Exhibit 1.1
5,000,000 Shares of Common Stock
KOMAG, INCORPORATED
UNDERWRITING AGREEMENT
January __, 2004
BEAR, XXXXXXX & CO. INC.
Xxxxx Xxxxxxx & Co.
Xxxxxxx & Company, Inc.
Xxxxxx Xxxxxx Partners LLC
As Representatives of the
several Underwriters named in
Schedule I attached hereto (the "Representative(s)")
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies/Gentlemen:
Komag, Incorporated, a corporation organized and existing under the laws
of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 3,000,000 shares (the "Company
Shares") of its common stock, par value $0.01 per share (the "Common Stock").
The stockholders of the Company listed on Schedule II hereto (the "Selling
Stockholders") severally propose to sell to the Underwriters an aggregate of
2,000,000 shares of Common Stock (the "Selling Stockholders' Shares" and
together with the company Shares, the "Firm Shares"). For the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, at the
option of the Underwriters, the Company also proposes to issue and sell to the
Underwriters up to an additional 750,000 shares of Common Stock (the "Additional
Shares"). The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "Shares". The Shares are more fully
described in the Registration Statement and Prospectus referred to below. Bear,
Xxxxxxx & Co. Inc. ("Bear Xxxxxxx"), Xxxxx Xxxxxxx & Co., Xxxxxxx & Company,
Inc., and Xxxxxx Xxxxxx Partners LLC, are acting as lead managers (the "Lead
Managers") in connection with the offering and sale of the Shares contemplated
herein (the "Offering").
1. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-110182), and amendments thereto, and related preliminary prospectuses for
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the Shares which registration statement, as so amended, has been
declared effective by the Commission and copies of which have heretofore been
delivered to the Underwriters. The registration statement, as amended at the
time it became effective, including the prospectus, financial statements,
schedules, exhibits and other information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A or
434(d) under the Securities Act, is hereinafter referred to as the "Registration
Statement." If the Company has filed or is required pursuant to the terms hereof
to file a registration statement pursuant to Rule 462(b) under the Securities
Act registering additional shares of Common Stock (a "Rule 462(b) Registration
Statement"), then, unless otherwise specified, any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission. All of the
Shares have been registered under the Securities Act pursuant to the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. No stop order suspending the effectiveness of
either the Registration Statement 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. The Company, if required by the Securities Act and
the rules and regulations of the Commission (the "Rules and Regulations"),
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act ("Rule 424(b)"). The prospectus, in the form in which
it is to be filed with the Commission pursuant to Rule 424(b), or, if the
prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
prospectus in the form included as part of the Registration Statement at the
time the Registration Statement became effective, is hereinafter referred to as
the "Prospectus," except that if any revised prospectus or prospectus supplement
shall be provided to the Underwriters by the Company for use in connection with
the Offering which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b)), the term "Prospectus" shall also refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the time
it is first provided to the Underwriters for such use. Any preliminary
prospectus or prospectus subject to completion included in the Registration
Statement or filed with the Commission pursuant to Rule 424 under the Securities
Act is hereafter called a "Preliminary Prospectus." Any reference herein to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act (as
defined below) on or before the effective date of the Registration Statement,
the date of such Preliminary Prospectus or the date of the Prospectus, as the
case may be, and any reference herein to the terms "amend", "amendment" or
"supplement" with respect
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to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include (i) the filing of any document under the
Exchange Act after the effective date of the Registration Statement, the date of
such Preliminary Prospectus or the date of the Prospectus, as the case may be,
which is incorporated therein by reference and (ii) any such document so filed.
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing shall be deemed to include any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("XXXXX").
(ii) At the time of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 under the
Securities Act ("Rule 434"), when any supplement to or amendment of the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed and at the Closing Date and the Additional Closing
Date, if any (as hereinafter respectively defined), the Registration Statement
and the Prospectus and any amendments thereof and supplements thereto complied
or will comply in all material respects with the applicable provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the Rules and Regulations and did not and will not contain an untrue
statement of a material fact and did not and will not omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein (i) in the case of the Registration Statement, not misleading and (ii)
in the case of the Prospectus or any related Preliminary Prospectus in light of
the circumstances under which they were made, not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) under the Securities Act) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the Rules and Regulations and did not
contain an untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Lead Managers specifically for use therein. The
parties acknowledge and agree that such information provided by or on behalf of
any Underwriter consists solely of the material included in paragraphs
under the caption "Underwriting" in the Prospectus.
(iii) KPMG LLP and Ernst & Young LLP, who have certified the
financial statements and supporting schedules and information of the Company and
its subsidiaries that are included or incorporated by reference in the
Registration Statement each are independent public accountants as required by
the Securities Act, the Exchange Act and the Rules and Regulations.
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(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
disclosed in the Registration Statement and the Prospectus, the Company has not
declared, paid or made any dividends or other distributions of any kind on or in
respect of its capital stock and there has been no material adverse change or
any development involving a prospective material adverse change, whether or not
arising from transactions in the ordinary course of business, in or affecting
(A) the business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and each subsidiary
of the Company listed on Exhibit A hereto (the "Subsidiaries"), individually or
taken as a whole; (B) the long-term debt or capital stock of the Company or any
of its Subsidiaries; or (C) the Offering or consummation of any of the other
transactions contemplated by this Agreement, the Registration Statement or the
Prospectus (a "Material Adverse Change"). Since the date of the latest balance
sheet presented, or incorporated by reference, in the Registration Statement and
the Prospectus, neither the Company nor any Subsidiary has incurred or
undertaken any liabilities or obligations, whether direct or indirect,
liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business or asset,
which are material to the Company and the Subsidiaries individually or taken as
a whole, except for liabilities, obligations and transactions which are
disclosed in the Registration Statement and the Prospectus.
(v) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column headed "Actual"
under the caption "Capitalization," as adjusted to reflect the sale by the
Company of idle property is as set forth in the column headed "As Adjusted"
under the caption "Capitalization," and after giving effect to the Offering and
the other transactions contemplated by this Agreement, the Registration
Statement and the Prospectus, and the proposed concurrent offering by the
Company of convertible debt, will be as set forth in the column headed "As
Further Adjusted" under the caption "Capitalization". All of the issued and
outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable state, federal and foreign securities laws and
not in violation of or subject to any preemptive or similar right that does or
will entitle any person, upon the issuance or sale of any security, to acquire
from the Company or any Subsidiary any Common Stock or other security of the
Company or any Subsidiary or any security convertible into, or exercisable or
exchangeable for, Common Stock or any other such security (any "Relevant
Security"), except for such rights as may have been fully satisfied or waived
prior to the effectiveness of the Registration Statement.
(vi) The Shares have been duly and validly authorized and,
when delivered in accordance with this Agreement, will be duly and validly
issued, fully paid and non-assessable, will have been issued in compliance with
all applicable state, federal and foreign securities laws and will not have been
issued in violation of or subject to any preemptive or similar right that does
or will entitle any person to acquire any Relevant Security from the Company or
any Subsidiary upon issuance or sale of Shares in the Offering. The Common Stock
and the Shares conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. Except as disclosed
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has outstanding warrants, options to
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purchase, or any preemptive rights or other rights to subscribe for or to
purchase, or any contracts or commitments to issue or sell, any Relevant
Security.
(vii) The Subsidiaries are the only subsidiaries of the
Company within the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries and as otherwise disclosed in the Registration Statement and the
Prospectus, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity. The Company owns, directly or indirectly through other
Subsidiaries, 100% of the outstanding capital stock or other securities
evidencing equity ownership of each Subsidiary free and clear of any lien,
charge, mortgage, pledge, security interest, claim, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any kind
whatsoever (any "Lien") other than the liens granted pursuant to the Loan and
Security Agreement, dated as of June 30, 2002, among the Company, the lenders
party thereto and Ableco Finance LLC, as administrative agent and collateral
agent, as amended (the "Loan Agreement") and the Indenture, dated as of June 30,
2002 between the Company and The Bank of New York, as trustee, as supplemented
(the "Senior Indenture"); and all of such securities have been duly and validly
authorized and issued and are fully paid and non-assessable and were not issued
in violation of any preemptive or similar rights that does or will entitle any
person, upon the issuance or sale of any security, to acquire from the Company
or any Subsidiary any Relevant Security, except for such rights as may have been
fully satisfied or waived prior to the effectiveness of the Registration
Statement.
(viii) Komag USA (Malaysia) Sdn., a Malaysian corporation (the
"Significant Subsidiary") is the Company's only "significant subsidiary" within
the meaning of Rule 405 under the Securities Act. Each of the Company and the
Subsidiaries has been duly organized and validly exists as a corporation,
partnership or limited liability company in good standing under the laws of its
jurisdiction of organization. Each of the Company and the Subsidiaries has all
requisite power and authority to carry on its business as it is currently being
conducted and as described in the Prospectus, and to own, lease and operate its
respective properties. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which (individually and in
the aggregate) could not reasonably be expected to have a material adverse
effect on (A) the business, condition (financial or otherwise), results of
operations, stockholders' equity, properties or prospects of the Company and the
Subsidiaries, individually or taken as a whole; (B) the long-term debt or
capital stock of the Company or any Subsidiary; or (C) the Offering or
consummation of any of the other transactions contemplated by this Agreement,
the Registration Statement or the Prospectus (any such effect being a "Material
Adverse Effect").
(ix) Each of the Company and the Significant Subsidiary has
all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all judicial,
regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (each, a "Consent" and collectively, the
"Consents"), to own, lease and operate its properties and conduct its business
as it is now being conducted and as disclosed in the Registration Statement and
the Prospectus, and
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each such Consent is valid and in full force and effect except for such failures
as could not reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any Significant Subsidiary has received notice of any
investigation or proceedings which results in or, if decided adversely to the
Company or the Significant Subsidiary, could reasonably be expected to result
in, the revocation of, or imposition of a materially burdensome restriction on,
any Consent. Each of the Company and the Significant Subsidiary is in compliance
with all applicable laws, rules, regulations, ordinances, directives, judgments,
decrees and orders, foreign and domestic, except where failure to be in
compliance could not reasonably be expected to have a Material Adverse Effect.
No Consent contains a materially burdensome restriction not adequately disclosed
in the Registration Statement and the Prospectus.
(x) The Company has full right, power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus. This Agreement and the transactions contemplated
by this Agreement, the Registration Statement and the Prospectus have been duly
and validly authorized by the Company. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(xi) The execution, delivery, and performance of this
Agreement and consummation of the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus do not and will not (A) conflict
with, require consent under or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement, instrument, franchise, license or
permit to which the Company or any Subsidiary is a party or by which the Company
or any Subsidiary or their respective properties, operations or assets may be
bound, except (1) under the Loan Agreement, which will be terminated by the
Company on or prior to the Closing Date and (2) a confirmation from the trustee
under the Senior Indenture that the Securities will be subordinated to the
Company's Senior Secured Notes due 2007 on terms reasonably acceptable to such
trustee, (B) violate or conflict with any provision of the certificate or
articles of incorporation, by-laws, certificate of formation, limited liability
company agreement, partnership agreement or other organizational documents of
the Company or any Subsidiary, or (C) violate or conflict with any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign,
except (in the case of clauses (A) and (C) above) as could not reasonably be
expected to have a Material Adverse Effect.
(xii) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance of this
Agreement or consummation of the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus,
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including the issuance, sale and delivery of the Shares to be issued, sold and
delivered hereunder, except the registration under the Securities Act of the
Shares, which has become effective, and such Consents as may be required under
state securities or blue sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") or NASD Regulation, Inc.
("NASDR") in connection with the purchase and distribution of the Shares by the
Underwriters, each of which has been obtained and is in full force and effect.
(xiii) Except as disclosed in the Registration Statement and
the Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; to the best of the Company's knowledge, no such
proceeding, litigation or arbitration is threatened or contemplated; and the
defense of all such proceedings, litigation and arbitration against or involving
the Company or any Subsidiary could not reasonably be expected to have a
Material Adverse Effect.
(xiv) The financial statements and pro forma data, including
the notes thereto, and the supporting schedules included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in all
material respects the financial position as of the dates indicated and the cash
flows and results of operations for the periods specified of the Company and its
consolidated subsidiaries and the other entities for which financial statements
are included or incorporated by reference; except as otherwise stated in the
Registration Statement and the Prospectus, said financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved; and
the supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly in all material
respects the information required to be stated therein. All non-GAAP financial
information included or incorporated by reference in the Registration Statement
and Prospectus complies with the requirements of Regulation G and Item 10 of
Regulation S-K under the Securities Act. No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The other financial and statistical information included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in all
material respects the information included therein and have been prepared on a
basis consistent with that of the financial statements that are included or
incorporated by reference in the Registration Statement and the Prospectus and
the books and records of the respective entities presented therein.
(xv) There are no pro forma or as adjusted financial
statements which are required to be included or incorporated by reference in the
Registration Statement and the Prospectus in accordance with Regulation S-X.
(xvi) The statistical, industry-related and market-related
data included in the Registration Statement and the Prospectus are based on or
derived from sources which the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from which they are
derived.
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(xvii) The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and files reports with the Commission on
the XXXXX System. The Common Stock is registered pursuant to Section 12(b) of
the Exchange Act and the outstanding shares of Common Stock (including the
Shares) are listed for quotation on the Nasdaq (as defined in Section 11(b)
below) and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or de-listing the Common Stock from the Nasdaq, nor has the Company received
any notification that the Commission or the Nasdaq is contemplating terminating
such registration or listing.
(xviii) The Company and the Subsidiaries maintain a system of
internal accounting and other controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management's
general or specific authorizations, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with United States
generally accepted accounting principles and to maintain accountability for
assets, (C) access to assets is permitted only in accordance with management's
general or specific authorization, and (D) the recorded accounting for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(xix) Neither the Company nor any of its affiliates that it
controls (within the meaning of Rule 144 under the Securities Act) has taken,
directly or indirectly, any action which constitutes or is designed to cause or
result in, or which could reasonably be expected to constitute, cause or result
in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Shares.
(xx) Neither Company nor any of its affiliates that it
controls has, prior to the date hereof, made any offer or sale of any securities
which could be "integrated" for purposes of the Securities Act or the Rules and
Regulations with the offer and sale of the Shares pursuant to the Registration
Statement. Except as disclosed in the Registration Statement and the Prospectus,
neither Company nor any of its affiliates has sold or issued any Relevant
Security during the six-month period preceding the date of the Prospectus,
including but not limited to any sales pursuant to Rule 144A or Regulation D or
S under the Securities Act, other than shares of Common Stock issued pursuant to
employee benefit plans, qualified stock option plans or the employee
compensation plans or pursuant to outstanding options, rights or warrants as
described in the Registration Statement and the Prospectus.
(xxi) Except as disclosed in the Registration Statement and
the Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
(xxii) The conditions for use of Form S-3 to register the
Offering under the Securities Act, as set forth in the General Instructions to
such Form, have been satisfied.
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(xxiii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Securities Act, the Exchange Act and the Rules and
Regulations, and, when read together with the other information in the
Prospectus, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(xxiv) The Company is not and, at all times up to and
including consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, and after giving effect to the
application of the net proceeds of the Offering, will not be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended, and is not and will not be an entity "controlled" by an
"investment company" within the meaning of such act.
(xxv) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act, the Exchange Act or the Rules and
Regulations and which have not been so described or filed.
(xxvi) No relationship, direct or indirect, exists between or
among any of the Company or any affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement or the Prospectus which is not so described and described
as required. There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus. The Company has not,
in violation of the Xxxxxxxx-Xxxxx Act, directly or indirectly, including
through a Subsidiary, extended or maintained credit, arranged for the extension
of credit, or renewed an extension of credit, in the form of a personal loan to
or for any director or executive officer of the Company.
(xxvii) Except as disclosed in the Registration Statement and
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 the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, shareholders, partners,
employees, Subsidiaries or affiliates that may affect the Underwriters'
compensation as determined by the NASD.
(xxviii) The Company and each Subsidiary owns or leases all
such properties as are necessary to the conduct of its business as presently
operated and as proposed to
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be operated as described in the Registration and the Prospectus. The Company and
the Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them,
in each case free and clear of all Liens except such as are described in the
Registration Statement and the Prospectus or such as do not (individually or in
the aggregate) materially affect the value of such property or materially
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; and any real property and buildings held under
lease or sublease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material to, and do not materially interfere with, the use made and proposed to
be made of such property and buildings by the Company and the Subsidiaries.
Neither the Company nor any Subsidiary has received any notice of any claim
adverse to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held
under lease or sublease by the Company or any Subsidiary.
(xxix) The Company and each Subsidiary (i) owns, possesses or
can obtain on commercially reasonable terms adequate right to use all patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses, formulae,
customer lists, and know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, "Intellectual Property") necessary for the
conduct of their respective businesses as being conducted and as described in
the Registration Statement and Prospectus except where the failure to own or
possess such rights could not be reasonably expected to result in a Material
Adverse Effect and (ii) have no reason to believe that the conduct of their
respective businesses does or will conflict with, and have not received any
notice of any claim of conflict with, any such right of others. To the best of
the Company's knowledge, all material technical information developed by and
belonging to the Company or any Subsidiary which has not been patented has been
kept confidential. Neither the Company nor any Subsidiary has granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the current products and services of the Company
and its Subsidiaries or those products and services described in the
Registration Statement and Prospectus. To the Company's knowledge, there is no
infringement by third parties of any such Intellectual Property; there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the Company's or any Subsidiary's rights in or to
any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; and there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by others
that the Company or any Subsidiary infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
any such claim.
(xxx) The Company and the Significant Subsidiary maintains
insurance in such amounts and covering such risks as the Company reasonably
considers adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries, all of which insurance is in full force and effect, except
where the failure to maintain such insurance could not reasonably be expected to
have a Material Adverse Effect. There are no material claims by the Company or
the Significant Subsidiary under any such policy or instrument as to which any
insurance company is
10
denying liability or defending under a reservation of rights clause. The Company
reasonably believes that it will be able to renew its existing insurance as and
when such coverage expires or will be able to obtain replacement insurance
adequate for the conduct of the business and the value of its properties at a
cost that could not reasonably be expected to have a Material Adverse Effect.
(xxxi) The Company has in effect insurance covering the
Company, its directors, officers and the Underwriters for liabilities or losses
arising in connection with this Offering, including, without limitation,
liabilities or losses arising under the Securities Act, the Exchange Act, the
Rules and Regulations and applicable foreign securities laws.
(xxxii) Each of the Company and the Subsidiaries has
accurately prepared and timely filed all federal, state, foreign and other tax
returns that are required to be filed by it and has paid or made provision for
the payment of all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the
Company or any Subsidiary is obligated to withhold from amounts owing to
employees, creditors and third parties, with respect to the periods covered by
such tax returns (whether or not such amounts are shown as due on any tax
return) except for any assessments, fines or penalties that are currently being
contested in good faith. No deficiency assessment with respect to a proposed
adjustment of the Company's or any Subsidiary's applicable federal, state, local
or foreign taxes is pending or, to the best of the Company's knowledge,
threatened. The accruals and reserves on the books and records of the Company
and the Subsidiaries in respect of tax liabilities for any taxable period not
finally determined are adequate to meet any assessments and related liabilities
for any such period and, since December 29, 2002, the Company and the
Subsidiaries have not incurred any liability for taxes other than in the
ordinary course of its business. There is no tax lien, whether imposed by any
federal, state, foreign or other taxing authority, outstanding against the
assets, properties or business of the Company or any Subsidiary.
(xxxiii) No labor disturbance by the employees of the Company
or the Significant Subsidiary exists or, to the best of the Company's knowledge,
is imminent and the Company is not aware of any existing or imminent labor
disturbances by the employees of any of its or the Significant Subsidiary's
principal suppliers, manufacturers', customers or contractors, which, in either
case (individually or in the aggregate), could reasonably be expected to have a
Material Adverse Effect.
(xxxiv) No "prohibited transaction" (as defined in either
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")), "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or other event of the kind described 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 for which the Company or any Subsidiary would have any liability which
could (individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect; each employee benefit plan for which the Company or any
Subsidiary would have any liability is in compliance
11
in all material respects with applicable law, including (without limitation)
ERISA and the Code, except for any failure to so comply that could not result in
a Material Adverse Effect; 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 plan for which the Company would
have any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or by failure
to act, which could cause the loss of such qualification.
(xxxv) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company or any Subsidiary (or, to the Company's knowledge, any other entity
for whose acts or omissions the Company is or may be liable) upon any other
property now or previously owned or leased by the Company or any Subsidiary, or
upon any other property, which would be a violation of or give rise to any
liability under any applicable law, rule, regulation, order, judgment, decree or
permit relating to pollution or protection of human health and the environment
("Environmental Law"), except for violations and liabilities which, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. There has been no disposal discharge, emission or other release of any
kind onto such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which the
Company or any Subsidiary has knowledge, except as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any Subsidiary has agreed to assume, undertake or provide
indemnification for any liability of any other person under any Environmental
Law, including any obligation for cleanup or remedial action, except as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There is no pending or, to the best of the Company's knowledge,
threatened administrative, regulatory or judicial action, claim or notice of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any Subsidiary.
(xxxvi) Neither the Company, any Subsidiary nor, to the
Company's knowledge, any of its employees or agents has at any time during the
last five years (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States of any
jurisdiction thereof.
(xxxvii) Neither the Company nor any Subsidiary (i) is in
violation of its certificate or articles of incorporation, by-laws, certificate
of formation, limited liability company agreement, partnership agreement or
other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute a default
under or result in the creation or imposition of any lien, charge or encumbrance
upon any of its property or assets pursuant to, 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, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial,
12
regulatory or other legal or governmental agency or body, foreign or domestic,
except (in the case clauses (ii) and (iii) above) violations or defaults that
could not (individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect and except (in the case of clause (ii) alone) for any
lien, charge or encumbrance disclosed in the Registration Statement and the
Prospectus.
(xxxviii) The Company is in compliance in all material
respects with applicable provisions of the Xxxxxxxx-Xxxxx Act that are effective
and is actively taking steps to ensure that it will be in compliance in all
material respects with other applicable provisions of the Xxxxxxxx-Xxxxx Act
upon the effectiveness of such provisions.
(xxxix) The Company has established and maintains "disclosure
controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the
Exchange Act); the Company's "disclosure controls and procedures" are reasonably
designed to ensure that all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Rules and Regulations, and that all such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the Chief Executive Officer and Chief Financial Officer of
the Company required under the Exchange Act with respect to such reports.
(xl) Since the date of the filing of the Company's Annual
Report on Form 10-K for the year ended December 29, 2002, the Company's auditors
and the audit committee of the board of directors of the Company (or persons
fulfilling the equivalent function) have not been advised of (i) any significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company's ability to record, process, summarize and report
financial data nor any material weaknesses in internal controls; (ii) any fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company's internal controls.
(xli) Since the date of the filing of the Company's Annual
Report on Form 10-K for the year ended December 29, 2002, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
(xlii) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operation - Critical Accounting
Policies" included or incorporated by reference in the Registration Statement
and the Prospectus accurately and fully describes (i) accounting policies which
the Company believes are the most important in the portrayal of the financial
condition and results of operations of the Company and its consolidated
subsidiaries and which require management's most difficult, subjective or
complex judgments ("critical accounting policies"); (ii) judgments and
uncertainties affecting the application of critical accounting policies; and
(iii) explanation of the likelihood that materially different amounts would be
reported under different conditions or using different assumptions.
13
(xliii) The Company's board of directors, senior management
and audit committee have reviewed and agreed with the selection, application and
disclosure of critical accounting policies and have consulted with their legal
advisers and independent accountants with regard to such disclosure.
(xliv) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" in the Registration Statement and the Prospectus accurately
and fully describes (i) all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the Company
believes would materially affect liquidity and are reasonably likely to occur;
and (ii) all off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on the financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources of the Company and the Subsidiaries
taken as a whole.
(xlv) Except as disclosed in the Registration and the
Prospectus, there are no outstanding guarantees or other contingent obligations
of the Company or any Subsidiary that could reasonably be expected to have a
Material Adverse Effect.
(xlvi) No event or circumstance has occurred or arisen that
could reasonably be expected to give rise to a requirement that the Company make
additional disclosure on Form 8-K and has not been so disclosed.
(xlvii) Any certificate signed by or on behalf of the Company
and delivered to the Representatives or to counsel for the Underwriters' shall
be deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, each of the Underwriters, as of the date hereof, and as of the
Closing Date that:
(i) Such Selling Stockholder has full right, power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus. This Agreement and the transactions
contemplated by this Agreement, the Registration Statement and the Prospectus
have been duly and validly authorized by such Selling Stockholder. This
Agreement has been duly and validly executed and delivered by such Selling
Stockholder and constitutes the legal, valid and binding obligation of such
Selling Stockholder, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(ii) Such Selling Stockholder has full right, power and
authority to execute and deliver (i) a Custody Agreement by and between such
Selling Stockholder and , as custodian (the
"Custodian"), relating to the deposit of the Shares to be sold by such Selling
Stockholder and (ii) a Power of Attorney
14
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 (such
Selling Stockholder's "Custody Agreement" and "Power of Attorney",
respectively). The Custody Agreement and Power of Attorney and the transactions
contemplated thereby have been duly and validly authorized by such Selling
Stockholder. The Custody Agreement and Power of Attorney have each been duly and
validly executed and delivered by such Selling Stockholder and constitute the
legal, valid and binding obligation of such Selling Stockholder, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Counterparts of such Selling
Stockholder's Custody Agreement, duly signed by the Custodian and each
Attorney-In-Fact have been delivered to the Company and the Lead Manager on or
prior to the date of this Agreement.
(iii) Such Selling Stockholder agrees that the Shares to be
sold by such Selling Stockholder, whether or not on deposit with the Custodian,
are subject to the interests of the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of such
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Custody Agreement and Power of Attorney, by any act of
such Selling Stockholder, by operation of law or by the occurrence of any other
event. If such Selling Stockholder should die or become incapacitated, or if any
other event should occur affecting the legal status or capacity of such Selling
Stockholder before the delivery of the Shares to be sold by a Selling
Stockholder hereunder, the documents evidencing the Shares to be sold by such
Selling Stockholder then on deposit with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such event had not occurred, regardless of whether or not the Custodian shall
have received notice thereof.
(iv) Such Selling Stockholder has, and on the Closing Date
will have, good and valid title to and is the lawful owner of the Shares to be
sold by such Selling Stockholder hereunder and upon sale and delivery of, and
payment for, such Shares as provided herein, such Selling Stockholder will
convey to the Underwriters good and marketable title to such Shares, free and
clear of all Liens. Certificates for all of the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment
in blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver such Shares to
the Underwriters pursuant to this Agreement.
(v) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance by the Selling
Stockholder of this Agreement or its Custody Agreement and Power of Attorney, or
consummation by the Selling Stockholders of the transactions contemplated herein
or therein, except the registration of the Shares under the Securities Act,
which has become effective, and such Consents as may be required under state
securities or blue sky laws, or the by-laws and rules of the NASD or NASDR in
connection with
15
the purchase and distribution of such Selling Stockholder's Shares by the
Underwriters, each of which has been obtained and is in full force and effect.
(vi) The execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by such Selling
Stockholder and consummation of any of the other transactions contemplated
herein and therein by the Selling Stockholder or the fulfillment of the terms
hereof by the Selling Stockholder do not and will not (A) conflict with, require
consent under, or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Selling
Stockholder pursuant to any law, statute, rule or regulation or the terms of any
indenture or other agreement or instrument to which such Selling Stockholder is
party or bound, or to which any of the property or assets of such Selling
Stockholder is subject, or (B) violate or conflict with any provision of the
certificate or articles of incorporation, bylaws, certificate of formation,
limited liability company agreement, partnership agreement, trust agreement or
other organizational documents, as applicable, of the Selling Stockholder, or
(C) violate or conflict with any law, rule regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, domestic or foreign, having jurisdiction over such
Selling Stockholder.
(vii) Such Selling Stockholder does not have any registration
or other similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in the offering
of the Shares except for such rights as have been waived or which are described
in the Prospectus (and which have been complied with).
(viii) Such Selling Stockholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares that are to be sold
by the Company or any other Selling Stockholder to the Underwriters pursuant to
this Agreement; and such Selling Stockholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(ix) 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 the Company or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with this offering or, to such Selling Stockholder's knowledge, any
other arrangements, agreements, understandings, payments or issuance with
respect to the Company or any of its officers, directors, shareholders,
partners, employees, Subsidiaries or affiliates that may affect the
Underwriters' compensation as determined by the NASD.
(x) All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration Statement and
Prospectus is, and on the Closing Date will be, true, correct and complete in
all material respects, and does not, and on the Closing Date will not, contain
any untrue statement of a material fact or omit to state any
16
material fact necessary to make such information not misleading. Such Selling
Stockholder confirms as accurate the number of Shares set forth opposite such
Selling Stockholder's name in the Prospectus under the caption "Principal and
Selling Stockholders" (both prior to and after giving effect to the sale of
Shares).
(xi) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which constitutes or is designed to cause or
result in, or which could reasonably be expected to, constitute, cause or result
in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Shares.
(xii) Such Selling Stockholder has not distributed and will
not distribute, prior to the later of the Additional Closing Date, if any, and
the completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares by the Selling
Stockholders other than a Preliminary Prospectus, the Prospectus or the
Registration Statement.
(xiii) The representations and warranties of such Selling
Stockholder in its Custody Agreement and Power of Attorney are, and on the
Closing Date will be, true and correct.
Any certificate signed by or on behalf of the Selling Stockholder
and delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and each Selling Stockholder, severally and not jointly,
agree to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase from the Company and the Selling Stockholders, at a
purchase price per share of $_______, the number of Firm Shares set forth
opposite their respective names on Schedule I hereto together with any
additional number of Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
representing, the Firm Shares shall be made at the office of Xxxxxxxx &
Xxxxxxxx, LLP ("Underwriters' Counsel"), or at such other place as shall be
agreed upon by the Lead Managers and the Company, at 10:00 A.M., New York City
time, on the third or (as permitted under Rule 15c6-1 under the Exchange Act)
fourth business day (unless postponed in accordance with the provisions of
Section 9 hereof) following the date of the effectiveness of the Registration
Statement (or, if the Company has elected to rely upon Rule 430A under the
Securities Act, the third or (as permitted under Rule 15c6-1 under the Exchange
Act) fourth business day after the determination of the public offering price of
the Shares), or such other time not later than ten business days after such date
as shall be agreed upon by the Lead Managers and the Company (such time and date
of payment and delivery being herein called the "Closing Date").
17
(c) Payment of the purchase price for the Firm Shares shall be made
by wire transfer in same day funds to or as directed by the Company and the
Custodian (pursuant to each Selling Stockholder's Power of Attorney and Custody
Agreement), as the case may be, upon delivery of certificates for the Firm
Shares to the Representatives through the facilities of The Depository Trust
Company for the respective accounts of the several Underwriters. Each Selling
Stockholder hereby agrees that (i) it will pay all stock transfer taxes, stamp
duties and other similar taxes, if any, payable upon the sale or delivery of the
Firm Shares to be sold by the Selling Stockholders to the several Underwriters,
or otherwise in connection with the performance of the Selling Stockholder's
obligations hereunder and (ii) the Custodian is authorized to deduct or such
payment any such amounts from the proceeds to the Selling Stockholder hereunder
and to hold such amounts for the account of the Selling Stockholders with the
Custodian under the Custody Agreement and Power of Attorney. Certificates for
the Firm Shares shall be registered in such name or names and shall be in such
denominations as the Lead Managers may request at least two business days before
the Closing Date. The Company will permit the Lead Managers to examine and
package such certificates for delivery at least one full business day prior to
the Closing Date.
(d) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the Underwriters,
acting severally and not jointly, the option to purchase up to 750,000
Additional Shares at the same purchase price per share to be paid by the
Underwriters for the Firm Shares as set forth in Section 2(a) above, for the
sole purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters. This option may be exercised at any time and from time to time, in
whole or in part on one or more occasions, on or before the thirtieth day
following the date of the Prospectus, by written notice from the Lead Managers
to the Company. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised and the date and time, as
reasonably determined by Bear Xxxxxxx, when the Additional Shares are to be
delivered (any such date and time being herein sometimes referred to as the
"Additional Closing Date"); provided, however, that no Additional Closing Date
shall occur earlier than the Closing Date or earlier than the second full
business day after the date on which the option shall have been exercised nor
later than the eighth full business day after the date on which the option shall
have been exercised (unless such time and date are postponed in accordance with
the provisions of Section 9 hereof). Upon any exercise of the option as to all
or any portion of the Additional Shares, each Underwriter, acting severally and
not jointly, agrees to purchase from the Company the number of Additional Shares
that bears the same proportion of the total number of Additional Shares then
being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the total number of Firm Shares that the Underwriters
have agreed to purchased hereunder, subject, however, to such adjustments to
eliminate fractional shares as Bear Xxxxxxx in its sole discretion shall make.
(e) Payment of the purchase price for, and delivery of certificates
representing, the Additional Shares shall be made at the office of Underwriters'
Counsel, or at such other place as shall be agreed upon by the Lead Managers and
the Company, at 10:00 A.M., New York City time, on the Additional Closing Date
(unless postponed in accordance with the provisions of Section 9 hereof), or
such other time as shall be agreed upon by Bear Xxxxxxx and the Company.
18
(f) Payment of the purchase price for the Additional Shares shall be
made by wire transfer in same day funds to or as directed by the Company upon
delivery of certificates for the Additional Shares to the Representatives
through the facilities of The Depository Trust Company for the respective
accounts of the several Underwriters. Certificates for the Additional Shares
shall be registered in such name or names and shall be in such denominations as
the Lead Managers may request at least two business days before the Additional
Closing Date. The Company will permit the Lead Managers to examine and package
such certificates for delivery at least one full business day prior to the
Additional Closing Date.
3. Offering. Upon authorization of the release of the Firm Shares by the
Lead Managers, the Underwriters propose to offer the Shares for sale to the
public upon the terms and conditions set forth in the Prospectus.
4. Covenants of the Company; Covenants of the Selling Stockholders.
(a) The Company covenants and agrees with the Underwriters that:
(i) The Registration Statement and any amendments thereto have
been declared effective, and if Rule 430A is used or the filing of the
Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will
file the Prospectus (properly completed if Rule 430A has been used) pursuant to
Rule 424(b) within the prescribed time period and will provide evidence
satisfactory to the Lead Managers of such timely filing. If the Company elects
to rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434, and the Prospectus shall not be
"materially different" (as such term is used in Rule 434) from the Prospectus
included in the Registration Statement at the time it became effective.
The Company will notify you immediately (and, if requested by
the Lead Managers, will confirm such notice in writing) (i) when the
Registration Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
Company's intention to file or prepare any supplement or amendment to the
Registration Statement or the Prospectus, (iv) of the mailing or the delivery to
the Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the
Securities Act, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of the initiation, or the threatening, of any proceedings
therefor, it being understood that the Company shall make every reasonable
effort to avoid the issuance of any such stop order, (vi) of the receipt of any
comments from the Commission, and (vii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for that purpose. If the Commission shall propose or enter a stop order at any
time, the Company will make every reasonable effort to prevent the issuance of
any such stop order and, if issued, to obtain the lifting of such order as soon
as possible. The Company will not file any amendment to the Registration
Statement or any amendment of or supplement to the Prospectus (including the
prospectus required to be filed pursuant to Rule 424(b) or Rule 434) that
differs from the prospectus on file at the time of the effectiveness of the
19
Registration Statement or file any document under the Exchange Act if such
document would be deemed to be incorporated by reference into the Prospectus to
which the Lead Managers shall object in writing after being timely furnished in
advance a copy thereof. The Company will provide the Lead Managers with copies
of all such amendments, filings and other documents a sufficient time prior to
any filing or other publication thereof to permit the Lead Managers a reasonable
opportunity to review and comment thereon.
(ii) The Company shall comply with the Securities Act and the
Exchange Act to permit completion of the distribution as contemplated in this
Agreement, the Registration Statement and the Prospectus. If at any time when a
prospectus relating to the Shares is required to be delivered under the
Securities Act or the Exchange Act in connection with the sales of Shares, any
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company, include
an 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
the light of the circumstances existing at the time of delivery to the
purchaser, not misleading, or if to comply with the Securities Act, the Exchange
Act or the Rules and Regulations it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement, or to file any document
incorporated by reference in the Registration Statement or the Prospectus or in
any amendment thereof or supplement thereto, the Company will notify you
promptly and prepare and file with the Commission, subject to Section 4(a)(i)
hereof, an appropriate amendment or supplement (in form and substance
satisfactory to the Lead Managers) which will correct such statement or omission
or which will effect such compliance and will use its best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(iii) The Company will promptly deliver to each of you and
Underwriters' Counsel a signed or conformed copy of the Registration Statement,
as initially filed and all amendments thereto, including all consents and
exhibits filed therewith, and will maintain in the Company's files manually
signed copies of such documents for at least five years after the date of
filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any Preliminary Prospectus, the Prospectus, the Registration
Statement, all amendments of and supplements to such documents, if any, and all
documents incorporated by reference in the Registration Statement and Prospectus
or any amendment thereof or supplement thereto as you may reasonably request.
Prior to 10:00 A.M., New York time, on the business day next succeeding the date
of this Agreement and from time to time thereafter, the Company will furnish the
Underwriters with copies of the Prospectus in New York City in such quantities
as you may reasonably request.
(iv) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430 and
Section 5(b) of the Securities Act.
(v) The Company will use its reasonable efforts, in
cooperation with the Lead Managers, at or prior to the time of effectiveness of
the Registration Statement, to qualify the Shares for offering and sale under
the securities laws relating to the offering or sale of the Shares of such
jurisdictions, domestic or foreign, as the Lead Managers may designate and to
maintain such qualification in effect for so long as required for the
distribution thereof; except
20
that in no event shall the Company be obligated in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process.
(vi) The Company will make generally available, to the extent
not available on XXXXX, to its security holders and to the Underwriters as soon
as practicable, but in any event not later than twelve 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 the 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).
(vii) During the period of 90 days from the date of the
Prospectus, without the prior written consent of the Lead Managers the Company
(i) will not, directly or indirectly, issue, offer, sell, agree to issue, offer
or sell, solicit offers to purchase, grant any call option, warrant or other
right to purchase, purchase any put option or other right to sell, pledge,
borrow or otherwise dispose of any Relevant Security, or make any announcement
of any of the foregoing, (ii) will not establish or increase any "put equivalent
position" or liquidate or decrease any "call equivalent position" (in each case
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder) with respect to any Relevant Security, and
(iii) will not otherwise enter into any swap, derivative or other transaction or
arrangement that transfers to another, in whole or in part, any economic
consequence of ownership of a Relevant Security, whether or not such transaction
is to be settled by delivery of Relevant Securities, other securities, cash or
other consideration; and the Company will obtain an undertaking in substantially
the form of Annex III hereto of each of its officers and directors, each of the
Selling Stockholders, and its stockholders listed on Schedule III attached
hereto not to engage in any of the aforementioned transactions on their own
behalf, other than the sale of Shares as contemplated by this Agreement and the
Company's issuance of Common Stock upon (i) the exercise of currently
outstanding warrants; and (ii) the grant and exercise of options under, or the
issuance and sale of shares pursuant to, employee stock option plans in effect
on the date hereof, each as described in the Registration Statement and the
Prospectus. The Company will not file a registration statement under the
Securities Act in connection with any transaction by the Company or any person
that is prohibited pursuant to the foregoing, except for registration statements
on Form S-8 relating to employee benefit plans.
(viii) During the period of five years from the effective date
of the Registration Statement, the Company will furnish to you, to the extent
not available on XXXXX, copies of all reports or other communications (financial
or other) furnished to security holders or from time to time published or
publicly disseminated by the Company, and will deliver to you, to the extent not
available on XXXXX, (i) as soon as they are available, copies of any reports,
financial statements and proxy or information statements furnished to or filed
with the Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as you may from
time to time reasonably request (such financial information to be on a
consolidated basis to the extent the accounts of the Company and the
Subsidiaries are consolidated in reports furnished to its security holders
generally or to the Commission).
21
(ix) The Company will apply the net proceeds from the sale of the
Shares as set forth under the caption "Use of Proceeds" in the Prospectus.
(x) The Company will use its reasonable efforts to list the Shares
for quotation on the Nasdaq and maintain the listing of the Shares on the
Nasdaq.
(xi) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to the Securities
Act, the Exchange Act and the Rules and Regulations within the time periods
required thereby.
(xii) The Company will use its best efforts to do and perform all
things required to be done or performed under this Agreement by the Company
prior to the Closing Date or the Additional Date, as the case may be, and to
satisfy all conditions precedent to the delivery of the Firm Shares and the
Additional Shares.
(xiii) The Company will not take, and will cause its affiliates that
it controls (within the meaning of Rule 144 under the Securities Act) not to
take, directly or indirectly, any action which constitutes or is designed to
cause or result in, or which could reasonably be expected to constitute, cause
or result in, the stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Shares.
(xiv) The Company will take such steps as shall be necessary to
ensure that neither the Company nor any of its Subsidiaries becomes an
"investment company" as defined, and subject to regulation, under the Investment
Company Act.
(b) Each Selling Stockholder covenants and agrees with each Underwriter:
(i) To deliver to the Representatives prior to the 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), which in each case may be
replaced by any other applicable form or statement specified by Treasury
Department regulations in lieu thereof;
(ii) To notify promptly the Company and the Representatives if, at
any time prior to the date on which the distribution of the Shares as
contemplated herein and in the Prospectus has been completed, as determined by
the Representatives, such Selling Stockholder has knowledge of the occurrence of
any event as a result of which the Prospectus or the Registration Statement, in
each case as then amended or supplemented, would include an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(iii) To cooperate to the extent necessary to cause the Registration
Statement or any post-effective amendment thereto to become effective at the
earliest possible time and to do and perform all things to be done and performed
under this Agreement prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Shares pursuant to this Agreement;
22
(iv) To pay or to cause to be paid all transfer taxes, stamp duties
and other similar taxes with respect to the Shares, if any, to be sold by such
Selling Stockholder; and
(v) To deliver to the Lead Managers on or prior to the date of this
Agreement each lock-up agreement referenced in Section 6(j) hereof.
5. Payment of Expenses. Whether or not the transactions contemplated by
this Agreement, the Registration Statement and the Prospectus are consummated or
this Agreement is terminated, the Company hereby agrees to pay all costs and
expenses incident to the performance of its obligations hereunder, including the
following: (i) all expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and any and all amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers; (ii) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and the
Offering; (iii) the cost of producing this Agreement and any agreement among
Underwriters, blue sky survey, closing documents and other instruments,
agreements or documents (including any compilations thereof) in connection with
the Offering; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state or foreign securities or blue sky laws
as provided in Section 4(a)(v) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with any blue sky survey; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the NASD of the terms of the Offering; (vi) all
fees and expenses in connection with listing the Shares on the Nasdaq; (vii) all
travel expenses of the Company's officers and employees and any other expense of
the Company incurred in connection with attending or hosting meetings with
prospective purchasers of the Shares; (viii) any stock transfer taxes incurred
in connection with this Agreement or the Offering; and (ix) the fees of the
Custodian and other fees and expenses related to the offering of Shares by the
Selling Stockholders. The Company also will pay or cause to be paid: (x) the
cost of preparing stock certificates representing the Shares; (y) the cost and
charges of any transfer agent or registrar for the Shares; and (z) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section 5. It is
understood, however, that except as provided in this Section, and Sections 7, 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel and stock transfer taxes on resale of any of
the Shares by them. Notwithstanding anything to the contrary in this Section 5,
in the event that this Agreement is terminated pursuant to Section 6 or 11(b)
hereof, or subsequent to a Material Adverse Change, the Company will pay all
out-of pocket expenses of the Underwriters (including but not limited to fees
and disbursements of counsel to the Underwriters) incurred in connection
herewith.
The Selling Stockholders will pay all fees and expenses related to the
offering of the Shares to be sold by them, including (i) the fees and
disbursements of their counsel, if any, and (ii) any applicable stock transfer
or other taxes related to the offering of their Shares. Notwithstanding the
foregoing, nothing shall affect any agreement that the Company and the Selling
Stockholders may make for the sharing or allocation of such costs and expenses.
23
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company and the Selling Stockholders herein contained, as of
the date hereof and as of the Closing Date (for purposes of this Section 6
"Closing Date" shall refer to the Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished
to you or to Underwriters' Counsel pursuant to this Section 6 of any
misstatement or omission, to the performance by the Company and the Selling
Stockholders of their obligations hereunder, and to each of the following
additional conditions:
(a) The Registration Statement shall have become effective and all
necessary regulatory or stock exchange approvals shall have been received not
later than 5:30 P.M., New York time, on the date of this Agreement, or at such
later time and date as shall have been consented to in writing by the Lead
Managers; if the Company shall have elected to rely upon Rule 430A or Rule 434
under the Securities Act, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a)(i) hereof and a
form of the Prospectus containing information relating to the description of the
Shares and the method of distribution and similar matters shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the favorable
written opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx Professional Corporation,
counsel for the Company, dated the Closing Date, addressed to the Underwriters
in the form attached hereto as Annex I.
(c) At the Closing Date, you shall have received the favorable
written opinion of Malaysian counsel to the Significant Subsidiary, dated the
Closing Date, addressed to the Underwriters in form and substance satisfactory
to the Underwriters.
(d) At the Closing Date, you shall have received the favorable
written opinion of counsel to the Selling Stockholders, dated the Closing Date,
addressed to the Underwriters in the form attached hereto as Annex II.
(e) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Lead Managers and to Underwriters'
Counsel, and the Underwriters shall have received from Underwriters' Counsel a
favorable written opinion, dated as of the Closing Date, with respect to the
issuance and sale of the Shares, the Registration Statement and the Prospectus
and such other related matters as the Lead Managers may require, and the Company
shall have furnished to Underwriters' Counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
24
(f) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date to the effect that (i) the condition set forth in subsection (a) of
this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company and the Subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, (v) no stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings therefor
have been initiated or threatened by the Commission, (vi) there are no pro forma
or as adjusted financial statements that are required to be included in the
Registration Statement and the Prospectus pursuant to the Rules and Regulations
that have not been included as required and (vii) subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus there has not been any material adverse change or any development
involving a prospective material adverse change, whether or not arising from
transactions in the ordinary course of business, in or affecting (x) the
business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and the
Subsidiaries, individually or taken as a whole; (y) the long-term debt or
capital stock of the Company or any of its Subsidiaries; or (z) the Offering or
consummation of any of the other transactions contemplated by this Agreement,
the Registration Statement and the Prospectus.
(g) At the time this Agreement is executed and at the Closing Date,
you shall have received a comfort letter, from KPMG LLP and Ernst & Young LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the Underwriters
and in form and substance satisfactory to the Underwriters and Underwriters'
Counsel.
(h) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any Subsidiary or any change or
development involving a change, whether or not arising from transactions in the
ordinary course of business, in the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or prospects
of the Company and the Subsidiaries, individually or taken as a whole, including
but not limited to the occurrence of any fire, flood, storm, explosion, accident
or other calamity at any of the properties owned or leased by the Company or any
of its Subsidiaries, the effect of which, in any such case described above, is,
in the judgment of the Lead Managers, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any supplement).
(i) No downgrading shall have occurred in the Company's corporate
credit rating or the rating accorded the Company's debt securities or preferred
stock by any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g)
25
under the Securities Act) and no such organization shall have publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities.
(j) You shall have received a duly executed lock-up agreement from
each person who is a director or officer of the Company, each Selling
Stockholder and each other person listed on Schedule III hereto, in each case
substantially in the form attached hereto as Annex III.
(k) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(l) At the Closing Date, the NASD shall have confirmed that it has
not raised any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(m) At the Closing Date, you shall have received a certificate of an
authorized representative of the Selling Stockholders, dated the Closing Date,
to the effect that the representations and warranties of the Selling
Stockholders set forth in Section 1(b) hereof are accurate and that each of the
Selling Stockholders 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.
(n) On or prior to the Closing Date, you shall have received 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) from each Selling Stockholder.
(o) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any federal, state or
foreign governmental or regulatory authority that would, as of the Closing Date,
prevent the issuance or sale of the Shares; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Shares.
(p) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this Section 6 shall not be satisfactory in form and
substance to the Lead Managers and to Underwriters' Counsel, all obligations of
the Underwriters hereunder may be cancelled by the Lead Managers at, or at any
time prior to, the Closing Date and the obligations of the Underwriters to
purchase the Additional Shares may be cancelled by the Lead Managers at, or at
any time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone. Any such telephone
notice shall be confirmed promptly thereafter in writing.
7. Indemnification.
26
(a) The Company shall indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
and all losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
(A) the Registration Statement, as originally filed or any amendment thereof, or
any related Preliminary Prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Shares, including any road show or investor
presentations made to investors by the Company (whether in person or
electronically) ("Marketing Materials"), or (ii) the omission or alleged
omission to state in the Registration Statement, as originally filed or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or in any Marketing Materials, a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Lead Managers expressly for use therein. The parties agree that such
information provided by or on behalf of any Underwriter through the Lead
Managers consists solely of the material referred to in the last sentence of
Section 1(a)(ii) hereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have, including but not limited to
other liability under this Agreement.
(b) Each Selling Stockholder shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
relating to a Selling Stockholder contained in the Registration Statement for
the registration of the Shares, as originally filed or any amendment thereof, or
any related Preliminary Prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact relating to such Selling
Stockholder required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Selling Stockholders will
not be
27
liable in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the Lead
Managers expressly for use therein (as described in the last sentence of Section
1(a)(ii) hereof); provided further, however, that such Selling Stockholder will
not be liable in any such case to the extent but only to the extent that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use therein,
it being agreed that the only such information is that which is included under
the heading "Principal and Selling Stockholders" which relates to such Selling
Stockholder; and provided further, however, that in no such case shall any
Selling Stockholder be liable or responsible for any amount in excess of the
proceeds (net of the underwriting discount but before deducting other expenses)
applicable to the Shares sold by such Selling Stockholder pursuant to the
transactions contemplated hereby. This indemnity agreement will be in addition
to any liability that any Selling Stockholder may otherwise have including under
this Agreement.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each Selling Stockholder each of the directors of the
Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, as originally filed or any amendment
thereof, or any related Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, 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 any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter through the Lead Managers
specifically for use therein; provided, however, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder. The parties agree that such information provided by or on
behalf of any Underwriter through the Lead Managers consists solely of the
material referred to in the last sentence of Section 1(a)(ii) hereof. This
indemnity will be in addition to any liability which any Underwriter may
otherwise have, including but not limited to other liability under this
Agreement.
28
(d) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 7
to the extent that it is not materially prejudiced as a result thereof, and in
any event shall not relieve it from any liability that such indemnifying party
may have otherwise than on account of the indemnity agreement hereunder). In
case any such claim or 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, at its own expense in the defense of such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party; provided however, that counsel to the indemnifying party
shall not (except with the written consent of the indemnified party) also be
counsel to the indemnified party. Notwithstanding the foregoing, the indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall
not have employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the
indemnifying party does not diligently defend the action after assumption of the
defense, or (iv) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
No indemnifying party shall, without the prior written consent of the
indemnified parties, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened claim,
investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 7 or Section 8 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
8. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
29
liabilities and expenses suffered by the Company and any Selling Stockholder,
any contribution received by the Company and any Selling Stockholder from
persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company or any Selling Stockholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
officers of the Company who signed the Registration Statement and directors of
the Company) as incurred to which the Company, any Selling Stockholder and one
or more of the Underwriters may be subject, in such proportions 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 hand from
the Offering or, if such allocation is not permitted by applicable law, in such
proportions as are appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, 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 hand
shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Stockholders bears to (y) the
underwriting discount or commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of each of the Company and the Selling Stockholders on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or a Selling Stockholder on the one hand and
the Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 8,
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed 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 and (ii)
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. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange
30
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company and any Selling Stockholder, as applicable, subject
in each case to clauses (i) and (ii) of the immediately preceding sentence. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. The obligations of the Company and the
Selling Stockholders to contribute pursuant to this Section 8 are several and
not joint. The obligations of the Underwriters to contribute pursuant to this
Section 8 are several in proportion to the respective number of Shares to be
purchased by each of the Underwriters hereunder and not joint.
9. Underwriter and Selling Stockholder Default.
(a) Underwriter Default.
(i) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates (the
"Default Shares") do not (after giving effect to arrangements, if any, made by
the Lead Managers pursuant to subsection (b) below) exceed in the aggregate 10%
of the number of Firm Shares or Additional Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Company that number of Default Shares that bears the same proportion of the
total number of Default Shares then being purchased as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto bears to
the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Lead Managers in their sole discretion shall make.
(ii) In the event that the aggregate number of Default Shares
exceeds 10% of the number of Firm Shares or Additional Shares, as the case may
be, the Lead Managers may in their discretion arrange for itself or for another
party or parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase the Default Shares on the terms contained herein. In the
event that within five calendar days after such a default the Lead Managers do
not arrange for the purchase of the Default Shares as provided in this Section
9, this Agreement or, in the case of a default with respect to the Additional
Shares, the obligations of the Underwriters to purchase and of the Company to
sell the Additional Shares shall thereupon terminate, without liability on the
part of the Company with respect thereto (except in each case as provided in
Sections 5, 7, 8, 10 and 11(d)) or the Underwriters, but nothing in this
Agreement shall relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(iii) In the event that any Default Shares are to be purchased by
the non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, the Lead Managers or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may be for a
period, not exceeding five business days, in
31
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion
of Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares and Additional Shares.
(b) Selling Stockholder Default.
(i) If any Selling Stockholder or Selling Stockholders shall default
in its or their obligation to sell and deliver any Firm Shares hereunder, then
the Lead Managers may, by notice to the Company, terminate this Agreement
without any liability on the xxx of any non-defaulting party except that the
provisions of Sections 1, 5, 7, 8, 10 and 11 hereof shall remain in full force
and effect. No action taken pursuant to this Section 9 shall relieve any Selling
Stockholder so defaulting from liability, if any, in respect of such default.
(ii) In the event that such default occurs and the Company and
Underwriters agree to proceed with the Offering, then the Underwriters may, at
the option of the Lead Managers, or the Company shall have the right, in each
case by notice to the other, to postpone the Closing Date for a period not
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable; and in no event shall the Company be obligated to increase the number
of Shares it is required to sell hereunder.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Underwriters, the Company, and the
Selling Stockholders contained in this Agreement or in certificates of officers
of the Company or any Subsidiary or of the Selling Stockholders submitted
pursuant hereto, including the agreements contained in Section 5, the indemnity
agreements contained in Section 7 and the contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
thereof or by or on behalf of the Company or any Selling Stockholder, any of
their officers and directors or any controlling person thereof, and shall
survive delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 10 and 11 hereof shall survive any termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the execution of this
Agreement. Notwithstanding any termination of this Agreement, the provisions of
this Section 11 and of Sections 1, 5, 7, 8 and 12 through 17, inclusive, shall
remain in full force and effect at all times after the execution hereof.
32
(b) The Lead Managers shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Lead Managers will in the immediate future materially disrupt,
the market for the Company's securities or securities in general; or (ii)
trading on The New York Stock Exchange ("the NYSE") or The Nasdaq National
Market (the "Nasdaq") shall have been suspended or been made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the NYSE
or the Nasdaq or by order of the Commission or any other governmental authority
having jurisdiction; or (iii) a banking moratorium has been declared by any
state or federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred; or (iv) (A)
there shall have occurred any outbreak or escalation of hostilities or acts of
terrorism involving the United States or there is a declaration of a national
emergency or war by the United States or (B) there shall have been any other
calamity or crisis or any change in political, financial or economic conditions
if the effect of any such event in (A) or (B), in the judgment of the Lead
Managers, makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be
in writing.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to (i) notification by the Lead Managers
as provided in Section 11(a) hereof or (ii) Section 9(b) hereof), or if the sale
of the Shares provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by the Lead Managers, reimburse the Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or faxed
and confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Parish, Senior
Managing Director, Equity Capital Markets, with a copy to Underwriter's Counsel
at Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq.;
(b) if sent to the Company, shall be mailed, delivered, or faxed and
confirmed in writing to the Company and its counsel at the addresses set forth
in the Registration Statement;
(c) If sent to the Selling Stockholders, shall be mailed, delivered
or faxed and confirmed in writing to the Custodian;
33
provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to Bear Xxxxxxx, which address
will be supplied to any other party hereto by Bear Xxxxxxx upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the Selling
Stockholders and the controlling persons, directors, officers, employees and
agents referred to in Sections 7 and 8 hereof, and their respective successors
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and said controlling persons and their respective successors,
officers, directors, heirs and legal representatives, and it is not for the
benefit of any other person, firm or corporation. The term "successors and
assigns" shall not include a purchaser, in its capacity as such, of Shares from
any of the Underwriters.
14. Governing Law and Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. The Company irrevocably (a) submits to the jurisdiction of any court
of the State of New York or the United State District Court for the Southern
District of the State of New York for the purpose of any suit, action, or other
proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus (each, a "Proceeding"), (b) agrees that all claims in respect of any
Proceeding may be heard and determined in any such court, (c) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the fullest extent
permitted by law, any claim that such Proceeding is brought in an inconvenient
forum. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY
LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
15. 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 instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
16. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
34
17. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
35
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
KOMAG, INCORPORATED
By:
---------------------------------------
Name:
Title:
CERBERUS PARTNERS, L.P.
CERBERUS INTERNATIONAL, LTD.
CERBERUS SERIES ONE HOLDINGS, LLC
CERBERUS SERIES TWO HOLDINGS, LLC
CERBERUS AMERICA SERIES ONE HOLDINGS, LLC
By:
---------------------------------------
Name:
Title: as Attorney-in-Fact for the
Selling Stockholders
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXX XXXXXXX & CO.
XXXXXXX & COMPANY, INC.
XXXXXX XXXXXX PARTNERS LLC
By:
---------------------------------------
Name:
Title:
On behalf of themselves and the other Underwriters named in Schedule I hereto.
SCHEDULE I
Number of Additional
Total Number of Firm Shares to be Purchased
Underwriter Shares to be Purchased if Option is Fully Exercised
----------- ---------------------- ----------------------------
Bear, Xxxxxxx & Co. Inc.
Xxxxx Xxxxxxx & Co.
Xxxxxxx & Company, Inc.
Xxxxxx Xxxxxx Partners LLC
[Names of other Underwriters]
Total....................
======================== ==============================
SCHEDULE II
Selling Stockholder Number of Firm Shares
to be Sold
----------
1. Cerberus Partners, L.P. 212,591
2. Cerberus International, Ltd. 960,572
3. Cerberus Series One Holdings, LLC 485,598
4. Cerberus Series Two Holdings, LLC 289,179
5. Cerberus America Series One Holdings, LLC 52,060
Total 2,000,000
=========
SCHEDULE III
Stockholders subject to the lock-up provision
EXHIBIT A
Subsidiaries
Komag (Bermuda) Ltd., a Bermuda corporation
Komag Netherlands Antilles N.V., a Netherlands Antilles corporation
Komag Technology (N) B.V., a Netherlands corporation
Komag USA (Malaysia) Sdn., a Malaysian corporation
ANNEX I
Form of Opinion of Xxxxxx Xxxxxxx Xxxxxxxx and Xxxxxx Professional Corporation
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 with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus. The Company is duly qualified as
a foreign corporation for the transaction of business and is in good
standing in the States of [insert names of States.
2. The Company has, as of the dates specified in the Prospectus, an
authorized capitalization as set forth under the caption "Capitalization"
in the Prospectus. The shares to be delivered on the Closing Date and the
Additional Closing Date, if any, have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with
the Underwriting Agreement, will be duly and validly issued and fully paid
and non-assessable and will not be in violation of or subject to any
preemptive rights under the Company's charter or by-laws, the DGCL, or any
Reviewed Agreement. The Common Stock and the Shares conform to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
3. The Common Stock currently outstanding is listed, and the Shares are duly
authorized for quotation on the Nasdaq National Market.
4. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
5. To our knowledge, there are no legal or governmental proceedings pending
against the Company or the Significant Subsidiary required to be disclosed
in the Registration Statement or Prospectus by the Act or the rules and
regulations of the Commission thereunder, other than those described
therein.
6. The execution, delivery and performance of the Underwriting Agreement and
the consummation of the transactions contemplated by the Underwriting
Agreement, the Registration Statement and the Prospectus do not and will
not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute an event of default (or an event which
with notice or lapse of time, or both, would constitute an event of
default) under, or result in the creation or imposition of any lien,
charge or encumbrance on any properties or assets of the Company or any of
its Subsidiaries pursuant to, any Reviewed Agreement, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or Bylaws of the Company or any U.S. federal or California
state statute or the DGCL or any order, rule or regulation known to us of
any
1
U.S. federal or California or Delaware (under the DGCL) state court or
governmental agency or body having jurisdiction over the Company or any of
its properties.
7. No consent, approval, authorization, order, registration or qualification
of or with any U.S. federal or California or Delaware (under the DGCL)
state court or governmental agency or body is required for the issue and
sale of the Securities or the consummation by the Company of the
transaction contemplated by the Underwriting Agreement, except such as
have been made or obtained under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters (as to which
we express no opinion).
8. The statements set forth in the Prospectus under the caption ["Risk
Factors - Anti-takeover provisions in our certificate of incorporation
could discourage potential acquisition proposals or deal or prevent a
change of control," and paragraphs __and __ of the "Underwriting " in the
Prospectus and Item 14 of Part II of the Registration Statement,] insofar
as such statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called or
with respect to such legal matters, documents and proceedings.
9. The Company is not an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended.
10. The Registration Statement has been declared effective under the
Securities Act, and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and all
filings required by Rule 424(b) under the Securities Act have been made.
11. Except as disclosed in the Prospectus or otherwise expressly waived in
writing, there are no contracts, agreements or understandings known to us
between the Company and any person granting such person the right to
require the Company to include any securities of the Company owned by such
person in the Registration Statement.
12. The Registration Statement and the Prospectus and any further amendments
and supplements thereto made by the Company prior to the date hereof (it
being understood that we are not called upon and do not comment with
respect to any financial statements and related schedules and other
information of an accounting or financial nature included therein or
omitted therefrom) comply on their face as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder.
-------------------------
2
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with the Company, the Company's counsel, certain
officers and other representatives of the Company, and the independent certified
public accountants of the Company, at which conferences the contents of the
Registration Statement and Prospectus and related matters were discussed.
Although such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus, except as set forth in paragraphs 10 and 11 above, no
facts have come to such counsel's attention that caused such counsel to believe
(i) that the Registration Statement, as of its effective date, 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 not misleading
(it being understood that such counsel are not called upon and do not comment
with respect to any financial statements and the notes thereto and related
schedules and other information of an accounting or financial nature included
therein or omitted therefrom or the Form T-1) or that the Prospectus, as of its
date or the date hereof, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel is not called upon
and do not comment with respect to any financial statements and the notes
thereto and related schedules and other information of an accounting or
financial nature included therein or omitted therefrom), or (ii) that any
amendment to the Registration Statement was required to be filed at or prior to
the date hereof or that there were any contracts or other documents of a
character required to be filed as an Exhibit to the Registration Statement or
required to be described in the Registration Statement or Prospectus which were
not filed or described in all material respects as required misleading (it being
understood that such counsel is not called upon and do not comment with respect
to any financial statements and the notes thereto and related schedules and
other information of an accounting or financial nature included therein or
omitted therefrom or the Form T-1).
3
ANNEX II
Form of Opinion of Selling Stockholders' Counsel
(i) The Selling Stockholder has been duly organized or formed and is
validly existing as a corporation, partnership or limited liability company in
good standing under the laws of its jurisdiction of incorporation or formation
with full power and corporate and all other necessary authority to own its
properties and conduct its business.
(ii) The Selling Stockholder has full legal right, power and authority,
and any approval required by law (other than any approval imposed by the
applicable state securities and Blue Sky laws), to enter into the Agreement, the
Custody Agreement and the Power of Attorney executed by it and to sell, assign,
transfer and deliver the Shares to be sold by such Selling Stockholder in the
manner provided in the Agreement.
(iii) To the best of such counsel's knowledge, after due inquiry, the
Selling Stockholder is the holder of record and has good and valid title to the
certificates for the Shares and the Additional Shares to be sold by such Selling
Stockholder, and upon delivery thereof pursuant hereto and payment therefor,
good and clear title will pass to the Underwriters, severally, free and clear of
all Liens. The Selling Stockholder has the legal right and power, and all
authorizations and approvals required under its charter and by-laws, partnership
agreement, limited liability company agreement, trust agreement or other
organizational documents, as the case may be, to enter into the Underwriting
Agreement and its Custody Agreement and Power of Attorney, to sell, transfer and
deliver all of the Shares which may sold by such Selling Stockholder under this
Agreement and to comply with its other obligations under this Agreement and its
Custody Agreement and Power of Attorney.
(iv) This Agreement has been duly and validly authorized, executed and
delivered by the Selling Stockholder, and is a valid and binding agreement of
the Selling Stockholder.
(v) The Custody Agreement and Power of Attorney have been duly authorized,
executed and delivered by or on behalf of such Selling Stockholder and are the
valid and binding agreements of the Selling Stockholder, enforceable in
accordance with their terms, and pursuant to such power of attorney, such
Selling Stockholder has authorized such Attorney-In-Fact to execute and deliver
on such Selling Stockholder's behalf the Agreement and any other document
necessary or desirable in connection with the transactions contemplated hereby
and to deliver the Shares and the Additional Shares to be sold by such Selling
Stockholder pursuant to this Agreement.
(vi) Assuming that the Underwriters purchase the Shares sold by such
Selling Stockholder pursuant to this Agreement for value, in good faith and
without notice of any adverse claim, the delivery of such Shares pursuant to
this Agreement will pass good and valid title to such Shares, free and clear of
any Lien.
(vii) The execution, delivery and performance of this Agreement and the
Custody Agreement and Power of Attorney by the Selling Stockholder, compliance
by the Selling Stockholder with all the provisions hereof and thereof and
consummation of the transactions
1
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except such as may be required under the
Securities Act, state securities laws or Blue Sky laws) and will not conflict
with or constitute a breach of any of the terms or provisions of, or a default
under, any agreement, indenture or other instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder or property of the
Selling Stockholder is bound, will not contravene or conflict with, result in a
breach or violation of, or constitute a default under, the charter, bylaws,
certificate of formation, partnership agreement, limited liability agreement,
trust agreement or other organizational documents, as the case may be, of such
Selling Stockholder violate, contravene or conflict with any provision of
applicable law or regulation, statute, administrative regulation or ruling, and
will not or violate, result in a breach of or constitute a default under the
terms of any other agreement or instrument to which such Selling Stockholder is
a party or by which it is bound, or any judgment, order or decree applicable to
such Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator applicable to such Selling Stockholder or
property of such Selling Stockholder.
(viii) In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the extent
they deem proper, on certificates of the Selling Stockholders provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel shall state that the opinion
of any such other counsel is in form satisfactory to such counsel and, in their
opinion, you and they are justified in relying thereon.
2
ANNEX III
Form of Lock-Up Agreement
[Date]
Bear, Xxxxxxx & Co. Inc.
Xxxxx Xxxxxxx & Co.
Xxxxxxx & Company, Inc.
Xxxxxx Xxxxxx Partners LLC
As Representatives of the several
Underwriters referred to below
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
Komag, Incorporated Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed public
offering (the "Offering") by Komag, Incorporated, a Delaware corporation (the
"Company"), of its common stock, $.01 par value (the "Stock").
In order to induce you and the other underwriters for which you act as
representatives (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, Xxxxxxx & Co.
Inc. ("Bear Xxxxxxx"), during the period from the date hereof until ninety (90)
days from the date of the final prospectus for the Offering (the "Lock-Up
Period"), the undersigned (a) will not, directly or indirectly, offer, sell,
agree to offer or sell, solicit offers to purchase, grant any call option or
purchase any put option with respect to, pledge, borrow or otherwise dispose of
any Relevant Security (as defined below), and (b) will not establish or increase
any "put equivalent position" or liquidate or decrease any "call equivalent
position" with respect to any Relevant Security (in each case within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder), or otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in
whole or in part, any economic consequence of ownership of a Relevant Security,
whether or not such transaction is to be settled by delivery of Relevant
Securities, other securities, cash or other consideration. As used herein
"Relevant Security" means the Stock, any other equity security of the Company or
any of its subsidiaries and any security convertible into, or exercisable or
exchangeable for, any Stock or other such equity security.
The undersigned hereby authorizes the Company during the Lock-Up Period to
cause any transfer agent for the Relevant Securities to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the
undersigned is the beneficial but not the record holder, agrees during the
Lock-Up Period to cause the record holder to cause the relevant transfer agent
to decline to transfer, and to note stop transfer restrictions on the stock
register and other records relating to, such Relevant Securities. The
undersigned hereby further agrees that, without the prior written consent of
Bear Xxxxxxx, during the Lock-up Period the undersigned (x) will not file or
participate in the filing with the Securities and Exchange Commission of any
registration statement, or circulate or participate in the circulation of any
preliminary or final prospectus or other disclosure document with respect to any
proposed offering or sale of a Relevant Security and (y) will not exercise any
rights the undersigned may have to require registration with the Securities and
Exchange Commission of any proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _____________________________
Print Name: _______________________
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