imminent which might be expected to have a Material Adverse Effect. The
Company is not aware that any key employee or significant group of
employees of the Company or any subsidiary plans to terminate employment
with the Company or any such subsidiary.
(w) No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan which could have a Material Adverse Effect; each
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any "pension plan"; and
each "pension plan" (as defined in ERISA) for which the Company would have
any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could cause the loss of such
qualification.
(x) Except as disclosed in the Prospectus or as otherwise would not,
singly or in the aggregate, have a Material Adverse Effect or otherwise
require disclosure in the Prospectus, (i) neither the Company nor any of
its subsidiaries has been or is in violation of any federal, state or
local laws or regulation relating to pollution or protection of human
health or the environment, including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of toxic or hazardous substances, materials or wastes, or
petroleum and petroleum products ("Materials of Environmental Concern"),
or otherwise relating to the protection of human health and safety, or the
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which
violation includes, without limitation, noncompliance with, or lack of,
any permits or other environmental authorizations; (ii) to the Company's
knowledge, there are no circumstances, either past, present or that are
reasonably foreseeable, that may lead to any such violation in the future;
(iii) neither the Company nor any of its subsidiaries has received any
communication (written or oral), whether from a governmental agency or
body or otherwise, alleging any such violation; (iv) there is no pending
or threatened claim, action, investigation, notice (written or oral) or
other proceeding by any person or entity alleging potential liability of
either the Company or any of its subsidiaries (or against any person or
entity for whose acts or omissions the Company or any of its subsidiaries
is or may reasonably be expected to be liable, either contractually or by
operation of law) for investigatory, cleanup, or other response costs, or
natural resources or property damages, or personal injuries, attorney's
fees or penalties relating to (A) the presence, or release into the
environment, of any Materials of Environmental Concern at any location, or
(B) circumstances forming the basis of any violation or potential
violation, of any Environmental Law (collectively, "Environmental
Claims"); and (v) to the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that
could form the basis of any Environmental Claim.
(y) The Company and its subsidiaries each (i) have filed with all
necessary federal, state and foreign income and franchise tax returns,
(ii) have paid all federal state, local and foreign taxes due and payable
for which it is liable, and (iii) do not have any tax deficiency or claims
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outstanding or assessed or, to the best of the Company's knowledge,
proposed against it which could reasonably be expected to have a Material
Adverse Effect.
(z) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses
in similar industries.
(aa) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(bb) The minute books of the Company and each of its subsidiaries have
been made available to the Underwriters and counsel for the Underwriters,
and such books (i) contain a complete summary of all meetings and actions
of the board of directors (including each committee thereof) and
stockholders of the Company and each of its subsidiaries since the time of
its respective incorporation through the date of the latest meeting and
action, and (ii) accurately in all material respects reflect all
transactions referred to in such minutes.
(cc) There is no franchise, lease, contract, agreement or document
required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the
Registration Statements which is not described or filed therein as
required; and all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statements are
accurate and complete descriptions of such documents in all material
respects. Other than as described in the Prospectus, no such franchise,
lease, contract or agreement has been suspended or terminated for
convenience or default by the Company or any of the other parties thereto,
and the Company has not received notice or any other knowledge of any such
pending or threatened suspension or termination, except for such pending
or threatened suspensions or terminations that would not reasonably be
expected to, singularly or in the aggregate, have a Material Adverse
Effect.
(dd) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus and which is not so described.
(ee) No person or entity has the right to require registration of shares
of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statements or otherwise, except for
persons and entities who have expressly waived such right or who have been
given timely and proper notice and have failed to exercise such right
within the time or times required under the terms and conditions of such
right.
(ff) Neither the Company nor any of its subsidiaries own any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any
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margin security or for any other purpose which might cause any of the
Securities to be considered a "purpose credit" within the meanings of
Regulation T, U or X of the Federal Reserve Board.
(gg) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering
and sale of the Stock.
(hh) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(ii) The Stock is listed or has been approved for listing subject to
notice of issuance on the Nasdaq Stock Market's National Market.
(II) Representations and Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder severally, and as to itself only,
represents and warrants to, and agrees with, the several Underwriters that such
Selling Stockholder:
(a) Has, and immediately prior to the First Closing Date (as defined in
Section 3 hereof) the Selling Stockholder will have, good and valid title
to the shares of Firm Stock to be sold by the Selling Stockholder
hereunder on such date, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of such shares and payment therefor
pursuant hereto, good and valid title to such shares, free and clear of
all liens, encumbrances, equities or claims, will pass to the several
Underwriters.
(b) Has duly and irrevocably executed and delivered a power of attorney,
in substantially the form heretofore delivered by the Representatives (the
"Power of Attorney"), appointing each of Xxx X. Xxxxxxxx and Xxxxxx
Xxxxxxxx as attorney-in-fact (the "Attorney-in-Fact") with authority to
execute and deliver this Agreement on behalf of such Selling Stockholder,
to authorize the delivery of the shares of Firm Stock to be sold by such
Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder in connection with the transactions contemplated by
this Agreement.
(c) Has duly and irrevocably executed and delivered a custody agreement,
in substantially the form heretofore delivered by the Representatives (the
"Custody Agreement"), with EquiServe, Inc. and its fully-owned subsidiary
EquiServe Trust Company, N.A. (the "Custodian"), pursuant to which
certificates in negotiable form for the shares of Firm Stock to be sold by
such Selling Stockholder hereunder have been placed in custody for
delivery under this Agreement.
(d) Has full right, power and authority to enter into this Agreement, the
Power of Attorney and the Custody Agreement; the execution, delivery and
performance of this Agreement, the Power of Attorney and the Custody
Agreement by such Selling Stockholder and the consummation by such Selling
Stockholder of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of the charter or bylaws
of such Selling Stockholder (if such Selling Stockholder is a corporation)
or articles of partnership of such Selling Stockholder (if such Selling
Stockholder is a partnership) or any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which the Selling Stockholder is bound or to
which any of the property or assets of the Selling Stockholder is subject,
nor will such actions result in any violation of any statute or any order,
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rule or regulation of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or the property or assets of the
Selling Stockholder; and, except for the registration of the Firm Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state securities laws, the National Association of
Securities Dealers, Inc. and the Nasdaq National Market in connection with
the purchase and distribution of the Firm Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Power of
Attorney or the Custody Agreement by such Selling Stockholder and the
consummation by the Selling Stockholder of the transactions contemplated
hereby and thereby.
(e) The Registration Statements do not, and the Prospectus and any further
amendments or supplements to the Registration Statements or the Prospectus
will not, as of the applicable effective date (as to the Registration
Statements and any amendment thereto) and as of the applicable filing date
(as to the Prospectus and any amendment or supplement thereto) contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
provided, however, that the foregoing shall apply only to the extent that
any information contained in or omitted from the Registration Statements
or Prospectus was in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder
specifically for inclusion therein. Nothing in this Section 2(II)(e) shall
limit or restrict any of the representations and warranties of the
Principal Selling Stockholders in Section 2(I) hereof.
(f) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the any shares
of Firm Stock.
3. Purchase Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, (a) the Company agrees to issue and sell
the Company Firm Stock to the several Underwriters, (b) each Selling Stockholder
agrees, severally and not jointly, to sell to the several Underwriters the
number of shares of Selling Stockholder Firm Stock set forth opposite such
Selling Stockholder's name on Schedule B hereto, provided, however, that, to the
extent any Selling Stockholder sells a number of shares of Selling Stockholder
Firm Stock less than that number set forth opposite such Selling Stockholder's
name on Schedule B hereto, the remaining of such shares shall be allocated
either among the other Selling Stockholders on a pro rata basis or as the
Company shall otherwise determine in its sole discretion, and (c) each
Underwriter agrees, severally and not jointly, to purchase from the Company and
the Selling Stockholders that number of shares of Firm Stock set forth opposite
the name of such Underwriter in Schedule A hereto (subject to adjustment by XX
Xxxxx to eliminate fractions). The number of shares of Firm Stock to be
purchased by each Underwriter from the Company and each Selling Stockholder
hereunder shall, as nearly as practicable, be in the same proportion to the
percentage of shares of Firm Stock being purchased by such Underwriter
hereunder.
The purchase price per share to be paid by the Underwriters to the Company
and the Selling Stockholders for the Stock will be $[ ] per share (the "Purchase
Price").
The Company and the Selling Stockholders will deliver the Firm Stock to
the Representatives for the respective accounts of the several Underwriters (in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company
10
given at or prior to 12:00 Noon, New York time, on the second full business day
preceding the First Closing Date (as defined below) against payment of the
aggregate Purchase Price therefor by same-day wire transfer to an account at a
bank reasonably acceptable to XX Xxxxx, payable to the order of the Company,
Equiserve, Inc., as Custodian for the Selling Stockholders, all at the offices
of Heller, Ehrman, White & XxXxxxxxx, LLP, 0000 Xx Xxxxx Xxxxxxx Xxxxx, 0xx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 7:00 A.M., California time, on July 15,
2003, in accordance with Rule 15c6-1 of the Exchange Act. Delivery of the Firm
Stock will be made by credit through full fast transfer to accounts at the
Depository Trust Company. The time and date of such payment and delivery are
herein referred to as the "First Closing Date." The First Closing Date and the
location of delivery of, and the form of payment for, the Firm Stock may be
varied by agreement between the Company, the Attorney-in-Fact and XX Xxxxx.
The Company and the Selling Stockholders shall make the certificates
representing the Firm Stock available to the Representatives for examination on
behalf of the Underwriters in San Diego, California at least twenty-four hours
prior to the First Closing Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase from the Company up to all of the Optional Stock. The
price per share to be paid for the Optional Stock shall be the Purchase Price.
The Company agrees to sell to the Underwriters the numbers of shares of Optional
Stock specified in the written notice by XX Xxxxx described below and the
Underwriter agree, severally and not jointly, to purchase such shares of
Optional Stock. Such shares of Optional Stock shall be purchased for the account
of each Underwriter in the same proportion as the number of shares of Firm Stock
set forth opposite such Underwriter's name bears to the total number of shares
of Firm Stock (subject to adjustment by XX Xxxxx to eliminate fractions). The
option granted hereby may be exercised as to all or any part of the Optional
Stock at any time, and from time to time, up to three times, not more than
thirty (30) days subsequent to the date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by XX Xxxxx to the Company.
The option granted hereby may be exercised by written notice being given
to the Company by XX Xxxxx setting forth the number of shares of the Optional
Stock to be purchased by the Underwriters and the date and time for delivery of
and payment for the Optional Stock. Each date and time for delivery of and
payment for the Optional Stock (which may be the First Closing Date, but not
earlier) is herein called an "Option Closing Date" and shall in no event be
earlier than two (2) business days nor later than five (5) business days after
written notice is given. (The Option Closing Dates and the First Closing Date
are herein called the "Closing Dates".)
The Company will deliver the Optional Stock to the Underwriters (in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York time, on the second full business day preceding
an Option Closing Date against payment of the aggregate Purchase Price therefor
by same-day funds by wire transfer to an account at a bank reasonably acceptable
to XX Xxxxx payable to the order of the Company, all at the offices of Heller,
Ehrman, White & XxXxxxxxx, LLP, 0000 Xx Xxxxx Xxxxxxx Xxxxx, 0xx Xxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000. Delivery of the Optional Stock will be made by credit
through full fast transfer to accounts at the Depository Trust Company. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligations of each Underwriter
hereunder. The Company shall make the certificates for the Optional Stock
available to the Representatives for examination on behalf of the Underwriters
in San Diego, California not later than 7:00 A.M., California time, on the
business day preceding an Option Closing
11
Date. Any Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by agreement among the Company and
XX Xxxxx.
The several Underwriters propose to offer the Stock for sale upon the
terms and conditions set forth in the Prospectus.
(4) (I) Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and file such Rule
462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representatives and file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the second business day following the execution and delivery of this
Agreement; make no further amendment or any supplement to the Registration
Statements or to the Prospectus to which the Representatives shall
reasonably object by notice to the Company after a reasonable period to
review, other than any such amendment or supplement which, in the opinion
of legal counsel to the Company, is required by applicable laws or
regulations to be filed; advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to either
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Representatives with copies thereof; advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statements or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, use
promptly its best efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered any event occurs as a
result of which the Prospectus as then amended or supplemented would
include any 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, or if it is
necessary at any time to amend the Prospectus to comply with the
Securities Act, the Company will promptly notify the Representatives
thereof and upon their request will prepare an amended or supplemented
Prospectus which will correct such statement or omission or effect such
compliance. The Company will furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives may
from time to time reasonably request of such amended or supplemented
Prospectus; and in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the effective
date of the Initial Registration Statement, the Company upon the request
of the Representatives and at the expense of such Underwriter will prepare
promptly an amended or supplemented Prospectus as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the
Securities Act.
(c) To furnish promptly to each of the Representatives and to counsel for
the Underwriters a signed copy of each of the Registration Statements as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith.
12
(d) To deliver promptly to XX Xxxxx Securities Corporation in New York
City such number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration Statements as
originally filed with the Commission and each amendment thereto (in each
case excluding exhibits), (ii) each Preliminary Prospectus, and (iii) the
Prospectus (not later than 9:00 A.M., New York time, of the second
business day following the execution and delivery of this Agreement, or
such later date agreed to by the Company and the Representatives) and any
amended or supplemented Prospectus (not later than 9:00 A.M., New York
time, on the second business day following the date of such amendment or
supplement or such later date agreed to by the Company and XX Xxxxx
Securities Corporation).
(e) To make generally available to its stockholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158).
(f) The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Representatives may designate in writing to the Company and to
continue such qualifications in effect for so long as required for the
distribution of the Stock; provided that the Company and its subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction.
(g) During the period of five years from the date hereof, the Company will
deliver to the Representatives and, upon request, to each of the other
Underwriters, (i) as soon as they are available, copies of all reports or
other communications furnished to stockholders and (ii) as soon as they
are available, copies of any reports and financial statements furnished or
filed with the Commission pursuant to the Exchange Act or any national
securities exchange or automatic quotation system on which the Stock is
listed or quoted.
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 90 days from the date of the Prospectus
without the prior written consent of XX Xxxxx other than (i) the Company's
sale of the Stock hereunder, (ii) the issuance of options to purchase
shares of Common Stock in the ordinary course of business and pursuant to
the Company's 2003 Equity Incentive Plan, 2003 Employee Stock Purchase
Plan and 2003 Foreign Subsidiary Employee Stock Purchase Plan
(collectively, the "Plans") (not to exceed the shares available for
issuance of grant under such plans as set forth in the Prospectus) and
(ii) the issuance of shares of Common Stock upon exercise of options to
purchase shares of Common Stock outstanding as of the date of this
Agreement or issued in the ordinary course of business and pursuant to the
Plans. The Company will cause all of its officers, directors and security
holders (other than those security holders listed on Schedule C hereto) to
furnish to the Representatives, prior to the First Closing Date, a letter,
substantially in the form of Exhibit I hereto, pursuant to which each such
person shall agree not to directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 90 days from the date of the Prospectus,
without the prior written consent of XX Xxxxx.
13
(i) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(j) Prior to each of the Closing Dates, the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(k) Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and of which the
Representatives are notified), without the prior written consent of the
Representatives, unless in the judgment of the Company and its counsel,
and after notification to the Representatives, such press release or
communication is required by law.
(l) In connection with the offering of the Stock, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as defined
in Regulation M under the Exchange Act) not to, either alone or with one
or more other persons, bid for or purchase, for any account in which it or
any of its affiliated purchasers has a beneficial interest, any Stock, or
attempt to induce any person to purchase any Stock; and not to, and to
cause its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of raising
the price of the Stock.
(m) The Company will not take any action prior to the Option Closing Date
which would require the Prospectus to be amended or supplemented pursuant
to Section 4(I)(b).
(n) The Company will apply the net proceeds from the sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds".
(II) FURTHER AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder,
severally and not jointly, agrees with the several Underwriters that:
(a) The shares of Selling Stockholder Firm Stock represented by the
certificates held in custody under the Custody Agreement are for the
benefit of and coupled with and subject to the interests of the
Underwriters and the other Selling Stockholders, and that the arrangement
for such custody and the appointment of the Attorney-in-Fact are
irrevocable; that the obligations of such Selling Stockholder hereunder
shall not be terminated by operation of law, whether by the death or
incapacity, liquidation or distribution of such Selling Stockholder, or
any other event, that if such Selling Stockholder should die or become
incapacitated or is liquidated or dissolved or any other event occurs,
before the delivery of the Firm Stock hereunder, certificates for the Firm
Stock to be sold by such Selling Stockholder shall be delivered on behalf
of such Selling Stockholder in accordance with the terms and conditions of
this Agreement and the Custody Agreement, and action taken by the
Attorney-in-Fact or any of them under the Power of Attorney shall be as
valid as if such death, incapacity, liquidation or dissolution or other
event had not occurred, whether or not the Custodian, the Attorney-in-Fact
or any of them shall have notice of such death, incapacity, liquidation or
dissolution or other event.
14
(b) Such Selling Stockholder will deliver to XX Xxxxx on or 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) or such other applicable form or statement specified by Treasury
Department regulations in lieu thereof.
(c) Such Selling Stockholder will not take, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result
in the stabilization or manipulation of the price of any security of the
Company or facilitate the sale or resale of the any shares of Stock.
5. PAYMENT OF EXPENSES. The Company agrees with the Underwriter to pay: (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statement,
Preliminary Prospectus, Prospectus any amendments and exhibits thereto the costs
of printing, reproducing and distributing the Power of Attorney, the Custody
Agreement, the "Agreement Among Underwriters" between the Representatives and
the Underwriters, the Master Selected Dealers' Agreement, the Underwriters'
Questionnaire and this Agreement by mail, telex or other means of
communications; (d) the fees and expenses (including related fees and expenses
of counsel for the Underwriters) incurred in connection with filings made with
the National Association of Securities Dealers; (e) any applicable listing or
other fees; (f) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 4(I)(f) and
of preparing, printing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including related fees and expenses of counsel to the Underwriters);
(g) all fees and expenses of the registrar and transfer agent of the Stock; and
(h) all other costs and expenses incident to the performance of the obligations
of the Company under this Agreement (including, without limitation, the fees and
expenses of the Company's counsel and the Company's independent accountants);
provided that, except as otherwise expressly provided in this Section 5 and in
Section 9, the Underwriters shall pay their own costs and expenses, including
the fees and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters.
Each Selling Stockholder will pay all fees and expenses incident to the
performance of such Selling Stockholder's obligations under this Agreement which
are not otherwise specifically provided for herein, including but not limited to
any fees and expenses of counsel for such Selling Stockholder, such Selling
Stockholder's pro rata share of fees and expenses of the Attorney-in-Fact and
the Custodian and all expenses and taxes incident to the sale and delivery of
the Firm Stock to be sold by such Selling Stockholder to the Underwriters
hereunder.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the respective representations and warranties of
the Company and the Selling Stockholders contained herein, to the accuracy of
the respective statements of the Company and the Selling Stockholders made in
any certificates pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholders of their respective obligations hereunder,
and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of either of the
Registration Statements shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission, and any
request for additional information on the part of the Commission (to be
included in the Registration Statements or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the
Representatives. The Rule 462(b) Registration
15
Statement, if any, and the Prospectus shall have been timely filed with
the Commission in accordance with Section 4(I)(a).
(b) None of the Underwriters shall have discovered on or prior to the
Closing Date that the Registration Statements or the Prospectus or any
amendment or supplement thereto contains an untrue statement of a fact
which, in the reasonable opinion of counsel for the Underwriters, is
material or omits to state any fact which, in the reasonable opinion of
such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Custody
Agreements, the Powers of Attorney, the Stock, the Registration Statements
and the Prospectus and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the Underwriters, and the Company
and the Selling Stockholders shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Xxxxxx Xxxxxx White & XxXxxxxxx LLP shall have furnished to the
Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in the form
attached hereto as Exhibit II.
(e) O'Melveny & Xxxxx LLP shall have furnished to the Representatives such
counsel's written opinion, as counsel to the Selling Stockholders,
addressed to the Underwriters and dated the First Closing Date, in the
form attached hereto as Exhibit III.
(f) The Representatives shall have received from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Underwriters may reasonably require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(g) At the time of the execution of this Agreement, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, addressed to
the Underwriters and dated such date, in form and substance satisfactory
to the Representatives (i) confirming that they are independent certified
public accountants with respect to the Company and its subsidiaries within
the meaning of the Securities Act and the Rules and Regulations and (ii)
stating the conclusions and findings of such firm with respect to the
financial statements and certain financial information contained in the
Prospectus.
(h) On the Closing Date, the Representatives shall have received a letter
(the "bring-down letter") from PricewaterhouseCoopers LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus as of a date not more than three
business days prior to the date of the bring-down letter), the conclusions
and findings of such firm with respect to the financial information and
other matters covered by its letter delivered to the Representatives
concurrently with the execution of this Agreement pursuant to Section
6(g).
(i) The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its Chief Executive Officer and President and
its Chief Financial Officer stating that (i) such officers have carefully
examined the Registration Statements and the Prospectus and, in their
opinion, the Registration Statements as of their respective effective
dates and the Prospectus, as
16
of each such effective date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, (ii) since the
effective date of the Initial Registration Statement no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statements or the Prospectus, (iii) to the best of their
knowledge after reasonable investigation, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true
and correct and the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, and (iv) subsequent to the date of the most
recent financial statements in the Prospectus, there has been no change in
the financial position or results of operation of the Company and its
subsidiaries, or any change, or any development including a prospective
change, in each of the instances in this clause (iv), that might have a
Material Adverse Effect on the condition (financial or otherwise), results
of operations, business or prospects of the Company and its subsidiaries
taken as a whole, except as set forth in the Prospectus.
(j) Each Selling Stockholder (or an Attorney-in-Fact on behalf of such
Selling Stockholder) shall have furnished to the Representatives on
Closing Date a certificate, dated the such date, signed by, or on behalf
of, the Selling Stockholder stating that the representations, warranties
and agreements of the Selling Stockholder contained herein are true and
correct as of the First Closing Date and that the Selling Stockholder has
complied with all agreements contained herein to be performed by the
Selling Stockholder at or prior to the First Closing Date.
(k) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus, and (ii) since such date there shall not have been any change
in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in
clause (i) or (ii), is, in the judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed
with the sale or delivery of the Stock on the terms and in the manner
contemplated in the Prospectus.
(l) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Stock; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance
or sale of the Stock.
(m) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the Company's corporate credit rating
or the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization," as that term is defined by
the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations
and (ii) no such organization shall have publicly announced that it has
under surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of any of the Company's
debt securities.
17
(n) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or in the over-the-counter
market, or trading in any securities of the Company on any exchange or in
the over-the-counter market, shall have been suspended or minimum or
maximum prices or maximum range for prices shall have been established on
any such exchange by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction; (ii) a
banking moratorium shall have been declared by United States Federal or
state authorities, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United
States; (iii) (A) a declaration of a material national emergency or a
declaration of war by the United States, or a material outbreak or
escalation of hostilities between the United States and any foreign power,
(B) an outbreak or material escalation of any other insurrection or armed
conflict, or act of terrorism involving the United States, or any other
material national or international crisis, calamity or emergency, (C) a
"Red" terrorist threat condition, announced by the Homeland Security
Advisory System or similar agency in the United States, (D) any material
discharge, detonation, explosion or use against any person or entity or
nation anywhere in the world of any weapon of mass destruction has
occurred or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the sole judgment of the Representatives,
impracticable or inadvisable to proceed with the sale or delivery of the
Stock on the terms and in the manner contemplated in the Prospectus.
(o) The Nasdaq National Market System shall have approved the Stock for
inclusion, subject only to official notice of issuance.
(p) XX Xxxxx shall have received the written agreements, substantially in
the form of Exhibit I hereto, of all of the officers and directors of the
Company and all security holders of the Company listed on Schedule B
hereto.
(q) Eversheds LLP shall have furnished to the Representatives such
counsel's written opinion, as special counsel to Digital Theater Systems
(UK), addressed to the Underwriters and dated the Closing Date, in the
form attached hereto as Exhibit IV.
(r) XX Xxxxx shall have received a certificate from the general counsel or
the substantial equivalent reasonably acceptable to XX Xxxxx of each of
Forth Investments LLC, Universal City Studios LLP, Eos Partners SBIC,
L.P., Scripps Ventures, L.L.C. and H&Q Digital Theater Systems Investors
L.P., which certificate shall state that each of this Agreement, the
Custody Agreement and the Power-of-Attorney has been duly authorized by or
on behalf of such Selling Stockholder.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters, except that the opinions in (d), (e) and (q)
above shall be in the form attached as Exhibits II, III and IV, respectively,
hereto.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Principal Selling Stockholders shall indemnify and
hold harmless each Underwriter, its officers, employees, representatives
and agents and each person, if any, who controls any Underwriter within
the meaning of the Securities Act (collectively the "Underwriter
Indemnified Parties" and, each an "Underwriter Indemnified Party") against
any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which that Underwriter
18
Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Prospectus,
either of the Registration Statements or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission
to state in any Preliminary Prospectus, either of the Registration
Statements or the Prospectus or in any amendment or supplement thereto a
material fact required to be stated therein or necessary to make the
statements therein not misleading and shall reimburse each Underwriter
Indemnified Party reasonably promptly upon demand for any legal or other
expenses reasonably incurred by that Underwriter Indemnified Party in
connection with investigating or preparing to defend or defending against
or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that neither the Company nor any Principal Selling
Stockholder shall be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon
(i) an untrue statement or alleged untrue statement in or an omission or
alleged omission from the Preliminary Prospectus, either of the
Registration Statements or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for use therein, which information the
parties hereto agree is limited to the Underwriters' Information (as
defined in Section 16); provided, further, however, that the foregoing
indemnification agreement with respect to the Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting
any such loss, claim, damage or liability purchases Stock, or any
officers, employees, representatives, agents or controlling persons of
such Underwriter, if (i) a copy of the Prospectus (as then amended or
supplemented) was required by law to be delivered to such person at or
prior to the written confirmation of the sale of Stock to such person,
(ii) a copy of the Prospectus (as then amended or supplemented) was not
sent or given to such person by or on behalf of such Underwriter and such
failure was not due to non-compliance by the Company with Section 4(I)(d),
and (iii) the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability.
The liability of any Principal Selling Stockholder under this subsection
(a) shall be on a several, and not a joint, basis and shall not exceed the
net proceeds received by such Principal Selling Stockholder in connection
with the sale of such Principal Selling Stockholder's Firm Shares.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to
each Underwriter Indemnified Party.
(b) Each Non-Principal Selling Stockholder, severally and not jointly,
shall indemnify and hold harmless each Underwriter Indemnified Party
against any loss, claim, damage or liability or any action in respect
thereof, to which that Underwriter Indemnified Party may become subject
under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, either of the Registration Statements or the
Prospectus or in any amendment or supplement thereto or (ii) the omission
or alleged omission to state in any Preliminary Prospectus, either of the
Registration Statements or the Prospectus or in any amendment or
supplement thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the
extent that the 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 by or on behalf of such
Non-Principal Selling Stockholder specifically for inclusion in the
"Principal and Selling Stockholders" section therein, and shall reimburse
each Underwriter Indemnified Party reasonably promptly upon demand for any
legal or other expenses reasonably incurred by that
19
Underwriter Indemnified Party in connection with investigating or
preparing to defend or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
foregoing indemnification agreement with respect to the Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such loss, claim, damage or liability purchased
Stock, or any officers, employees, representatives, agents or controlling
persons of such Underwriter, (A) if (i) a copy of the Prospectus (as then
amended or supplemented) was required by law to be delivered to such
person at or prior to the written confirmation of the sale of Stock to
such person, (ii) a copy of the Prospectus (as then amended or
supplemented) was not sent or given to such person by or on behalf of such
Underwriter and such failure was not due to non-compliance by the Company
with Section 4(I)(d), and (iii) the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability or (B) to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Preliminary
Prospectus, either of the Registration Statements or the Prospectus or any
amendment or supplement in reliance upon and in conformity with the
Underwriters' Information (as defined in Section 16); and provided
further, however, that the liability of any Non-Principal Selling
Stockholder under this subsection (b) shall not exceed the net proceeds
received by such Non-Principal Selling Stockholder in connection with the
sale of such Non-Principal Selling Stockholder's Firm Shares. This
indemnity agreement is not exclusive and will be in addition to any
liability which the Non-Principal Selling Stockholders might otherwise
have and shall not limit any rights or remedies which may otherwise be
available at law or in equity to each Underwriter Indemnified Party.
(c) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company its officers, employees, representatives and agents,
each of its directors (including any person who with his consent is named
in the Registration Statements as expected to become a director of the
Company shortly after the First Closing Date) and each person, if any, who
controls the Company within the meaning of the Securities Act
(collectively the "Company Indemnified Parties" and each a "Company
Indemnified Party") and the Selling Stockholders, their respective
officers, employees, representatives and agents and each person, if any,
who controls the Selling Stockholders within the meaning of the Securities
Act (collectively, the "Selling Stockholder Indemnified Parties" and each
a "Selling Stockholder Indemnified Party," against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, to which
the Company Indemnified Parties or the Selling Stockholder Parties may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Prospectus, either of the Registration
Statements or the Prospectus or in any amendment or supplement thereto or
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the 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 through the Representatives by or on behalf of that
Underwriter specifically for use therein, and shall reimburse the Company
Indemnified Parties and the Selling Stockholder Indemnified Parties for
any legal or other expenses reasonably incurred by such parties in
connection with investigating or preparing to defend or defending against
or appearing as third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided
that the parties hereto hereby agree that such written information
provided by the Underwriters consists solely of the Underwriters'
Information (as defined in Section 16). This indemnity agreement is not
exclusive and will be in addition to any liability which the Underwriters
might otherwise have and shall not
20
limit any rights or remedies which may otherwise be available at law or in
equity to the Company Indemnified Parties and the Selling Stockholder
Indemnified Parties.
(d) Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7
except to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any indemnified
party shall have the right to employ separate counsel in any such action
and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i)
the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party and in the reasonable judgment of such counsel
it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense
of the indemnifying party, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for
all such indemnified parties, which firm shall be designated in writing by
XX Xxxxx, if the indemnified parties under this Section 7 consist of any
Underwriter Indemnified Party, or by the Company if the indemnified
parties under this Section 7 consist of any Company Indemnified Parties or
Selling Stockholder Indemnified Parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 7(a), 7(b) and
7(c), shall use all reasonable efforts to cooperate with the indemnifying
party in the defense of any such action or claim. Subject to the
provisions of Section 7(f) below, no indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without
its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the request for
reimbursement, (ii) such indemnifying party shall have
21
received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with such request
prior to the date of such settlement.
(f) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section 7(a),
7(b) or 7(c), then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company, the Selling
Stockholders and the Underwriters from the offering of the Stock or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Selling Stockholders and the
Underwriters with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and
the Underwriters on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement received by the
Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Stock purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company and the Selling Stockholders on the one hand or the Underwriters
on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission; provided that the parties hereto agree that the
written information furnished to the Company through the Representatives
by or on behalf of the Underwriters for use in any Preliminary Prospectus,
either of the Registration Statements or the Prospectus consists solely of
the Underwriters' Information (as defined in Section 16). The Company, the
Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 7(f) were to be
determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7(f) shall be deemed to include, for
purposes of this Section 7(f), 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
Section 7(f), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public were offered to the
public less the amount of any damages which such Underwriter has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions
of this Section 7(f), no Selling Stockholder shall be required to
contribute any amount in excess of the net proceeds received by such
Selling Stockholder in connection with the sale of such Selling
Stockholder's Firm Stock, after giving effect to any indemnification
payment by such Selling Stockholder under Section 7(b) hereof. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 7(f)
are several in proportion to their respective underwriting obligations and
not joint. Each Selling Stockholder's obligation to contribute as provided
in this Section 7(f) is several in proportion to the respective number of
shares of Firm Stock to be sold by such Selling Stockholder.
22
8. TERMINATION. The obligations of the Underwriters hereunder may be terminated
by XX Xxxxx, in its absolute discretion by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 6(k), 6(m) or 6(n) have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8 or 10, (b) the Company fails to tender any
of the Company Firm Stock or Optional Stock for delivery to the Underwriters for
any reason not permitted under this Agreement, (c) the Selling Stockholders
collectively fail to tender all of the Selling Stockholder Firm Stock for
delivery to the Underwriters for any reason not permitted under this Agreement
or (d) the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement, the Company and the Selling Stockholders shall
reimburse the Underwriters for the fees and expenses of their counsel and for
such other out-of-pocket expenses as shall have been reasonably incurred by them
in connection with this Agreement and the proposed purchase of the Stock,
consistent with Section 5, and upon demand the Company and the Selling
Stockholders shall pay the full amount thereof to the XX Xxxxx; provided,
however, that if this Agreement is terminated pursuant to subsection (c) above,
no Selling Stockholder shall be required to reimburse the Underwriters for fees
and expenses unless such Selling Stockholder has failed to tender the Firm Stock
for delivery to the Underwriters for any reason permitted under this Agreement
and the other Selling Stockholders have not tendered additional shares of its
Common Stock to cover such shortage. If this Agreement is terminated pursuant to
Section 8 or 10 by reason of the default of one or more Underwriters, neither
the Company nor any Selling Stockholder shall be obligated to reimburse any
defaulting Underwriter on account of those expenses; provided, however, that the
foregoing shall not limit any reimbursement obligation of the Company to any
non-defaulting Underwriter under this Section 9.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares of Stock underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares of Stock which such defaulting Underwriter or Underwriters
agreed but failed to purchase. If any Underwriter or Underwriters shall so
default and the aggregate number of shares with respect to which such default or
defaults occur is more than ten percent (10%) of the total number of shares of
Stock and arrangements satisfactory to the Representatives and the Company for
the purchase of such shares by other persons are not made within forty-eight
(48) hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company
shall have the right to postpone the applicable Closing Date for a period of not
more than five (5) full business days in order that the Company and the Selling
Stockholders may effect whatever changes may thereby be made necessary in the
Registration Statements or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statements or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective numbers of shares to be purchased by the
remaining Underwriters or substituted Underwriters shall be taken as the basis
of their underwriting obligation for all purposes of this Agreement. Nothing
herein contained shall relieve any defaulting Underwriter of its liability to
the Company, the Selling Stockholders or the other Underwriters for damages
occasioned by its default hereunder. Any termination of this Agreement pursuant
to this Section 10 shall be without liability on the part of any non-defaulting
Underwriter, the Selling Stockholders or the Company, except expenses to be paid
or reimbursed pursuant to Sections 5 and 9 and except the provisions of Section
7 shall not terminate and shall remain in effect.
23
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and the Selling Stockholders and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the persons mentioned in the preceding sentence any
legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Company and the Selling Stockholders contained in this Agreement shall also be
for the benefit of the Underwriter Indemnified Parties, and the indemnities of
the several Underwriters shall also be for the benefit of the Company
Indemnified Parties and the Selling Stockholder Indemnified Parties. It is
understood that the Underwriter's responsibility to the Company is solely
contractual in nature and the Underwriters do not owe the Company, or any other
party, any fiduciary duty as a result of this Agreement. The term "successor" as
used in this Section 11 shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Selling Stockholders, the Company or any person
controlling any of them and shall survive delivery of and payment for the Stock.
13. NOTICES. All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to XX Xxxxx Securities Corporation
Attention: Equity Capital Markets (Fax: 000-000-0000), with a copy
to the same address, Attention: Legal Department (Fax:
000-000-0000);
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Digital Theater Systems, Inc., Attention:
Xxx Xxxxxxxx (Fax: (000) 000-0000);
(c) if to any of the Selling Stockholders, shall be delivered or sent by
mail, telex or facsimile transmission to such Selling Stockholder at the
address set forth on Schedule C hereto; provided, however, that any notice
to an Underwriter pursuant to Section 7 shall be delivered or sent by
mail, telex or facsimile transmission to such Selling Stockholder at the
address set forth on Schedule C hereto; Underwriter at its address set
forth in its acceptance telex to the Representatives, which address will
be supplied to any other party hereto by the Representatives upon request.
Any such statements, requests, notices or agreements shall take effect at
the time of receipt thereof. Any party to this Agreement may change its
address for notice by sending to the other parties to this Agreement
written notice of a new address for such purposes.
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a)
"business day" means any day on which the New York Stock Exchange, Inc. is
open for trading and (b) "subsidiary" has the meaning set forth in Rule
405 of the Rules and Regulations.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. Underwriters' Information. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the "Underwriters' Information" consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the
24
Underwriters; (ii) the table of underwriters participating in the offering in
the first paragraph under the heading "Underwriting"; and (iii) the statements
concerning the Underwriters contained in the third paragraph under the heading
"Underwriting" (which paragraph begins "The underwriters propose to offer the
shares . . . .").
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters; and any action taken under this Agreement by any of the
Attorneys-in-Fact will be binding on all the Selling Stockholders.
18. 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.
19. GENERAL. 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. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and the
Representatives.
20. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
Any person executing and delivering this Agreement as Attorney-in-Fact for the
Selling Stockholders represents by so doing that he or she has been duly
appointed as Attorney-in-Fact by such Selling Stockholders pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact to
take such action.
If the foregoing is in accordance with your understanding of the agreement
between the Company, the Selling Stockholders and the several Underwriters,
kindly indicate your acceptance in the space provided for that purpose below.
[Signature Page Follows]
25
If the foregoing is in accordance with your understanding of the agreement
between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
DIGITAL THEATER SYSTEMS, INC.
By:____________________________
Name: Xxx Xxxxxxxx
Title: President and Chief Executive
Officer
SELLING STOCKHOLDERS LISTED IN
SCHEDULE B
By: Attorney in fact
By:_____________________________
Attorney-in-Fact acting on own behalf
and on behalf of the Selling
Stockholders listed in Schedule B.
Accepted as of the
date first above written:
XX XXXXX SECURITIES CORPORATION
XXXXXXX XXXXX & COMPANY
XXXXXX XXXXXX PARTNERS LLC
U.S. BANCORP XXXXX XXXXXXX, INC.
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the
foregoing Agreement.
By: XX XXXXX SECURITIES CORPORATION
By:______________________________
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Head of Equity Capital Markets
26
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
---- --------- ---------
XX Xxxxx Securities Corporation
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxxxx Xxxxxx Partners LLC
U.S. Bancorp Xxxxx Xxxxxxx, Inc.
Total 4,500,000 675,000
========= =======
27
SCHEDULE B
NUMBER
OF SHARES OF FIRM
PRINCIPAL SELLING STOCKHOLDERS STOCK TO BE OFFERED
------------------------------- -------------------
Xxx Xxxxxxx.......................................... 60,224
Xxx Xxxxxxxx......................................... 123,654
Xxxxxx X. Xxxxxxxx................................... 29,059
Xxxxx Xxxxxxx........................................ 21,985
NUMBER
OF SHARES OF FIRM
NON-PRINCIPAL SELLING STOCKHOLDERS STOCK TO BE OFFERED
---------------------------------- -------------------
Eos Partners SBIC, L.P............................... 272,828
Weston Presidio Capital II, L.P...................... 912,222
Forth Investments, LLC............................... 499,007
Universal City Studios LLLP.......................... 499,007
Xxxxxxx Xxxxx........................................ 105,480
H&Q Digital Theater Systems Investors, L.P........... 51,309
Xxxxxxxxx & Xxxxx LLC................................ 8,792
Xxxxx Xxxxxxxxx...................................... 52,956
Xxx Xxxxxxxx......................................... 45,456
Xxxxxxx Xxxxxxxxx.................................... 41,675
Xxxxxxx Xxxxxx ...................................... 32,064
Xxxxx Xxxxxx ........................................ 26,952
Xxxxxx Xxxxx......................................... 19,176
Xxxxxx Xxxxxxx....................................... 21,768
Xxxxx Xxxxxxxxxx..................................... 15,876
Xxxxx Xxxxxxxx....................................... 15,876
Xxxx Xxx............................................. 12,800
W. Xxxx Xxxxx........................................ 44,985
Xxxxxxx Xxxxxx....................................... 33,072
28
Xxxxxx Xxx........................................... 28,156
Jan Wissmuller....................................... 6,261
Xxxxxxx Xxxxxxx...................................... 3,164
Comerica Bank........................................ 5,917
Mr. and Xxx. Xxxx X. Xxxxx........................... 3,502
Xxxxxxxxx Xxxxx...................................... 2,389
Xxxx and Xxxx Xxxxxxxx............................... 1,752
Xxxxx and Xxxxxxxx Xxxxxx............................ 1,752
Xxxxxxx Xxxxxxxx..................................... 188
Xxxxx Xxxx........................................... 369
Xxx. X.X. Xxxxxxxxx.................................. 327
TOTAL................................................ 3,000,000
=========
29
EXHIBIT I
Form of Lock Up Agreement
________________, 2003
XX Xxxxx Securities Corporation
As representative of the several Underwriters
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Digital Theater Systems, Inc
Ladies and Gentlemen:
In order to induce XX Xxxxx Securities Corporation ("XX Xxxxx") and the
several underwriters to enter in to a certain underwriting agreement (the
"Underwriting Agreement") with Digital Theater Systems, Inc., a Delaware
corporation (the "Company"), with respect to the proposed public offering (the
"Offering") of shares of the Company's Common Stock, par value $0.0001 per share
("Common Stock"), the undersigned hereby agrees that for a period of 90 days
following the date of the final prospectus filed by the Company with the
Securities and Exchange Commission in connection with the Offering (the "Lock-Up
Period"), the undersigned will not, without the prior written consent of XX
Xxxxx, directly or indirectly, (i) offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Exchange Act of 1934, as the same
may be amended or supplemented from time to time (such shares, the "Beneficially
Owned Shares")) or securities convertible into or exercisable or exchangeable in
Common Stock, (ii) enter into any swap, hedge or similar agreement or
arrangement that transfers, in whole or in part, the economic risk of ownership
of the Beneficially Owned Shares or securities convertible into or exercisable
or exchangeable in Common Stock or (iii) engage in any short selling of the
Common Stock.
The foregoing paragraph shall not apply to (1) any transfer of shares of
Common Stock or any security convertible into Common Stock (a) as a bona fide
gift or gifts, (b) to any trust for the benefit of the undersigned or the
undersigned's immediate family, (c) by will or intestacy to the undersigned's
legal representative, heir or legatee, (d) if the undersigned is a partnership
or corporation or similar entity, as a distribution to partners or stockholders
of the undersigned or (e) acquired in the public market on or after the date of
the final prospectus filed by the Company with the Securities and Exchange
Commission in connection with the Offering, other than shares acquired through
any directed share program of the Company, which shall be subject to the
restrictions of said program; provided that each donee, transferee or
distributee shall execute and deliver to XX Xxxxx a duplicate form of this
letter; or (2) any sale of shares of Common Stock in the Offering pursuant to
the Underwriting Agreement.
Anything contained herein to the contrary notwithstanding, any person to
whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Agreement.
30
In addition, the undersigned hereby waives, from the date hereof until the
expiration of the Lock-Up Period, any and all rights, if any, to request or
demand registration pursuant to the Securities Act of any shares of Common Stock
that are registered in the name of the undersigned or that are Beneficially
Owned Shares. In order to enable the aforesaid covenants to be enforced, the
undersigned hereby consents to the placing of legends and/or stop-transfer
orders with the transfer agent of the Common Stock with respect to any shares of
Common Stock or Beneficially Owned Shares.
If the Offering does not close by December 31, 2003, this Agreement shall
terminate immediately upon such date and be of no further force and effect.
By:
------------------------------
---------------------------------
Print Name
---------------------------------
Title (if applicable)
31
EXHIBIT II
[FORM OF OPINION OF XXXXXX XXXXXX WHITE & XXXXXXXXX LLP]
XX XXXXX SECURITIES CORPORATION
XXXXXXX XXXXX & COMPANY
XXXXXX XXXXXX PARTNERS LLC
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: DIGITAL THEATER SYSTEMS, INC.
Ladies and Gentlemen:
We have acted as counsel to Digital Theater Systems, Inc., a Delaware
corporation (the "Company"), in connection with the Underwriting Agreement,
dated as of November ___, 2003 (the "Agreement"), among the Company, the Selling
Stockholders listed therein and you as the Representatives of the several
Underwriters named therein, regarding the Company's issuance and sale of
1,500,000 shares of its common stock, par value $.0001 per share, at the First
Closing pursuant to the Agreement (the "Company Firm Stock"); the preparation of
the Registration Statement (Commission No. 333-[ ]), as amended at the time it
became effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A of the
Securities Act of 1933, as amended (the "Securities Act"), (the "Registration
Statement") and the prospectus in the form deemed to be a part of the
Registration Statement as filed pursuant to Rule 424(b) of the Securities Act on
November ___, 2003 (the "Prospectus").
This opinion is being rendered pursuant to Section 6(d) of the Agreement.
Capitalized terms used without definition in this opinion shall have the
meanings ascribed to them in the Agreement.
I.
In connection with this opinion, we have assumed the authenticity of all
records, documents, and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural persons, the
conformity to the originals of all records, documents, and instruments submitted
to us as copies, faxes or .pdf files, and the genuineness of such originals. We
have based our opinion upon our review of the following records, documents and
instruments:
a. The Amended and Restated Certificate of Incorporation of the Company,
including all amendments thereto, and certified by the Secretary of State of the
State of Delaware as of [ ], 2003 and by an officer of the Company as being
complete and in full force and effect as of the date of this opinion.
b. The Certificate of Incorporation of DTS Consumer Products, Inc. ("DTS
Consumer") certified by the Secretary of State of the State of Delaware as of [
], 2003, and certified to us by an officer of the Company as being complete and
in full force and effect as of the date of this opinion.
32
c. The Certificate of Formation of DTS Entertainment, LLC ("DTS Entertainment")
certified by the Secretary of State of the State of Delaware as of [ ], 2003,
and certified to us by an officer of the Company as being complete and in full
force and effect as of the date of this opinion.
d. The Bylaws of the Company certified to us by an officer of the Company as
being complete and in full force and effect as of the date of this opinion.
e. The Bylaws of DTS Consumer certified to us by an officer of the Company as
being complete and in full force and effect as of the date of this opinion.
f. Records certified to us by an officer of the Company as constituting all
records of proceedings and actions of the Board of Directors of the Company, the
Pricing Committee and any other committees of the Board of Directors and the
stockholders of the Company relating to: (i) the authority to execute and
deliver the Agreement; (ii) the transactions contemplated by the Agreement,
(iii) the issuance of all capital stock of the Company and all options and
warrants to purchase such capital stock and (iv) certain factual matters.
g. Records certified to us by an officer of the Company as constituting all
records of proceedings and actions of the Board of Directors of DTS Consumer and
any committees thereof and the stockholders of DTS Consumer relating to the
issuance of all equity securities of DTS Consumer.
h. Records certified to us by an officer of the Company as constituting all
records of proceedings and actions of the members of DTS Entertainment relating
to the issuance of all membership interests and other equity securities of DTS
Entertainment.
i. The Officers' Certificate, dated November __, 2003, of the President and
Chief Executive Officer and the Chief Financial Officer of the Company delivered
pursuant to Section 6(i) of the Agreement.
j. The letters of PricewaterhouseCoopers LLP, dated November __, 2003 and
November ___, 2003, relating to the financial statements included in the
Registration Statement and other matters referred to therein, delivered pursuant
to Section 6(g) of the Agreement.
k. The opinion letter, dated November ___, 2003, of Eversheds LLP, special
counsel for Digital Theater Systems (UK), delivered pursuant to Section 6(q) of
the Agreement.
l. The opinion letter, dated November __, 2003, of O'Melveny & Xxxxx LLP,
counsel to the Selling Stockholders delivered pursuant to Section 6(e) of the
Agreement.
m. A Certificate of Good Standing relating to the Company, issued by the
Secretary of State of the State of Delaware, dated November ___, 2003, and
bring-down letter as to the good standing of the Company in the State of
Delaware as of November ___, 2003.
n. A Certificate of Good Standing relating to DTS Consumer, issued by the
Secretary of State of the State of Delaware, dated November ___, 2003, and
bring-down letter as to the good standing of DTS Consumer in the State of
Delaware as of November ___, 2003.
o. A Certificate of Good Standing relating to DTS Entertainment, issued by the
Secretary of State of the State of Delaware, dated November ___, 2003, and
bring-down letter as to the good standing of DTS Entertainment in the State of
Delaware as of November ___, 2003.
p. A Certificate of Status - Domestic Corporation relating to the Company,
issued by the Secretary of State of the State of California, dated November ___,
2003, and bring-down letter as to the good standing of the Company in the State
of California as of November ___, 2003.
q. A Certificate of Status - Domestic Corporation relating to DTS Consumer,
issued by the Secretary of State of the State of California, dated November ___,
2003, and bring-down letter as to the good standing of DTS Consumer in the State
of California as of November ___, 2003.
33
r. A Certificate of Good Standing relating to DTS Entertainment, issued by the
Secretary of State of the State of California, dated November ___, 2003, and
bring-down letter as to the good standing of DTS Entertainment in the State of
California as of November ___, 2003.
s. The Registration Statement.
t. The Prospectus.
u. The agreements, leases or other documents or instruments that are filed as
exhibits to the Registration Statement (or incorporated by reference therein),
including executed counterparts of the Agreement.
v. A certificate from Equiserve, the Company's Registrar and Transfer Agent.
w. The stock ledger of DTS Consumer certified to us by an officer of the Company
as being complete and accurate as of the date of this opinion letter.
x. The membership ledger of DTS Entertainment certified to us by an officer of
the Company as being complete and accurate as of the date of this opinion
letter.
y. A letter from The Nasdaq Stock Market, Inc. to the Company, dated November
___, 2003, related to the quotation of the Stock on the Nasdaq National Market.
z. The Registration Statement on Form 8-A relating to the common stock of the
Company (Commission No. 000-50335), as filed with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
aa. The Certificate in Support of Legal Opinion, dated November __, 2003 (the
"Backup Certificate"), of the President and Chief Executive Officer and the
Chief Financial Officer of the Company delivered to us in connection with this
opinion letter.
bb. Such other records, certificates, documents and instruments as we have
deemed necessary for the purpose of rendering the opinions contained herein.
Our opinion is rendered subject to the following qualifications:
a. Our opinion in Paragraph 1 of Part III below that the Company is "validly
existing as a corporation in good standing under the laws of the State of
Delaware" is based solely on the records identified in Items (a) and (m) of Part
I. Our opinion in Paragraph 1 of Part III that the Company is "duly qualified as
a foreign corporation and is in good standing under the laws of the State of
California" is based solely on the records identified in Item (p) of Part I.
b. Our opinion in Paragraph 2 of Part III below that DTS Consumer and DTS
Entertainment (collectively, the "Major Subsidiaries") are "validly existing in
good standing under the laws of the State of Delaware" is based solely on the
records identified in Items (b), (c), (n) and (o) of Part I. Our opinion in
Paragraph 2 of Part III that the Major Subsidiaries are "duly qualified as a
foreign corporation or limited liability company and are in good standing under
the laws of the State of California" is based solely on the records identified
in Items (q) and (r) of Part I.
c. Our opinion in Paragraph 3 of Part III below as to (i) the "authorized
capitalization" of the Company is based solely on the records identified in
Items (a) and (f) of Part I, (ii) the number of shares of common stock of the
Company outstanding as of the date of this opinion is based solely on the
records identified as Items (a), (f), (i) and (v) of Part I and (iii) the
fully-paid and nonassessable status of the outstanding shares of capital stock
of the Company is based on representations set forth in the Backup Certificate
that the Company has received the amount of consideration recited in the
applicable agreements and board resolutions pursuant to which such capital stock
of the Company was issued.
d. Our opinion in Paragraph 4 of Part III below as to (i) the fully paid and
nonassessable status of the outstanding shares of capital stock or membership
interests of each Major Subsidiary is based on representations set forth in the
34
Backup Certificate that the Company has received the amount of consideration
recited in the applicable agreements and board resolutions pursuant to which
such capital stock or membership interests of each Major Subsidiary was issued
and (ii) the ownership of the shares of capital stock or membership interests of
each Major Subsidiary by the Company is based solely on the records identified
as Items (g), (h), (v) and (w) of Part I and statements in the Backup
Certificate.
e. With regard to our opinion in Paragraphs 7 and 8 of Part III below, we
express no opinion with respect to any consents, approvals, authorizations,
orders, filings, registrations or qualifications required by the NASD and the
Blue Sky laws of the various states and other jurisdictions within the United
States or the securities laws of any jurisdiction outside the United States for
the issue and sales of the Company Firm Stock and compliance by the Company with
the provisions of the Agreement. In addition, with regard to our opinion in item
(C) of Paragraph 7 of Part III below, we opine only as to those federal,
Delaware corporate and California state laws, regulations and rules that
customarily apply to transactions of this type, and our opinion does not cover
regional and local laws, rules and regulations in such jurisdictions.
f. In connection with our opinion in Paragraph 9 of Part III below, as to
matters of fact material to our opinion, we have relied upon the representations
of factual matters contained in the Backup Certificate.
g. In connection with our opinion in Paragraph 10 of Part III below (and
elsewhere)= relating to agreements or instruments filed as exhibits to the
Registration Statement (or incorporated by reference therein), we have not
reviewed, and express no opinion on (i) financial covenants or similar
provisions requiring financial calculations or determinations to ascertain
compliance, (ii) provisions relating to the occurrence of a "material adverse
event" or words of similar import or (iii) parol evidence bearing on
interpretation or construction. To the extent that any agreement, lease or
instrument filed as an exhibit to the Registration Statement (or incorporated by
reference therein) is governed by the laws of any jurisdiction other than the
laws of the State of California or the Delaware General Corporation Law, our
opinion relating to those agreements is based solely upon the plain meaning of
their language without regard to interpretation or construction that might be
indicated by the laws governing those agreements or instruments.
h. Our opinion in Paragraph 12 of Part III below is based solely on the
description of the nature of the Company's outstanding litigation matters set
forth in the Backup Certificate.
i. Our opinion in Paragraph 13 of Part III below is based solely upon telephone
communications between an attorney of this firm and a member of the Commission
Staff, on November __, 2003, confirming that that the Registration Statement has
become effective under the Securities Act, communications between an attorney of
this firm and a member of the Commission Staff, on November ___, 2003,
confirming that no stop order has been issued with respect to the Registration
Statement and statements in the Backup Certificate that no stop order
proceedings with respect to the Registration Statement are pending or threatened
under the Securities Act. For purposes of our opinion in Paragraph 13 of Part
III below, relating to the filing of the Prospectus pursuant to Rule 424(b), we
have relied solely upon a confirmation of filing received from the Commission's
XXXXX filing system dated November ___, 2003.
j. Our opinion in Paragraph 16 of Part III below, we have relied as to certain
factual matters upon the Backup Certificate and have assumed that, pending the
uses identified in the Prospectus, the net proceeds of the offering contemplated
by the Prospectus will be invested in government securities within the meaning
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), to the extent necessary to ensure that the Company will not hold
"investment securities" (within the meaning of the Investment Company Act)
having a value exceeding 40% of the Company's total assets (exclusive of
government securities and cash items) on an unconsolidated basis. We have also
not considered the effect on such opinion of the identity, business or control
of any of the Company's stockholders and have assumed that none of the Company's
stockholders would be deemed an "investment company" within the meaning of the
Investment Company Act.
As used in our opinion, the expressions "to our knowledge," "known to us," and
similar phrases mean that, after an examination of the documents made available
to us by the Company and after inquiries of officers of the Company, but without
any further independent factual investigation, we find no reason to believe that
the statements herein so qualified are inaccurate. Further, the expressions "to
our knowledge," "known to us," and similar phrases refer to
35
the actual knowledge of attorneys in this firm who are or have been involved in
substantive legal representation of the Company regarding the Agreement and the
transactions contemplated thereby. Except to the extent expressly set forth
herein, we have not undertaken any independent investigation to determine the
existence or absence of any fact or the accuracy of any statement so qualified,
and any limited inquiry undertaken by us during the preparation of this opinion
letter should not be regarded as such investigation. Except to the extent
expressly set forth herein, no inference as to our knowledge of any matters
bearing on the accuracy of any statement so qualified should be drawn from our
representation of the Company or our rendering of the opinions set forth below.
We have also assumed that there are no facts or circumstances relating to the
Underwriters or any holder of securities that might prevent them from enforcing
any of the rights to which our opinion relates (for example, lack of due
incorporation by any Underwriter, regulatory prohibitions relating to any
Underwriter or failure on the part of any Underwriter to qualify to do business
in any state where such qualification is a prerequisite to enforcement of rights
under the Agreement). In addition, we have assumed that the representations and
warranties as to factual matters made by the Company in the Agreement and
pursuant thereto are true, correct and complete.
II.
With respect to the opinions set forth in Part III below, we express no opinion
as to:
a. Any securities law anti-fraud provisions, tax, anti-trust, land use, export,
safety, environmental or hazardous materials laws, rules or regulations.
b. The securities laws of any jurisdiction, other than the federal securities
laws, or any necessary qualification under the state securities or blue sky laws
of the various jurisdictions in which the Firm Stock is being offered by the
Underwriters.
c. The applicable choice of law rules that may affect the interpretation
of the Agreement.
d. The financial statements and schedules and other financial and statistical
data included in the Registration Statement or Prospectus.
e. Any state or federal laws, rules or regulations applicable to the
transactions contemplated by the Agreement because of the nature of the business
of any party thereto other than the Company.
f. The past, present or future fair market value of any securities.
This opinion is limited to the federal laws of the United States of America and
the laws of the State of California, and the Delaware General Corporation Law.
We disclaim any opinion as to the laws of any other jurisdiction and we further
disclaim any opinion as to any statute, rule, regulation, ordinance, order or
other promulgation of any regional or local governmental body. Without limiting
the generality of the foregoing, we are not acting here as experts on, and we do
not express any opinion on any applicable laws, rules or regulations relating to
patents, copyrights, trademarks and other proprietary rights and licenses. The
limitation in the foregoing sentence regarding applicable laws, rules or
regulations relating to patents, copyrights, trademarks and other proprietary
rights and licenses does not apply to our opinion in Paragraph 7 of Part III
below or our statement in Part IV below, which opinion or statement shall not be
so limited.
III.
Based upon the foregoing and our examination of such questions of law as we have
deemed necessary or appropriate for the purpose of this opinion, and subject to
the, assumptions, exceptions, limitations and qualifications expressed in this
opinion letter, it is our opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, and has
all corporate power and authority necessary to own or hold its properties and to
36
conduct its business as described in the Registration Statement, except where
the failure to have such power or authority would not have, singularly or in the
aggregate, a material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect"). The Company is duly qualified as
a foreign corporation and is in good standing under the laws of the State of
California.
2. Each of the Major Subsidiaries has been duly incorporated or formed and is
validly existing in good standing under the laws of the State of Delaware, and
has all corporate or limited liability company, as the case may be, power and
authority necessary to own or hold its properties and to conduct its business as
described in the Registration Statement, except where the failure to have such
power or authority would not have, singularly or in the aggregate, a Material
Adverse Effect. Each of the Major Subsidiaries is duly qualified as a foreign
corporation or limited liability company and is in good standing under the laws
of the State of California.
3. The Company has an authorized capitalization as set forth in the Prospectus
and all of the issued shares of capital stock of the Company have been duly
authorized and validly issued, are non-assessable and, to our knowledge, are
fully-paid. Such shares conform to the description thereof contained under the
heading "Description of Securities" in the Prospectus. The Company Firm Stock
being delivered by the Company on the First Closing Date has been duly
authorized and, when issued and delivered to and paid for by the Underwriters in
accordance with the Agreement, will be validly issued, fully-paid and
non-assessable and conform to the description thereof contained under the
heading "Description of Securities" in the Prospectus.
4. All the outstanding shares of capital stock or membership interests of each
Major Subsidiary have been duly authorized and validly issued, are
non-assessable, and, to our knowledge, are fully-paid and, except to the extent
set forth in the Prospectus, are owned by the Company directly or indirectly
through one or more wholly owned subsidiaries, to our knowledge, free and clear
of any claim, lien, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party, except for any security interest
granted to Comerica pursuant to the Company's credit facility with such
institution.
5. There are no preemptive or other rights to subscribe for or to purchase from
the Company any shares of the Company Firm Stock pursuant to the Company's
Amended and Restated Certificate of Incorporation or Bylaws or, to our
knowledge, contractual preemptive rights, except for such rights and/or
restrictions that have been waived.
6. The Agreement has been duly authorized, executed and delivered by the
Company.
7. The execution and delivery of the Agreement by the Company and the sale of
the Company Firm Stock to the Underwriters contemplated thereby will not result
in (A) a breach of any of the terms or provisions of, or constitute a default
under, any agreement or instrument that is an exhibit to the Registration
Statement, (B) any violation of the Amended and Restated Certificate of
Incorporation or Bylaws of the Company or the charter, bylaws or operating
agreement of the Major Subsidiaries or (C) any violation of any federal,
Delaware corporate or California state law, regulation or rule or, to our
knowledge, any decree, judgment or order applicable to the Company.
8. Except for the registration of the Company Firm Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities or blue sky laws in connection with the purchase and distribution of
the Company Firm Stock by the Underwriters (except that that we express no
opinion as to any necessary qualification under state securities or blue sky
laws of the various jurisdictions in which the Stock is being offered by the
Underwriters), no consent, approval, authorization or order of, or filing or
registration with, any federal, Delaware corporate or California state
governmental or regulatory agency or body is required in connection with the
execution and delivery of the Agreement by the Company and the sale of the
Company Firm Stock to the Underwriters as contemplated thereby.
9. The statements (A) in the Prospectus under the heading "Certain Relationships
and Related Party Transactions," "Description of Securities," "Shares Eligible
for Future Sale," "Material United States Federal Income Tax Considerations for
Non-U.S. Holders of Our Common Stock" and "Risk Factors - Anti-Takeover
Provisions Under Our Charter Documents and Delaware Law Could Delay or Prevent a
Change of Control and Could Also Limit the Market Price of Our Stock" and (B) in
the Registration Statement, Part II, Items 14 and 15 to the extent that they
constitute summaries of matters of law or documents referred to therein, fairly
summarize the matters of law and documents described therein in all material
respects.
37
10. To our knowledge, neither the Company nor the Major Subsidiaries is in
violation of its respective charter or bylaws, or is in breach of, or, except as
disclosed in the Registration Statement, in default under any provision of any
agreement or instrument which is an exhibit to the Registration Statement.
11. To our knowledge, there are no contracts, licenses, agreements or leases of
a character which are required to be filed as exhibits to the Registration
Statement or incorporated by reference therein which have not been so filed or
incorporated by reference therein as required.
12. To our knowledge, there are no legal or governmental proceedings pending to
which the Company or any Major Subsidiary is a party or of which any property or
asset of the Company or a Major Subsidiary is the subject which are required to
be described in the Prospectus but are not so described.
13. The Registration Statement (including all post-effective amendments, if any)
has become effective under the Securities Act, any required filing of the
Prospectus pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424, and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and,
to our knowledge, no proceeding for that purpose is pending or been threatened
by the Commission.
14. The Registration Statement, as of its effective date, and the Prospectus, as
of its date, and any further amendments or supplements thereto made by the
Company prior to the First Closing Date, as of their respective dates (other
than the financial statements and schedules and other financial and statistical
data contained therein or incorporated by reference therein, as to which with
your permission we express no opinion) complied as to form in all material
respects with the requirements of the Securities Act.
15. To our knowledge, except as described in the Prospectus, no person or entity
has the right to require the Company to register shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statement, except for persons and entities who have expressly
waived such right or who have been given proper notice and have failed to
exercise such right within the time or times required under the terms and
conditions of such right.
16. Neither the Company nor any Major Subsidiary is an "investment company"
within the meaning of the Investment Company Act and the rules and regulations
of the Commission thereunder.
IV.
In connection with the registration of the Company Firm Stock, we have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants of the Company
and representatives of the Underwriters at which the contents of the
Registration Statement and Prospectus were discussed. We are not, however,
passing upon and do not assume responsibility for and we have not independently
checked or verified the accuracy, completeness or fairness of the information
contained in the Registration Statement and the Prospectus (except as and to the
extent stated in Paragraph 9 of Part III above). We state, however, that based
upon our participation as described in this paragraph, no facts have come to our
attention that cause us to believe that the Registration Statement or any
amendment thereto, at the time such Registration Statement or amendment became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or that the Prospectus or any supplement thereto, at the date of
such Prospectus or such supplement, and at all times up to the date of this
opinion letter, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that we express no belief with respect to
the financial statements and schedules and other financial and statistical data
contained or incorporated by reference in the Registration Statement or
Prospectus).
This opinion letter is rendered to you in connection with the Agreement and is
solely for your benefit in connection with the Agreement. This opinion letter
may not be relied upon by you for any other purpose, or relied upon by any other
person, firm, corporation or other entity for any purpose, without our prior
written consent. We disclaim any
38
obligation to advise you of any facts, circumstances, events or developments in
areas covered by this opinion letter that occur or that are brought to our
attention after the date of this opinion letter.
Very truly yours,
Prepared by: ____________________
Signed by: ____________________
Approved by: ____________________
Date: November ___, 2003
39
EXHIBIT III
[FORM OF OPINION OF O'MELVENY & XXXXX LLP]
November ___, 2003
XX Xxxxx Securities Corporation
Xxxxxxx Xxxxx & Company
Xxxxxx Xxxxxx Partners LLC
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: SALE OF _______ SHARES OF COMMON STOCK OF DIGITAL THEATER
SYSTEMS, INC.
Ladies and Gentlemen:
We have acted as counsel to those certain selling stockholders (the
"Selling Stockholders") set forth on Schedule B to that certain Underwriting
Agreement, dated November ___, 2003 (the "Agreement"), by and among you, as
representatives of the several Underwriters named therein, Digital Theater
Systems, Inc. (the "Company") and the Selling Stockholders, in connection with
the Selling Stockholders' sale of ______ shares (the "Securities") of the common
stock, par value $0.0001 per share (the "Common Stock"), of the Company,
pursuant to the Agreement. We are providing this opinion to you pursuant to
Section 6(e) of the Agreement.
In our capacity as such counsel, we have examined originals or copies of
those corporate and other records and documents we considered appropriate,
including the following:
(a) the Agreement;
(b) that certain Custody Agreement, dated November ___, 2003, between the
Selling Stockholders, the Company, EquiServe, Inc., and its fully-owned
subsidiary EquiServe Trust Company, N.A. (the "Custody Agreement"); and
(c) those certain Selling Stockholders' Irrevocable Powers-of-Attorney, dated
November ___, 2003, between the Selling Stockholder and the attorneys named
therein (the "Power-of-Attorney").
As to relevant factual matters, we have relied upon, among other
things, the factual representations in those certain Selling Stockholder
Certificates dated November ___, 2003 (the "Selling Stockholder Certificates"),
a copy of which has been given to you. With regard to our opinion in paragraph
(i) below, we have relied solely upon the Selling Stockholder Certificates and
have not reviewed the charter, bylaws or articles of partnership of any Selling
Stockholder. In addition, we have obtained and relied upon those certificates of
public officials we considered appropriate.
We have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with originals
of all documents submitted to us as copies. We have assumed that each natural
person who is a party to the transaction has sufficient legal capacity to enter
into and carry out his obligations under the Agreement, the Custody Agreement
and the Powers-
40
of-Attorney. To the extent the Selling Stockholders' obligations depend on the
enforceability of the Agreement, the Custody Agreement and the
Powers-of-Attorney against the other parties to the Agreement, the Custody
Agreement and the Powers-of-Attorney, we have assumed that the Agreement, the
Custody Agreement and the Powers-of-Attorney are enforceable against such other
parties.
On the basis of such examination, our reliance upon the assumptions
in this opinion and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications in this opinion, we
are of the opinion that:
(i) Neither the sale of the Securities pursuant to the Agreement nor the
consummation by any of the Selling Stockholders of the other transactions
contemplated thereby will (i) result in a breach or violation of (A) the
charter or bylaws of any Selling Stockholder (if such Selling Stockholder
is a corporation) or articles of partnership of such Selling Stockholder
(if such Selling Stockholder is a corporation) or (B) any indenture or
other agreement identified in the Selling Stockholder Certificates
delivered by the Selling Stockholders and attached hereto as Exhibit A,
(ii) breach or otherwise violate any obligation of or restriction on any
Selling Stockholder, as identified in the Selling Stockholder
Certificates, under any order, judgment or decree of any court or
governmental authority binding on any Selling Stockholder, or (iii)
violate any California, New York or federal statute, rule or regulation
that we have, in the exercise of our costmary professional diligence,
deemed applicable to any Selling Stockholder or to the transactions of the
type contemplated by the Agreement.
(ii) No order, consent, permit or approval of any California, New York or
federal governmental authority is required on the part of any Selling
Stockholder for the execution and delivery of the Agreement or the sale of
the Securities sold by any Selling Stockholder, except such as is required
under the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder and such as may be required under
the securities or blue sky laws of any other jurisdiction.
(iii) Each of the Agreement, the Custody Agreement and the
Power-of-Attorney has been duly executed and delivered by or on behalf of
each Selling Stockholder.
(iv) Each of the Agreement, Custody Agreement and the Power-of-Attorney
constitutes a legally valid and binding obligation of each Selling
Stockholder, except that we do not opine as to the validity or
enforceability of any indemnification provisions contained in the
Agreement or the Power-of-Attorney.
(v) Upon payment for and delivery to the Underwriters in New York of the
Securities to be sold by each Selling Stockholder in accordance with the
Agreement, assuming each of the Underwriters is acquiring the Securities
sold by the Selling Stockholder without notice of any adverse claim, no
action based on an adverse claim to the Securities may successfully be
asserted against the Underwriters under the Uniform Commercial Code in
effect in the State of New York.
The law covered by this opinion is limited to the present federal
law of the United States and the present law of the States of California and New
York. We express no opinion as to the laws of any other jurisdiction and no
opinion regarding the statutes, administrative decisions, rules, regulations or
requirements of any county, municipality, subdivision or local authority of any
jurisdiction.
This opinion is furnished by us as counsel for the Selling
Stockholders to you as the Underwriters and may be relied upon by you only in
connection with the issuance and sale of the Securities. It may not be used or
relied upon by you for any other purpose or by any other person, nor may copies
be delivered to any other person, without in each instance our prior written
consent. This opinion is expressly limited to the matters set forth above and we
render no opinion, whether by implication or otherwise, as to any other matters.
We assume no obligation to update or supplement this opinion to reflect any
facts or circumstances that arise after the date of this opinion and come to our
attention, or any future changes in law.
41
EXHIBIT IV
[FORM OF OPINION OF EVERSHEDS LLP]
XX Xxxxx Securities Corporation
Xxxxxxx Xxxxx & Company
Xxxxxx Xxxxxx Partners LLC
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
[ ] November 2003
Dear Sirs
DIGITAL THEATER SYSTEMS (UK) LIMITED
1. OVERVIEW
We begin (in section 2) by introducing some defined terms used in this letter.
In section 3, we describe the steps we have taken in preparation for giving our
opinion.
In order to give our opinion, we need to make various assumptions about facts
and about points of law; these are listed in section 4.
Our opinion itself is in section 5.
After that, in section 6, we explain some qualifications to which our opinion is
subject.
Finally, in section 7, we set out the terms upon which we are giving our
opinion.
2. DEFINED TERMS
For the sake of convenience, some words and phrases in this letter have been
given special meanings. These are as follows.
I "COMPANIES ACT" means the Companies Xxx 0000, as amended.
II "COMPANY" means Digital Theater Systems (UK) Limited (company number
03691273).
III "CONSTITUTIONAL DOCUMENTS" means the Company's memorandum and articles of
association.
IV "DTS INC" means Digital Theater Systems, Inc a Delaware corporation.
V "INSOLVENCY ACT" means the Insolvency Xxx 0000, as amended.
VI "PROSPECTUS" means the prospectus relating to the Transaction.
VII "REGISTRAR" means the registrar of companies for England and Wales.
VIII "REGISTRATION STATEMENT" means the Registration Statement No. 333-104761
filed with the Securities Exchange Commission under the Securities Act of
1933, as amended, relating to the Transaction.
IX "TRANSACTION" means the public offering of DTS Inc's stock comprising the
sale of [4,500,000] shares of common stock of DTS Inc plus up to an
additional [675,000] shares of common stock to cover over-allotments, and
approval for quotation of DTS Inc's stock on the Nasdaq National Market.
42
X "UNDERWRITING AGREEMENT" means the agreement dated [ ] November 2003
between DTS Inc, the Selling Stockholders (as defined therein), XX Xxxxx
Securities Corporation, Xxxxxxx Xxxxx & Company, Xxxxxx Xxxxxx Partners
LLC and U.S. Bancorp Xxxxx Xxxxxxx.
Where other capitalised terms are used in this letter and not otherwise defined,
such terms shall have the meanings assigned to them in the Underwriting
Agreement.
3. PREPARATIONS
I We have taken the following steps in preparation for giving our opinion.
(a) We have reviewed the following documents:
1 a copy of each Constitutional Document;
2 a Certificate of good standing in relation to the Company issued by
the Registrar on [ November] 2003;
3 the statutory books and minute book of the Company as provided to us
on [ ] November 2003;
4 a final draft of the Underwriting Agreement dated [ ] November 2003;
and
5 the Prospectus and Registration Statement dated [ ] November 2003.
(b) We have commissioned a search of the Company's file maintained by the
Registrar, using the following method. We have obtained through ICC
Juniper (an independent on-line search system) a copy of each document
which is listed on Companies House Direct (an on-line search system
supplied by the Registrar) as being contained on the Company's file today.
(c) We have asked an official at the Royal Courts of Justice in London today
to check for any entry in respect of the Company on the Central Index of
Winding-up Petitions for England and Wales.
II We have not reviewed any other documents, looked at any other information,
carried out any other searches or made any other enquiries for the
purposes of this opinion.
4. ASSUMPTIONS
For the purposes of giving our opinion, we are making the assumptions listed in
this section 4. We have not taken any steps to check their veracity, except as
described in relation to section 4.1.3.
I ASSUMPTIONS ABOUT THE STATUS OF THE COMPANY
(a) We assume that the Company is solvent at the time of the giving of this
opinion. "Solvent," here, means that the Company is not deemed unable to
pay its debts under section 123 of the Insolvency Act.
(b) We assume that no person has taken any step to put the Company into
administration, to appoint an administrative receiver (or other receiver)
in respect of it or any of its assets, to effect a voluntary arrangement
in respect of it, to obtain a moratorium in respect of it (under section
1A of the Insolvency Act), to wind it up or to dissolve it.
(c) In relation to the assumption in section 4.1.2, we are able to provide the
following information.
1 There are requirements to send information to the Registrar in
connection with each of the following events, namely: the making of
an administration order; the appointment of an administrative
receiver; the approval of a voluntary arrangement; the coming into
force of a moratorium under section 1A of the Insolvency Act; the
passing of a resolution to enter a voluntary liquidation; the making
of a winding-up order; and the making of an order (under section 427
of the Companies Act) for the dissolution of a company in connection
with a compromise or arrangement. Any such information sent to the
Registrar should be placed on the relevant company's file. In
addition, where the Registrar is taking steps to strike a company
off the register, we would expect a copy of each relevant letter and
advertisement to be placed on the company's file.
43
2 The results of the company search mentioned in section 3.1.2 did not
reveal any information of the type listed in section 4.1.3(a).
However, this should not be taken to mean that the Company is not in
administration, receivership or liquidation, not subject to a
voluntary arrangement or to a moratorium and not being dissolved.
There are two --- reasons for this. First, whenever information of
this type is required to be sent to the Registrar, it need not be
sent immediately (so an event could have occurred recently in
respect of which the relevant filing has not yet been made).
Secondly, there is no requirement to send to the Registrar notice of
the presentation of a petition for winding-up or of a petition for
administration (a filing requirement applies only once an order is
made) but, on this point, see also section 4.1.3(c).
3 The Central Index of Winding-up Petitions for England and Wales
records details of each petition for the winding up of a company. It
also records details of each petition for an administration order
presented at the Royal Courts of Justice (but not of any such
petition presented to any other court). The official we spoke to at
the Royal Courts of Justice today told us that there was then no
entry on the Index in respect of the Company. However, there is no
guarantee given by Government (or by any person) as to the accuracy
or reliability of the information provided by court officials in
response to requests like ours.
II ASSUMPTIONS ABOUT CORPORATE MATTERS
We assume that:
(a) there have been no changes to the Constitutional Documents since the date
of the company search;
(b) each person identified in the company search and certificate of good
standing as a director of the Company was validly appointed as such and
continues in office;
(c) the person identified in the company search and certificate of good
standing as the Company's secretary was validly appointed as such and
continues in office;
(d) the correct procedures were followed with regard to each board meeting
referred to in the company search or minute books - for example, each
board meeting was validly convened and was quorate, each director made an
appropriate declaration of his interests (if necessary) and each
resolution was duly passed;
(e) the resolutions recorded in the minute book of the Company have not been
amended; and
(f) the board minutes contained in the minute book are an accurate record of
each relevant board meeting.
III ASSUMPTIONS ABOUT DOCUMENTS
(a) We assume that:
1 each document listed in section 3.1.1 which is an original (not a
copy) is authentic and complete; and
2 each document listed in section 3.1.1 which is a copy is a true copy
of an authentic and complete original.
(b) We assume that the Underwriting Agreement will be validly executed and
delivered by the parties to it in substantially the form we have reviewed.
(c) We assume that the Underwriting Agreement will, once executed and
delivered, constitute valid, binding and enforceable obligations.
IV ASSUMPTIONS ABOUT THE COMPANY SEARCH
In relation to the company search mentioned in section 3.1.2, we assume
that:
(a) no event has occurred in relation to the Company in respect of which a
filing required to be made with the Registrar has not been made;
(b) all documents filed with the Registrar in relation to the Company have
been placed on the Company's file; and
(c) the results of the search comprise a complete copy of each document on the
Company's file today.
44
V ASSUMPTIONS ABOUT STATUTORY BOOKS
We assume that the statutory books and minute book of the Company as
referred to in 3.1.1 above:
(a) have been kept up to date;
(b) have been written up accordingly; and
(c) have not been amended since [ ] November 2003.
VI ASSUMPTION ABOUT OTHER LAWS
We assume that no law other than the law of England would affect our
opinion.
5. OPINION
Our opinion, under English law, is as follows.
I CORPORATE STATUS
The Company is a company duly incorporated in England and Wales and is validly
existing in good standing under the Companies Act. The Company has all power and
authority necessary under its constitution to own or hold its property and to
conduct the business in which it is engaged, except where the failure to have
such power or authority would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Company (a "Material Adverse Effect").
II SHARE CAPITAL
All the issued shares of the Company have been duly authorised and validly
issued, are fully-paid and are owned directly by DTS Inc and save for any
security interests held by Comerica pursuant to the credit facility between
Comerica and DTS Inc, to our knowledge are free and clear of any claim, lien,
encumbrance, security interest, restriction upon voting or transfer or any other
claim of any third party.
III UNDERWRITING AGREEMENT
The execution and delivery of the Underwriting Agreement by DTS Inc and the sale
of the Firm Stock by DTS Inc to the Underwriters contemplated thereby will not
result in any breach or violation of the Constitutional Documents.
IV REGISTRATION STATEMENT
To our knowledge, the Company is not in violation of its Constitutional
Documents, or is in breach of, or, except as disclosed in the Registration
Statement, in default under any provision of any agreement or instrument which
is an exhibit to the Registration Statement.
6. QUALIFICATIONS
Our opinion is subject to various qualifications, as follows.
I NO OPINION ON OTHER MATTERS
We are not giving any opinion about any of the following matters:
(a) the treatment of any person or payment for the purposes of taxation or for
the purposes of accounting;
(b) the veracity of any facts stated in the Prospectus, Registration Statement
or Underwriting Agreement;
(c) whether the Company complies with the laws, regulations and rules
affecting it, its business or its assets (except where we say so
specifically in this letter); or
(d) the laws of any jurisdiction other than England.
II NO OPINION AS TO THE FUTURE
(a) Our opinion in section 5 is given on the basis of the information
available to us today and this letter states the law as it is today.
45
(b) We have not undertaken to up-date our opinion in future or to advise you
of any changes in the law (or in its interpretation) that might affect our
opinion.
III KNOWLEDGE
(a) Whenever a statement in this letter is qualified by the phrase "to our
knowledge," or by any other similar phrase, or where it is noted that
nothing has been brought to our attention, it means that the opinion
stated is based solely upon the conscious awareness of information as to
the matters being opined upon by (i) the partner who signs, on behalf of
Eversheds LLP, this opinion letter, (ii) any qualified solicitor at
Eversheds LLP who has been actively involved in preparing this opinion
letter, and (iii) solely as to information relevant to a particular
opinion issue or confirmation regarding a particular factual matter, any
qualified solicitor at Eversheds LLP who is primarily responsible for
providing the response concerning that particular opinion issue or
confirmation. We have not undertaken, nor were we obligated or expected to
undertake, an independent investigation to determine the accuracy of the
facts or other information as to which our knowledge is sought, 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 engagement by DTS Inc.
7. TERMS ON WHICH OUR OPINION IS GIVEN
I We are giving our opinion to you in connection with the Transaction and
you must not rely on it (or any part of it) for any other purpose.
II In sections 7.3 to 7.6, "LOSSES" means any loss, liability or damage
arising out of or in connection with this letter, however it is caused and
whether in contract (by way of indemnity or otherwise), in tort (including
negligence) or in misrepresentation, restitution or otherwise (in each
case, whether caused by negligence or not).
III The extent to which any Losses will be recoverable from us will be limited
so as to be in proportion to our contribution to the overall fault for
such Losses, taking into account any contributory negligence by the
claimant, its other advisers and/or any other third party responsible to
the claimant and/or liable in respect of such Losses.
IV No person is permitted to bring any claim in respect of Losses against any
of our partners, employees or agents even where our partners, employees or
agents have been negligent. This restriction will not operate to exclude
any liability which cannot be excluded at law or to exclude the liability
of Eversheds LLP for the acts or omissions of any of our partners,
employees or agents. Each of our partners, employees and agents will have
the right to enforce this section 7.4 pursuant to the Contracts (Rights of
Third Parties) Xxx 0000. Each reference here to a "partner" is to a member
of Eversheds LLP. The use of that term does not imply that the members of
Eversheds LLP are carrying on business in partnership for the purposes of
the Partnership Xxx 0000.
V Nothing in section 7.3 or 7.4 will affect any liability which we have at
any time in respect of any Losses caused by our fraud, fraudulent
misrepresentation or reckless disregard of our professional obligations or
any other situation where the law prohibits us from excluding or limiting
our liability.
VI No person other than the addressees of this letter is permitted to rely on
our opinion (or any part of it) unless we give our prior consent.
Yours faithfully
EVERSHEDS LLP
