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3,000,000 SHARES
COM21, INC.
COMMON STOCK, PAR VALUE $0.001 PER SHARE
UNDERWRITING AGREEMENT
February __, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXX XXXXXXXX XXXXXXX, A DIVISION OF XXXX XXXXXXXX INCORPORATED
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Com21, Inc., a Delaware corporation ("COMPANY") proposes
to issue and sell 2,480,000 shares of its common stock, par value $0.001 per
share ("SECURITIES") and the stockholders listed in Schedule A hereto ("SELLING
STOCKHOLDERS") propose severally to sell an aggregate of 520,000 outstanding
shares of the Securities (such 3,000,000 shares of Securities being hereinafter
referred to as the "FIRM SECURITIES"). The Company also proposes to sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
450,000 additional shares of its Securities, as set forth below (such 450,000
additional shares being hereinafter referred to as the "OPTIONAL SECURITIES").
The Firm Securities and the Optional Securities are herein collectively called
the "OFFERED SECURITIES". The Company and the Selling Stockholders hereby agree
with the several Underwriters named in Schedule B hereto ("UNDERWRITERS") as
follows:
2. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-70945) relating to the
Offered Securities, including a form of prospectus, has been filed
with the Securities and Exchange Commission ("COMMISSION") and
either (A) has been declared effective under the Securities Act of
1933 ("ACT") and is not proposed to be amended or (B) is proposed to
be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the
"INITIAL REGISTRATION STATEMENT") has been declared effective,
either (A) an additional registration statement (the "ADDITIONAL
REGISTRATION STATEMENT") relating to the Offered Securities may have
been filed with the Commission pursuant to Rule 462(b) ("RULE
462(b)") under the Act and, if so filed, has become effective upon
filing pursuant to such Rule and the Offered Securities all have
been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional
registration statement or (B) such an additional registration
statement is proposed to be
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filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration
statement has been filed and the Company does not propose to amend
it, and if any post-effective amendment to either such registration
statement has been filed with the Commission prior to the execution
and delivery of this Agreement, the most recent amendment (if any) to
each such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule
462(c) ("RULE 462(c)") under the Act or, in the case of the
additional registration statement, Rule 462(b). For purposes of this
Agreement, "EFFECTIVE TIME" with respect to the initial registration
statement or, if filed prior to the execution and delivery of this
Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to
amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (B) if the Company
has advised the Representatives that it proposes to file an amendment
or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of
this Agreement but the Company has advised the Representatives that
it proposes to file one, "EFFECTIVE TIME" with respect to such
additional registration statement means the date and time as of which
such registration statement is filed and becomes effective pursuant
to Rule 462(b). "EFFECTIVE DATE" with respect to the initial
registration statement or the additional registration statement (if
any) means the date of the Effective Time thereof. The initial
registration statement, as amended at its Effective Time, including
all material incorporated by reference therein, including all
information contained in the additional registration statement (if
any) and deemed to be a part of the initial registration statement as
of the Effective Time of the additional registration statement
pursuant to the General Instructions of the Form on which it is filed
and including all information (if any) deemed to be a part of the
initial registration statement as of its Effective Time pursuant to
Rule 430A(b) ("RULE 430A(b)") under the Act, is hereinafter referred
to as the "INITIAL REGISTRATION STATEMENT". The additional
registration statement, as amended at its Effective Time, including
the contents of the initial registration statement incorporated by
reference therein and including all information (if any) deemed to be
a part of the additional registration statement as of its Effective
Time pursuant to Rule 430A(b), is hereinafter referred to as the
"ADDITIONAL REGISTRATION STATEMENT". The Initial Registration
Statement and the Additional Registration are hereinafter referred to
collectively as the "REGISTRATION STATEMENTS" and individually as a
"REGISTRATION STATEMENT". The form of prospectus relating to the
Offered Securities, as first filed with the Commission pursuant to
and in accordance with Rule 424(b) ("RULE 424(b)") under the Act or
(if no such filing is required) as included in a Registration
Statement, including all material incorporated by reference in such
prospectus, is hereinafter referred to as the "PROSPECTUS". No
document has been or will be prepared or distributed in reliance on
Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(A) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act and the rules and regulations of the
Commission ("RULES AND REGULATIONS") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed or will conform, in all respects to the requirements of
the Act and the Rules and Regulations and did not include, or will
not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements
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therein not misleading, and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the Effective
Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the
Prospectus will conform, in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents
includes, or will include, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the
Rules and Regulations, neither of such documents will include any
untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do
not apply to statements in or omissions from a Registration
Statement or the Prospectus based upon written information furnished
to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that
the only such information is that described as such in Section 7(c)
hereof.
(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business
requires such qualification.
(iv) The Company has no subsidiaries.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized and validly
issued, fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to the Securities.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter for a brokerage commission, finder's fee or other
like payment in connection with this offering.
(vii) Except as specifically disclosed in the Prospectus,
there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such person
or to require the Company to include such securities in the
securities registered pursuant to a Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(viii) The Company has received written notice from the Nasdaq
Stock Market's National Market stating that the Securities have been
approved for additional listing thereon.
(ix) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is
required to be obtained or made by the Company for the consummation
of the transactions contemplated by this Agreement in connection
with the sale of the Offered Securities, except such as have been
obtained and made under the Act and such as may be required under
state securities laws.
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(x) The execution, delivery and performance of this Agreement,
and the consummation of the transactions herein contemplated will
not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any of
its properties, or any agreement or instrument to which the Company
is a party or by which the Company is bound or to which any of the
properties of the Company is subject, or the charter or by-laws of
the Company.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Except as disclosed in the Prospectus, the Company has
good and marketable title to all real properties and all other
properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made
thereof by it; and except as disclosed in the Prospectus, the
Company holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially
interfere with the use made or to be made thereof by it.
(xiii) The Company possesses adequate certificates,
authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it and
has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company, would
individually or in the aggregate have a material adverse effect on
the condition (financial or other), business, properties or results
of operations of the Company ("MATERIAL ADVERSE EFFECT").
(xiv) No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent that might
have a Material Adverse Effect.
(xv) The Company owns, possesses or can acquire on reasonable
terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, "INTELLECTUAL
PROPERTY RIGHTS") necessary to conduct the business now operated by
it, or presently employed by it, and, except as specifically
disclosed in the Prospectus, has not received any notice of
infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined
adversely to the Company, would individually or in the aggregate
have a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, the Company is
not in violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances
(collectively, "ENVIRONMENTAL LAWS"); to the best of the Company's
knowledge, it does not own or operate any real property contaminated
with any substance that is subject to any environmental laws, is not
liable for any off-site disposal or contamination pursuant to any
environmental laws, and is not subject to any claim relating to any
environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have Material Adverse
Effect; and the Company is not aware of any pending investigation
which might lead to such a claim.
(xvii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the
Company, or any of its properties that, if determined adversely to
the Company, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability
of the Company to perform its obligations under this Agreement, or
which are otherwise material in the context of the sale of the
Offered
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Securities; and no such actions, suits or proceedings are threatened
or, to the Company's knowledge, contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position
of the Company as of the dates shown and its results of operations
and cash flows for the periods shown, and, except as otherwise
disclosed in the Prospectus, such financial statements have been
prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis; and
the schedules included in each Registration Statement present fairly
the information required to be stated therein.
(xix) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company, and, except as disclosed in or
contemplated by the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(xx) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of
the proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940.
(xxi) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Securities it
commences doing such business.
(xxii) The Company has reviewed its operations and those any
third parties with which the Company has a material relationship to
evaluate the extent to which the business or operations of the
Company will be affected by the Year 2000 Problem. As a result of
such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a Material Adverse
Effect. The "YEAR 2000 PROBLEM" as used herein means any significant
risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case
of dates or time periods occurring after December 31, 1999, function
at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder on
such Closing Date and full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver the Offered
Securities to be delivered by such Selling Stockholder on such
Closing Date hereunder; and upon the delivery of and payment for the
Offered Securities on each Closing Date hereunder the several
Underwriters will acquire valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder on
such Closing Date.
(ii) Such Selling Stockholder has reviewed the Registration
Statement and Prospectus, and, although such Selling Stockholder has
not independently verified the accuracy or completeness of the
information contained therein (other than the information regarding
such Selling Stockholder set forth under the captions "Management"
and "Principal and Selling
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Stockholders"), nothing has come to the attention of such Selling
Stockholder that would lead such Selling Stockholder to believe that
(A) upon the effectiveness of the Registration Statement, the
Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading or (B) as of the date of the date of the Prospectus, the
Prospectus contained and, on each Closing Date hereunder, contains
any untrue statement of a material fact or omitted or omits to state
any material fact necessary in order to make the statements therein
not misleading.
(iii) Such Selling Stockholder has reviewed the
representations and warranties of the Company contained in this
Agreement and the information contained in the Registration
Statement. Based on the foregoing, but without performing any
independent check or verification (1) such Selling Stockholder has
no reason to believe and does not believe that such representations
and warranties of the Company contained in this Agreement are not
true and correct in all material respects and (2) the sale of the
Offered Securities by such Selling Stockholder pursuant hereto is
not prompted by any adverse information concerning the Company which
is not set forth in the Registration Statement.
(iv) All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration
Statement and Prospectus is, and on each Closing will be, true,
correct, and complete in all material respects, and does not, and on
such Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make
such information not misleading. The preceding sentence does not
apply to statements in or omissions from a Registration Statement or
the Prospectus based upon written information furnished to the
Company by and Underwriter through the Representatives specifically
for use therein, it being understood and agreed that the only such
information is that described as such in Section 7(c) hereof. Such
Selling Stockholder confirms as accurate the number of Securities
set forth opposite such Selling Stockholder's name in the Prospectus
under the caption "Principal and Selling Stockholders" (both prior
to and after giving effect to the sale of the Securities).
(v) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Stockholder and any person that would give rise to a valid claim
against such Selling Stockholder or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with
this offering.
(vi) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as the enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies
of creditors or by general equitable principles.
(vii) Each of the (a) Custody Agreement signed by such Selling
Stockholder and Boston Equiserve, as custodian (the "CUSTODIAN"),
relating to the deposit of the Securities to be sold by such Selling
Stockholder (the "CUSTODY AGREEMENT") and (b) power of attorney
("POWER OF ATTORNEY") appointing certain individuals named therein
as such Selling Stockholder's attorneys-in-fact (each, an
"ATTORNEY-IN-FACT") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus, of such
Selling Stockholder has been duly authorized, executed and delivered
by such Selling Stockholder and is a valid and binding agreement of
such Selling Stockholder, enforceable in accordance with its terms,
except as the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(viii) The execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its
obligations under, this Agreement, the Custody Agreement and the
Power of Attorney or the consummation by any Selling Stockholder or
any of the other
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transactions contemplated hereby, will not contravene or conflict
with, result in a breach of, or constitute a default under, or
require the consent of any other party to, the charter or by-laws,
partnership agreement, trust agreement or other organizational
documents of such Selling Stockholder or any other agreement or
instrument to which such Selling Stockholder is bound or under which
it is entitled to any right or benefit, any provision of applicable
law or any judgment, order, decree or regulation applicable to such
Selling Stockholder of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over
such Selling Stockholder. No consent, approval, authorization or
other order of, or registration or filing with, any court or other
governmental authority or agency, is required for the consummation
by such Selling Stockholder of the transactions contemplated in this
Agreement, except such as have been obtained or made and are in full
force and effect under the Act, applicable state securities or blue
sky laws and from the NASD.
(ix) 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 stabilization or
manipulation of the price of the Securities to facilitate the sale
or resale of the Securities.
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, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Stockholder, at a purchase price of $_______ per share, that number
of Firm Securities (rounded up or down, as determined by Credit Suisse First
Boston Corporation ("CSFBC") in its discretion, in order to avoid fractions)
obtained by multiplying 2,480,000 Firm Securities in the case of the Company,
and the number of Firm Securities set forth opposite the name of such Selling
Stockholder in Schedule A hereto, in the case of a Selling Stockholder, in each
case by a fraction, the numerator of which is the number of Firm Securities set
forth opposite the name of such Underwriter in Schedule B hereto and the
denominator of which is the total number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under Custody Agreements made with the Custodian. Each
Selling Stockholder agrees that the shares represented by the certificates held
in custody for the Selling Stockholders under such Custody Agreements are
subject to the interests of the Underwriters hereunder, that the arrangements
made by the Selling Stockholders for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholders hereunder
shall not be terminated by operation of law, whether by the death of any
individual Selling Stockholder or the occurrence of any other event, or in the
case of a trust, by the death of any trustee or trustees or the termination of
such trust. If any individual Selling Stockholder or any such trustee or
trustees should die, or if any other such event should occur, or if any of such
trusts should terminate, before the delivery of the Offered Securities
hereunder, certificates for such Offered Securities shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death or other event or termination had not occurred, regardless of whether
or not the Custodian shall have received notice of such death or other event or
termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to CSFBC drawn to the order of
the Company in the case of 2,480,000 shares of Firm Securities and the Custodian
in the case of 520,000 shares of Firm Securities, at the office of Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto,
California, at 9:30 A.M., New York time, on _______, 1999, or at such other time
not later than seven full business days thereafter as CSFBC and the Company
determine, such time being herein referred to as the "FIRST CLOSING DATE". The
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as CSFBC requests and
will be made available for checking and packaging at the offices in New York,
New York of the Company's transfer agent or registrar or of the Representatives
at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders from time to time not more than 30 days subsequent to the
date of the Prospectus, the Underwriters may purchase all or less than all
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of the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. The Company agrees to sell to the Underwriters the number of
shares of Optional Securities specified in such notice, and the Underwriters
agree, severally and not jointly, to purchase such Optional Securities. Such
Optional Securities shall be purchased from the Company for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price therefor in Federal (same day) funds by official bank check
or checks or wire transfer to an account at a bank acceptable to CSFBC drawn to
the order of the Company, at the above office of Xxxxxxx, Phleger & Xxxxxxxx
LLP. The certificates for the Optional Securities being purchased on each
Optional Closing Date will be in definitive form, in such denominations and
registered in such names as CSFBC requests upon reasonable notice prior to such
Optional Closing Date and will be made available for checking and packaging at
the offices in New York, New York of the Company's transfer agent or registrar
or of the Representatives at a reasonable time in advance of such Optional
Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company, the Selling Stockholders and the
Underwriters. The Company agrees with the several Underwriters and the Selling
Stockholders that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant
to Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and an
additional registration statement is necessary to register a portion of
the Offered Securities under the Act but the Effective Time thereof has
not occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance with
Rule 462(b) on or prior to 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, on or prior to the time the Prospectus is
printed and distributed to any Underwriter, or will make such filing at
such later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as
filed or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent; and the
Company will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of
a Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
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(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the 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 Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "AVAILABILITY DATE" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"AVAILABILITY DATE" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (four of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as CSFBC requests. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information
concerning the Company as CSFBC may reasonably request.
(h) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act
relating to, any additional shares of its Securities or securities
convertible into or exchangeable or exercisable for any shares of its
Securities, or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent of
CSFBC, except issuances of Securities pursuant to the conversion or
exchange of convertible or exchangeable securities or the exercise of
warrants or options, in each case outstanding on the date hereof, sales of
stock to employees pursuant to an employee stock purchase plan, grants of
employee stock options pursuant to the terms of a plan in effect on the
date hereof or issuances of Securities pursuant to the exercise of such
options.
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(i) The Company agrees with the several Underwriters that the
Company will pay all expenses incident to the performance of the
obligations of the Company and the Selling Stockholders, as the case may
be, under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel) in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. of the
Offered Securities, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities, for any transfer taxes on the sale by the Selling Stockholders
of the Offered Securities to the Underwriters and for expenses incurred in
distributing preliminary prospectuses and the Prospectus (including any
amendments and supplements thereto) to the Underwriters.
(j) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(k) Each Selling Stockholder agrees, for a period of 90 days after
the date of the initial public offering of the Offered Securities, not to
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any additional shares of the Securities of the Company or
securities convertible into or exchangeable or exercisable for any shares
of Securities, or publicly disclose the intention to make any such offer,
sale, pledge or disposition, without the prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Deloitte & Touche LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statements comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company who
have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:
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(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all
material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations or
any material modifications should be made to such unaudited
financial statements for them to be in conformity with
generally accepted accounting principles;
(B) the unaudited consolidated net sales, net operating
income, net income and net income per share amounts for the
five three-month periods, beginning with the three-month
period ended December 31, 1997 and continuing through the
three-month period ended December 31, 1998, included in the
Prospectus do not agree with the amounts set forth in the
unaudited consolidated financial statements for those same
periods or were not determined on a basis substantially
consistent with that of the corresponding amounts in the
audited statements of income;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of such
letter, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company or, at the date of the latest available balance sheet
read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared
with amounts shown on the latest balance sheet included in the
Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period
of corresponding length ended the date of the latest income
statement included in the Prospectus, in consolidated net
sales or net operating income in the total or per share
amounts of consolidated net income;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company subject to the internal controls of the
Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "REGISTRATION STATEMENTS" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statements is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "REGISTRATION STATEMENTS" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective Time, and
(iii) "PROSPECTUS" shall mean the prospectus included in the Registration
Statements.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York
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time, on the date of this Agreement or such later date as shall have
been consented to by CSFBC. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution and
delivery of this Agreement, such Effective Time shall have occurred
not later than 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CSFBC. If the Effective Time
of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed
with the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to such Closing Date, no stop
order suspending the effectiveness of a Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the
Company or the Representatives, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company which, in the
judgment of a majority in interest of the Underwriters including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (iv) any banking moratorium declared by U.S. Federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Underwriters including
the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment
for the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company,
to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; and the
Company is duly qualified to do business as a foreign corporation in
good standing in each jurisdiction known to such counsel in which
its ownership or lease of property or the conduct of its business
requires such qualification;
(ii) The Offered Securities delivered on such Closing Date
and, to such counsel's knowledge, all other outstanding shares of
the Common Stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect
to the Offered Securities;
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned
by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
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(iv) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of
the proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940.
(v) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company or any Selling Stockholder for the
consummation of the transactions contemplated by this Agreement or
the Custody Agreement in connection with the sale of the Offered
Securities, except such as have been obtained and made under the Act
and such as may be required under state securities laws;
(vi) The execution, delivery and performance of this Agreement
or the Custody Agreement and the consummation of the transactions
herein or therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over
the Company or any of its properties, or any material agreement or
instrument to which the Company is a party or by which the Company
is bound or to which any of the properties of the Company is
subject, or the charter or by-laws of the Company;
(vii) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed
and became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule
424(b) specified in such opinion on the date specified therein or
was included in the Initial Registration Statement or the Additional
Registration Statement (as the case may be), and, to the knowledge
of such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; such counsel have no reason to believe that any part of
a Registration Statement or any amendment thereto, as of its
effective date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or that the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; the descriptions in the Registration
Statements and Prospectus of statutes, legal and governmental
proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel do not know of any legal or governmental proceedings
required to be described in a Registration Statement or the
Prospectus which are not described as required or of any contracts
or documents of a character required to be described in a
Registration Statement or the Prospectus or to be filed as exhibits
to a Registration Statement which are not described and filed as
required; it being understood that such counsel need express no
opinion as to the financial statements or other financial data
contained in the Registration Statements or the Prospectus;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company;
(ix) Such counsel is not aware of any written claim or any
challenge by any person to the rights of the Company with respect to
its business other than those identified in the Prospectus;
(x) Such counsel is not aware of any legal actions, claims or
proceedings pending or threatened against the Company asserted in
writing and alleging that the Company is infringing or
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otherwise violating any patents, trademarks, copyrights, mask work
rights, trade secrets or other intellectual property rights owned by
others other than those identified in the Prospectus; and
(xi) Such counsel has reviewed the descriptions of patents and
patent applications under the captions "Risk Factors--Our Failure to
Adequately Protect Our Proprietary Rights May Adversely Affect Us"
and "Business--Intellectual Property" in the Registration Statement
and Prospectus, and, to the extent they constitute matters of law or
legal conclusions, these descriptions are accurate and fairly and
completely present the patent situation of the Company.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials and, as to
matters involving the application of laws of any jurisdiction other than
the States of California and Delaware, or the United States, to the extent
satisfactory in form and scope to counsel for the Underwriters, upon the
opinion of other counsel. The foregoing opinion shall also state that the
Underwriters are justified in relying upon such opinion of such counsel
and, and copies of any such opinion shall be delivered to the
Representatives and counsel for the Underwriters.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx, Xxxxxxx & Xxxxxxxx, counsel for the Selling
Stockholders, to the effect that:
(i) Each Selling Stockholder had valid and unencumbered title
to the Offered Securities delivered by such Selling Stockholder on
such Closing Date and had full right, power and authority to sell,
assign, transfer and deliver the Offered Securities delivered by
such Selling Stockholder on such Closing Date hereunder; and the
several Underwriters have acquired valid and unencumbered title to
the Offered Securities purchased by them from the Selling
Stockholders on such Closing Date hereunder;
(ii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required to be obtained or made by any Selling Stockholder for the
consummation of the transactions contemplated by the Custody
Agreement or this Agreement in connection with the sale of the
Offered Securities sold by the Selling Stockholders, except such as
have been obtained and made under the Act and such as may be
required under state securities laws;
(iii) The execution, delivery and performance of the Custody
Agreement and this Agreement and the consummation of the
transactions therein and herein contemplated will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court having
jurisdiction over any Selling Stockholder or any of their properties
or any agreement or instrument to which any Selling Stockholder is a
party or by which any Selling Stockholder is bound or to which any
of the properties of any Selling Stockholder is subject, or the
charter or by-laws of any Selling Stockholder which is a
corporation;
(iv) The Power of Attorney and related Custody Agreement with
respect to each Selling Stockholder has been duly authorized,
executed and delivered by such Selling Stockholder and constitute
valid and legally binding obligations of each such Selling
Stockholder enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and
(v) This Agreement has been duly authorized, executed and
delivered by the Attorney-in-Fact for the Selling Stockholders.
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(f) The Representatives shall have received from Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the
Underwriters, such opinion or opinions, dated such Closing Date,
with respect to the incorporation of the Company, the validity of
the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as
the Representatives may require, and the Selling Stockholders and
the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such
matters.
(g) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and
a principal financial or accounting officer of the Company in which
such officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties
of the Company in this Agreement are true and correct; the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such
Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission;
the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing
fee in accordance with Rule 111(a) or (b) under the Act, prior to
the time the Prospectus was printed and distributed to any
Underwriter; and, subsequent to the dates of the most recent
financial statements in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company except
as set forth in or contemplated by the Prospectus or as described in
such certificate.
(h) The Representatives shall have received a letter, dated
such Closing Date, of Deloitte & Touche LLP which meets the
requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not
more than three days prior to such Closing Date for the purposes of
this subsection.
The Selling Stockholders and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and documents
as the Representatives reasonably request. CSFBC may in its sole discretion
waive on behalf of the Underwriters compliance with any conditions to the
obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal
or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
will not be liable in any such case 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 in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter
consists of the information described as such in subsection (c) below and
provided, further, that with respect to any untrue statement or alleged
untrue statement in or omission or alleged omission from any preliminary
prospectus the indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the Offered
Securities concerned, to the extent that a prospectus
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relating to such Offered Securities was required to be delivered by such
Underwriter under the Act in connection with such purchase and any such
loss, claim, damage or liability of such Underwriter results from the fact
that there was not sent or given to such person, at or prior to the
written confirmation of the sale of such Offered Securities to such
person, a copy of the Prospectus if the Company had previously furnished
copies thereof to such Underwriter.
(b) Selling Stockholders.
(i) The Selling Stockholders will jointly and severally
indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any
Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Selling Stockholders will
not be liable in any such case 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 in or omission or alleged
omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information
described as such in subsection (c) below and provided, further,
that (A) the liability under this Section 7(b) of each Selling
Stockholder shall be limited to an amount equal to the aggregate
proceeds, net of underwriting discounts and commissions, to such
Selling Stockholder from the sale of the Offered Securities sold by
such Selling Stockholder hereunder and (B) with respect to any
untrue statement or alleged untrue statement in or omission or
alleged omission from any preliminary prospectus the indemnity
agreement contained in this subsection (b)(i) shall not inure to the
benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered
Securities concerned, to the extent that a prospectus relating to
such Offered Securities was required to be delivered by such
Underwriter under the Act in connection with such purchase and any
such loss, claim, damage or liability of such Underwriter results
from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Prospectus if the Company
had previously furnished copies thereof to such Underwriter.
Notwithstanding anything herein to the contrary, the Underwriters
agree that they shall not seek indemnification under this Section
7(b)(i) from the Selling Stockholders unless the Underwriters shall
first have sought indemnity from the Company under Section 7(a) and
the Company has not agreed to satisfy such request for
indemnification in full within 30 days; provided however, that the
Underwriters shall not be required to effect such initial demand
upon the Company and wait such 30-day period if it would prejudice
their right to indemnification from the Selling Stockholders
hereunder.
(ii) The Selling Stockholders will severally indemnify and
hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent but
only to the extent that such untrue statement or alleged untrue
statement or
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omission or alleged omission was made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder
expressly for use therein, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter
in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that the Selling Stockholders will not be liable in any
such case 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 in or omission or alleged omission from any
of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any
Underwriter consists of the information described as such in
subsection (c) below and provided, further, that the liability under
this Section 7(b) of each such Selling Stockholder shall be limited
to an amount equal to the aggregate proceeds, net of underwriting
discounts and commissions, to such Selling Stockholder from the sale
of Offered Securities sold by such Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company, its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the Act,
and each Selling Stockholder against any losses, claims, damages or
liabilities to which the Company or such Selling Stockholder may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company by
such Underwriter through the Representatives specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company and each Selling Stockholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred, it being understood and agreed that the only such
information furnished by any Underwriter consists of the following
information in the Prospectus furnished on behalf of each Underwriter: the
last paragraph at the bottom of the cover page concerning the terms of the
offering by the Underwriters, the legend concerning over-allotments and
stabilizing and passive market making on the inside front cover page, the
concession and reallowance figures appearing under the caption
"Underwriting" and the information contained in the paragraphs under the
caption "Underwriting" regarding sales to discretionary accounts and/or
passive market making.
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under subsection (a), (b) or (c) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under subsection (a),
(b) or (c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement
of any pending or threatened action in respect of which any indemnified
party is or could have
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been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the
subject matter of such action.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a), (b) or (c) above (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the
offering of the Securities 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 and the
Selling Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and
the Selling Stockholders bear to the total underwriting discounts and
commissions received by the Underwriters. 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, the Selling Stockholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (e) shall
be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations in this subsection (e) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(f) The obligations of the Company and the Selling Stockholders
under this Section shall be in addition to any liability which the Company
and the Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to
each officer of the Company who has signed a Registration Statement and to
each person, if any, who controls the Company within the meaning of the
Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
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10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c), the Company and the Selling
Stockholders will, jointly and severally, reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department -
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Com21, Inc., 000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, or, if sent to the
Selling Stockholders or any of them, will be mailed, delivered or telegraphed
and confirmed to _________________________ at ___________________________ ;
provided, however, that any notice to an Underwriter pursuant to Section 7 will
be mailed, delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters. Attorneys-in-Fact will act for
the Selling Stockholders in connection with such transactions, and any action
under or in respect of this Agreement taken by Attorneys-in-Fact will be binding
upon all the Selling Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
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If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
SELLING STOCKHOLDERS
----------------------------------------
By: ,
------------------------------------
Attorney-In-Fact
COM21, INC.
By:
------------------------------------
Xxxxx X. Xxxxxx, President
and Chief Executive Officer
The foregoing underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXX XXXXXXXX XXXXXXX, A DIVISION OF XXXX
XXXXXXXX INCORPORATED
Acting on behalf of themselves and as the
Representatives of the several
Underwriters.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
---------------------------------------
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SCHEDULE A
NUMBER OF
FIRM
SECURITIES
SELLING STOCKHOLDER TO BE SOLD
------------------- ----------
-----------
Total...........................................................
===========
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SCHEDULE B
NUMBER OF
FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Credit Suisse First Boston Corporation.................................
Xxxx Xxxxxxxx Xxxxxxx, a division of Xxxx Xxxxxxxx Incorporated........
Total...................................................
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