2,500,000 Shares
PERICOM SEMICONDUCTOR CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
November , 1997
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SOUNDVIEW FINANCIAL GROUP, INC.
UNTERBERG HARRIS
As Representatives of the several Underwriters
c/o SoundView Financial Group, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
1. DESCRIPTION OF SHARES. Pericom Semiconductor Corporation, a
California corporation (the "Company"), and the selling shareholders named in
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Schedule B attached hereto (the "Selling Shareholders") propose to sell, upon
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the terms and subject to the conditions of this Agreement, to the several
underwriters named in Schedule A attached hereto (collectively, the
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"Underwriters," or each an "Underwriter"), an aggregate of 2,500,000 shares (the
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"Firm Shares") of the Company's common stock, no par value ("Common Stock"). The
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Selling Shareholders and the Company also propose to sell to the Underwriters,
upon the terms and subject to the conditions of this Agreement, as set forth in
Section 5, up to an aggregate of an additional 375,000 shares of Common Stock
(the "Option Shares," and, collectively with the Firm Shares, the "Shares").
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2. REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on
Form S-1 (File No. 333-35327) in the form in which it became or becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective with respect to the Shares, including any
preliminary prospectuses included as part of the registration statement as
originally filed or as part of any amendment or supplement thereto, or filed
pursuant to Rule 424 ("Rule 424") under the Securities Act of 1933, as amended
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(the "Securities Act"), and the rules and regulations (the "Rules and
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Regulations") of the Securities and Exchange Commission (the "Commission")
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thereunder, copies of which amendments have heretofore been delivered to
SoundView Financial Group, Inc. ("SoundView") and Unterberg Harris, the
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representatives of the several Underwriters hereunder (collectively, the
"Representatives"), has been prepared by the Company in compliance with the
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requirements of the Securities Act and has been filed with the Commission under
the Securities Act. One or more amendments to such registration statement,
including in each case an amended preliminary prospectus, copies of which
amendments have heretofore been delivered to the Representatives, have also been
so prepared and filed. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to such
registration statement will be filed and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
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in this Agreement means the registration statement as amended by said post-
effective amendment. The term "Registration Statement" as used in this Agreement
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shall also include any registration statement relating to the Shares that is
filed and declared effective pursuant to Rule 462(b) under the Securities Act.
The term "Prospectus" as used in this Agreement means the prospectus in the form
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included in the Registration Statement, or, (a) if the prospectus included in
the Registration Statement omits information in reliance on Rule 430A under the
Securities Act ("Rule 430A") and such information is included in a prospectus
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filed with the Commission pursuant to Rule 424(b) under the Securities Act, the
term "Prospectus" as used in this Agreement means the prospectus in the form
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included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b), and (b) if prospectuses that meet the requirements of
Section 10(a) of the Securities Act are delivered pursuant to Rule 434 under the
Securities Act ("Rule 434"), then (i) the term "Prospectus" as used in this
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Agreement means the "prospectus subject to completion" (as such term is defined
in Rule 434(g) under the Securities Act) as supplemented by (A) the addition of
Rule 430A information or other information contained in the form of prospectus
delivered pursuant to Rule 434(b)(2) under the Securities Act or (B) the
information contained in the term sheets described in Rule 434(b)(3) under the
Securities Act, and (ii) the date of such prospectuses shall be deemed to be the
date of the term sheets. The term "Preliminary Prospectus" as used in this
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Agreement means the prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of the Registration
Statement with the Commission, and as such prospectus shall have been amended
from time to time prior to the date of the Prospectus.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) SECURITIES ACT COMPLIANCE. The Registration Statement has been
prepared in compliance with the requirements of the Securities Act and has
been filed with the Commission under the Securities Act. The Commission has
not issued or threatened to issue any order preventing or suspending the
use of any Preliminary Prospectus, and, at its date of issue, each
Preliminary Prospectus conformed in all material respects with the
requirements of the Securities Act and did not include any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, when the
Registration Statement becomes effective and at all times subsequent
thereto up to and including the Closing Dates (as hereinafter defined), the
Registration Statement and the Prospectus and any amendments or supplements
thereto contained and will contain all material statements and information
required to be included therein by the Securities Act and conformed and
will conform in all material respects to the requirements of the Securities
Act, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, included or will include any untrue
statement of a material fact or omitted or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations,
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warranties and agreements shall not apply to information contained in or
omitted
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from any Preliminary Prospectus or the Registration Statement or the
Prospectus or any such amendment or supplement thereto in reliance upon,
and in conformity with, written information furnished to the Company by
any Underwriter specifically for use in the preparation thereof. There is
no contract, agreement, lease, franchise or document required to be
described in the Registration Statement or Prospectus or to be filed as
an exhibit to the Registration Statement which is not described therein
or filed therewith as required, and all descriptions of any such
contracts, agreements, leases, franchises or documents contained in the
Registration Statement are accurate and complete descriptions of such
documents in all material respects.
(b) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company has
been duly organized and is validly existing and in good standing as a
corporation under the laws of the State of California, with power and
authority (corporate and other) to own or lease its properties and to
conduct its business as described in the Prospectus. The Company is in
possession of and operating in compliance with all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and
orders required for the conduct of its business, all of which are valid and
in full force and effect, and is duly qualified to do business and in good
standing as a foreign corporation in all other jurisdictions where its
ownership or leasing of properties or the conduct of its business requires
such qualification. The Company has obtained all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses
and permits of and from all public regulatory or governmental agencies and
bodies to own, lease and operate its properties and conduct its business as
now being conducted and as described in the Registration Statement and the
Prospectus, and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus.
(c) SUBSIDIARIES. The Company does not have any subsidiaries.
Except as set forth in the Prospectus, the Company does not own or control,
directly or indirectly, any interest in any other corporation, association
or other business entity.
(d) NO CHANGES. Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as set forth or contemplated in the Prospectus, the Company has not
incurred any liabilities or obligations, direct or contingent, and has not
entered into any transactions not in the ordinary course of business, and
there has not been any material adverse change in the condition (financial
or otherwise), properties, business, management, prospects, net worth or
results of operations of the Company, or any change in the capital stock,
short-term or long-term debt of the Company.
(e) VALID ISSUANCE OF THE SHARES. The Shares to be issued and sold
by the Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will conform
to the description thereof in the Prospectus.
(f) AUTHORIZATION. The Company has the full corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder (including to issue, sell and deliver the Shares), and this
Agreement has been duly and validly authorized, executed and
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delivered by the Company and is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that rights to indemnity and contribution hereunder
may be limited by federal or state securities laws or the public policy
underlying such laws.
(g) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of the
terms or provisions of, constitute a default under or result in the
creation of any lien under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which it or any of its properties is or may be bound, the Articles of
Incorporation, Bylaws or other organizational documents of the Company, or
any law, order, Rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties.
(h) LEGAL COMPLIANCE. The Company, in all material respects, is in
compliance with and conducts its business in conformity with all applicable
federal, state, local and foreign laws, rules and regulations of any court
or governmental agency or body, and, to the knowledge of the Company,
except as set forth in the Registration Statement and the Prospectus, no
prospective change in any of such federal or state laws, rules or
regulations has been adopted which, when made effective, would have a
material adverse effect on the operations of the Company.
(i) GOVERNMENTAL CONSENTS. No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Agreement, except such as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") or under the Securities Act in
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connection with the purchase and distribution of the Shares by the
Underwriters.
(j) FINANCIAL STATEMENTS. The financial statements, together with
the related notes and schedules, set forth in the Prospectus and elsewhere
in the Registration Statement fairly present, on the basis stated in the
Registration Statement, the financial condition and the results of
operations of the Company at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as may be set forth in the
Prospectus. The selected financial and statistical data set forth in the
Prospectus under the caption "Selected Financial Data" fairly present, on
the basis stated in the Registration Statement, the information set forth
therein. The Company has provided the Representatives with all financial
statements from its inception to the date hereof that are available to the
officers of the Company.
(k) INDEPENDENT AUDITORS. Deloitte & Touche LLP, who have
expressed their opinions on the audited financial statements and related
schedules included in the Registration Statement and the Prospectus, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
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(l) CAPITALIZATION. The Company's authorized and outstanding
capital stock is on the date hereof, and will be on the Closing Dates, as
set forth under the heading "Capitalization" in the Prospectus and conforms
to the description thereof set forth under the heading "Description of
Capital Stock" in the Prospectus. The outstanding shares of Common Stock
(including the outstanding Shares) (i) conform to the description thereof
in the Prospectus, (ii) have been duly authorized and validly issued and
are fully paid and nonassessable, (iii) have been issued in compliance with
all federal and state securities laws, and (iv) were not issued in
violation of or subject to any preemptive rights or similar rights to
subscribe for or purchase securities. Except as disclosed in the Prospectus
and the financial statements of the Company and related notes thereto
included in the Prospectus, the Company does not have outstanding any
options or warrants to purchase, or any preemptive rights or other rights
to subscribe for or to purchase any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations, except for options granted subsequent to the date of
information provided in the Prospectus pursuant to the Company's stock
option plans as disclosed in the Prospectus. The description of the
Company's stock option and other stock plans or arrangements and the
options or other rights granted or exercised thereunder, as set forth in
the Prospectus, accurately and fairly presents the information required to
be disclosed with respect to such plans, arrangements, options and rights.
All of the issued and outstanding shares of capital stock of Pericom
Technology, Inc., a British Virgin Islands corporation ("PTI"), have been
duly authorized and validly issued, are fully paid and nonassessable and
the shares of capital stock of PTI held by the Company, as set forth in the
Prospectus, are owned directly by the Company free and clear of any liens,
encumbrances, equities or claims.
(m) LITIGATION. Except as set forth in the Prospectus, there is no
legal or governmental action, suit, proceeding or investigation pending to
which the Company or any of its affiliates is a party or to which any
property of the Company or any affiliate is subject, which, if determined
adversely to the Company or any such subsidiary or affiliate, might
individually or in the aggregate (i) prevent or adversely affect the
transactions contemplated by this Agreement, (ii) suspend the effectiveness
of the Registration Statement, (iii) prevent or suspend the use of the
Preliminary Prospectus in any jurisdiction, or (iv) result in a material
adverse change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of the
Company, and, to the best of the Company's knowledge, no such action, suit,
proceeding or investigation is threatened or contemplated against the
Company or any affiliate by governmental authorities or others. The Company
is not a party to and is not subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body or
other governmental agency or body.
(n) TAX RETURNS AND PAYMENTS. The Company has filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns and has paid all taxes shown as due thereon or with respect to any
of its properties, and there is no tax deficiency that has been, or, to the
knowledge of the Company, is likely to be asserted against the Company or
any of its properties or assets that would adversely affect the financial
condition, business or operations of the Company. All distributions to the
shareholders of the Company prior to the
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date hereof have been made in compliance with applicable law and have not
exceeded the amounts to which such shareholders were legally entitled.
(o) REGISTRATION RIGHTS. No person or entity has the right to
require registration of shares of Common Stock or other securities of the
Company as a result of the filing or effectiveness of the Registration
Statement and, in any event, except as set forth in the Prospectus, no
person or entity has the right to require registration of shares of Common
Stock or other securities of the Company.
(p) PRICE STABILIZATION AND MANIPULATION. Neither the Company nor
any of its officers, directors or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or
resulted in, or which might in the future reasonably be expected to cause
or result in, stabilization or manipulation of the price of any security of
the Company.
(q) PATENTS AND TRADEMARKS. The Company owns or possesses all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, tradenames, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by it or necessary
for the conduct of its business as now conducted or as proposed to be
conducted, and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company with respect to
the foregoing. The Company's business as now conducted does not infringe or
conflict with in any material respect any trademarks, service marks,
tradenames, copyrights, trade secrets, licenses or other intellectual
property or franchise right, or, to the Company's knowledge, any patents,
of any person. No claim has been made against the Company alleging the
infringement by the Company of any patent, trademark, service xxxx,
tradename, copyright, trade secret, license in or other intellectual
property right or franchise right of any person, except as described in the
Prospectus or with respect to claims which, singly or in the aggregate,
will not have a material adverse affect on the business, financial
condition or operating results of the Company.
(r) MATERIAL CONTRACTS. The Company has performed all material
obligations required to be performed by it under all contracts required by
Item 601(b)(10) of Regulation S-K under the Securities Act to be filed as
exhibits to the Registration Statement, and neither the Company nor, to the
knowledge of the Company, any other party to such contract is in default
under or in breach of any such obligations, except with respect to any
defaults or breaches which, singly or in the aggregate, will not result in
a material adverse effect on the business, financial condition or operating
results of the Company. The Company has not received any notice of such
default or breach.
(s) LABOR AGREEMENTS AND ACTIONS. The Company is not involved in
any labor dispute, and no such dispute is threatened. The Company is not
aware that (i) any executive, key employee or significant group of
employees of the Company plans to terminate employment with the Company, or
(ii) any such executive or key employee is subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar agreement
that would be violated by the present or proposed business activities of
the Company. The Company does not and does not expect to have any liability
for any prohibited transaction or funding
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deficiency or any complete or partial withdrawal liability with respect to
any pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which the
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Company makes or ever has made a contribution and in which any employee of
the Company is or has ever been a participant. With respect to such plans,
the Company is in compliance in all material respects with all applicable
provisions of ERISA, except with respect to any non-compliance with such
provisions which, singly or in the aggregate, will not have a material
adverse effect on the business, financial condition or operating results of
the Company.
(t) LOCK-UP AGREEMENTS. Except as disclosed in the Prospectus, the
Company has obtained the written agreement, in substantially the form
attached hereto as Schedule C, from each of its officers and directors and
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each holder of any shares of Common Stock or securities convertible into or
exchangeable or exercisable for or rights to purchase or acquire shares of
Common Stock.
(u) TITLE TO PROPERTY AND ASSETS. The Company has and, as of the
Closing Dates, will have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned
or proposed to be owned by it which is material to the business of the
Company, in each case free and clear of all liens, encumbrances and defects
except such as are described the Prospectus or such as would not have a
material adverse effect on the Company. Any real property and buildings
held under lease by the Company or proposed to be held after giving effect
to the transactions described in the Prospectus are, or will be as of the
Closing Dates, held by it under valid, subsisting and enforceable leases
with such exceptions as would not have a material adverse effect on the
Company, in each case except as described in or contemplated by the
Prospectus.
(v) INSURANCE. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as are customary in the business in which it is engaged or proposes to
engage in after giving effect to the transactions described in the
Prospectus, 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, or the earnings,
business or operations of the Company, except as described in or
contemplated by the Prospectus.
(w) BROKERS. Other than as contemplated by this Agreement, there
is no broker, finder or other party that is entitled to receive from the
Company any brokerage or finder's fee or other fee or commission as a
result of any of the transactions contemplated by this Agreement.
(x) INTERNAL ACCOUNTING CONTROLS. The Company maintains a system
of internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the
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recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(y) DISTRIBUTION OF OFFERING MATERIALS. The Company has not
distributed and will not distribute prior to the later of (i) the First
Closing Date or the Option Closing Date, as the case may be, and (ii) the
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Securities Act.
(z) PAYMENT OR RECIPIENT OF FUNDS. Except as set forth in the
Prospectus, neither the Company nor, to the Company's knowledge, any
employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds in violation of any law, Rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(aa) INVESTMENT COMPANY. The Company is not an "investment company"
or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(bb) ENVIRONMENTAL LAWS. The Company is in compliance with all
federal, state, local and foreign laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
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Laws"). The Company has received no notice from any governmental authority
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of any claim under any Environmental Laws. No property that is owned,
leased or occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Response, Compensation and Liability Act of
1980, as amended (420 U.S.C. (S) 9601 et seq.), or otherwise designated as
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a contaminated site under applicable state or local laws.
(cc) PERMITS. The Company has such permits, licenses, franchises
and authorizations of governmental or regulatory authorities ("permits"),
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including, without limitation, under any applicable Environmental Laws, as
are necessary to own, lease and operate its property and to conduct its
business. The Company has fulfilled and performed all of its material
obligations with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the holder of any such permit, and, except as described in the
Prospectus, such permits contain no restrictions that are materially
burdensome to the Company.
(dd) EMPLOYMENT MATTERS. The Company has not violated any federal
or state law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws, nor any
provisions of ERISA or the rules and regulations promulgated thereunder,
which in each case might result in any material adverse change in the
business, prospects, financial condition or results of operation of the
Company.
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(ee) 1934 ACT REGISTRATION. The Company has filed a registration
statement pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), which registration statement has been or
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will be declared effective simultaneously with the effectiveness of the
Registration Statement.
(ff) NASDAQ LISTING. The Common Stock has been approved for
quotation on the Nasdaq National Market, subject to official notice of
issuance.
(gg) CERTIFICATES. Each certificate signed by any officer of the
Company and delivered to the Underwriters or counsel for the Underwriters
pursuant to this Agreement or in connection with the offering contemplated
hereby shall be deemed to be a representation and warranty of the Company
as to the matters covered thereby.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder, severally and not jointly, represents and warrants to, and
agrees with, the several Underwriters that:
(a) VALID AND MARKETABLE TITLE. Such Selling Shareholder now has,
and on the Closing Dates will have, valid and marketable title to the
Shares to be sold by such Selling Shareholder, free and clear of any lien,
claim, security interest or other encumbrance, including, without
limitation, any restriction on transfer, and has full right, power and
authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement (each as hereinafter defined), and each of the several
Underwriters will acquire valid and marketable title to all of the Shares
being sold to the Underwriters by such Selling Shareholder, free and clear
of any liens, encumbrances, equities claims, restrictions on transfer or
other defects whatsoever.
(b) AUTHORITY. Such Selling Shareholder now has, and on the
Closing Dates will have, upon delivery of and payment for each of the
Shares hereunder, full right, power and authority, and shall have obtained
any approval required by law, to sell, transfer, assign and deliver the
Shares being sold by such Selling Shareholder hereunder.
(c) MARKET STAND-OFF. Such Selling Shareholder has executed and
delivered to the Representatives a lock-up agreement in substantially the
form attached hereto as Schedule C (the "Lock-Up Agreement"), providing
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that, with certain limited exceptions specified therein, and as provided in
more detail therein, for a period of one hundred eighty (180) days after
the effective date of the Registration Statement, without the consent of
SoundView, such Selling Shareholder will not offer to sell, sell, contract
to sell or otherwise dispose of any shares of Common Stock, or securities
convertible into or exchangeable for shares of Common Stock, including,
without limitation, shares of Common Stock which may be deemed to be
beneficially owned by such Selling Shareholders in accordance with the
Rules and Regulations, except for the Shares being sold hereunder.
(d) POWER OF ATTORNEY. Such Selling Shareholder has duly executed
and delivered a power of attorney, in substantially the form heretofore
delivered to the Representatives (the "Power of Attorney"), appointing Alex
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Chi-Xxxx Xxx and Xxxxxxx X. Xxxxxxx, and each of them, as attorney-in-fact
(the "Attorneys-in-Fact") with authority to execute
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and deliver this Agreement on behalf of such Selling Shareholder, to
authorize the delivery of the Shares to be sold by such Selling Shareholder
hereunder and otherwise to act on behalf of such Selling Shareholder in
connection with the transactions contemplated by this Agreement.
(e) CUSTODY AGREEMENT. Such Selling Shareholder has duly executed
and delivered a custody agreement, in substantially the form heretofore
delivered to the Representatives (the "Custody Agreement"), with Boston
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EquiServe, L.P. as custodian (the "Custodian"), pursuant to which
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certificates in negotiable form for the Shares to be sold by such Selling
Shareholder hereunder have been placed in custody for delivery under this
Agreement.
(f) BINDING OBLIGATIONS. Such Selling Shareholder has, by
execution and delivery of each of this Agreement, the Power of Attorney,
the Custody Agreement and the Lock-Up Agreement, created valid and binding
obligations of such Selling Shareholder, enforceable against such Selling
Shareholder in accordance with their respective terms, except to the extent
that rights to indemnity hereunder may be limited by federal or state
securities laws or the public policy underlying such laws.
(g) COMPLIANCE WITH OTHER INSTRUMENTS. The performance of this
Agreement, the Custody Agreement and the Power of Attorney, and the
consummation of the transactions contemplated hereby and thereby, will not
result in a breach or violation by such Selling Shareholder of any of the
terms or provisions of, or constitute a default by such Selling Shareholder
under, (i) any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement or
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder or any of its properties is bound, (ii) any judgment of
any court or governmental agency or body applicable to such Selling
Shareholder or any of its properties, or any statute, decree, order, Rule
or regulation of any court or governmental agency or body applicable to
such Selling Shareholder or any of its properties, or (iii) if such Selling
Shareholder is other than a natural person, any provisions of the charter,
bylaws or other organizational documents of such Selling Shareholder.
(h) NO REVOCATION. Each Selling Shareholder agrees that (i) the
Shares represented by the certificates held in custody under the Custody
Agreement are for the benefit of and coupled with and subject to the
interests of the Underwriters and the Company hereunder, (ii) the
arrangement for such custody and the appointment of the Attorneys-in-Fact
are irrevocable, (iii) that the obligations of such Selling Shareholder
hereunder shall not be terminated by operation of law, whether by the death
or incapacity, liquidation or distribution of such Selling Shareholder, or
any other event, and (iv) if such Selling Shareholder should die or become
incapacitated or is liquidated or dissolved or any other event occurs,
before the delivery of the Shares hereunder, certificates for the Shares to
be sold by such Selling Shareholder shall be delivered on behalf of such
Selling Shareholder in accordance with the terms and conditions of this
Agreement and the Custody Agreement, and action taken by the Attorneys-in-
Fact or any of them under the Power of Attorney shall be as valid as if
such death, incapacity, liquidation or dissolution or other event had not
occurred, whether or not the Custodian, the Attorneys-in-Fact or any of
them shall have notice of such death, incapacity, liquidation or
dissolution or other event.
10
(i) NO STABILIZATION OR MANIPULATION. Such Selling Shareholder has
not taken, and will not take, directly or indirectly, any action designed
to, or which might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares pursuant to the distribution
contemplated by this Agreement, and, other than as permitted by the
Securities Act, the Selling Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(j) GOVERNMENTAL CONSENTS. The execution, delivery and performance
of this Agreement by such Selling Shareholder, compliance by such Selling
Shareholder with all the provisions hereof and the consummation of the
transactions contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except as such may be required under the
Securities Act or by the NASD.
(k) BENEFICIAL OWNERSHIP. The information set forth under the
heading "Principal and Selling Shareholders" in the Prospectus which
specifically relates to such Selling Shareholder does not, and will not on
the Closing Dates, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of circumstances under which they
were made, not misleading, and such Selling Shareholder has agreed to
immediately notify the Company if, at any time during the period when a
Prospectus is required by law to be delivered in connection with sales of
Common Stock by an Underwriter or a dealer, there is any change in such
information.
(l) ORGANIZATION AND GOOD STANDING. Such Selling Shareholder, if
other than a natural person, has been duly organized and is validly
existing in good standing under the laws of the jurisdiction of its
organization as the type of entity it purports to be.
(m) NO PREEMPTIVE OR OTHER RIGHTS. Such Selling Shareholder does
not have, or has waived prior to the date hereof, any preemptive right, co-
sale right or right of first refusal or other similar right to purchase any
of the Shares that are to be sold by the Company or any of the other
Selling Shareholders to the Underwriters pursuant to this Agreement. Such
Selling Shareholder does not have, or has waived prior to the date hereof,
any registration right or other similar right to participate in the
offering made by the Prospectus, other than such rights of participation as
have been satisfied by the participation of such Selling Shareholder in the
transactions to which this Agreement relates in accordance with the terms
of this Agreement. Such Selling Shareholder does not own any warrants,
options or similar rights to acquire, and does not have any right or
arrangement to acquire, any capital stock, rights, warrants, options or
other securities from the Company, other than those described in the
Registration Statement and the Prospectus.
5. PURCHASE AND SALE OF THE SHARES. The Company and the Selling
Shareholders agree, severally and not jointly, to sell to the Underwriters the
Firm Shares, with the number of shares to be sold by the Company and each
Selling Shareholder being the number of Shares set opposite his, her or its name
in Schedule B attached hereto, and on the basis of the representations,
----------
warranties, covenants and agreements herein contained, but upon the terms and
11
subject to the conditions herein set forth, the Underwriters agree, severally
and not jointly, to purchase the Firm Shares from the Company and the Selling
Shareholders, with the number of shares of Firm Shares to be purchased by each
Underwriter being set opposite its name in Schedule A attached hereto, subject
----------
to adjustment in accordance with Section 14 hereof. The number of Shares to be
purchased by each Underwriter from each Selling Shareholder hereunder shall bear
the same proportion to the total number of Shares to be purchased by such
Underwriter hereunder as the number of Shares being sold by each Selling
Shareholder bears to the total number of Shares being sold by all of the Selling
Shareholders, subject to adjustment by the Representatives to eliminate
fractions.
(a) PURCHASE PRICE. The purchase price per Share to be paid by the
Underwriters to the Company and the Selling Shareholders will be $
---------
per share (the "Purchase Price").
--------------
(b) CLOSING. The Company and the Selling Shareholders will deliver
the Firm Shares to the Representatives for the respective accounts of the
several Underwriters in the form of definitive certificates, issued in such
names and in such denominations as the Representatives may direct by notice
in writing to the Company and the Selling Shareholders given at or prior to
10:00 a.m., California time, on the second full business day preceding the
First Closing Date (as defined below) or, if no such direction is received,
in the names of the respective Underwriters or in such other names as
SoundView may designate (solely for the purpose of administrative
convenience) and in such denominations as SoundView may determine, against
payment of the aggregate Purchase Price therefor in Federal or other
immediately available funds, by certified or official bank check or checks
payable to the order of the Company and the Custodian or by wire transfer
to accounts designated by the Company and the Custodian, all at the offices
of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000. Such delivery and closing shall occur at 7:00 a.m., California time,
on the fourth business day after the date of this Agreement (the "First
-----
Closing Date"). The First Closing Date and the location of delivery of, and
------------
the form of payment for, the Firm Shares may be varied by agreement between
the Company and SoundView. The First Closing Date may be postponed pursuant
to the provisions of Section 14.
(c) CERTIFICATES FOR THE SHARES. The Company and the Selling
Shareholders shall make the certificates for the Firm Shares available to
the Representatives for examination on behalf of the Underwriters not later
than 12:00 p.m., New York time, on the business day preceding the First
Closing Date at such location within New York, New York as may be
designated by the Representatives. If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives.
(d) PAYMENT ON BEHALF OF UNDERWRITERS. It is understood that the
Representatives, individually and not as Representatives of the several
Underwriters, may (but shall not be obligated to) make payment to the
Company or the Selling Shareholders on behalf of any Underwriter or
Underwriters for the Shares to be purchased by such Underwriter or
Underwriters. Any such payment by the Representatives shall not relieve
such Underwriter or Underwriters from any of its or their other obligations
hereunder.
12
(e) INITIAL PUBLIC OFFERING. The several Underwriters agree to
make an initial public offering of the Firm Shares at the initial public
offering price of $ per share as soon after the effectiveness
--------------
of the Registration Statement as, in their judgment, is advisable. The
Representatives shall promptly advise the Company and the Selling
Shareholders of the making of the initial public offering. After the
initial public offering, the several Underwriters may, in their discretion,
vary the public offering price.
(f) OVER-ALLOTMENT OPTION.
(i) OPTION SHARES. 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 Shareholders
hereby grant to the Underwriters an option (the "Option") to purchase,
------
severally and not jointly, up to the aggregate number of shares of Option
Shares set forth opposite each of the names of the Company and such Selling
Shareholders on Schedule B attached hereto, for an aggregate of up to
----------
375,000 shares of Common Stock. The price per share to be paid for the
Option Shares shall be the Purchase Price. The Option may be exercised as
to all or any part of the Option Shares at any time, and from time to time,
not more than thirty (30) days subsequent to the effective date of this
Agreement. No Option Shares shall be sold and delivered unless the Firm
Shares previously have been, or simultaneously are, sold and delivered.
The right to purchase the Option Shares or any portion thereof may be
surrendered and terminated at any time upon notice by the Underwriters to
the Company.
(ii) EXERCISE OF OPTION. The Option may be exercised by the
Underwriters by giving written notice from SoundView to the Company and the
Selling Shareholders setting forth the number of shares of the Option
Shares to be purchased by them and the date and time for delivery of and
payment for the Option Shares (the "Option Closing Date," and, collectively
-------------------
with the First Closing Date, the "Closing Dates"). The Option Closing Date
-------------
shall not be earlier than the First Closing Date and shall in no event be
earlier than two (2) business days nor later than ten (10) business days
after written notice is given. All purchases of Option Shares from the
Selling Shareholders and the Company shall be made on a pro rata basis in
accordance with the allocations set forth on Schedule B attached hereto.
----------
Option Shares shall be purchased for the account of each Underwriter in the
same proportion as the number of Firm Shares set forth opposite such
Underwriter's name on Schedule A attached hereto bears to the total number
----------
of Firm Shares (subject to adjustment by the Underwriters to eliminate odd
lots). Upon exercise of the Option by the Underwriters, the Selling
Shareholders agree to sell to the Underwriters the number of Option Shares
set forth in the written notice of exercise and the Underwriters agree,
severally and not jointly and upon the terms and subject to the conditions
herein set forth, to purchase the number of such shares determined as
aforesaid.
(iii) OPTION CLOSING. The Selling Shareholders will deliver
the Option Shares to the Underwriters (in the form of definitive certificates,
issued in such names and in such denominations as the Representatives may direct
by notice in writing to the Company and the Selling Shareholders given at or
prior to 10:00 a.m, California time, on the second full business day preceding
the Option Closing Date or, if no such direction is received, in the names of
the respective Underwriters or in such other names as SoundView may designate
(solely for the
13
purpose of administrative convenience) and in such denominations as SoundView
may determine, against payment of the aggregate Purchase Price therefor in
Federal or other immediately available funds, by certified or official bank
check or checks payable to the order of the Company and/or the Custodian or by
wire transfer to accounts designated by the Company and the Custodian, all at
the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000. The Company the Selling Shareholders shall make the
certificates for the Option Shares available to the Underwriters for examination
not later than 12:00 p.m., New York time, on the business day preceding the
Option Closing Date, at such location within New York, New York as may be
designated by the Representatives. If the Representatives so elect, delivery of
the Option Shares may be made by credit through full fast transfer to the
accounts at The Depository Trust Company designated by the Representatives. The
Option Closing Date and the location of delivery of, and the form of payment
for, the Option Shares may be varied by agreement between the Company and
SoundView. The Option Closing Date may be postponed pursuant to the provisions
of Section 14.
6. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the several Underwriters that:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Company will (i)
if the Company and the Representatives have determined not to proceed
pursuant to Rule 430A, use its best efforts to cause the Registration
Statement to become effective, (ii) if the Company and the Representatives
have determined to proceed pursuant to Rule 430A, use its best efforts to
comply with the provisions of and make all requisite filings with the
Commission pursuant to Rule 430A and Rule 424, (iii) if the Company and the
Representatives have determined to deliver Prospectuses pursuant to Rule
434, to use its best efforts to comply with all the applicable provisions
thereof, and (iv) use its best efforts to cause any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations
as may be required subsequent to the date the Registration Statement is
declared effective to become effective as promptly as possible. The Company
will advise the Representatives promptly as to the time at which the
Registration Statement becomes effective, will advise the Representatives
promptly of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the
lifting thereof, if issued. The Company will advise the Representatives
promptly of the receipt of any comments of the Commission or any request by
the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information and will not at
any time file any amendment to the Registration Statement or supplement to
the Prospectus which shall not previously have been submitted to the
Representatives a reasonable time prior to the proposed filing thereof or
to which the Representatives shall reasonably object in writing or which is
not in compliance with the Securities Act and the Rules and Regulations.
(b) AMENDMENTS AND REPORTS. The Company will prepare and file with
the Commission, promptly upon the request of the Representatives, any
amendments or supplements to the Registration Statement or the Prospectus
which in the opinion of the Representatives may be necessary to enable the
several Underwriters to continue the distribution of the Shares and will
14
use its best efforts to cause the same to become effective as promptly as
possible. The Company will promptly file all reports and any definitive
proxy or information statements required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Shares.
(c) PROSPECTUS. If, at any time after the effective date of the
Registration Statement when a prospectus relating to the Shares is required
to be delivered under the Securities Act, any event relating to or
affecting the Company occurs as a result of which the Prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Securities Act, the Company will promptly
notify the Representatives thereof and will prepare an amended or
supplemented prospectus which will correct such statement or omission.
(d) COPIES OF REGISTRATION STATEMENT AND PROSPECTUS. The Company
will deliver to the Representatives, at or before the Closing Dates,
manually signed copies of the Registration Statement, and each amendment
thereto, including all financial statements and exhibits thereto, and will
deliver to the Representatives such number of copies of the Registration
Statement, including such financial statements but without exhibits, and
all amendments thereto, as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the Representatives,
from time to time until the effective date of the Registration Statement,
as many copies of the Preliminary Prospectus as the Representatives may
reasonably request. The Company will deliver or mail to or upon the order
of the Representatives on the date of the initial public offering, and
thereafter from time to time during the period when delivery of a
prospectus relating to the Shares is required under the Securities Act, as
many copies of the Prospectus, in final form or as thereafter amended or
supplemented as the Representatives may reasonably request.
(e) SECTION 11(A) EARNINGS STATEMENT. The Company will make
generally available to its shareholders as soon as practicable, but not
later than fifteen (15) months after the effective date of the Registration
Statement, an earnings statement which will be in reasonable detail (but
which need not be audited) and which will comply with Section 11(a) of the
Securities Act, covering a period of at least twelve (12) months beginning
after the "effective date" (as defined in Rule 158 under the Securities
Act) of the Registration Statement.
(f) BLUE SKY QUALIFICATION. The Company will cooperate with the
Representatives to enable the Shares to be registered or qualified for
offering and sale by the Underwriters and by dealers under the securities
laws of such jurisdictions as the Representatives may reasonably request.
(g) REPORTS TO SHAREHOLDERS. The Company will furnish to its
shareholders annual reports containing financial statements certified by
independent public accountants and will
15
furnish or make available to its shareholders quarterly summary financial
information in reasonable detail, which may be unaudited.
(h) NASDAQ NATIONAL MARKET. The Company will use its best efforts
to maintain the listing of the Common Stock on the Nasdaq National Market
for a period of five (5) years after the effective date of the Registration
Statement.
(i) TRANSFER AGENT AND REGISTRAR. The Company will maintain a
transfer agent and registrar for its Common Stock.
(j) REVIEW OF AUDITORS. Prior to filing its Quarterly Reports on
Form 10-Q under the Exchange Act, the Company will have its independent
accountants perform a limited review of its quarterly numbers.
(k) MARKET STAND-OFF. The Company will not offer, sell, assign,
transfer, encumber, contract to sell, grant an option to purchase or
otherwise dispose of any shares of Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by
the Company in accordance with the Rules and Regulations) during the 180
days following the effective date of the Registration Statement, other than
the Company's sale of Common Stock hereunder and the Company's issuance of
Common Stock upon the exercise of stock options which are presently
outstanding and described in the Prospectus. In addition, during the 180
days following the effective date of the Registration Statement, the
Company will not release any officer, director or securityholder of the
Company from their obligations under any similar agreement with the Company
not to sell, transfer or dispose of securities of the Company for the 180-
day period following the effective date of the Registration Statement.
(l) USE OF PROCEEDS. The Company will apply the net proceeds from
the sale of the Shares as set forth in the description under the heading
"Use of Proceeds" in the Prospectus, which description complies in all
respects with the requirements of Item 504 of Regulation S-K under the
Securities Act.
(m) SEC CORRESPONDENCE. The Company will supply the
Representatives with copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the
registration of the Shares under the Securities Act.
(n) FINANCIAL STATEMENTS. Prior to the Closing Dates the Company
will furnish to the Representatives, as soon as they have been prepared,
copies of any unaudited interim financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(o) PRESS RELEASES. Prior to the Closing Dates and during the
period when a prospectus relating to the Shares is required to be delivered
under the Securities Act, the Company will issue no press release or other
communications directly or indirectly and hold no press conference with
respect to the Company or its financial condition, results of operation,
business, prospects, assets or liabilities, or the offering of the Shares,
without the prior consent of
16
the Representatives, which consent shall not be unreasonably withheld. For
a period of twelve (12) months following the Closing Date, the Company will
use its best efforts to provide to the Representatives copies of each press
release or other public communications with respect to the financial
condition, results of operations, business, prospects, assets or
liabilities of the Company at least twenty-four (24) hours prior to the
public issuance thereof or such longer advance period as may reasonably be
practicable.
(p) REPORTS TO REPRESENTATIVES. During the period of five (5)
years from the date hereof, the Company will furnish to the
Representatives, and, upon request of the Representatives, to each of the
Underwriters (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and statements of income,
shareholder's equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public accountants, (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on
Form 8-K or other report filed by the Company with the Commission, Nasdaq
or any securities exchange, (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of its
Common Stock, and (iv) such other information concerning the Company as the
Representatives may reasonably request from time to time.
(q) FORM S-8. The Company will not file any registration
statements on Form S-8 covering shares of Common Stock issuable under its
stock option plans for a period of ninety (90) days following the
effectiveness of the Registration Statement.
7. PAYMENT OF EXPENSES.
(a) EXPENSES OF THE COMPANY. The Company will pay, either directly
or by reimbursement, all costs, fees and expenses incurred in connection
with expenses incident to the performance of the obligations of the Company
and of the Selling Shareholders under this Agreement and in connection with
the transactions contemplated hereby, including, but not limited to, (i)
all expenses and taxes incident to the issuance and delivery of the Shares
to the Representatives, (ii) all expenses incident to the registration of
the Shares under the Securities Act, (iii) all costs of preparing stock
certificates, including printing and engraving costs, (iv) all fees and
expenses of the registrar and transfer agent of the Shares, (v) all
necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Shares to the Underwriters, (vi) all fees and
expenses of the Company's counsel and the Company's independent
accountants, (vii) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the
Registration Statement, each Preliminary Prospectus and the Prospectus,
including all exhibits and financial statements, and all amendments and
supplements provided for herein, the Powers of Attorney, the Custody
Agreement, the Underwriters' Questionnaire, the Blue Sky memoranda and this
Agreement, (viii) all filing fees and attorneys' fees and expenses incurred
by the Company or the Underwriters in connection with exemptions from
qualifying or registering (or obtaining qualification or registration of)
all or any part of the Shares for offer and sale and determination of its
eligibility for investment under the Blue Sky or other securities laws of
such jurisdictions as the Representatives may designate, (ix) all fees and
expenses paid or incurred in connection with filings made with the NASD,
(x) all fees and expense s associated with
17
the listing of the Shares and the Common Stock on the Nasdaq National
Market, and (xi) all other costs and expenses incident to the performance
of their obligations hereunder which are not otherwise specifically
provided for in this Section.
(b) EXPENSES OF THE SELLING SHAREHOLDERS. Each Selling Shareholder
will pay, either directly or by reimbursement, all fees and expenses
incident to the performance of such Selling Shareholder's obligations under
this Agreement which are not otherwise specifically provided for herein,
including, but not limited to, any fees and expenses of counsel for such
Selling Shareholder, such Selling Shareholder's pro rata share of fees and
expenses of the Attorneys-in-Fact and the Custodian and all expenses and
taxes incident to the sale and delivery of the Shares to be sold by such
Selling Shareholder to the Underwriters hereunder.
(c) REIMBURSEMENT OF UNDERWRITERS BY THE COMPANY. In addition to
its other obligations under Section 8(a) hereof, the Company agrees that,
as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon (i)
any statement or omission or any alleged statement or omission described in
Section 8(a) or Section 8(b), or (ii) any breach or inaccuracy in their
representations and warranties contained in this Agreement, the Company
will reimburse each Underwriter on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse
each Underwriter for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, each Underwriter shall promptly return it to
the Company, together with interest, compounded daily, determined on the
basis of the prime rate (or other commercial lending rate for borrowers of
the highest credit standing) listed from time to time in the Wall Street
Journal (the "Prime Rate"). Any such interim reimbursement payments which
----------
are not made to an Underwriter in a timely manner as provided below shall
bear interest at the Prime Rate from the due date for such reimbursement.
This expense reimbursement agreement will be in addition to any other
liability which the Company may otherwise have, but shall be subject to the
limitation on liability set forth in clause (i) of the first sentence of
Section 8(e). The request for reimbursement will be sent to the Company.
(d) REIMBURSEMENT OF THE UNDERWRITERS BY THE SELLING SHAREHOLDERS.
Each Selling Shareholder, severally and not jointly, agrees that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission or any alleged statement or omission described in Section 8(b)
hereof, it will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding notwithstanding the absence of a judicial determination
as to the propriety and enforceability of the Selling Shareholder's
obligation to reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Selling Shareholder, together with
interest, compounded daily, determined on the basis of
18
the Prime Rate. Any such interim reimbursement payments which are not made
to an Underwriter in a timely manner as provided below shall bear interest
at the Prime Rate from the due date for such reimbursement. This expense
reimbursement will be in addition to any other liability which any Selling
Shareholder may otherwise have, but shall be subject to the provisions of
Section 8(e).
(e) ARBITRATION. It is agreed that any dispute or controversy
arising out of the operation of the interim reimbursement arrangements set
forth in Section 7(c) or Section 7(d) including the amounts of any
requested reimbursement payments and the method of determining such
amounts, shall be settled by arbitration conducted under the provisions of
the Constitution and Rules of the Board of Governors of the New York Stock
Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the
NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in
such demand or notice, then the party responding to said demand or notice
is authorized to do so. Such an arbitration would be limited to the
operation of the interim reimbursement provisions contained in Section 7(c)
or Section 7(d) and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses which is created by
the provisions of Section 8.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Underwriter, each person, if any, who
controls such Underwriter within the meaning of the Securities Act and the
respective officers, directors, partners, employees, representatives and
agents of each of such Underwriter and controlling person (collectively,
the "Underwriter Indemnified Parties" and, each, an "Underwriter
Indemnified Party") against any losses, claims, damages, liabilities or
expenses (including the reasonable cost of investigating and defending
against any claims therefor and fees of counsel incurred in connection
therewith), joint or several, which may be based upon (i) any breach of any
representation, warranty, agreement or covenant of the Company or the
Selling Shareholders contained herein, or (ii) the Securities Act, the
Exchange Act, or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or
any Preliminary Prospectus, the Registration Statement or the Prospectus as
from time to time amended or supplemented) includes or allegedly includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon,
and in conformity with, written information furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof. The Company will be entitled to participate at
its own expense in the defense or, if it so elects, to assume the defense
of any suit brought to enforce any such liability, but, if the Company
elects to assume the defense, such defense shall be conducted by counsel
chosen by it. In the event the Company elects to assume the defense of any
such suit and retain such counsel, any Underwriter Indemnified Parties,
defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) the Company
shall have specifically authorized the retaining of
19
such counsel, or (ii) the parties to such suit include any such Underwriter
Indemnified Parties, and the Company and such Underwriter Indemnified
Parties have been advised by counsel to the Underwriters that one or more
legal defenses may be available to it or them which may not be available to
the Company, in which case the Company shall not be entitled to assume the
defense of such suit, notwithstanding its obligation to bear the fees and
expenses of such counsel. This indemnity agreement is not exclusive and
will be in addition to any liability which the Company might otherwise have
and shall not limit any rights or remedies which may otherwise be available
at law or in equity to each Underwriter Indemnified Party.
(b) INDEMNIFICATION BY THE SELLING SHAREHOLDERS. Each Selling
Shareholder jointly and severally agrees to indemnify and hold harmless
each Underwriter Indemnified Party against any losses, claims, damages,
liabilities or expenses (including, unless such Selling Shareholder elects
to assume the defense, the reasonable cost of investigating and defending
against any claims therefor and fees of counsel incurred in connection
therewith), joint or several, which may be based upon (i) any breach of any
representation, warranty, agreement or covenant of any Selling Shareholder
herein contained, or (ii) the Securities Act, the Exchange Act, or any
other federal, state, local or foreign statute or regulation, or at common
law, on the ground or alleged ground that any Preliminary Prospectus, the
Registration Statement or the Prospectus (or any Preliminary Prospectus,
the Registration Statement or the Prospectus, as from time to time amended
and supplemented) includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, unless such statement or omission was
made in reliance upon, and in conformity with, written information
furnished to the Company by any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof; provided,
--------
however, that the indemnification obligation arising under this Section
-------
8(b) shall apply only to the extent that such loss, claim, damage,
liability or expense is caused by or related to an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and
in conformity with information relating to such Selling Shareholder
furnished in writing to the Company by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendments or supplements
thereto. Such Selling Shareholder shall be entitled to participate at his
own expense in the defense, or, if he so elects, to assume the defense of
any suit brought to enforce any such liability, but, if such Selling
Shareholder elects to assume the defense, such defense shall be conducted
by counsel chosen by him. In the event that any Selling Shareholder elects
to assume the defense of any such suit and retain such counsel, the
Underwriter Indemnified Parties, defendant or defendants in the suit, may
retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) such Selling Shareholder shall have specifically
authorized the retaining of such counsel, or (ii) the parties to such suit
include such Underwriter Indemnified Parties and such Selling Shareholder
and such Underwriter Indemnified Parties have been advised by counsel to
the Underwriters that one or more legal defenses may be available to it or
them which may not be available to such Selling Shareholder, in which case
such Selling Shareholder shall not be entitled to assume the defense of
such suit notwithstanding its obligation to bear the fees and expenses of
such counsel. Subject to Section 8(e) below, this indemnity agreement is
not exclusive and will be in addition to any liability which such Selling
Shareholder might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in
20
equity to each Underwriter Indemnified Party. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights
of the Underwriters under this Agreement, as to their respective amounts of
such liability for which they each shall be responsible.
(c) INDEMNIFICATION BY UNDERWRITERS. Each Underwriter severally
agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the
Securities Act (collectively, the "Company Indemnified Parties") and each
Selling Shareholder and each person, if any, who controls a Selling
Shareholder within the meaning of the Securities Act (collectively, the
"Shareholder Indemnified Parties") against any losses, claims, damages,
liabilities or expenses (including, unless the Underwriter or Underwriters
elect to assume the defense, the reasonable cost of investigating and
defending against any claims therefor and fees of counsel incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other
federal, state, local or foreign statute or regulation, or at common law,
on the ground or alleged ground that any Preliminary Prospectus, the
Registration Statement or the Prospectus (or any Preliminary Prospectus,
the Registration Statement or the Prospectus, as from time to time amended
and supplemented) includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in
which they were made, not misleading, but only insofar as any such
statement or omission was made in reliance upon, and in conformity with,
written information furnished to the Company by such Underwriter, directly
or through the Representatives, specifically for use in the preparation
thereof, and the parties acknowledge and agree that the only information
furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Registration Statement or the Prospectus, as
from time to time amended or supplemented, is the information set forth in
the last paragraph of the front cover page (insofar as such information
relates to the Underwriters), the information on page 2 concerning
stabilization and over-allotment by the Underwriters, and certain
information under the caption "Underwriting"; provided, however, that in no
-------- -------
case is such Underwriter to be liable with respect to any claims made
against any Company Indemnified Party or Shareholder Indemnified Party
against whom the action is brought unless such Company Indemnified Party or
Shareholder Indemnified Party shall have notified such Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon the Company Indemnified Party or Shareholder Indemnified Party,
but failure to notify such Underwriter of such claim shall not relieve it
from any liability which it may have to any Company Indemnified Party or
Shareholder Indemnified Party otherwise than on account of its indemnity
agreement contained in this paragraph. Such Underwriter shall be entitled
to participate at its own expense in the defense, or, if it so elects, to
assume the defense of any suit brought to enforce any such liability, but,
if such Underwriter elects to assume the defense, such defense shall be
conducted by counsel chosen by it. In the event that any Underwriter elects
to assume the defense of any such suit and retain such counsel, the Company
Indemnified Parties or Shareholder Indemnified Parties and any other
Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, respectively. The Underwriter against whom
indemnity may be sought shall not be liable to
21
indemnify any person for any settlement of any such claim effected without
such Underwriter's consent. This indemnity agreement is not exclusive and
will be in addition to any liability which such Underwriter might otherwise
have and shall not limit any rights or remedies which may otherwise be
available at law or in equity to any Company Indemnified Party or
Shareholder Indemnified Party.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an indemnified
party under subsection (a) or (b) or (c) above in respect of any losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to herein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders on the one
hand, and the Underwriters on the other hand, from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the Selling
Shareholders on the one hand, and the Underwriters on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Shareholders on the one
hand, and the Underwriters on the other hand, shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Shareholders or
the Underwriters, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above. The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses (or actions in respect thereof) referred
to above shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating,
defending, settling or compromising any such claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Underwriters'
obligations to contribute are several in proportion to their respective
underwriting obligations and not joint. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f)
22
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) LIMITATION OF LIABILITY. Notwithstanding any provision herein
to the contrary, (i) the indemnity agreements contained in Section 8(a) and
Section 8(b) with respect to any Preliminary Prospectus and the
reimbursement provisions of Section 7(c) and 7(d) shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter)
from whom the person asserting any such loss, claim, damage, liability or
expense purchased the Shares which are the subject thereof if at or prior
to the written confirmation of the sale of such Shares a copy of the
Prospectus (or the Prospectus as amended or supplemented) was not sent or
delivered to such person (excluding the documents incorporated therein by
reference), the untrue statement or omission of a material fact contained
in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented), and such failure to send or deliver
a copy of the Prospectus (or the Prospectus as amended or supplemented) was
not the result of the Company's non-compliance with the provisions of
Section 6(d), (ii) the liability (including any liability for
indemnification under Section 8(b), any liability for breach of any
representation, warranty or agreement contained herein, and any liability
for reimbursement pursuant to Section 7(d)) of each Selling Shareholder
shall not exceed the Purchase Price of the Shares sold by such Selling
Shareholder to the Underwriters, and (iii) such liability shall be further
limited for each Selling Shareholder such that such Selling Shareholder's
liability, in proportion to the aggregate liability of all Selling
Shareholders as a group, shall not exceed the proportion that the number of
Shares sold by such Selling Shareholder bears to the aggregate number of
Shares sold by all Selling Shareholders hereunder; provided, however, that
-------- -------
the limitation on liability set forth in the foregoing clause (iii) shall
not apply with respect to any particular Selling Shareholder if such
liability is attributable to such Selling Shareholder, as set forth in the
first sentence of Section 8(b); and, provided, further, that nothing in the
-------- -------
foregoing clause (iii) shall require the Underwriters to seek
indemnification from any other Selling Shareholder(s) as a condition of
their being entitled to indemnification from any particular Selling
Shareholder. Notwithstanding anything to the contrary in this Agreement,
the Underwriters and their control persons shall not seek indemnification
pursuant to this Section 8 or reimbursement of expenses pursuant to Section
7 from the Selling Shareholders unless they shall have first reasonably
determined that the Company is unable or not required to fully satisfy the
indemnification and reimbursement obligations of the Selling Shareholders
pursuant to such Sections.
9. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Shareholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Shares.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the several Underwriters hereunder shall be subject to the material accuracy,
at and (except as otherwise stated herein) as of the date hereof and at and as
of the Closing Dates, of the
23
representations and warranties made herein by the Company and the Selling
Shareholders, to compliance at and as of the Closing Dates by the Company and
the Selling Shareholders with their covenants and agreements herein contained
and other provisions hereof to be satisfied at or prior to the Closing Dates,
and to the following additional conditions:
(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall have become effective and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings for that purpose shall
have been initiated or, to the knowledge of the Company or the
Representatives, shall be threatened by the Commission, and any request for
additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives. Any
filings of the Prospectus, or any supplement thereto, required pursuant to
Rule 424(b) or Rule 434 of the Rules and Regulations, shall have been made
in the manner and within the time period required by Rule 424(b) and Rule
434 of the Rules and Regulations, as the case may be.
(b) CHANGES. The Representatives shall have been reasonably
satisfied that there shall not have occurred any change prior to the
Closing Dates in the condition (financial or otherwise), properties,
business, prospects, net worth or results of operations of the Company, or
any change in the capital stock, short-term or long-term debt of the
Company, such that (i) the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact
which, in the reasonable opinion of the Representatives, is material, or
omits to state a fact which, in the reasonable opinion of the
Representatives, is required to be stated therein or is necessary to make
the statements therein not misleading, or (ii) it is impracticable in the
reasonable judgment of the Representatives to proceed with the public
offering or to purchase the Shares as contemplated hereby.
(c) LITIGATION. The Representatives shall be satisfied that no
legal or governmental action, suit, proceeding or investigation affecting
the Company which is material and adverse to the Company or which affects
or may affect the Company's or the Selling Shareholders' ability to perform
their respective obligations under this Agreement shall have been
instituted or threatened, and there shall have occurred no material adverse
development in any existing such action, suit, proceeding or investigation.
(d) COMFORT LETTER. Prior to the execution of this Agreement, the
Representatives shall have received from Deloitte & Touche L.L.P.,
independent certified public accountants, a letter, dated the date hereof,
in form and substance reasonably satisfactory to the Underwriters.
(e) BRING-DOWN. The Representatives shall have received from
Deloitte & Touche L.L.P, independent certified public accountants, letters,
dated the Closing Dates, to the effect that such accountants reaffirm, as
of the Closing Dates, and as though made on the Closing Dates, the
statements made in the letter furnished by such accountants pursuant to
Section 10(d); provided, however, that the letter delivered on the First
-------- -------
Closing Date shall use a "cut-off date"
24
not earlier than the date hereof, and the letter delivered on the Option
Closing Date shall use a "cut-off date" not more than five (5) business
days prior to such Option Closing Date.
(f) LEGAL OPINION OF COUNSEL FOR THE COMPANY. The Representatives
shall have received from Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company
and the Selling Shareholders, an opinion, dated the Closing Dates, which
opinion shall be rendered to the Underwriters at the request of the Company
or one or more Selling Shareholders (and shall so state therein) to the
effect that:
(i) the Company has been duly incorporated, is validly
existing as corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority required to
carry on its business as described in the Prospectus and to own, lease and
operate its property;
(ii) the Company is duly qualified and is in good standing
as a foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the Company;
(iii) the Company has no subsidiaries and does not control,
directly or indirectly, any corporation, partnership, association or other
business organization;
(iv) all of the outstanding shares of Common Stock
(including the Shares to be sold by the Selling Shareholders) have been
duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights, except as disclosed in the
Prospectus;
(v) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement, will
have been validly issued and will be fully paid and non-assessable, and the
issuance of such shares is not subject to any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and each Selling Shareholder and is a valid and
binding agreement of the Company and each Selling Shareholder enforceable
in accordance with its terms (except as rights to indemnity and
contribution hereunder may be limited by applicable law);
(vii) the authorized capital stock of the Company, including
the Common Stock, conforms as to legal matters to the description thereof
contained in the Prospectus;
(viii) the Registration Statement has become effective under
the Securities Act, no stop order suspending its effectiveness has been
issued and no proceedings for that purpose are, to the knowledge of such
counsel, pending before or contemplated by the Commission;
25
(ix) the statements under the captions "Certain Transactions,"
"Shares Eligible for Future Sale" and "Description of Capital Stock" and
the statements in the third paragraph under the caption "Business--
Intellectual Property" in the Prospectus and Items 14 and 15 of Part II of
the Registration Statement insofar as such statements constitute a summary
of agreements, legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such agreements,
legal matters, documents and proceedings;
(x) the Company is not in violation of its Articles of
Incorporation or bylaws and, to such counsel's knowledge, the Company is
not in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material to
the conduct of the business of the Company, to which the Company is a party
or by which it or its property is bound;
(xi) the execution, delivery and performance of this Agreement
by the Company and each Selling Shareholder, compliance by the Company and
each Selling Shareholder with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may
be required under the Securities Act) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the Articles of Incorporation or bylaws of the Company, or any
agreement, indenture or other instrument known to such counsel to which the
Company is a party or by which the Company or its property is bound, or, to
such counsel's knowledge, violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company or its
property;
(xii) to such counsel's knowledge, there is no legal or
governmental proceeding pending or threatened to which the Company is a
party or to which any of its property is subject which is required to be
described in the Registration Statement or the Prospectus and is not so
described, or of any contract or other document which is required to be
described in the Registration Statement or the Prospectus or is required to
be filed as an exhibit to the Registration Statement which is not described
or filed as required;
(xiii) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xiv) to such counsel's knowledge, except otherwise set forth
in the Registration Statement, no holder of any security of the Company has
any right to require registration of shares of Common Stock or any other
security of the Company;
(xv) to such counsel's knowledge, except as otherwise set
forth in the Registration Statement or such as are not material to the
business, prospects, financial condition or results of operation of the
Company, the Company has good and marketable title, free and clear of all
liens, claims, encumbrances and restrictions except liens for taxes not yet
due and payable, to all property and assets described in the Registration
Statement as being owned by it;
26
(xvi) to such counsel's knowledge, all leases to which the
Company is a party are valid and binding and no default has occurred or is
continuing thereunder which might result in any material adverse change in
the business, prospects, financial condition or results of operation of the
Company, and the Company enjoys peaceful and undisturbed possession under
all such leases to which it is a party as lessee with such exceptions as do
not materially interfere with the use made by the Company;
(xvii) (A) the Registration Statement (including any
Registration Statement filed under Rule 462(b) under the Securities Act, if
any) and the Prospectus and any supplement or amendment thereto (except for
financial statements as to which no opinion need be expressed) comply as to
form in all material respects with the Securities Act, and (B) nothing has
come to the attention of such counsel which has caused it to believe that
(except for financial statements, as aforesaid) the Registration Statement
and the prospectus included therein at the time the Registration Statement
became effective 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 that the Prospectus, as
amended or supplemented, if applicable (except for financial statements, as
aforesaid) contains any untrue statement of a material fact 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;
(xviii) the Custody Agreement has been duly authorized,
executed and delivered by each Selling Shareholder and is a valid and
binding agreement of such Selling Shareholder enforceable in accordance
with its terms;
(xix) this Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Shareholder;
(xx) each Selling Shareholder has full legal right, power and
authority, and any approval required by law (other than any approval
imposed by the applicable state securities and Blue Sky laws) to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Shareholder in the manner provided in this Agreement and the Custody
Agreement;
(xxi) each Selling Shareholder has good and clear title to
the certificates for the Shares to be sold by such Selling Shareholder and,
upon delivery thereof, pursuant hereto and payment therefor, good and clear
title will pass to the Underwriters, severally, free of all restrictions on
transfer, liens, encumbrances, security interests and claims whatsoever;
and
(xxii) the Power of Attorney signed by each Selling
Shareholder appointing Xxxx Xxx-Xxxx Xxx and Xxxxxxx X. Xxxxxxx, or either
of them, as such Selling Shareholder's attorney-in-fact to the extent set
forth therein with regard to the transactions contemplated hereby has been
duly authorized, executed and delivered by or on behalf of each Selling
Shareholder and are valid and binding instruments of such Selling
Shareholder, and pursuant to such power of attorney, each of the Selling
Shareholders has authorized Xxxx Xxx-Xxxx Xxx and Xxxxxxx X. Xxxxxxx, or
either of them, to execute and deliver on their behalf
27
this Agreement and any other documents necessary or desirable in connection
with transactions contemplated hereby and to deliver the Shares to be sold
by them pursuant to this Agreement.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the State of California upon
opinions of local counsel, and as to questions of fact upon representations
or certificates of officers of the Company, the Selling Shareholders or
officers of the Selling Shareholders (when such Selling Shareholder is not
a natural person), and of government officials, in which case their opinion
is to state that they are so relying and that they have no knowledge of any
material misstatement or inaccuracy in any such opinion, representation or
certificate. Copies of any opinion, representation or certificate so relied
upon shall be delivered to the Representatives and to counsel for the
Underwriters.
(g) LEGAL OPINION OF COUNSEL FOR THE UNDERWRITERS. The
Representatives shall have received from Xxxx Xxxx Xxxx & Freidenrich,
counsel for the Underwriters, their opinion or opinions, dated the Closing
Dates, with respect to the incorporation of the Company, the validity of
the Shares, the Registration Statement and the Prospectus and such other
related matters as it may reasonably request, and the Company and the
Selling Shareholders shall have furnished to such counsel such documents as
they may request for the purpose of enabling them to pass upon such
matters.
(h) OFFICERS' CERTIFICATE. The Representatives shall have received
a certificate, dated the Closing Dates, of the Chief Executive Officer of
the Company and the Chief Financial Officer of the Company to the effect
that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the knowledge
of the signers, no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act;
(ii) Neither any Preliminary Prospectus, as of its date, nor
the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as of the time when the Registration Statement became
effective and at all times subsequent thereto up to the delivery of such
certificate, included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(iii) The representations and warranties of the Company in
this Agreement are true and correct in all material respects at and as of
the Closing Dates, and the Company has substantially complied with all of
the agreements and substantially performed or satisfied all of the
conditions on its part to be performed or satisfied at or prior to the
Closing Dates; and
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as
disclosed in or contemplated by the Prospectus, (A) there has not been any
material adverse change or a development involving a material adverse
change in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the Company,
(B) the business and
28
operations conducted by the Company have not sustained a loss by strike,
fire, flood, accident or other calamity (whether or not insured) of such a
character as to interfere materially with the conduct of the business and
operations of the Company, (C) no legal or governmental action, suit,
proceeding or investigation is pending or threatened against the Company
which is material to the Company, whether or not arising from transactions
in the ordinary course of business, or which may materially and adversely
affect the transactions contemplated by this Agreement, (D) since such
dates and except as so disclosed, the Company has not incurred any material
liability or obligation, direct, contingent or indirect, made any change in
its capital stock (except pursuant to its stock option plans), made any
material change in its short-term or funded debt or repurchased or
otherwise acquired any of the Company's capital stock, (E) the Company has
not declared or paid any dividend, or made any other distribution, upon its
outstanding capital stock payable to shareholders of record on a date prior
to the Closing Date, and (F) the Company has not entered into any material
transactions not in the ordinary course of business.
(i) CERTIFICATE OF SELLING SHAREHOLDERS. The Representatives shall
have received a certificate or certificates, dated the Closing Dates, of
the Attorneys-in-fact on behalf of each of the Selling Shareholders to the
effect that as of the Closing Dates its representations and warranties in
this Agreement are true and correct as if made on and as of the Closing
Dates, and that it has performed all its obligations and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Dates.
(j) OPINION OF PATENT COUNSEL. The Representatives shall have
received from Xxxxxxxx and Xxxxxxxx and Crew, special patent counsel for
the Company, an opinion, dated the Closing Dates, with respect to certain
patent law matters. Such opinion shall be in form and substance reasonably
satisfactory to the Underwriters.
(k) ADDITIONAL CERTIFICATES. The Company and each of the Selling
Shareholders shall have furnished to the Representatives such additional
certificates as the Representatives may have reasonably requested as to the
accuracy, at and as of the Closing Dates, of the representations and
warranties made herein by them and as to compliance at and as of the
Closing Dates by them with their covenants and agreements herein contained
and other provisions hereof to be satisfied at or prior to the Closing
Dates, and as to satisfaction of the other conditions to the obligations of
the Underwriters hereunder.
(l) SATISFACTION. All opinions, certificates, letters and other
documents will be in compliance with the provisions hereunder only if they
are reasonably satisfactory in form and substance to the Representatives.
The Company will furnish to the Representatives such number of original and
conformed copies of such opinions, certificates, letters and other
documents as the Representatives shall reasonably request. If any of the
conditions hereinabove provided for in this Section 8 shall not have been
satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such
termination in writing or by telegram at or prior to the Closing Dates, but
SoundView shall be entitled to waive any of such conditions.
11. EFFECTIVE DATE. This Agreement shall become effective at the
earlier of (a) 6:30 a.m., California time, on the first business day following
the effective date of the
29
Registration Statement, and (b) the time of the initial public offering of any
of the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the initial public offering shall mean the time of the
release by the Representatives for publication of the first newspaper
advertisement relating to the Shares, or the time at which the Shares are first
generally offered by the Underwriters to the public by letter, telephone,
telegram or facsimile, whichever shall first occur. By giving notice as set
forth in Section 15 before the time this Agreement becomes effective, the
Representatives or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in Section 7, Section 8 and Section 13 and except as provided in Section 14 as
to the liability of defaulting Underwriters.
12. TERMINATION. The Representatives shall have the right to terminate
this Agreement by giving notice to the Company as hereinafter specified at any
time at or prior to the First Closing Date or the Option Closing Date, as the
case may be, (a) if the Company or any Selling Shareholder shall have failed,
refused or been unable to perform any agreement on its part to be performed, or
because any other condition of the Underwriters' obligations hereunder required
to be fulfilled is not fulfilled, including, without limitation, any change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company from that set forth in the Registration
Statement or Prospectus, which, in the sole reasonable judgment of the
Representatives, is material and adverse, or (b) if additional material
governmental restrictions, not in force and effect on the date hereof, shall
have been imposed upon trading in securities generally or minimum or maximum
prices shall have been generally established on the New York Stock Exchange or
on the American Stock Exchange or in the over-the-counter market by the NASD, or
trading in securities generally shall have been suspended on either such
exchange or in the over-the-counter market by the NASD, or if a banking
moratorium shall have been declared by federal, New York or California
authorities, or (c) if the Company shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as to interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured, or (d) if there
shall have been a material adverse change in the general political or economic
conditions or financial markets as in the reasonable judgment of the
Representatives makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (e) if there shall have been an
outbreak or escalation of hostilities or of any other insurrection or armed
conflict or the declaration by the United States of a national emergency which,
in the reasonable opinion of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In the event of termination pursuant to this Section 12 the
Company shall remain obligated to pay costs and expenses pursuant to Section 7,
Section 8 and Section 13 hereof. If the Company shall elect to prevent this
Agreement from becoming effective as provided in Section 11, the Company shall
promptly notify the Representatives by telephone, facsimile or telegraph, in
each case confirmed by letter. If the Representatives elect to prevent this
Agreement from becoming effective as provided in Section 11 or to terminate this
Agreement as provided in this Section 12, the Representatives shall promptly
notify the Company by telephone, facsimile or telegraph, in each case confirmed
by letter.
30
13. REIMBURSEMENT OF UNDERWRITERS. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any election
of the Company pursuant to Section 11 or shall be terminated by the
Representatives under Section 10 or Section 12(a), the Company will bear and pay
the expenses specified in Section 7 hereof and, in addition to its obligations
pursuant to Section 8 hereof, the Company will reimburse the reasonable out-of-
pocket expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
Agreement and the proposed purchase of the Shares, and promptly upon demand the
Company will pay such amounts to the Representatives.
14. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters
shall default in its or their obligations to purchase shares of Shares hereunder
and the aggregate number of shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the total number of shares underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate. If the remaining
Underwriters or substituted Underwriters are required hereby or agree to take up
all or part of the shares of Shares of a defaulting Underwriter or Underwriters
as provided in this Section 14, (a) the Company and the Selling Shareholders
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full business days in order that the Company and the Selling
Shareholders may effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (b) the respective numbers of shares to be purchased by the
remaining Underwriters or substituted Underwriters shall be taken as the basis
of their underwriting obligation for all purposes of this Agreement. Nothing
herein contained shall relieve any defaulting Underwriter of its liability to
the Company, the Selling Shareholders or the other Underwriters for damages
occasioned by its default hereunder. Any termination of this Agreement pursuant
to this Section 14 shall be without liability on the part of any non-defaulting
Underwriter, the Selling Shareholders or the Company, except for expenses to be
paid or reimbursed pursuant to Section 7 and except for the provisions of
Section 8.
15. NOTICES. All communications hereunder shall be in writing and, (a)
if sent to the Underwriters, shall be mailed, delivered, transmitted by
facsimile or telegraphed and confirmed to the Representatives, x/x XxxxxXxxx, 00
Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (facsimile: (000) 000-0000), except
that notices given to an Underwriter pursuant to Section 8 hereof shall be sent
to such Underwriter at the address furnished by the Representatives, or (b) if
sent to the Company, shall be mailed, delivered, transmitted by facsimile or
telegraphed and confirmed to the Company, 0000 Xxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, Attn: President (facsimile: (000) 000-0000), or (c) if sent to
the Selling Shareholders, shall be mailed, delivered,
31
transmitted by facsimile or telegraphed and confirmed to the Selling
Shareholders, c/o Attorneys-in-fact, c/o the Company, 0000 Xxxxxx Xxxxx, Xxx
Xxxx, Xxxxxxxxxx 00000 (facsimile: (000) 000-0000).
16. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company and the Selling Shareholders
and their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person, except that the representations,
warranties, covenants, agreements and indemnities of the Company and the Selling
Shareholders contained in this Agreement shall also be for the benefit of the
person or persons, if any, who control any Underwriter or Underwriters within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the indemnities of the several Underwriters shall also be for the
benefit of each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company or any Selling Shareholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
17. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
principles of conflicts of laws.
18. AUTHORITY OF REPRESENTATIVES. In connection with this Agreement,
the Representatives will act for and on behalf of the several Underwriters, and
any action taken under this Agreement by the Representatives will be binding on
all the Underwriters, and any action taken under this Agreement by any of the
Attorneys-in-Fact will be binding on all of the Selling Shareholders.
19. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph or provision hereof. If any
section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.
21. GENERAL. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include on another. The section headings
in this Agreement are for the convenience of the parties only and will not
affect the construction or interpretation of this Agreement. This Agreement may
be amended or modified, and the observance of any term of this
32
Agreement may be waived, only by a writing signed by the Company, the Selling
Shareholders and the Representatives.
22. COUNTERPARTS. This Agreement may be signed in two (2) or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
23. ATTORNEY-IN-FACT. Any person executing and delivering this
Agreement as Attorney-in-Fact for the Selling Shareholders represents by so
doing that he has been duly appointed as Attorney-in-Fact by such Selling
Shareholder pursuant to a validly existing and binding Power of Attorney which
authorizes such Attorney-in-Fact to take such action.
33
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
PERICOM SEMICONDUCTOR CORPORATION
By:
---------------------------------------------
Xxxx X. Xxx, President
and Chief Executive Officer
SELLING SHAREHOLDERS NAMED IN SCHEDULE B
By:
--------------------------------------------
Xxxx X. Xxx
As Attorney-in-Fact of the Selling
Shareholders listed in Schedule B hereto.
Agreed to and accepted as of
the date first set forth above:
SOUNDVIEW FINANCIAL GROUP, INC.
UNTERBERG HARRIS
By: SoundView Financial Group, Inc.
By:
-------------------------------------
Xxxxxxxx Xxxxxx, Managing Director
34
SCHEDULE A
Number of Firm Number of Option
Shares to be Shares to be
Name Purchased Purchased
------------------------------------------------------ --------------------- ------------------
SoundView Financial Group, Inc........................
Unterberg Harris......................................
--------------------- -------------------
TOTAL............................................
===================== ===================
SCHEDULE B
Number of Firm Number of Option
Name Shares to be Sold Shares to be Sold
------------------------------------------------------ --------------------- ---------------------
Pericom Semiconductor Corporation..................... 2,000,000
Selling Shareholders:
--------------------
Dato' Sri Tay Kia Hong...............................
Chye Xxxx Xxxxxxx (Pte) Ltd...........................
Tay Xxxx Xxxxx........................................
Tay Xxxxxx Xxxxx......................................
Xxx Xxxxx Song........................................
Xxx Xxxxx Yew.........................................
Xxxxxxx Xxxxx.........................................
Xxx Xxxx-Xxxxx........................................
Xxx Xxxx-Xxx..........................................
Xxx Xxxx-Xxx..........................................
Xxx Xx-Pu.............................................
Koh Quee Chew.........................................
Koh Kwee Khoon........................................
Koh Kwee Ngee.........................................
--------------------- ---------------------
TOTAL............................................
===================== =====================
SCHEDULE C
LOCK-UP AGREEMENT
SoundView Financial Group, Inc.
Unterberg Harris
c/o SoundView Financial Group, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned is a director, officer and/or securityholder of Pericom
Semiconductor Corporation (the "Company") and wishes to facilitate the proposed
initial public offering (the "Offering") of the Company's common stock ("Common
Stock") pursuant to a registration statement on Form S-1 (the "Registration
Statement") to be filed with the Securities and Exchange Commission (the "SEC").
The undersigned recognizes and agrees that the Offering will benefit the
undersigned as a director, officer or securityholder of the Company.
In consideration of the foregoing, and in order to induce the several
underwriters to act as such in connection with the Offering, the undersigned
hereby irrevocably agrees not to, directly or indirectly, offer, sell, contract
to sell, transfer the economic risk of ownership in, make any short sale,
pledge, establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended, grant any option
to sell, transfer or otherwise dispose of any shares of Common Stock, or any
securities convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock, or publicly announce the undersigned's
intention to do any of the foregoing, without the prior written consent of
SoundView Financial Group, Inc., for a period commencing on the date hereof and
terminating one hundred eighty (180) days after the effective date of the
Registration Statement (the "Lock-Up Period"); provided, however, that shares of
-------- -------
Common Stock purchased by the undersigned in the pubic market after the Offering
shall not be subject to this agreement.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock either during his or her lifetime
or on death by will or intestacy to his or her immediate family or to a trust if
the beneficiaries of such trust are exclusively the undersigned and/or a member
or members of his or her immediate family; provided, however, that prior to any
-------- -------
such transfer each transferee shall execute an agreement, satisfactory to
SoundView Financial Group, Inc., pursuant to which each transferee shall agree
to receive and hold such shares of Common Stock, or securities convertible into
or exchangeable or exercisable for Common Stock, subject to the provisions
hereof, and there shall be no further transfer except in accordance with the
provisions hereof. In addition, if the undersigned is a partnership, the
partnership may transfer any shares of Common Stock or securities convertible
into or exchangeable or exercisable for
Common Stock to a partner of such partnership, to a retired partner of such
partnership, or to the estate of any such partner or retired partner, and any
such partner who is an individual may transfer such shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock by
gift, will or intestacy to a member or members of his or her immediate family;
provided, however, that prior to any such transfer each transferee shall execute
-------- -------
an agreement, satisfactory to SoundView Financial Group, Inc., pursuant to which
each transferee shall agree to receive and hold such shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock,
subject to the provisions hereof, and there shall be no further transfer except
in accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
In addition, the undersigned agrees that, without the prior written consent
of SoundView Financial Group, Inc., the undersigned will not, during the Lock-Up
Period, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
The undersigned confirms that he or she understands that the underwriters
of the Offering and the Company will rely upon the representations set forth in
this agreement in proceeding with the Offering. The undersigned further
confirms that this agreement is irrevocable and shall be binding upon the
undersigned's heirs, legal representatives, successors and assigns so long as
the closing of the Offering occurs on or prior to May 31, 1998. The undersigned
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of Common Stock or other
securities of the Company held by the undersigned except in compliance with this
agreement.
Dated: , 1997. --------------------------------------
----------------- Name of Securityholder
By:
-----------------------------------
--------------------------------------
Print Name
--------------------------------------
Title
2
