EXHIBIT 1.1
DATED _________, 1998
ARTISAN COMPONENTS, INC.
2,900,000 shares
Common Stock
__________________________
UNDERWRITING AGREEMENT
__________________________
ARTISAN COMPONENTS, INC.
2,900,000 Shares
Plus an option to purchase up to
435,000 additional shares to cover over-allotments
Common Stock
UNDERWRITING AGREEMENT
----------------------
February __, 1998
DEUTSCHE XXXXXX XXXXXXXX INC.
XXXXXXXXX & XXXXX L.L.C.
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
As Representatives of the several Underwriters
c/o Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Artisan Components, Inc., a Delaware corporation (the "Company"),
and the persons named in Schedule 2 hereto (the "Selling Stockholders") hereby
confirm their agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (the firms acting in such capacities, the "Representatives"), as
set forth below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be references to the Underwriters.
Section 1. Underwriting. Subject to the terms and conditions contained
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herein:
(a) The Company proposes to issue and sell 2,900,000 shares of
common stock, par value $.001 per share (the "Common Stock"), of the Company
(said shares to be issued and sold by the Company, the "Firm Shares") to the
several Underwriters. The Company also proposes to issue and sell not more than
65,000 additional shares of Common Stock and the Selling Stockholders propose to
sell not more than 370,000 additional shares of Common Stock as set forth in
Schedule 2 (collectively, the "Option Shares" and, together with the Firm
Shares, the "Shares") to the several Underwriters if requested by the
Representatives as provided in Section 2(b) hereof.
(b) Upon your authorization of the release of the Firm Shares,
the Underwriters propose to make a public offering (the "Offering") of the Firm
Shares upon the terms set forth in the Prospectus (as defined below) as soon
after the Registration Statement (as defined below) and this
Agreement have become effective as in the Representatives' sole judgment is
advisable. As used in this Agreement, the term "Original Registration Statement"
means the registration statement (File No. 333-41219) initially filed with the
Securities and Exchange Commission (the "Commission") relating to the Shares, as
amended at the time when it was or is declared effective, including all
financial schedules and exhibits thereto and including any information omitted
therefrom pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "Securities Act"), and included in the Prospectus; the term "Rule 462(b)
Registration Statement" means any registration statement filed with the
Commission pursuant to Rule 462(b) under the Securities Act (including the
Registration Statement and any Preliminary Prospectus (as defined below) or
Prospectus incorporated therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both the Original
Registration Statement and any Rule 462(b) Registration Statement; the term
"Preliminary Prospectus" means each prospectus subject to completion filed with
the Original Registration Statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Original Registration
Statement or any amendment thereto at the time it was or is declared effective);
the term "Prospectus" means:
(i) if the Company relies on Rule 434 under the Securities
Act, the Term Sheet (as defined below) relating to the
Shares that is first filed pursuant to Rule 424(b)(7) under
the Securities Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(ii) if the Company does not rely on Rule 434 under the
Securities Act, the prospectus first filed with the
Commission pursuant to Rule 424(b) under the Securities Act;
(iii) if the Company does not rely on Rule 434 under the
Securities Act and if no prospectus is required to be filed
pursuant to Rule 424(b) under the Securities Act, the
prospectus included in the Registration Statement; or
(iv) for purposes of the representations and warranties
contained in Section 5 hereof, if the prospectus is not in
existence, the most recent Preliminary Prospectus;
and the term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Securities Act. Any reference herein to
the "date" of a Prospectus that includes a Term Sheet shall mean the date
of such Term Sheet.
Section 2. Purchase and Closing.
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(a) On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters, severally and not jointly, agrees to purchase from the
Company, at a purchase price of $___ per Share (the "Purchase Price"), the
respective number of Firm Shares set forth opposite the name of such Underwriter
in Schedule 1 hereto. Firm Shares shall be registered by BankBoston, N.A. in the
name of the nominee of the Depository Trust Company ("DTC"), Cede & Co. ("Cede &
Co."), and credited to the accounts of such of its participants as the
Representatives shall request, upon notice to the Company at least 48
2
hours prior to the First Closing Date (as defined below), with any transfer
taxes payable in connection with the transfer of the Firm Shares to the
Underwriters duly paid, against payment by or on behalf of the Underwriters to
the account of the Company of the aggregate Purchase Price therefor by wire
transfer in immediately available funds. Delivery or registry of and payment for
the Firm Shares shall be made at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 at 9:30 A.M., New
York City time, on the fourth full business day following the date of this
Agreement, or at such other place, time or date as the Representatives and the
Company may agree upon. Such time and date of delivery against payment are
herein referred to as the "First Closing Date", and the implementation of all
the actions described in this Section 2(a) is herein referred to as the "First
Closing".
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Shares as contemplated by the
Prospectus, the Company and the Selling Stockholders hereby grant to the several
Underwriters an option to purchase, severally and not jointly, the Option
Shares. The purchase price to be paid for any Option Shares shall be the same as
the Purchase Price for the Firm Shares set forth above in paragraph (a) of this
Section 2. The option granted hereby may be exercised as to all or any part of
the Option Shares from time to time within thirty days after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange and the Nasdaq
Stock Market's National Market (the "Nasdaq National Market") are open for
trading). The Underwriters shall not be under any obligation to purchase any of
the Option Shares prior to the exercise of such option. The Representatives may
from time to time exercise the option granted hereby by giving notice in writing
or by telephone (confirmed in writing) to the Company and the Selling
Stockholders setting forth the aggregate number of Option Shares as to which the
several Underwriters are then exercising the option and the date and time for
delivery or registry of and payment for such Option Shares. Any such date of
delivery or registry shall be determined by the Representatives but shall not be
earlier than two business days or later than five business days after such
exercise of the option and, in any event, shall not be earlier than the First
Closing Date. The time and date set forth in such notice, or such other time or
date as the Representatives, the Company and the Selling Stockholders may agree
upon or as the Representatives may determine pursuant to Section 2(a) hereof, is
herein called an "Option Closing Date" with respect to such Option Shares, and
the implementation of all the actions described in this Section 2(b) is herein
referred to as the "Option Closing". As used in this Agreement, the term
"Closing Date" means either the First Closing Date or any Option Closing Date,
as applicable, and the term "Closing" means either the First Closing or any
Option Closing, as applicable. If the option is exercised as to all or any
portion of the Option Shares, then either one or more certificates in definitive
form for such Option Shares shall be delivered or, if such Option Shares are to
be held through DTC, such Option Shares shall be registered and credited, on the
related Option Closing Date in the same manner, and upon the same terms and
conditions, set forth in paragraph (a) of this Section 2, except that reference
therein to the Firm Shares and the First Closing Date shall be deemed, for
purposes of this paragraph (b), to refer to such Option Shares and Option
Closing Date, respectively. Upon exercise of the option as provided herein, the
Company and the Selling Stockholders shall become obligated to sell to each of
the several Underwriters, and, on the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, each of the Underwriters (severally and not
jointly) shall become obligated to purchase from the Company and the Selling
Stockholders, the same percentage of the total number
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of the Option Shares as to which the several Underwriters are then exercising
the option as such Underwriter is obligated to purchase of the aggregate number
of Firm Shares, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares. In the event that the option is exercised
in part, the number of Option Shares to be sold by each of the Selling
Stockholders shall be, as nearly as practicable, in the same proportion to each
other as are the number of Option Shares to be sold by each Selling Stockholder
listed opposite their names on Schedule 2 hereto.
(c) The Company and the Selling Stockholders hereby acknowledge
that the payment of monies pursuant to Section 2(a) hereof (a "Payment") by or
on behalf of the Underwriters of the aggregate Purchase Price for any Shares
does not constitute closing of a purchase and sale of the Shares. Only execution
and delivery, by facsimile or otherwise, of a receipt for Shares by the
Underwriters indicates completion of the closing of a purchase of the Shares
from the Company and the Selling Stockholders. Furthermore, in the event that
the Underwriters make a Payment to the Company and the Selling Stockholders
prior to the completion of the closing of a purchase of Shares, the Company and
the Selling Stockholders hereby acknowledge that until the Underwriters execute
and deliver such receipt for the Shares, the Company and the Selling
Stockholders will not be entitled to the Payment and shall return the Payment to
the Underwriters as soon as practicable (by wire transfer of same-day funds)
upon demand. In the event that the closing of a purchase of Shares is not
completed and the Payment is not returned by the Company and the Selling
Stockholders to the Underwriters on the same day the Payment was received by the
Company and the Selling Stockholders, the Company and the Selling Stockholders
agree to pay to the Underwriters in respect of each day the Payment is not
returned by them, in same-day funds, interest on the amount of such Payment in
an amount representing the Underwriters' cost of financing as reasonably
determined by the Representatives, pro rata in proportion to the percentage of
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such Payment received by each.
(d) It is understood that any of you, individually and not as
one of the Representatives, may (but shall not be obligated to) make Payment on
behalf of any Underwriter or Underwriters for any of the Shares to be purchased
by such Underwriter or Underwriters. No such Payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
Section 3. Covenants.
---------
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will:
(x) use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as
promptly as possible. If required, the Company will file
the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the
Commission in the manner and within the time period required
by Rules 434 and 424(b) under the Securities Act. During
any time when a prospectus relating to the Shares is
required to be
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delivered under the Securities Act, the Company (I) will
comply with all requirements imposed upon it by the
Securities Act and the rules and regulations of the
Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Shares in
accordance with the provisions hereof and of the Prospectus,
as then amended or supplemented, and (II) will not file with
the Commission the Prospectus, Term Sheet, any amendment or
supplement to such Prospectus or Term Sheet, any amendment
to the Registration Statement (including the amendment
referred to in the second sentence of Section 5(a)(i)
hereof) or any Rule 462(b) Registration Statement unless the
Representatives previously have been advised of, and
furnished with a copy within a reasonable period of time
prior to, the proposed filing and the Representatives shall
have given their consent to such filing. The Company will
prepare and file with the Commission, in accordance with the
rules and regulations of the Commission, promptly upon
request by the Representatives or counsel for the
Underwriters, any amendments to the Registration Statement
or amendments or supplements to the Prospectus that may be
necessary or advisable in connection with the distribution
of the Shares by the several Underwriters. The Company will
advise the Representatives, promptly after receiving notice
thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or
the Prospectus or Term Sheet or any amendment or supplement
thereto has been filed and will provide evidence
satisfactory to the Representatives of each such filing or
effectiveness.
(y) without charge, provide (I) to each of the
Representatives and to counsel for the Underwriters, an
executed and a conformed copy of the Original Registration
Statement and each amendment thereto or any Rule 462(b)
Registration Statement (in each case including exhibits
thereto), (II) to each other Underwriter, a conformed copy
of the Original Registration Statement and each amendment
thereto or any Rule 462(b) Registration Statement (in each
case without exhibits thereto), and (III) so long as a
prospectus relating to the Shares is required to be
delivered under the Securities Act, as many copies of each
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto as the Representatives may reasonably
request. Without limiting the application of clause (III)
of the preceding sentence, the Company, not later than (A)
9:00 A.M., New York City time, on the second business day
following the date of determination of the public offering
price, if such determination occurred at or prior to 12:00
noon, New York City time, on such date or (B) 6:00 P.M., New
York City time, on the second business day following the
date of determination of the public offering price, if such
determination occurred after 12:00 noon, New York City time,
on such date, will
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deliver to the Underwriters, without charge, as many copies
of the Prospectus and any amendment or supplement thereto as
the Representatives may reasonably request for purposes of
confirming orders that are expected to settle on the First
Closing Date.
(z) advise the Representatives, promptly after receiving
notice or obtaining knowledge thereof, of (I) the issuance
by the Commission of any stop order suspending the
effectiveness of the Original Registration Statement or any
amendment thereto or any Rule 462(b) Registration Statement
or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, (II) the suspension of the qualification
of the Shares for offering or sale in any jurisdiction,
(III) the institution, threatening or contemplation of any
proceeding for any purpose identified in the preceding
clause (I) or (II), or (IV) any request made by the
Commission for amending the Original Registration Statement
or any Rule 462(b) Registration Statement, for amending or
supplementing the Prospectus or for additional information.
The Company will use all reasonable efforts to prevent the
issuance of any such stop order and, if any such stop order
is issued, to obtain the withdrawal thereof as promptly as
possible.
(ii) The Company will arrange for the qualification of the
Shares for offering and sale in each jurisdiction as the
Representatives shall reasonably designate including, but not
limited to, pursuant to applicable state securities ("Blue Sky")
laws of certain states of the United States of America or other
U.S. jurisdictions, and the Company shall maintain such
qualifications in effect for so long as may be necessary in order
to complete the placement of the Shares; provided, however, that
the Company shall not be obliged to file any general consent to
service of process or to qualify as a foreign corporation or as a
securities dealer in any jurisdiction or to subject itself to
taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject.
(iii) If, at any time prior to the final date when a prospectus
to the Shares is required to be delivered under the Securities Act,
any event occurs as a result of which the Prospectus, as then
amended or supplemented, would include any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other
reason it shall be necessary at any time to amend the Registration
Statement or amend or supplement the Prospectus to comply with the
Securities Act or the rules or regulations of the Commission
thereunder or applicable law, the Company will promptly notify the
Representatives thereof and will promptly, at its own expense, but
subject to the second sentence of Section 3(a)(i)(x) hereof: (x)
prepare and file with the Commission an
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amendment to the Registration Statement or amendment or supplement
to the Prospectus which will correct such statement or omission or
effect such compliance; and (y) supply any amended Registration
Statement or amended or supplemented Prospectus to the Underwriters
in such quantities as the Underwriters may reasonably request.
(iv) The Company will make generally available to its
securityholders and to the Representatives as soon as practicable
an earnings statement that satisfies the provisions of Section
11(a) of the Securities Act, including Rule 158 thereunder.
(v) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under "Use of
Proceeds" in the Prospectus.
(vi) The Company will not publicly announce any intention to, and
will not itself, without the prior written consent of the
Representatives, on behalf of the Underwriters, (x) offer, pledge,
sell, offer to sell, contract to sell, sell any option or contract
to purchase, purchase any option to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for,
Common Stock, or (y) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the shares of Common Stock or securities convertible
into, or exercisable or exchangeable for, shares of Common Stock
(whether any such transaction described in clause (x) or (y) above
is to be settled by delivery of shares of Common Stock or such
other securities, in cash or otherwise), for a period beginning
from the date hereof and continuing to and including the date 180
days after the date hereof, except pursuant to this Agreement and
other than with respect to (I) shares of Common Stock to be issued
upon the exercise of warrants to purchase shares of Common Stock,
or upon conversion or exchange of securities convertible or
exchangeable into shares of Common Stock, in each case, which are
outstanding on the date hereof and disclosed in the Prospectus, and
(II) shares of Common Stock (or any securities convertible into,
exercisable for or exchangeable for shares of Common Stock) issued
or issuable pursuant to any employee benefit plans, qualified stock
option plans or other employee compensation plans which are
disclosed in the Prospectus.
(vii) Neither the Company nor any of its affiliates, nor any
person acting on behalf of any of them will, directly or
indirectly, (x) take any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares or (y) (I) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Shares or (II) pay or
agree to pay to any person
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any compensation for soliciting another to purchase any other
securities of the Company.
(viii) The Company will obtain the agreements described in Section
7(h) hereof prior to the First Closing Date.
(ix) If at any time during the 25-day period after the
Registration Statement becomes effective or during the period prior
to any Closing Date, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the
Representatives' sole judgment the market price of the Shares has
been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after notice from
the Representatives advising the Company to the effect set forth
above, forthwith prepare, consult with the Representatives
concerning the substance of, and disseminate a press release or
other public statement reasonably satisfactory to the
Representatives, responding to or commenting on such rumor,
publication or event.
(x) If the Company elects to rely on Rule 462(b), the Company
shall both file the Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable
fees in accordance with Rule 111 promulgated under the Securities
Act by the earlier of (x) 10:00 P.M. New York City time on the date
of this Agreement and (y) the time confirmations are sent or given,
as specified by Rule 462(b)(2) under the Securities Act.
(xi) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the First Closing
Date. The Company will use all reasonable efforts to ensure that
the Shares remain included for quotation on the Nasdaq National
Market following the First Closing Date.
(b) Each Selling Stockholder agrees that:
(i) It will not, and no person acting on behalf of such Selling
Stockholder will, directly or indirectly, (x) take any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (y) (I) sell, bid
for, purchase, or pay anyone any compensation for soliciting
purchases of, the Shares or (II) pay or agree to pay to any person
any compensation for soliciting another to purchase any other
securities of the Company (except for the sale of Shares by the
Selling Stockholders under this Agreement) .
(ii) It will not publicly announce any intention to, and will not
itself, without the prior written consent of the Representatives on
behalf of the
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Underwriters, (x) offer, pledge, sell, offer to sell, contract to
sell, sell any option or contract to purchase, purchase any option
to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any of
the shares of Common Stock or any securities convertible into, or
exercisable or exchangeable for, Common Stock, or (y) enter into
any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the shares of
Common Stock or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock (whether any such
transaction described in clause (x) or (y) above is to be settled
by delivery of shares of Common Stock or such other securities, in
cash or otherwise), in each case, beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act) or otherwise
controlled by such person on the date hereof or hereafter acquired,
for a period beginning from the date hereof and continuing to and
including the date 180 days after the date hereof; provided,
however, that such Selling Stockholder may, without the prior
written consent of the Representatives on behalf of the
Underwriters, transfer shares of Common Stock or such other
securities to members of such Selling Stockholder's immediate
family or to trusts for the benefit of members of such Selling
Stockholder's immediate family or in connection with bona fide
gifts, provided that any transferee agrees to the transfer
restrictions described above.
Section 4. Expenses.
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(a) The Company shall bear and pay all costs and expenses incurred
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 9 hereof, including: (i) the fees and expenses of
its counsel, accountants and any other experts or advisors retained by the
Company; (ii) the costs of delivering and distributing the Powers of Attorney
(as defined below) and the Custody Agreements (as defined below) and the fees
and expenses of the Custodian (as defined below) (and any other Attorney-in-Fact
(as defined below)); (iii) fees and expenses incurred in connection with the
registration of the Shares under the Securities Act and the preparation and
filing of the Registration Statement, the Prospectus and all amendments and
supplements thereto; (iv) the printing and distribution of the Prospectus and
any Preliminary Prospectus and the printing and production of all other
documents connected with the Offering (including this Agreement and any other
related agreements); (v) expenses related to the qualification of the Shares
under the state securities or Blue Sky laws and the securities laws of Canada
and Japan, including filing fees and the fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of any Blue Sky memoranda; (vi) the filing fees and expenses, if any, incurred
with respect to any filing with the National Association of Securities Dealers,
Inc., including the fees and disbursements of counsel for the Underwriters in
connection therewith; (vii) all expenses arising from the quoting of the Shares
on the Nasdaq National Market; (viii) all arrangements relating to the
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees; (ix) the
costs and expenses of travel, lodging and meals of the Company's employees in
connection with the "roadshow" and any other meetings with prospective investors
in
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the Shares (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters) and one-half of the cost of
any aircraft chartered in connection with the roadshow; and (x) the costs and
expenses of advertising relating to the Offering (other than as shall have been
specifically approved by the Representatives to be paid for by the
Underwriters). Subject to the provisions of Section 10, the Underwriters agree
to pay all costs and expenses incident to the performance of their obligations
under this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of counsel
to the Underwriters (other than as set forth in clauses (v) and (vi) above).
(b) The Selling Stockholders shall bear and pay all costs and
expenses incurred incident to the performance of their respective obligations
under this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 9 hereof,
including: (i) any stamp duties, capital duties and stock transfer taxes, if
any, payable upon the sale of the Shares of such Selling Stockholders to the
Underwriters and (ii) the fees and disbursements of their respective counsel,
accountants and other advisors.
Section 5. Representations and Warranties.
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(a) As a condition of the obligation of the Underwriters to
underwrite and purchase the Shares, the Company and, to the best of their
knowledge after careful review of this Agreement, the Registration Statement and
the Prospectus, the Selling Stockholders represent and warrant to, and agree
with, each of the several Underwriters as follows:
Registration Statement and Prospectus
(i) The Original Registration Statement, including the
Preliminary Prospectus, has been filed by the Company with the
Commission under the Securities Act, and one or more amendments
to such Registration Statement may have been so filed. After the
execution of this Agreement, the Company will file with the
Commission either (x) if such Registration Statement, as it may
have been amended, has been declared by the Commission to be
effective under the Securities Act, either (I) if the Company
relies on Rule 434 under the Securities Act, a Term Sheet
relating to the Shares that shall identify the Preliminary
Prospectus that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the
Securities Act or (II) if the Company does not rely on Rule 434
under the Securities Act, a prospectus in the form most recently
included in an amendment to such Registration Statement (or, if
no such amendment shall have been filed, in such Registration
Statement), with such changes or insertions as are required by
Rule 430A under the Securities Act or permitted by Rule 424(b)
under the Securities Act, and in the case of either clause (I) or
(II) of this sentence, as have been provided to and approved by
the Representatives prior to the execution of this Agreement, or
(y) if such Registration Statement, as it may have been amended,
has not been declared by the Commission to be effective under the
Securities Act, an amendment to such Registration Statement,
including a form of prospectus, a copy of which amendment has
been furnished to and approved by the Representatives prior to
the execution of this Agreement. The Company may also file a Rule
462(b) Registration Statement with the Commission for the purpose
of registering certain
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additional Shares, which registration shall be effective upon
filing with the Commission.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any
Preliminary Prospectus was filed with the Commission, it (x)
contained all statements required to be stated therein in
accordance with, and complied in all material respects with the
requirements of, the Securities Act and the rules and regulations
of the Commission thereunder and (y) did not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
When the Registration Statement or any amendment thereto was or
is declared effective, it (I) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the
requirements of, the Securities Act and the rules and regulations
of the Commission thereunder and (II) did not or will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading. When the Prospectus or any
Term Sheet that is a part thereof or any amendment or supplement
to the Prospectus is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or such amendment or supplement is
not required to be so filed, when the Registration Statement or
the amendment thereto containing the Prospectus or such amendment
or supplement to the Prospectus was or is declared effective) and
on the Closing Date, the Prospectus, as amended or supplemented
at any such time, (A) contained or will contain all statements
required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of,
the Securities Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (ii) do
not apply to statements or omissions made in any Preliminary
Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(iii) If the Company has elected to rely on Rule 462(b) and
the Rule 462(b) Registration Statement is not effective, (x) the
Company will file a Rule 462(b) Registration Statement in
compliance with, and that is effective upon filing pursuant to,
Rule 462(b) and (y) the Company has given irrevocable
instructions for transmission of the applicable filing fee in
connection with the filing of the Rule 462(b) Registration
Statement, in compliance with Rule 111 under the Securities Act,
or the Commission has received payment of such filing fee.
(iv) If the Company has elected to rely on Rule 434 under
the Securities Act, the Prospectus is not "materially different",
as such term is used in Rule 434,
11
from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective
amendment thereto (including such information that is permitted
to be omitted pursuant to Rule 430A under the Securities Act).
(v) The Company has not distributed and, prior to the
later of (x) any Closing Date and (y) the completion of the
distribution of the Shares, will not distribute any offering
material in connection with the Offering other than the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement
thereto.
(vi) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (x) the Company has not incurred any material
liability or obligation, direct or contingent, nor entered into
any material transaction not in the ordinary course of business;
(y) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; and (z) there has
not been any material change in the capital stock, short-term or
long-term debt of the Company, except in each case as described
in or contemplated by the Prospectus.
The Shares
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus, and the Company
has no subsidiaries. All of the issued shares of capital stock of
the Company have been duly authorized and validly issued and are
fully paid and nonassessable, have been issued in compliance with
all applicable federal and state securities laws and were not
issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase such securities. The
Shares have been duly authorized by all necessary corporate
action of the Company and, after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable at
the Closing Date. No holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Shares, and no holder of
securities of the Company has any right which has not been fully
exercised or waived to require the Company to register the offer
or sale of any securities owned by such holder under the
Securities Act in the Offering contemplated by this Agreement.
(viii) Except as disclosed in the Prospectus, there are no
outstanding (x) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the
Company, (y) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations, or (z)
obligations of the Company to issue any shares of capital stock,
any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
12
(ix) The Company does not own any shares of stock or any
other equity securities of any corporation or have any equity
interest in any firm, partnership, association or other entity,
except as described in or contemplated by the Prospectus.
Listing
(x) All of the Shares have been duly authorized and
accepted for quotation on the Nasdaq National Market, subject to
official notice of issuance.
Market manipulation
(xi) Neither the Company nor any of its affiliates, nor
any person acting on behalf of any of them has, directly or
indirectly, (x) taken any action designed to cause or to result
in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of
the Shares, or (y) since the filing of the Original Registration
Statement (I) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares or (II) paid
or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
Corporate power and authority
(xii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the law of its
jurisdiction of incorporation with full power and authority to
own, lease and operate its properties and assets and conduct its
business as described in the Prospectus, is duly qualified to
transact business and is in good standing in each jurisdiction in
which its ownership, leasing or operation of its properties or
assets or the conduct of its business requires such
qualification, except where the failure to be so qualified does
not amount to a material liability or disability to the Company,
and has full power and authority to execute and perform its
obligations under this Agreement.
(xiii) The execution and delivery of this Agreement and the
issuance and sale of the Shares have been duly authorized by all
necessary corporate action of the Company, and this Agreement has
been duly executed and delivered by the Company and is the valid
and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as its
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
(xiv) The issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (x) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except (I) if the Company has elected to
rely on Rule 462(b) and the Rule 462(b) Registration Statement is
not effective, the registration of certain Shares pursuant to the
Rule 462(b) Registration
13
Statement that will be effective upon filing in compliance with
Rule 462(b) and (II) such as have been obtained or made or such
as may be required by the state securities or Blue Sky laws of
the various states of the United States of America or other U.S.
jurisdictions or by the National Association of Securities
Dealers, Inc. ("NASD") in connection with the offer and sale of
the Shares by the Underwriters, or (y) conflict with or result in
a breach or violation of any of the terms and provisions of, or
constitute a default under, any material indenture, mortgage,
deed of trust, lease or other agreement or instrument to which
the Company is a party or by which the Company or any of its
properties is bound, or the charter documents or by-laws of the
Company, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator applicable to the Company.
(xv) The Company is not, and will conduct its operations
in a manner so that it continues not to be, an "investment
company" and, after giving effect to the Offering and the
application of the proceeds therefrom, will not be an "investment
company", as such term is defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
Title, licenses and consents
(xvi) The Company has good and marketable title in fee
simple to all items of real property and marketable title to all
personal property owned by it, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely
affect the value of such property and do not interfere with the
use made or proposed to be made of such property by the Company,
and any real property and buildings held under lease by the
Company are held under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere
with the use made or proposed to be made of such property and
buildings by the Company, in each case except as described in or
contemplated by the Prospectus.
(xvii) The Company owns or possesses, or can acquire on
reasonable terms, all material patents, patent applications,
trademarks, service marks, trade names, licenses, know-how,
copyrights, trade secrets and proprietary or other confidential
information necessary to operate its business as described in the
Prospectus, and the Company has not received any notice of
infringement of or conflict with asserted rights of any third
party with respect to any of the foregoing which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling
or finding, would have a materially adverse effect on or
constitute a materially adverse change in, or constitute a
development involving a prospective materially adverse effect on
or change in, the condition (financial or otherwise), earnings,
properties, business affairs or business prospects, stockholders'
equity, net worth or results of operations of the Company, except
as described in or contemplated by the Prospectus.
14
(xviii) The Company possesses all consents, licenses,
certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct its business as described in the Prospectus,
and the Company has not received any notice of proceedings
relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on or constitute
a materially adverse change in, or constitute a development
involving a prospective materially adverse effect on or change
in, the condition (financial or otherwise), earnings, properties,
business affairs or business prospects, net worth or results of
operations of the Company, except as described in or contemplated
by the Prospectus.
Financial statements
(xix) Coopers & Xxxxxxx L.L.P., who have certified certain
financial statements of the Company and delivered their report
with respect to the audited financial statements and schedule
included in the Registration Statement and the Prospectus, are
independent public accountants as required by the Securities Act
and the applicable rules and regulations thereunder.
(xx) The financial statements and schedule of the Company
included in the Registration Statement and the Prospectus were
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the periods
involved (except as otherwise noted therein) and they present
fairly the financial condition of the Company as at the dates at
which they were prepared and the results of operations of the
Company in respect of the periods for which they were prepared.
Internal Accounting Controls
(xxi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (w)
transactions are executed in accordance with management's general
or specific authorizations; (x) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (y)
access to assets is permitted only in accordance with
management's general or specific authorization; and (z) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken
with respect to any differences.
Litigation
(xxii) No legal or governmental proceedings are pending or
threatened to which the Company is a party or to which the
property of the Company is subject that are required to be
described in the Registration Statement or the Prospectus and are
not described therein; and no statutes, regulations, contracts or
other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described
therein or filed as required.
15
Dividends and Distributions
(xxiii) The Company is not currently prohibited, directly or
indirectly, from paying any dividends or making any other distribution
on its capital stock, in each case except as described in or
contemplated by the Prospectus.
Taxes
(xxiv) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions of the time for filing thereof (except in any case in which
the failure so to file would not have a materially adverse effect on
the Company) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as described in or contemplated by the Prospectus.
Insurance
(xxv) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in its business as described in
the Prospectus; the Company has not been refused any insurance
coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, properties, business
affairs or business prospects, net worth or results of operations of
the Company, except as described in or contemplated by the Prospectus.
Pension and Labor
(xxvi) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (x) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (y) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension 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 in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
16
(xxvii) No labor dispute with the employees of the Company
exists or is threatened or imminent that could have a materially
adverse effect on or constitute a materially adverse change in, or
constitute a development involving a prospective materially adverse
effect on or change in, the condition (financial or otherwise),
properties, management, earnings, business affairs or business
prospects, net worth or results of operations of the Company, except
as described in or contemplated by the Prospectus.
Environmental
(xxviii) The Company is not in violation of any federal or state
law or regulation relating to occupational safety and health or to the
storage, handling or transportation of hazardous or toxic materials
and the Company has received all permits, licenses or other approvals
required of it under applicable federal and state occupational safety
and health and environmental laws and regulations to conduct its
business as described in the Prospectus, and the Company is in
compliance with all terms and conditions of any such permit, license
or approval, except any such violation of law or regulation, failure
to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, have a
materially adverse effect on or constitute a materially adverse change
in, or constitute a development involving a prospective materially
adverse effect on or change in, the condition (financial or
otherwise), earnings, properties, business affairs or business
prospects, net worth or results of operations of the Company, except
as described in or contemplated by the Prospectus.
Other Agreements
(xxix) No default by the Company, or to the Company's knowledge,
by another party, exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default by the Company,
or to the Company's knowledge, by another party, in the due
performance and observance of any term, covenant or condition of any
material indenture, mortgage, deed of trust, lease or other material
agreement or instrument to which the Company is a party or by which
the Company or any of its properties is bound.
Absence of Materially Adverse Change
(xxx) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
the Company has not sustained any material loss or interference with
its business as described in the Prospectus 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, and there has been no materially adverse change
(including, without limitation, a change in management or control), or
development involving a prospective materially adverse change, in the
condition (financial or otherwise), management, earnings, property,
business affairs or business prospects, stockholders' equity, net
worth or results of operations of the Company, other than as described
in or contemplated by the Prospectus (exclusive of any amendments or
supplements thereto).
17
(xxxi) No receiver or liquidator (or similar person) has been
appointed in respect of the Company or in respect of any part of the
assets of the Company; no resolution, order of any court, regulatory
body, governmental body or otherwise, or petition or application for
an order, has been passed, made or presented for the winding up of the
Company or for the protection of the Company from its creditors; and
the Company has not stopped or suspended payments of its debts, become
unable to pay its debts or otherwise become insolvent.
(b) As a further condition of the obligation of the Underwriters to
underwrite and pay for the Shares, each Selling Stockholder, severally and not
jointly, represents and warrants to, and agrees with, each of the several
Underwriters that:
(i) Such Selling Stockholder has full power to enter into this
Agreement and to sell, assign, transfer and deliver to the
Underwriters the Shares to be sold by such Selling Stockholder
hereunder in accordance with the terms of this Agreement; and this
Agreement has been duly executed and delivered by such Selling
Stockholder.
(ii) Such Selling Stockholder has duly executed and delivered a
power of attorney and custody agreement (with respect to such Selling
Stockholder, the "Power-of-Attorney" and the "Custody Agreement",
respectively), each in the form heretofore delivered to the
Representatives, appointing Xxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxx as
such Selling Stockholder's attorneys-in-fact (the "Attorney-in-Fact")
with authority to execute, deliver and perform this Agreement on
behalf of such Selling Stockholder and appointing First National Bank
of Boston, as custodian thereunder (the "Custodian"). Certificates in
negotiable form, endorsed in blank or accompanied by blank stock
powers duly executed, with signatures appropriately guaranteed,
representing the Shares to be sold by such Selling Stockholder
hereunder have been deposited with the Custodian pursuant to the
Custody Agreement for the purpose of delivery pursuant to this
Agreement. Such Selling Stockholder has full power to enter into the
Custody Agreement and the Power-of-Attorney and to perform its
obligations under the Custody Agreement. The Custody Agreement and the
Power-of-Attorney have been duly executed and delivered by such
Selling Stockholder and, assuming due authorization, execution and
delivery by the Custodian, are the legal, valid, binding and
enforceable instruments of such Selling Stockholder. Such Selling
Stockholder agrees that each of the Shares represented by the
certificates on deposit with the Custodian is subject to the interests
of the Underwriters hereunder, that the arrangements made for such
custody, the appointment of the Attorney-in-Fact and the right, power
and authority of the Attorney-in-Fact to execute and deliver this
Agreement, to agree on the price at which the Shares (including such
Selling Stockholder's Shares) are to be sold to the Underwriters, and
to carry out the terms of this Agreement, 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 the Custody Agreement, by any act of such Selling
Stockholder, by operation of law or otherwise, whether in the case of
any individual Selling Stockholder by the death or incapacity of such
Selling
18
Stockholder, in the case of a trust or estate by the death of the
trustee or trustees or the executor or executors or the termination of
such trust or estate, or in the case of a corporate or partnership
Selling Stockholder by its liquidation or dissolution or by the
occurrence of any other event. If any individual Selling Stockholder,
trustee or executor should die or become incapacitated or any such
trust should be terminated, or if any corporate or partnership Selling
Stockholder shall liquidate or dissolve, or if any other event should
occur, before the delivery of such Shares hereunder, the certificates
for such Shares deposited with the Custodian shall be delivered by the
Custodian in accordance with the respective terms and conditions of
this Agreement as if such death, incapacity, termination, liquidation
or dissolution or other event had not occurred, regardless of whether
or not the Custodian or the Attorney-in-Fact shall have received
notice thereof.
(iii) Such Selling Stockholder is the lawful owner of the Shares
to be sold by such Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Shares, as provided herein, such
Selling Stockholder will convey good and marketable title to such
Shares, free and clear of any security interests, liens, encumbrances,
equities, claims or other defects.
(iv) Neither such Selling Stockholder nor any person acting on
behalf of it has, directly or indirectly, (x) taken any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares or (y) since the filing of the
Original Registration Statement (I) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Shares or
(II) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company
(except for the sale of Shares by the Selling Stockholders under this
Agreement).
(v) Such Selling Stockholder has carefully reviewed this
Agreement, the Prospectus and the Registration Statement, and the
information regarding such Selling Stockholder set forth therein under
the caption "Principal Stockholders" is complete and accurate. All
information furnished by or on behalf of such Selling Stockholder for
use in the Registration Statement is, and on each Closing Date will
be, true, correct, and complete, and does not, and on such Closing
Date will not, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information not
misleading, and all information furnished in writing by or on behalf
of such Selling Stockholder for use in the Prospectus is, and on such
Closing Date will be, true, correct, and complete, and does not, and
on such Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make
such information not misleading in the light of the circumstances
under which they were made.
(vi) The sale by such Selling Stockholder of Shares pursuant
hereto is not prompted by any adverse information concerning the
Company that is not set forth in the Registration Statement or the
Prospectus.
19
(vii) The sale of the Shares to the Underwriters by such Selling
Stockholder pursuant to this Agreement, the compliance by such Selling
Stockholder with the other provisions of this Agreement, the Custody
Agreement and the consummation of the other transactions herein
contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority,
except such as have been obtained or made or such as may be required
by state securities or Blue Sky laws of the various states of the
United States of America or such other U.S. jurisdictions or by the
NASD and, if the Registration Statement is not effective under the
Securities Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under
the Securities Act, or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder or any of such Selling
Stockholder's properties are bound, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to such Selling Stockholder.
(viii) Such Selling Shareholder has not distributed and, prior to
the later of (x) any Closing Date and (y) the completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering other than the Registration Statement
or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto.
(c) The above representations and warranties shall be deemed to be
repeated at each Closing, and all references therein to the Shares and the
Closing Date shall be deemed to refer to the Firm Shares or the Option Shares
and the First Closing Date or the applicable Option Closing Date, each as
applicable.
Section 6. Indemnity.
---------
(a) The Company agrees to 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any and all
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 5 hereof,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or
20
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement
thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; and provided, further,
that the Company will not be liable to any Underwriter or any person controlling
such Underwriter with respect to any such untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary Prospectus that
is corrected in the Prospectus or any amendment or supplement thereto if the
person asserting any such loss, claim, damage or liability purchased Shares from
such Underwriter but was not sent or given a copy of the Prospectus, as amended
or supplemented, in any case where such delivery of the Prospectus, as amended
or supplemented, was required by the Securities Act, unless such failure to
deliver the Prospectus, as amended or supplemented, was a result of
noncompliance by the Company with Section 3 hereof. The indemnity provided for
in this Section 6 shall be in addition to any liability which the Company may
otherwise have. The Company will not, without the prior written consent of the
Representatives, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Representatives
or any person who controls any such Representatives is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(b) Each of the Selling Stockholders severally and not jointly agrees
to 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, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement made by
such Selling Stockholder in Section 5 hereof,
21
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that such
Selling Stockholder will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein. Notwithstanding any
other provision of this paragraph (b), no Selling Stockholder shall be liable
for indemnification hereunder in an aggregate amount exceeding the net proceeds
(before deducting expenses) received by such Selling Stockholder in respect of
the Shares sold by such Selling Stockholder to the Underwriters pursuant to this
Agreement. The indemnity provided for in this Section 6 shall be in addition to
any liability which the Selling Stockholders may otherwise have. The Selling
Stockholders will not, without the prior written consent of the Representatives,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not any such Representatives or any person
who controls any such Representatives is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(c) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each Selling Stockholder and each person, if
any, who controls the Company or such Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities to which the Company or any such director
or officer of the Company, such Selling Stockholder or any such controlling
person of the Company or such Selling Stockholder may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto or (ii) the
omission or the alleged omission to state in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses
22
reasonably incurred by the Company or any such director, officer or controlling
person or such Selling Stockholder or controlling person of such Selling
Stockholder in connection with investigating, defending against or appearing as
a third-party witness in connection with any such loss, claim, damage, liability
or any action in respect thereof. The indemnity provided in this Section 6 will
be in addition to any liability which any Underwriter may otherwise have. The
Underwriters will not, without the prior written consent of the Company, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not the Company or any person who controls
the Company is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of all of
the Company and such controlling persons from all liability arising out of such
claim, action, suit or proceeding. The remedies provided for in this Section 6
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a), (b) or (c) of this Section 6, such person (for
purposes of this paragraph (d), the "indemnified party") shall, promptly after
receipt by such party of notice of the commencement of such action, notify the
person against whom such indemnity may be sought (for purposes of this paragraph
(d), the "indemnifying party"), but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 6. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense of any such action and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 6 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated in writing by the Representatives in
the case of paragraph (a) or (b) of this Section 6, representing the indemnified
parties under such paragraph (a) or (b) who are parties to such action or
actions), or (ii) the indemnifying party does not promptly retain counsel
satisfactory to the indemnified party, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. All fees and expenses reimbursed pursuant to this
paragraph (d) shall be reimbursed as they are incurred. After such notice from
the indemnifying party to such indemnified party, the indemnifying party will
not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party.
23
(e) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 6 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the Offering or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the indemnifying
party or parties on the one hand and the indemnified party on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the Offering (before deducting expenses)
received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the Underwriters, the
parties' relative intents, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company, the Selling
Stockholders and the Underwriters agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (e). Notwithstanding any
other provision of this paragraph (e), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total public offering
price of the Shares purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute hereunder are several in proportion to their
respective underwriting obligations and not joint, and contributions among
Underwriters shall be governed by the provisions of the Deutsche Xxxxxx Xxxxxxxx
Inc. Master Agreement Among Underwriters. For purposes of this paragraph (e),
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 director of the Company,
each officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company or any Selling Stockholder 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 the Company or such Selling
Stockholder, as the case may be.
Section 7. Conditions Precedent. The obligations of the several Underwriters
--------------------
to purchase and pay for the Shares shall be subject, in the Representatives'
sole discretion, to the accuracy of the representations and warranties of the
Company and the Selling Stockholders contained herein as of
24
the date hereof and as of each Closing Date, as if made on and as of each
Closing Date, to the accuracy of the statements of the Company's officers and
the Selling Stockholders made pursuant to the provisions hereof, to the
performance by the Company and the Selling Stockholders of their respective
covenants and agreements hereunder and to the following additional conditions:
(a) (i) If the Original Registration Statement or any amendment
thereto filed prior to the First Closing Date has not been declared effective as
of the time of execution hereof, the Original Registration Statement or such
amendment shall have been declared effective not later than 6:00 P.M. New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 4:30 P.M. New York City time on such date,
or 12:00 Noon New York City time on the business day following the day on which
the public offering price was determined, if such determination occurred after
4:30 P.M. New York City time on such date, and (ii) if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have been
declared effective not later than the time confirmations are sent or given as
specified by Rule 462(b)(2), or such later time and date as shall have been
consented to by the Representatives; if required, the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement thereto
shall have been filed with the Commission in the manner and within the time
period required by Rules 434 and 424(b) under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall have received a legal opinion from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Registration Statement is effective under the
Securities Act; any required filing of the Prospectus, or any
Term Sheet that constitutes a part thereof, pursuant to Rules 434
and 424(b) has been made in the manner and within the time period
required by Rules 434 and 424(b); and no stop order suspending
the effectiveness of the Registration Statement or any amendment
thereto has been issued and, to the best knowledge of such
counsel, no proceedings for that purpose are pending or
threatened by the Commission;
(ii) the Original Registration Statement and each amendment
thereto, any Rule 462(b) Registration Statement and the
Prospectus (in each case, other than the financial statements,
including the notes thereto, schedule and other financial
information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Securities Act and the
rules and regulations of the Commission thereunder;
(iii) such counsel has no reason to believe that (in each case,
other than the financial statements, including the notes thereto,
schedule and other
25
financial information contained therein, as to which such counsel
need express no opinion) (x) the Registration Statement, as of
its effective date, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or (y) the Prospectus, as of its date or the date of
such opinion, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(iv) if the Company elects to rely on Rule 434 under the
Securities Act, the Prospectus is not "materially different", as
such term is used in Rule 434, from the prospectus included in
the Registration Statement at the time of its effectiveness or an
effective post-effective amendment thereto (including such
information that is permitted to be omitted pursuant to Rule 430A
under the Securities Act);
(v) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the dates
stated therein; all of the issued shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid and nonassessable, have been issued in compliance with
all applicable federal and state securities laws and were not
issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities; the Shares
have been duly authorized by all necessary corporate action of
the Company and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be validly issued,
fully paid and nonassessable; no holders of outstanding shares of
capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Shares;
and no holder of securities of the Company has any right which
has not been fully exercised or waived to require the Company to
register the offer or sale of any securities owned by such holder
under the Securities Act in the Offering contemplated by this
Agreement;
(vi) all of the Shares have been duly authorized and accepted
for quotation on the Nasdaq National Market, subject to official
notice of issuance;
(vii) the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing under
the laws of all other jurisdictions where the ownership, leasing
or operation of its properties or assets or the conduct of its
business requires such qualification, except where the failure to
be so qualified does not amount to a material liability or
disability to the Company; the Company has full power and
authority to own, lease and operate its properties and assets and
conduct its business as described in the
26
Registration Statement and the Prospectus, and the Company has
corporate power to enter into this Agreement and to carry out all
the terms and provisions hereof to be carried out by it;
(viii) the statements set forth under the heading "Description
of Capital Stock" in the Prospectus, insofar as such statements
purport to summarize certain provisions of the capital stock of
the Company, provide a fair summary of such provisions; and the
statements set forth under the headings "Risk Factors--Dependence
on Key Personnel," "--Certain Anti-Takeover Provisions," and
"--Shares Eligible for Future Sale," "Management--Limitation on
Liability and Indemnification Matters," "--Stock Plans," "--
401(k) Plan," and "-- Employment Agreements and Change in Control
Arrangements," "Certain Transactions," "Principal Stockholders,"
and "Shares Eligible for Future Sale" in the Prospectus, insofar
as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, have been reviewed
by such counsel and fairly present the information called for
with respect to such legal matters, documents and proceedings in
all material respects as required by the Securities Act and the
rules and regulations thereunder;
(ix) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Company
and this Agreement has been duly executed and delivered by the
Company;
(x) the issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (x) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained or made
(and specified in such opinion) or such as may be required by the
securities or Blue Sky laws of the various states of the United
States of America and other U.S. jurisdictions in connection with
the offer and sale of the Shares by the Underwriters, or (y)
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under (I) any
indenture, mortgage, deed of trust, lease or other agreement or
instrument, known to such counsel, to which the Company is a
party or by which the Company or any of its properties is bound,
and which is either required to be filed as an exhibit to the
Registration Statement or is an agreement with a customer of the
Company identified in the Prospectus, or (II) the charter
documents or by-laws of the Company, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel
and applicable to the Company;
27
(xi) the Company is not an "investment company" and, after
giving effect to the Offering and the application of the proceeds
therefrom, will not be an "investment company", as such term is
defined in the 1940 Act; and
(xii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company is a party
or to which the property of the Company is subject that are
required to be described in the Registration Statement or the
Prospectus and are not described therein or any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not
described therein or filed as required.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the States of Delaware and
California or the United States, to the extent satisfactory in form and scope to
counsel for the Underwriters, upon the opinion of local counsel. The foregoing
opinion shall also state that the Underwriters are justified in relying upon
such opinion of such local counsel, and copies of such opinion shall be
delivered to the Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion. The opinions of issuer's counsel described herein shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.
(c) The Representatives shall have received a legal opinion from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporations, counsel for the
Selling Stockholders, dated the Closing Date, to the effect that:
(i) such Selling Stockholder has full power to enter into this
Agreement, the Custody Agreement and the Power-of-Attorney and to
sell, assign, transfer and deliver the Shares being sold by such
Selling Stockholder hereunder in the manner provided in this
Agreement and to perform its obligations under the Custody
Agreement; this Agreement, the Custody Agreement and the
Power-of-Attorney have been duly executed and delivered by each
Selling Stockholder; assuming due authorization, execution and
delivery by the Custodian, the Custody Agreement and the
Power-of-Attorney are the legal, valid, binding and enforceable
instruments of such Selling Stockholder, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law);
(ii) the delivery by each Selling Stockholder to the several
Underwriters of certificates for the Shares being sold hereunder
by such Selling Stockholder against payment therefor as provided
herein, will convey good
28
and marketable title to such Shares to the several Underwriters,
free and clear of all security interests, liens, encumbrances,
equities, claims or other defects;
(iii) the sale of the Shares to the Underwriters by such Selling
Stockholder pursuant to this Agreement, the compliance by such
Selling Stockholder with the other provisions of this Agreement
and the Custody Agreement and the consummation of the other
transactions herein contemplated do not (x) require the consent,
approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and
such as may be required under state securities or Blue Sky laws,
or (y) conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which, to the best of such counsel's knowledge,
such Selling Stockholder is a party or by which such Selling
Stockholder or any of such Selling Stockholder's properties are
bound, or any statute, rule or regulation or, to the best of such
counsel's knowledge, any judgment, decree, order of any court or
other governmental authority or any arbitrator applicable to such
Selling Stockholder.
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of the Selling
Stockholders and public officials and, as to matters involving the application
of laws of any jurisdiction other than the State of California or the United
States, to the extent satisfactory in form and scope to counsel for the
Underwriters, upon the opinion of local counsel. The foregoing opinion shall
also state that the Underwriters are justified in relying upon such opinion of
such local counsel, and copies of such opinion shall be delivered to the
Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (c) shall include any amendment or supplement thereto at the date of
such opinion.
(d) The Representatives shall have received a legal opinion from
Fenwick & West LLP, counsel for the Underwriters, dated the Closing Date,
covering the issuance and sale of the Shares, the Registration Statement and the
Prospectus, and such other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(e) The Representatives shall have received from Coopers & Xxxxxxx
L.L.P. a letter or letters dated, respectively, the date hereof and the Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to the
Company within the meaning of the Securities Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited financial statements and
schedule examined by them and included in the Registration
Statement and the Prospectus comply in form in all material
respects with the applicable
29
accounting requirements of the Securities Act and the related
published rules and regulations;
(iii) on the basis of a reading of the latest available interim
unaudited financial statements of the Company, carrying out
certain specified procedures (which do not constitute an
examination made in accordance with generally accepted auditing
standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this
paragraph (iii), a reading of the minute books of the
stockholders, the board of directors and any committees thereof
of the Company, and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters,
nothing came to their attention that caused them to believe that:
(x) the unaudited financial statements of the Company
included in the Registration Statement and the Prospectus
do not comply in form in all material respects with the
applicable accounting requirements of the Securities Act
and the related published rules and regulations thereunder
or are not in conformity with GAAP applied on a basis
substantially consistent with that of the audited
financial statements included in the Registration
Statement and the Prospectus;
(y) at a specific date not more than five business
days prior to the date of such letter, there were any
changes in the capital stock or long-term debt of the
Company or any decreases in net current assets or
stockholders' equity of the Company, in each case compared
with amounts shown on the December 31, 1997 balance sheet
included in the Registration Statement and the Prospectus,
or for the period from January 1, 1998 to such specified
date there were any decreases, as compared with a period
of comparable length commencing on October 1, 1997, in
revenue, net income before provision for income taxes or
total or per share amounts of net income of the Company,
except in all instances for changes, decreases or
increases set forth in such letter.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company and are included in the
Registration Statement and the Prospectus under the captions
"Prospectus Summary," "Risk Factors," "Use of Proceeds,"
"Capitalization," "Dilution," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," "Management," "Certain
Transactions," "Principal Stockholders," "Description of Capital
Stock," "Shares Eligible for Future Sales" and "Item 15. Recent
Sales of Unregistered Securities" and in Exhibit 11.01 to the
Registration Statement, and have compared such amounts,
percentages and
30
financial information with such records of the Company and with
information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (I) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (II) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof. References to the Registration Statement and the Prospectus in this
paragraph (e) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(f) The Company shall have furnished or caused to be furnished to the
Underwriters at the Closing a certificate of its President and Chief Executive
Officer and its Vice President, Finance and Chief Financial Officer satisfactory
to the Underwriters to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the
Closing Date; the Registration Statement, as amended as of the
Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended
or supplemented as of the Closing Date, does not include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued,
and no proceedings for that purpose have been instituted or
threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the
Company has not sustained any material loss or interference with
its business as described in the Prospectus 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, and there has not been any materially
adverse change (including, without limitation, a change in
management or control), or development involving a prospective
materially adverse change, in the condition (financial or
otherwise), management, earnings, properties, business affairs or
business prospects, stockholders' equity, net worth or results of
operations of the
31
Company, except in each case as described in or contemplated by
the Prospectus (exclusive of any amendment or supplement
thereto).
(g) The Representatives shall have received from each Selling
Stockholder a certificate, signed by such Selling Stockholder, dated the Closing
Date, to the effect that:
(i) the representations and warranties of such Selling
Stockholder in this Agreement are true and correct as if made on
and as of the Closing Date;
(ii) the Registration Statement, as amended as of the Closing
Date, does not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or
supplemented as of the Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and
(iii) such Selling Stockholder has performed all covenants and
agreements on its part to be performed or satisfied at or prior
to the Closing Date.
(h) The Representatives shall have received from each stockholder and
optionholder an agreement dated on or before the date of this Agreement to the
effect that such person will not publicly announce any intention to and will
not, without the prior written consent of the Representatives on behalf of the
Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell any
option or contract to purchase, purchase any option to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the shares of Common Stock or any securities convertible
into, or exercisable or exchangeable for, Common Stock, or (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, shares of Common Stock
(whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of shares of Common Stock or such other securities, in cash
or otherwise), in each case, beneficially owned (within the meaning of Rule 13d-
3 under the Exchange Act) or otherwise controlled by such person on the date
hereof or hereafter acquired, for a period beginning from the date hereof and
continuing to and including the date 180 days after the date hereof; provided,
however, that such person may, without the prior written consent of the
Representatives on behalf of the Underwriters, transfer shares of Common Stock
or such other securities to members of such person's immediate family or to
trusts for the benefit of members of such person's immediate family or in
connection with bona fide gifts, provided that any transferee agrees to the
transfer restrictions described above.
(i) Prior to the commencement of the Offering, the Company shall have
made an application for the quotation of the Shares on the Nasdaq National
Market and the Shares shall have been included for trading on the Nasdaq
National Market, subject to official notice of issuance.
(j) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading, nor
shall any notice have been given
of any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act.
(k) On or before the Closing Date, the Representatives and counsel
for the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company and the
Selling Stockholders.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
satisfactory in all material respects to the Representatives and counsel for the
Underwriters. The Company and the Selling Stockholders shall furnish to the
Representatives such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representatives and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Shares shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Shares, except that all references therein
to the Shares and the Closing Date shall be deemed to refer to the Firm Shares
or the Option Shares and the First Closing Date or the related Option Closing
Date, each as applicable.
Section 8. Default of Underwriters. If, at any Closing, any one or more of the
-----------------------
Underwriters shall fail or refuse to purchase Shares that it has or they have
agreed to purchase hereunder on such date, and the aggregate number of Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is ten percent or less of the aggregate number of the Shares to be
purchased on such date, the other Underwriters may make arrangements
satisfactory to the Representatives for the purchase of such Shares by other
persons (who may include one or more of the non-defaulting Underwriters,
including the Representatives), but if no such arrangements are made by the
First Closing Date or the related Option Closing Date, as the case may be, the
other Underwriters shall be obligated severally in the proportions that the
number of Firm Shares set forth opposite their respective names in Schedule 1
hereto bears to the aggregate number of Firm Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as the
Representatives may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, at the First Closing, any Underwriter or Underwriters shall fail or
refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than ten per cent of the aggregate
number of Firm Shares to be purchased, and arrangements satisfactory to the
Representatives, the Company and the Selling Stockholders for the purchase of
such Firm Shares are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter,
the Company or any Selling Stockholder. In any such case either the
Representatives or the Company shall have the right to postpone the Closing, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, at any Option Closing, any
Underwriter or Underwriters shall fail or refuse to purchase Option Shares, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase
33
Option Shares or (ii) purchase not less than the number of Option Shares that
such non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 8. Any
action taken under this Section 8 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
Section 9. Termination. This Agreement shall be subject to termination in the
-----------
sole discretion of the Representatives by notice to the Company and the Selling
Stockholders given prior to any Closing Date in the event that the Company or
any Selling Stockholder shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior thereto or, if at or prior to any Closing Date, (a)
trading in securities generally on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited or minimum or
maximum prices shall have been established by or on, as the case may be, the
Commission or the New York Stock Exchange or the Nasdaq National Market; (b)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market; (c) a general moratorium on
commercial banking activities shall have been declared by Federal, New York
State or California authorities; (d) there shall have occurred (i) an outbreak
or escalation of hostilities between the United States and any foreign power,
(ii) an outbreak or escalation of any other insurrection or armed conflict
involving the United States, or (iii) any other calamity or crisis or materially
adverse change in general economic, political or financial conditions having an
effect on the U.S. financial markets that, in the sole judgment of the
Representatives, makes it impractical or inadvisable to proceed with the public
offering or the delivery of the Shares as contemplated by the Registration
Statement, as amended as of the date hereof; or (e) the Company shall have, in
the sole judgment of the Representatives, sustained any material loss or
interference with its business as described in the Prospectus 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, or
there shall have been any materially adverse change (including, without
limitation, a change in management or control), or constitute a development
involving a prospective materially adverse change, in the condition (financial
or otherwise), management, earnings, properties, business affairs or business
prospects, stockholders' equity, net worth or results of operations of the
Company, except in each case as described in or contemplated by the Prospectus
(exclusive of any amendment or supplement thereto). Termination of this
Agreement pursuant to this Section 9 shall be without liability of any party to
any other party except for the liability of the Company in relation to expenses
as provided in Sections 4 and 10 hereof, the liability of the Selling
Stockholders in relation to expenses as provided in Sections 4 and 10 hereof,
the indemnity provided in Section 6 hereof and any liability arising before or
in relation to such termination.
Section 10. Reimbursement of Expenses. If the sale of the Shares provided for
-------------------------
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 7 hereof is not satisfied or because of any
termination pursuant to Section 9 hereof (other than by reason of a default by
any of the Underwriters), the Company shall reimburse the Underwriters,
severally upon demand, for all out-of-pocket expenses (including fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Shares. If the Company is required to
make any payments to the Underwriters under this Section 10 because of any
Selling Stockholder's refusal, inability or failure to satisfy any condition
34
to the obligations of the Underwriters set forth in Section 7 hereof, such
defaulting Selling Stockholder, pro rata in proportion to the percentage of
--- ----
Shares to be sold by each, shall reimburse the Company on demand for all amounts
so paid.
Section 11. Information Supplied by Underwriters. The statements set forth in
------------------------------------
the last paragraph on the front cover page and under the heading "Underwriting"
in any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Section 5(a)(ii) and Section 6 hereof. The Underwriters confirm that such
statements (to such extent) are correct.
Section 12. Notices. In all dealings hereunder, you shall act on behalf of
-------
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representatives. Any notice or notification in
any form to be given under this Agreement may be delivered in person or sent by
facsimile or telephone (subject in the case of a communication by telephone to
confirmation by facsimile) addressed to :
in the case of the Company:
Artisan Components, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
in the case of the Underwriters:
Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile:
Attention:
In the case of the Selling Stockholders, any such notice shall be addressed to
the Selling Stockholders at the addresses set forth in Schedule 2 hereto. Any
notice under this Section 12 shall take effect, in the case of delivery, at the
time of delivery and, in the case of facsimile, at the time of dispatch with
confirmed receipt.
Section 13. Miscellaneous.
-------------
(a) Time shall be of the essence of this Agreement.
(b) 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.
35
(c) For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange is open for trading, and (b) "subsidiary"
has the meaning set forth in Rule 405 under the Securities Act.
(d) This Agreement may be executed in any number of counterparts, all
of which, taken together, shall constitute one and the same Agreement and any
party may enter into this Agreement by executing a counterpart.
(e) This Agreement shall inure to the benefit of and shall be binding
upon the several Underwriters, the Company, the Selling Stockholders and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that (i)
the indemnities of the Company and the Selling Stockholders contained in Section
6 hereof shall also be for the benefit of any person or persons who control any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 6 hereof shall also be for the benefit of the directors of the Company,
the officers of the Company who have signed the Registration Statement, each
Selling Stockholder and any person or persons who control the Company or such
Selling Stockholder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act. No purchaser of Shares from any Underwriter
shall be deemed a successor because of such purchase.
(f) The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers, the
Selling Stockholders and the several Underwriters set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, any of its officers or directors, the Selling
Stockholders, any Underwriter or any controlling person referred to in Section 6
hereof and (ii) delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections 4,
6 and 10 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
Section 14. Severability. It is the desire and intent of the parties that the
------------
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 15. Governing Law. The validity and interpretation of this Agreement,
-------------
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
36
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Stockholders. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in the Deutsche Xxxxxx Xxxxxxxx Inc. Master Agreement Among Underwriters,
the form of which shall be submitted to the Company for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
Artisan Components, Inc.
By_____________________________________
Chief Executive Officer
Xxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxxxxx Xxxxxx
By ____________________________________
Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
DEUTSCHE XXXXXX XXXXXXXX
XXXXXXXXX & XXXXX L.L.C.
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
By: DEUTSCHE XXXXXX XXXXXXXX
By _______________________
Name:
Title:
By _______________________
Name:
Title:
For itself and on behalf of the Representatives.
37
SCHEDULE 1
The Underwriters
Underwriter Underwriting commitment
----------- -----------------------
Deutsche Xxxxxx Xxxxxxxx Inc.
Xxxxxxxxx & Xxxxx LLC
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C.
---------
Total................................... 2,900,000
=========
SCHEDULE 2
The Selling Stockholders
Number Of Shares
Selling Stockholders To Be Sold
-------------------- ----------------
Xxxxx X. Xxxxxx 100,000
Xxxxx X. Xxxx 100,000
Xxxxxx X. Xxxxx 100,000
Xxxx X. Xxxxxx 50,000
Xxxxxxx Xxxxxx 20,000
-------
Total......................................... 370,000
=======
2
