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3,500,000 Shares
Common Stock
UNDERWRITING AGREEMENT
by and among
INSILICON CORPORATION,
a Delaware corporation
and
PHOENIX TECHNOLOGIES, LTD.,
a Delaware Corporation
and
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.,
PRUDENTIAL SECURITIES INCORPORATED,
and
XXXXXXX & COMPANY, INC.,
as Representatives of the several Underwriters
Dated March [__], 2000
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UNDERWRITING AGREEMENT
March [__], 0000
XxxxxXxxxxx Xxxxxxxxx Xxxxxxxx Inc.
Prudential Securities Incorporated
Xxxxxxx & Company, Inc.
As Representatives of the several Underwriters
c/o FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
INTRODUCTORY. inSilicon Corporation, a Delaware corporation (the
"Company"), and Phoenix Technologies, Ltd., a Delaware corporation ("Phoenix"),
hereby confirm their agreement with the several Underwriters named in SCHEDULE A
hereto (the "Underwriters") as follows. The Company proposes to issue and sell
to the Underwriters an aggregate of 3,500,000 shares (the "Firm Shares") of its
Common Stock, par value $0.001 per share ("Common Shares"). In addition, the
Company has granted to the Underwriters an option to purchase up to an
additional 525,000 Common Shares (the "Option Shares") as provided in Section 2.
The Firm Shares and, if and to the extent such option is exercised, the Option
Shares are collectively called the "Shares." FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
("Xxxxxxxxx Xxxxxxxx"), Prudential Securities Incorporated and Xxxxxxx &
Company, Inc., have agreed to act as representatives of the several Underwriters
(in such capacity, the "Representatives") in connection with the offering and
sale of the Shares. As a part of this offering contemplated by this Agreement,
Xxxxxxxxx Xxxxxxxx has agreed to reserve out of the Shares set forth opposite
its name on SCHEDULE A to this Agreement, up to 175,000 shares, for sale to the
Company's employees, officers, and directors and other parties associated with
the Company (collectively, "Participants"), as set forth in the Prospectus under
the heading "Underwriting--Directed Share Program"). The Shares to be sold by
Xxxxxxxxx Xxxxxxxx pursuant to the Directed Share Program (the "Directed
Shares") will be sold by Xxxxxxxxx Xxxxxxxx pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for purchase by
any Participants as of 7:00am New York time on the first day trading of the
shares commences will be offered to the public by Xxxxxxxxx Xxxxxxxx as set
forth in the Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333- 94573), which contains a form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus." Such registration statement, as
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amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is called the "Registration Statement." Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement," and from and after the date
and time of filing of the Rule 462(b) Registration Statement the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
Such prospectus, in the form first used by the Underwriters to confirm sales of
the Shares, is called the "Prospectus." All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus or the Prospectus, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("XXXXX").
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PHOENIX.
Each of the Company and Phoenix hereby represents, warrants and covenants
to each Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company represents and
warrants that the Registration Statement and any Rule 462(b) Registration
Statement have been declared effective by the Commission under the Securities
Act. The Company represents and warrants that the Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. The Company represents and warrants that no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.
The Company represents and warrants that each preliminary prospectus and
the Prospectus when filed complied in all material respects with the Securities
Act and, if filed by electronic transmission pursuant to XXXXX (except as may be
permitted by Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriters for use in connection with the offer and
sale of the Shares. The Company represents and warrants that each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain 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 not misleading. The Company represents
and warrants that each preliminary prospectus, as of its date, and the
Prospectus, as amended or supplemented, as of its date and at all subsequent
times through the 30th day after the date hereof, did not and will not contain
any untrue statement of a material fact or omit 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. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein. The
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Company represents and warrants that there are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company represents
and warrants that the Company has delivered to the Representatives three
complete conformed copies of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary prospectuses and the
Prospectus, as amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company
represents and warrants that the Company has not distributed and will not
distribute, prior to the later of the Second Closing Date (as defined below) and
the completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than a
preliminary prospectus, the Prospectus or the Registration Statement.
(d) THE UNDERWRITING AGREEMENT. Each of the Company and Phoenix represents
and warrants as to itself that this Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, each of the Company
and Phoenix, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) THE INTERCOMPANY AGREEMENTS. Each of the Company and Phoenix represents
and warrants as to itself that each of the Contribution Agreement, the Initial
Public Offering Agreement, the Services and Cost-Sharing Agreement, the Employee
Matters Agreement, the Tax-Sharing Agreement, the Registration Rights Agreement
and the Technology Distributor Agreement by and between the Company and Phoenix
(each an "Intercompany Agreement and, collectively, the "Intercompany
Agreements") has been duly authorized, has been or no later than the First
Closing Date (as defined below) shall be, executed and delivered by, and is or
shall be upon execution and delivery (as applicable) a valid and binding
agreement of, each of the Company and Phoenix, enforceable against each of them
in accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles, and except as rights to indemnification under the
Registration Rights Agreement and the Initial Public Offering Agreement for
liabilities arising under the federal securities laws may be limited by
applicable law.
(f) AUTHORIZATION OF THE SHARES. The Company represents and warrants that
the Shares to be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement, will be validly issued,
fully paid and nonassessable and no personal liability shall attach to the
holders of the shares by reason of their ownership thereof.
(g) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. The Company
represents and warrants that there are no persons with registration or other
similar rights to have any equity or debt securities registered for sale under
the Registration Statement or included in the offering contemplated by this
Agreement except for such rights as have been duly waived.
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(h) NO MATERIAL ADVERSE CHANGE. The Company represents and warrants that
subsequent to the respective dates as of which information is given in the
Prospectus: (i) there has been no material adverse change, or any development
that could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations,
whether or not arising from transactions in the ordinary course of business, of
the Company and its subsidiaries, considered as one entity (any such change or
effect, where the context so requires, is called a "Material Adverse Change" or
a "Material Adverse Effect"); (ii) the Company and its subsidiaries, considered
as one entity, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(i) INDEPENDENT ACCOUNTANTS. The Company represents and warrants that Ernst
& Young, LLP and PriceWaterhouseCoopers LLP who have expressed their opinions
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants as required
by the Securities Act.
(j) PREPARATION OF THE FINANCIAL STATEMENTS. Each of the Company and
Phoenix represents and warrants that the financial statements of the Company
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
its operations and cash flows for the periods specified. Each of the Company and
Phoenix represents and warrants that, to its knowledge, the financial statements
of Sand Microelectronics, Inc. filed with the Commission as a part of the
Registration Statement and included in the Prospectus present fairly the
financial position of Sand Microelectronics, Inc. of and at the dates indicated
and the results of its operations and cash flows for the periods specified. Each
of the Company and Phoenix represents and warrants that the supporting schedules
included in the Registration Statement presents fairly the information required
to be stated therein. Each of the Company and Phoenix represents and warrants
that such financial statements and supporting schedules have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as may be expressly stated in the
related notes thereto. Each of the Company and Phoenix represents and warrants
that no other financial statements or supporting schedules are required to be
included in the Registration Statement. Each of the Company and Phoenix
represents and warrants that the financial data set forth in the Prospectus
under the captions "Prospectus Summary--Summary Financial Data," "Selected
Consolidated Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement. Each of the Company and
Phoenix represents and warrants that the pro forma information included in the
consolidated financial statements of the Company and the related notes thereto
and the pro forma financial information included under the caption "Prospectus
Summary--Summary Financial Data", "Selected Consolidated Financial Data" and
elsewhere in the Prospectus and in the Registration Statement present fairly the
information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly presented on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein
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are appropriate to give effect to the transactions and circumstances referred to
therein. Each of the Company and Phoenix represents and warrants that no other
pro forma financial information is required to be included in the Registration
Statement pursuant to Regulation S-X under the Securities Act.
(k) COMPANY'S ACCOUNTING SYSTEM. Each of the Company and Phoenix represents
and warrants that it maintains a system of accounting controls sufficient to
provide reasonable assurances that (i) the Company's transactions are executed
in accordance with management's general or specific authorization; (ii) the
Company's transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for the Company's assets; (iii) access to the
Company's assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for the Company's
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(l) SUBSIDIARIES OF THE COMPANY. The Company represents and warrants that
the Company has no subsidiaries other than the subsidiaries listed in Exhibit 21
to the Registration Statement.
(m) INCORPORATION AND GOOD STANDING OF THE COMPANY, ITS SUBSIDIARIES AND
PHOENIX. The Company represents and warrants that the Company and each of its
subsidiaries, and Phoenix represents and warrants that Phoenix, has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of organization with full corporate power and authority
to own its properties and conduct its business as described in the prospectus
and to enter into and perform this Agreement, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification.
(n) CAPITALIZATION OF THE SUBSIDIARIES. The Company represents and warrants
that all the outstanding shares of capital stock of each subsidiary have been
duly and validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Prospectus, all outstanding shares of
capital stock of the subsidiaries are owned by the Company, either directly or
through wholly owned subsidiaries, free and clear of any security interests,
claims, liens or encumbrances.
(o) NO PROHIBITION ON SUBSIDIARIES FROM PAYING DIVIDENDS OR MAKING OTHER
DISTRIBUTIONS. The Company represents and warrants that no subsidiary of the
Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary's property or assets to the Company or any other subsidiary of the
Company, except as expressly described in or expressly contemplated by the
Prospectus.
(p) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. As adjusted to give
effect to the conversion of the Series A Preferred Shares (as defined below),
the Company represents and warrants that the authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" (other than for subsequent issuances, if any, pursuant to
employee benefit plans described in the Prospectus or upon exercise of the
outstanding warrant to purchase securities of the Company (the "Warrant") and
options described in the Prospectus). The Company represents and warrants that
the Common Shares
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(including the Shares) conform in all material respects to the description
thereof contained in the Prospectus. The Company represents and warrants that
all of the issued and outstanding shares of Series A Preferred Stock, par value
$0.001 per share (the "Series A Preferred Shares") and Common Shares have been
duly authorized and validly issued, are fully paid and nonassessable and have
been issued in compliance with federal and state securities laws. The Company
represents and warrants that none of the outstanding Series A Preferred Shares
or Common Shares was issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase securities of
the Company. The Company represents and warrants that there are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those accurately described in the Prospectus. The
Company represents and warrants that the description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(q) NO REGISTRATION REQUIRED IN CONNECTION WITH THE SERIES A PREFERRED
SHARES OR THE WARRANT. The Company represents and warrants that it is not
necessary in connection with (i) the sale of the Series A Preferred Shares and
the Warrant from the Company to Phoenix, (ii) the conversion of the Series A
Preferred Shares into Common Shares at the First Closing Date, or (iii) the
exercise of the Warrant, to register either the Series A Preferred Shares, the
Warrant or the underlying Common Shares under the Securities Act or to qualify
the offer or sale thereof under the California Corporate Securities Law.
(r) STOCK EXCHANGE LISTING. The Company represents and warrants that the
Shares have been approved for inclusion in the Nasdaq National Market, subject
only to official notice of issuance.
(s) NO REGULATORY CONSENTS, APPROVALS OR AUTHORIZATIONS REQUIRED. Each of
the Company and Phoenix represents and warrants as to itself that no consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein (including, without limitation, the execution, delivery and
performance of this Agreement and the Intercompany Agreements by the Company and
Phoenix), except such as have been obtained or made under the Securities Act and
such as may be required (i) under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Shares by the Underwriters
in the manner contemplated here and in the Prospectus, (ii) by the National
Association of Securities Dealers, Inc. or its subsidiary NASD Regulation, Inc.
(together with their affiliates, the "NASD"), or (iii) by the federal and
provincial securities laws of Canada or other foreign jurisdiction in which the
Shares are offered or sold.
(t) NON-CONTRAVENTION OF EXISTING INSTRUMENTS AND AGREEMENTS; NO ADDITIONAL
THIRD-PARTY CONSENTS REQUIRED. Each of the Company and Phoenix represents and
warrants as to itself that neither the issue and sale of the Shares nor the
consummation of any of the other transactions contemplated herein or in the
Intercompany Agreements (including, without limitation, assignment of certain
contracts and intellectual property rights from Phoenix to the Company as
contemplated by the Contribution Agreement) nor the fulfillment of the terms
hereof or thereof will conflict with, or require the consent of any other party
to, or result in a breach or violation of, or result in the imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, (i) the charter or
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by-laws of the Company or any of its subsidiaries or Phoenix, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which the Company or any of its subsidiaries or Phoenix is a party or bound or
to which their respective properties are subject, except for such conflicts,
breaches, violations, liens, charges or encumbrances as, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, and except for such third-party consents as have been obtained or which
the failure to obtain individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Effect, or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Company or any of
its subsidiaries or Phoenix of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its subsidiaries or Phoenix or any of their
properties.
(u) NO DEFAULTS OR VIOLATIONS. The Company represents and warrants that
none of the Company or any of its subsidiaries is, and Phoenix represents and
warrants that Phoenix is not, in violation or default of (i) any provision of
its charter or by-laws, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or Phoenix or any of their respective properties, as
applicable, except any such violation or default which, singly or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change and except as otherwise disclosed in the Prospectus.
(v) NO ACTIONS, SUITS OR PROCEEDINGS. The Company represents and warrants
as to itself and its subsidiaries, and Phoenix represents and warrants as to
itself, that no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or Phoenix or their respective properties is pending
or, to the best knowledge of the Company and Phoenix, threatened that (i) could
reasonably be expected to have a Material Adverse Effect on the performance of
this Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to result in a Material Adverse
Effect.
(w) ALL NECESSARY PERMITS, ETC. The Company represents and warrants that
the Company and each of its subsidiaries possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and the Company represents and warrants that neither the Company nor
any of its subsidiaries has, and Phoenix represents and warrants that Phoenix
has not, received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
(x) TITLE TO PROPERTIES. The Company represents and warrants that the
Company and each of its subsidiaries has good and marketable title to all the
properties and assets reflected as owned in the financial statements referred to
in Section 1(j) above, in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The Company represents and warrants that the
real property,
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improvements, equipment and personal property held under lease by the Company or
any of its subsidiaries are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use made
or proposed to be made of such real property, improvements, equipment or
personal property by the Company.
(y) TAX LAW COMPLIANCE. The Company represents and warrants that the
Company and its subsidiaries, and Phoenix represents and warrants that it, has
filed all necessary federal, state and foreign income and franchise tax returns
or has properly requested extensions thereof and has paid all taxes required to
be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against it. The Company represents and
warrants as to itself, and Phoenix represents and warrants as to itself, that it
has made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(j) above in respect of all federal, state
and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its subsidiaries or Phoenix has not been
finally determined. The Company represents and warrants as to itself, and
Phoenix represents and warrants as to itself, that it is not aware of any tax
deficiency that has been or might be asserted or threatened against the Company
or any of its subsidiaries or Phoenix that could result in a Material Adverse
Change.
(z) INTELLECTUAL PROPERTY RIGHTS. Each of the Company and Phoenix
represents and warrants that the Company and its subsidiaries owns or possesses
adequate rights to use all patents, patent rights or licenses, inventions,
collaborative research agreements, trade secrets, know-how, trademarks, service
marks, trade names and copyrights which are necessary to conduct its businesses
as described in the Registration Statement and Prospectus, including, without
limitation, those listed on SCHEDULE B hereto; the expiration of any patents,
patent rights, trade secrets, trademarks, service marks, trade names or
copyrights would not result in a Material Adverse Change that is not otherwise
disclosed in the Prospectus; the Company has not received any notice of, and
neither the Company nor Phoenix has any knowledge of, any infringement of or
conflict with asserted rights of the Company by others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights; and the Company has not received any notice
of, and neither the Company nor Phoenix has any knowledge of, any infringement
of or conflict with asserted rights of others with respect to any patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might result in a Material Adverse
Change. Each of the Company and Phoenix represents and warrants that there is no
claim pending or, to the knowledge of the Company and Phoenix, threatened
against the Company regarding patents, patent rights or licenses, inventions,
collaborative research, trade secrets, know-how, trademarks, service marks,
trade names or copyrights. Each of the Company and Phoenix represents and
warrants that the Company and its subsidiaries do not in the conduct of their
business as now or proposed to be conducted as described in the Prospectus
infringe or conflict with any right or patent of any third party, or any
discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company or any of its
subsidiaries, which such infringement or conflict might result in a Material
Adverse Change.
(aa) YEAR 2000 PREPAREDNESS. The Company represents and warrants that there
are no year 2000 issues related to the Company or any of its subsidiaries that
(i) are of a character required to be described or referred to in the
Registration Statement or Prospectus by the Securities Act which have not been
accurately described in the Registration Statement or Prospectus or (ii) might
reasonably be expected to result in any Material Adverse Change or that might
materially affect its properties, assets or rights.
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(bb) NO TRANSFER TAXES OR OTHER FEES. The Company represents and warrants
that there are no transfer taxes or other similar fees or charges under Federal
law or the laws of any state, or any political subdivision thereof, required to
be paid in connection with the execution and delivery of this Agreement or the
issuance and sale by the Company of the shares.
(cc) COMPANY NOT AN "INVESTMENT COMPANY". The Company represents and
warrants as to itself, and Phoenix represents and warrants as to itself, that it
has been advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company represents,
warrants and covenants as to itself, and Phoenix represents, warrants and
covenants as to itself, that it is not, and after the Company's receipt of
payment for the Shares, will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act. The Company represents, warrants and covenants that the Company
will conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(dd) INSURANCE. The Company represents and warrants that the Company and
each of its subsidiaries are insured by recognized, financially sound and
reputable institutions with policies in such amounts and with such deductibles
and covering such risks as are generally deemed adequate and customary for their
respective businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company or any subsidiary against
theft, damage, destruction, acts of vandalism and earthquakes, general liability
and Directors and Officers liability. The Company represents and warrants that
the Company has no reason to believe that the Company or any of its subsidiaries
will not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. The Company
represents and warrants that neither the Company nor any of its subsidiaries has
been denied any insurance coverage which it has sought or for which it has
applied.
(ee) LABOR MATTERS. The Company represents and warrants that to the best of
its knowledge, no labor disturbance by the employees of the Company or any of
its subsidiaries exists or is imminent; and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its principal
suppliers, subassemblers, value added resellers, subcontractors, original
equipment manufacturers, authorized dealers or international distributors that
might be expected to result in a Material Adverse Change.
(ff) NO PRICE STABILIZATION OR MANIPULATION. Each of the Company and
Phoenix represents and warrants as to itself that it has not taken and will not
take, directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(gg) LOCK-UP AGREEMENTS. The Company represents and warrants that each
officer and director of the Company and each beneficial owner of one or more
percent of the outstanding issued share capital of the Company has agreed to
sign an agreement substantially in the form attached hereto as EXHIBIT A (the
"Lock-up Agreements"). The Company represents and warrants that the Company has
provided to counsel for the Underwriters a complete and accurate list of all
security holders of the Company and the number and type of securities held by
each securityholder. The Company represents and warrants that the Company has
provided to counsel for the Underwriters true, accurate and complete copies of
all of the Lock-up Agreements presently in effect or effected hereby. The
Company hereby represents and warrants that it will not release any of its
officers, directors or other stockholders from any other
9
lock-up agreements currently existing (or hereafter effected in connection with
the offering of the Shares) without the prior written consent of Xxxxxxxxx
Xxxxxxxx.
(hh) RELATED PARTY TRANSACTIONS. The Company represents and warrants that
there are no business relationships or related-party transactions involving the
Company or any of its subsidiaries or any other person required to be described
in the Prospectus which have not been described as required.
(ii) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. The Company represents
and warrants that neither the Company nor, to the best of the Company's
knowledge, any employee or agent of the Company or any of its subsidiaries, has
made any contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(jj) ENVIRONMENTAL LAWS. The Company represents and warrants that (i) the
Company and each of its subsidiaries are in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
which are applicable to its business, except where the failure to comply would
not result in a Material Adverse Change, (ii) neither the Company nor any of its
subsidiaries has received any notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim is required to
be disclosed in the Registration Statement and the Prospectus, (iii) neither the
Company nor any of its subsidiaries is currently aware that it will be required
to make future material capital expenditures to comply with Environmental Laws
and (iv) no property which is owned, leased or occupied by the Company or any of
its subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601, ET SEQ.), or otherwise designated as a contaminated site
under applicable state or local law.
(kk) ERISA COMPLIANCE. The Company represents and warrants that it and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, or its subsidiaries or their "ERISA Affiliates" (as defined below)
are in compliance in all material respects with ERISA. "ERISA Affiliate" means,
with respect to the Company or a subsidiary, any member of any group of
organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such subsidiary
is a member. The Company represents and warrants that no "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its subsidiaries, or any of their ERISA Affiliates. The Company represents and
warrants that no "employee benefit plan" established or maintained by the
Company, or any of its subsidiaries, or any of their ERISA Affiliates, if such
"employee benefit plan were terminated, would have any "amount of unfounded
benefit liabilities" (as defined under ERISA). The Company represents and
warrants that neither the Company, nor any of its subsidiaries, nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any
employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code.
The Company represents and warrants that each employee benefit plan" established
or maintained by the Company, its subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so
qualified and
10
nothing has occurred, whether by action or failure to act, which would cause the
loss of such qualification.
(ll) CERTAIN EMPLOYMENT MATTERS. Each of the Company and Phoenix represents
and warrants that every material agreement between Phoenix and officers of the
Company (including, without limitation, any agreement to employ any such person
should his or her employment with the Company be terminated) has been disclosed
in the Prospectus.
(mm) CONSENTS REQUIRED IN CONNECTION WITH THE DIRECTED SHARE PROGRAM. The
Company represents and warrants that no consent, approval, authorization or
order of, or qualification with, any governmental body or agency, other than
those obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered.
(nn) NO IMPROPER INFLUENCE IN CONNECTION WITH THE DIRECTED SHARE PROGRAM.
The Company represents and warrants that the Company has not offered, or caused
Xxxxxxxxx Xxxxxxxx to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
Any certificate signed by an officer of the Company or Phoenix and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company or Phoenix, as the
case may be, to each Underwriter as to the matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) THE FIRM SHARES. The Company agrees to issue and sell to the several
Underwriters the Firm Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements of the Company and Phoenix herein
contained, and upon the terms but subject to the conditions herein set forth,
the Underwriters agree, severally and not jointly, to purchase from the Company
the respective number of Firm Shares set forth opposite their names on SCHEDULE
A. The purchase price per Firm Share to be paid by the several Underwriters to
the Company shall be $[__] per share.
(b) THE FIRST CLOSING DATE. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representatives at 6:00 a.m. San Francisco time, at the offices of Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, San Francisco, California (or at such other place as
may be agreed upon among the Representatives and the Company), (i) on the third
(3rd) full business day following the first day that Shares are traded, (ii) if
this Agreement is executed and delivered after 1:30 P.M., San Francisco time,
the fourth (4th) full business day following the day that this Agreement is
executed and delivered or (iii) at such other time and date not later that seven
(7) full business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "First
Closing Date"; provided, however, that if the Company has not made available to
the Representatives copies of the Prospectus within the time provided in
Sections 2(g) and 3(e) hereof, the Representatives may, in their sole
discretion, postpone the Closing
11
Date until no later that two (2) full business days following delivery of copies
of the Prospectus to the Representatives.
(c) THE OPTION SHARES; THE SECOND CLOSING DATE. In addition, on the basis
of the representations, warranties and agreements of the Company and Phoenix
herein contained, and upon the terms but subject to the conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 525,000 Option Shares
from the Company at the purchase price per share to be paid by the Underwriters
for the Firm Shares. The option granted hereunder is for use by the Underwriters
solely in covering any overallotments in connection with the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
at any time upon notice by the Representatives to the Company, which notice may
be given at any time within 30 days from the date of this Agreement. The time
and date of delivery of the Option Shares, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Option Shares
are to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Option Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Option Shares to be purchased as the number of
Firm Shares set forth on SCHEDULE A opposite the name of such Underwriter bears
to the total number of Firm Shares. The Representatives may cancel the option at
any time prior to its expiration by giving written notice of such cancellation
to the Company.
(d) PUBLIC OFFERING OF THE SHARES. The Representatives hereby advise the
Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Shares as soon
after this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, may
determined is advisable and practicable.
(e) PAYMENT FOR THE SHARES. Payment for the Shares shall be made at the
First Closing Date (and, if applicable, at the Second Closing Date) by wire
transfer in immediately available-funds to the order of the Company.
It is understood that the Representatives have been authorized, for their
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Shares and
any Option Shares the Underwriters have agreed to purchase. Xxxxxxxxx Xxxxxxxx,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment for any Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representatives by
the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
(f) DELIVERY OF THE SHARES. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Shares to an account or accounts at
The Depository Trust Company, as designated by the Representatives for the
accounts of the Representatives and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The Company shall
also deliver, or cause to be delivered a credit representing the Option Shares
the Underwriters have agreed to purchase at the First Closing Date (or the
Second Closing Date, as the case may be), to an account or accounts at The
Depository Trust Company as designated by the
12
Representatives for the accounts of the Representatives and the several
Underwriters, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00 noon
on the second business day following the date the Shares are released by the
Underwriters for sale to the public, the Company shall deliver or cause to be
delivered copies of the Prospectus in such quantities and at such places as the
Representatives shall request.
SECTION 3. COVENANTS OF THE COMPANY AND PHOENIX.
Each of the Company and Phoenix further covenant and agree with each
Underwriter as to itself as follows (but and only to the extent the Company or
Phoenix, as the case may be, is a named entity in respect of such covenant or
agreement):
(a) REGISTRATION STATEMENT MATTERS. The Company shall, and Phoenix shall
use its best efforts to cause the Company to, (i) use its best efforts to cause
a registration statement on Form 8-A (the "Form 8-A Registration Statement") as
required by the Securities Exchange Act of 1934 (the "Exchange Act") to become
effective simultaneously with the Registration Statement, (ii) use its best
efforts to cause the Registration Statement to become effective or, if the
procedure in Rule 430A of the Securities Act is followed, to prepare and timely
file with the Commission under Rule 424(b) under the Securities Act a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A of the Securities Act and (iii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall have reasonably objected in writing or
which is not in compliance with the Securities Act. If the Company elects to
rely on Rule 462(b) under the Securities Act, the Company shall, and Phoenix
shall use its best efforts to cause the Company to, file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b) under
the Securities Act prior to the time confirmations are sent or given, as
specified by Rule 462(b)(2) under the Securities Act, and shall pay the
applicable fees in accordance with Rule 111 under the Securities Act.
(b) SECURITIES ACT COMPLIANCE. The Company shall, and Phoenix shall use its
best efforts to cause the Company to, advise the Representatives promptly (i)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (ii) of receipt of any comments from the Commission,
(iii) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional information
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The Company shall, and
Phoenix shall use its best efforts to cause the Company to, use its best efforts
to prevent the issuance of any such stop order preventing or suspending the use
of the Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(c) BLUE SKY COMPLIANCE. The Company shall, and Phoenix shall use its best
efforts to cause the Company to, cooperate with the Representatives and counsel
for the Underwriters in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions (both national and foreign) as the
Representatives may reasonably have designated in writing and
13
shall make such applications, file such documents, and furnish such information
as may be reasonably required for that purpose, provided the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company shall, from time to time, prepare
and file such statements, reports and other documents, as are or may be required
to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT
MATTERS. The Company shall, and Phoenix shall use its best efforts to cause the
Company to, comply with the Securities Act and the Exchange Act, and the rules
and regulations of the Commission thereunder, so as to permit the completion of
the distribution of the Shares as contemplated in this Agreement and the
Prospectus. If during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion of the
Representatives or counsel for the Underwriters, it becomes necessary to amend
or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly shall,
and Phoenix shall use its best efforts to cause the Company to, prepare and file
with the Commission, and furnish at the Company's own expense to the
Underwriters and to dealers, an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(e) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The Company
agrees to, and Phoenix agrees to use its best efforts to cause the Company to,
furnish the Representative, without charge, during the period beginning on the
date hereof and ending on the later of the First Closing Date or such date, as
in the opinion of counsel for the Underwriters, the Prospectus is no longer
required by law to be delivered in connection with sales by an Underwriter or
dealer (the "Prospectus Delivery Period"), as many copies of the Prospectus and
any amendments and supplements thereto (including any documents incorporated or
deemed incorporated by reference therein) as the Representatives may request.
(f) INSURANCE. The Company shall, and Phoenix shall use its best efforts to
cause the Company to, (i) obtain Directors and Officers liability insurance in
the minimum amount of $10 million which shall apply to the offering contemplated
hereby and (ii) cause Xxxxxxxxx Xxxxxxxx to be added to such policy such that up
to $500,000 of its expenses pursuant to section 7(a) shall be paid directly by
such insurer.
(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the ninety (90) day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Company Shares has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company forthwith shall, after written notice from you advising
the Company to the effect set forth above, consult with the Representatives in
good faith regarding the possibility of preparing and disseminating a press
release or other public statement responding to or commenting on such rumor,
publication or event.
14
(h) USE OF PROCEEDS. The Company shall apply the net proceeds from the sale
of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(i) TRANSFER AGENT. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Company Shares.
(j) EARNINGS STATEMENT. As soon as practicable, the Company shall make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending on the date of the end of the Company's first quarter ending after one
year following the "effective date of the Registration Statement" (as defined in
Rule 158(c) under the Securities Act) that satisfies the provisions of Section
11(a) of the Securities Act.
(k) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Exchange Act and/or the rules and regulations of the NASD.
(l) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company shall
not, and Phoenix shall use its best efforts to cause the Company not to, sell or
contract to sell, or otherwise dispose of or enter into any transaction which is
designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other Common Shares or any
securities convertible into, or exchangeable for, Common Shares; provided,
however, that the Company may (i) issue and sell Common Shares pursuant to any
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and
described in the Prospectus so long as none of those shares may be transferred
and the Company shall enter stop transfer instructions with its transfer agent
and registrar against the transfer of any such Common Shares and (ii) the
Company may issue Common Shares issuable upon the exercise of the Warrant or
conversion of securities outstanding at the date of the Prospectus and described
in the Prospectus. These restrictions terminate after the close of trading of
the Shares on the 180th day of (and including) the day the Shares commenced
trading on the Nasdaq National Market (the "Lock-Up Period").
(m) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of five years
hereafter the Company shall furnish to the Representatives (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, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified 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, Current Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
(n) DIRECTED SHARE PROGRAM. The Company (i) will indemnify Xxxxxxxxx
Xxxxxxxx for any losses incurred in connection with the Directed Share Program,
(ii) will comply with all applicable securities and other applicable laws, rules
and regulations in each jurisdiction in
15
which the Directed Shares are offered in connection with the Directed Share
Program and (iii) will pay all reasonable fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program and
any stamp duties, similar taxes or duties or other taxes, if any, incurred by
the underwriters in connection with the Directed Share Program.
(o) COMPLIANCE WITH AND ENFORCEMENT OF INTERCOMPANY AGREEMENTS. Phoenix
shall in good faith comply with its obligations to the Company under the
Intercompany Agreements. The Company shall in good faith enforce its rights
against Phoenix under the Intercompany Agreements unless otherwise determined by
a vote of a majority of the independent members of its Board of Directors.
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the
Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and Phoenix set forth
in Section 1 hereof as of the date hereof and as of the First Closing Date as
though then made and, with respect to the Option Shares, as of the Second
Closing Date as though then made, to the timely performance by the Company and
Phoenix of their respective covenants and other obligations hereunder, and to
each of the following additional conditions:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO OBJECTION
FROM THE NASD. The Registration Statement shall have become effective prior to
the execution of this Agreement, or at such later date as shall be consented to
in writing by Xxxxxxxxx Xxxxxxxx; 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, Phoenix, or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of counsel to the
Underwriters; and the NASD shall have delivered a letter to the Representatives
stating that it intends not to raise any objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(b) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to counsel to
the Underwriters, and such counsel shall have been furnished with such papers
and information as they may reasonably have requested to enable them to pass
upon the matters referred to in this Section.
(c) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and delivery of
this Agreement and prior to the First Closing Date, or the Second Closing Date,
as the case may be, there shall not have been any Material Adverse Change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries, considered as one enterprise,
from that set forth in the Registration Statement or Prospectus, which, in the
sole judgment of Xxxxxxxxx Xxxxxxxx, is material and adverse and that makes it,
in the sole judgment of Xxxxxxxxx Xxxxxxxx, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus.
(d) OPINION OF COUNSEL FOR THE COMPANY. The Underwriters shall have
received on the First Closing Date, or the Second Closing Date, as the case may
be, an opinion of Orrick,
16
Xxxxxxxxxx & Xxxxxxxxx LLP, counsel for the Company substantially in the form of
EXHIBIT B attached hereto, dated the First Closing Date, or the Second Closing
Date, addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters. Counsel rendering the opinion
contained in EXHIBIT B may rely as to questions of law not involving the laws of
the United States or the States of California and Delaware upon opinions of
local counsel, and as to questions of fact upon representations or certificates
of officers of the Company 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 Underwriters, and to counsel to the Underwriters.
(e) OPINION OF INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY. The
Underwriters shall have received on the First Closing Date, or the Second
Closing Date, as the case may be, an opinion of Wildman, Harrold, Xxxxx & Xxxxx,
intellectual property counsel for the Company substantially in the form of
EXHIBIT C attached hereto.
(f) OPINION OF COUNSEL FOR THE UNDERWRITERS. The Underwriters shall have
received on the First Closing Date or the Second Closing Date, as the case may
be, an opinion of O'Melveny & Xxxxx LLP, in form and substance satisfactory to
the Representatives, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as the Representatives may reasonably require.
The Company shall have furnished to such counsel such documents as they may have
reasonably requested for the purpose of enabling them to pass upon such matters.
(g) ACCOUNTANTS' COMFORT LETTER. The Underwriters shall have received on
the First Closing Date and on the Second Closing Date, as the case may be, a
letter from Ernst & Young, LLP and PriceWaterhouseCoopers LLP, addressed to the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, confirming that they are independent certified public accountants
with respect to the Company or Sand Microelectronics, Inc., as the case may be,
within the meaning of the Act and the applicable published Rules and Regulations
and based upon the procedures described in such letter delivered to the
Underwriters concurrently with the execution of this Agreement (herein called
the "Original Letter"), but carried out to a date not more than four (4)
business days prior to the First Closing Date or the Second Closing Date, as the
case may be, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the First
Closing Date or the Second Closing Date, as the case may be, and (ii) setting
forth any revisions and additions to the statements and conclusions set forth in
the Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of such letter, or to reflect
the availability of more recent financial statements, data or information. The
letter shall not disclose 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
judgment of the Xxxxxxxxx Xxxxxxxx, is material and adverse and that makes it,
in the sole judgment of the Xxxxxxxxx Xxxxxxxx, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus. The Original Letter from Ernst & Young, LLP and
PriceWaterhouseCoopers LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company or Sand Microelectronics, Inc., as the
case may be, within the meaning of the Act and the applicable published Rules
and Regulations, (ii) set forth their opinion with
17
respect to their examination of the consolidated balance sheet of the Company as
of September 30, 1999 and December 31, 1999, and related consolidated statements
of operations, shareholders' equity, and cash flows for the twelve (12) months
ended September 30, 1999, and the three (3) months ended December 31, 1999, and
address other matters agreed upon by Ernst & Young, LLP, PriceWaterhouseCoopers
LLP, and the Representatives. In addition, you shall have received from Ernst &
Young, LLP and PriceWaterhouseCoopers LLP, a letter addressed to the Company and
made available to you for the use of the Underwriters stating that their review
of the Company's system of internal accounting controls, to the extent they
deemed necessary in establishing the scope of their examination of the Company's
consolidated financial statements as of December 31, 1999, did not disclose any
weaknesses in internal controls that they considered to be material weaknesses.
(h) COMPANY CERTIFICATE. The Representatives shall have received on the
First Closing Date and the Second Closing Date, as the case may be, a
certificate of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, to the effect that, and you shall be satisfied
that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the First Closing
Date or the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the First Closing Date or
the Second Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto contained all material information required to be
included therein by the Securities Act and in all material respects
conformed to the requirements of the Securities Act, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
did not and does 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 not misleading; and, since the effective date
of the Registration Statement, there has occurred no event required to be
set forth in an amended or supplemented Prospectus which has not been so
set forth; and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (a)
any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries, considered as one enterprise, (b) any transaction that is
material to the Company, except transactions entered into in the ordinary
course of business, (c) any obligation, direct or contingent, that is
material to the Company, incurred by the Company, except obligations
incurred in the ordinary course of business, (d) any change in the capital
stock or outstanding indebtedness of the Company that is material to the
Company other than the offering, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company, or (f) any
loss or damage (whether or not insured) to the property of the Company
which
18
has been sustained or will have been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise.
(i) PHOENIX CERTIFICATE. The Representatives shall have received on the
First Closing Date and the Second Closing Date, as the case may be, a
certificate of Phoenix, dated the First Closing Date or the Second Closing Date,
as the case may be, signed by the Chief Executive Officer and Chief Financial
Officer of Phoenix, to the effect that, and you shall be satisfied that the
representations and warranties of Phoenix in this Agreement are true and
correct, as if made on and as of the First Closing Date or the Second Closing
Date, as the case may be, and Phoenix has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the First Closing Date or the Second Closing Date, as the case may be.
(j) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY. The Company
shall have obtained and delivered to the Representatives an agreement
substantially in the form of EXHIBIT A attached hereto from each officer and
director of the Company, and from Phoenix and any other beneficial owner of one
or more percent of the outstanding issued share capital of the Company.
(k) INTERCOMPANY AGREEMENTS. Each of the Intercompany Agreements shall have
been executed and delivered and shall be in full force and effect and
unmodified; and a true and correct copy of each of them shall have been
delivered to counsel for the Underwriters.
(l) CONTRIBUTION FROM PHOENIX TO THE COMPANY. Any transfers or other
contributions of rights or assets from Phoenix to the Company required by the
Intercompany Agreements to occur at or prior to the Closing shall have occurred
to the reasonable satisfaction of the Representatives.
(m) STOCK EXCHANGE LISTING. The Shares shall have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
(n) COMPLIANCE WITH PROSPECTUS DELIVERY REQUIREMENTS. The Company shall
have complied with the provisions of Sections 2(g) and 3(e) hereof with respect
to the furnishing of Prospectuses.
(o) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date and
the Second Closing Date, as the case may be, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Shares, at any time prior to the
Second Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 5 (Payment of Expenses),
Section 6 (Reimbursement of Underwriters' Expenses), Section 7 (Indemnification
and Contribution) and Section 10 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
19
SECTION 5. PAYMENT OF EXPENSES.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants and other advisors, (v) all costs and
expenses incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada or any other country, and, if requested
by the Representatives, preparing and printing a "Blue Sky Survey," an
"International Blue Sky Survey" or other memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD review and
approval of the Underwriters' participation in the offering and distribution of
the Common Shares, (viii) the fees and expenses associated with including the
Common Shares on the Nasdaq National Market, (ix) all costs and expenses
incident to the travel and accommodation of the Company's employees on the "road
show" preparations to be made to prospective investors, and (x) all other fees,
costs and expenses referred to in Item 13 of Part II of the Registration
Statement. Except as provided in this Section 5, Section 6, and Section 7
hereof, the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel. This Section 5 shall not affect or modify any
separate, valid agreement relating to the allocation of payment of expenses
between the Company, on the one hand, and Phoenix, on the other hand.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If this Agreement is terminated by the Representatives pursuant to Section
4, Section 7, Section 8, Section 9, or if the sale to the Underwriters of the
Shares on the First Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or to comply with any provision hereof, the Company and Phoenix agree to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Underwriters in connection with the proposed
purchase and the offering and sale of the Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION OF THE UNDERWRITERS.
20
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each Underwriter, its officers and employees, and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company, which
consent shall not be unreasonably withheld), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be
a part thereof pursuant to Rule 430A under the Securities Act, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading;
or (ii) upon any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in
whole or in part upon any failure of the Company to perform its obligations
hereunder or under law; or (v) any untrue statement or alleged untrue
statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or
on behalf of the Company including, without limitation, slides, videos,
films or tape recordings, used in connection with the marketing of the
Shares; or (vi) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to,
the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon any matter covered by clause (i), (ii), (iii),
(iv) or (v) above, provided that the Company shall not be liable under this
clause (vi) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken
or omitted to be taken by such Underwriter through its bad faith or willful
misconduct; and to reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by Xxxxxxxxx Xxxxxxxx) as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for
use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further,
that with respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom the
person asserting any loss, claim, damage, liability or expense purchased
Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2
and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not
21
sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The indemnity agreement set
forth in this Section 7(a)(i) shall be in addition to any liabilities
that the Company may otherwise have.
(iii) INDEMNIFICATION BY PHOENIX. Phoenix agrees to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense,
as incurred, to which such Underwriter or such controlling person may
become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or is based (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment
thereto, including any information deemed to be a part thereof pursuant to
Rule 430A under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole
or in part upon any inaccuracy in the representations and warranties of
Phoenix contained herein; or (iv) in whole or in part upon any failure of
Phoenix to perform its obligations hereunder or under law; or (v) any
untrue statement or alleged untrue statement of any material fact contained
in any audio or visual materials provided by the Company or based upon
written information furnished by or on behalf of the Company including,
without limitation, slides, videos, films or tape recordings, used in
connection with the marketing of the Shares; or (vi) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Shares or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter covered
by clause (i), (ii), (iii), (iv) or (v) above, provided that Phoenix shall
not be liable under this clause (vi) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such
Underwriter through its bad faith or willful misconduct; and to reimburse
each Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by Xxxxxxxxx
Xxxxxxxx) as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense
to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and provided, further, that with
respect to any preliminary
22
prospectus, the foregoing indemnity agreement shall not inure to the
benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage, liability or expense. The
indemnity agreement set forth in this Section 7(a)(ii) shall be in addition
to any liabilities that Phoenix may otherwise have.
(iii) LIMITATION OF PHOENIX'S LIABILITY. Phoenix shall not be liable
under clauses (i), (ii), (v) or (vi) of Section 7(a)(ii) above unless (1)
the indemnified party shall have been notified of a loss, claim, damage,
liability or expense at a time when Phoenix owned at least 50% of the
outstanding Common Shares of the Company, and (2) the indemnified party has
made a demand on the Company for payment under clauses (i), (ii), (v) or
(vi) of Section 7(a)(i) above and such demanded sums have gone unpaid for a
period of 60 days after payment is due with respect thereto.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS, PHOENIX AND
THEIR RESPECTIVE CONTROL PERSONS. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who signed the Registration Statement, Phoenix and each person,
if any, who controls the Company or Phoenix within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense,
as incurred, to which the Company, Phoenix or any such director, officer or
controlling person may become subject, under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, Phoenix
or any such director, officer or controlling person for any legal and other
expense reasonably incurred by the Company, Phoenix or any such director,
officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The indemnity agreement set forth in this Section 7(b) shall
be in addition to any liabilities that each Underwriter may otherwise have.
(c) INFORMATION PROVIDED BY THE UNDERWRITERS. Each of the Company and
Phoenix and each person, if any, who controls the Company or Phoenix, within the
meaning of the Securities Act or the Exchange Act, hereby acknowledges that the
only information that the Underwriters have furnished to the Company expressly
for use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) are the statements set forth
in (i) the table in the paragraph entitled "General," (ii) the paragraph
entitled "Concessions
23
and Reallowances," (iii) the paragraph entitled "Stabilization" and (iv) the
paragraph entitled "Passive Market Making," in each case under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party for contribution or otherwise than
under the indemnity agreement contained in this Section 7 or to the extent it is
not prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (Xxxxxxxxx Xxxxxxxx in the case of Section 7(b) and Section
8), representing the indemnified parties who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 7(d) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to
24
the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes (i) an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(f) CONTRIBUTION. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by the Company and Phoenix on the one hand and the
Underwriters on the other 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 Phoenix on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. 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 or Phoenix on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(f) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7(f). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 7(f) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (f), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 7(f)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) TIMING OF ANY PAYMENTS OF INDEMNIFICATION. Any losses, claims, damages,
liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days of invoice to the indemnifying party.
25
(h) SURVIVAL. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties of the Company and Phoenix set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, Phoenix, their directors or
officers or any persons controlling the Company or Phoenix, (ii) acceptance of
any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter, or to the Company, Phoenix, their
directors or officers, or any person controlling the Company or Phoenix, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
(i) ACKNOWLEDGEMENTS OF PARTIES. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions of this Agreement
including, without limitation, the provisions of this Section 7, and are fully
informed regarding said provisions. They further acknowledge that the provisions
of this Section 7 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Securities Act and the Exchange Act.
(j) INDEMNIFICATION FOR DIRECTED SHARE PROGRAM. The Company agrees to
indemnify and hold harmless Xxxxxxxxx Xxxxxxxx and its affiliates and each
person, if any, who controls Xxxxxxxxx Xxxxxxxx or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act ("Xxxxxxxxx Xxxxxxxx Entities"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
consent of the Company for distribution to participants in connection with the
Directed Share Program, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) related to, arising out of, or in
connection with the failure of any participant to pay for and accept delivery of
Directed Shares that the participant has agreed to purchase; or (iii) related
to, arising out of, or in connection with the Directed Share Program; provided,
however, that the Company and Phoenix shall not be liable for any loss, claim,
damage, liability or expense under this Section 7(j) to the extent that a court
of competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or expense resulted directly from any acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and provided, further, that with respect to
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The indemnity agreement
set forth in this Section 7(j) shall be in addition to any liabilities that the
Company may otherwise have.
26
SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case may
be, any one or more of the several Underwriters shall fail or refuse to purchase
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on SCHEDULE A
bears to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Shares and the
aggregate number of Shares with respect to which such default occurs exceeds 10%
of the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the
provisions of Section 5 and Section 7 shall at all times be effective and shall
survive such termination. In any such case either the Representatives or the
Company shall have the right to postpone the First Closing Date or the Second
Closing Date, as the case may be, but in no event for longer than seven days, in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 9. TERMINATION OF THIS AGREEMENT.
Prior to the First Closing Date, this Agreement may be terminated by the
Representatives by notice given to the Company if (a) at any time after the
execution and delivery of this Agreement and prior to the First Closing Date (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the Nasdaq Stock Market, or trading
in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (iii)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective change in United States' or international
political, financial or economic conditions, as in the judgment of the
Representatives is material and adverse and makes it impracticable or
inadvisable to market the Common Shares in the manner and on the terms
contemplated in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
27
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured, or (b) in the case of any of
the events specified 9(a)(i)-(v), such event singly or together with any other
event, makes it, in your judgment, impracticable to market the Common Shares in
the manner and on the terms contemplated in the Prospectus. Any termination
pursuant to this Section 9 shall be without liability on the part of (x) the
Company or Phoenix to any Underwriter, except that the Company and Phoenix shall
be jointly or severally obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Sections 5 and 6 hereof, (y)
any Underwriter to the Company or Phoenix or any person controlling the Company
or Phoenix, or (z) any party hereto to any other party except that the
provisions of Section 7 shall at all times be effective and shall survive such
termination.
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, its officers, Phoenix or any person controlling
the Company or Phoenix and of the several Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or
Phoenix or any of its or their partners, officers or directors or any
controlling person, as the case may be, and shall survive delivery of and
payment for the Shares sold hereunder and any termination of this Agreement.
SECTION 11. NOTICES.
All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representative, to:
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Company, to:
inSilicon Corporation
000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxx Xxxxxxxx
cc: Xxxxx X. Power, Esq.
28
If to Phoenix, to:
Phoenix Technologies, Ltd.
000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxx
In each case, with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 12. SUCCESSORS.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 9
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7, and to their respective
successors, and personal representatives, and no other person shall have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 13. 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.
SECTION 14. GOVERNING LAW PROVISIONS.
(a) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the
29
enforcement of a judgment of any such court (a "Related Judgment"), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION 15. GENERAL PROVISIONS.
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. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
[The remainder of this page has been intentionally left blank.]
30
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.
Very truly yours,
INSILICON CORPORATION
By:
---------------------------------------------
Xxxxx X. Power
Vice President and General Counsel
PHOENIX TECHNOLOGIES, LTD.
By:
---------------------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer and Chairman of the
Board
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives as of the date first above written.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
PRUDENTIAL SECURITIES INCORPORATED
XXXXXXX & COMPANY, INC.
On their behalf and on behalf of each of the several underwriters named in
SCHEDULE A hereto.
BY: FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
By:
--------------------------------
AUTHORIZED SIGNATORY
S-1
SCHEDULE A
UNDERWRITERS TABLE
NUMBER OF FIRM COMMON
UNDERWRITER SHARES TO BE PURCHASED
--------------------------------------------------------------------------------
FleetBoston Xxxxxxxxx Xxxxxxxx Inc...................... [___]
Prudential Securities, Incorporated..................... [___]
Xxxxxxx & Company, Inc.................................. [___]
[___]................................................... [___]
[___]................................................... [___]
--------------------------------------------------------------------------------
TOTAL.......................................... 3,500,000
Schedule A
SCHEDULE B
CERTAIN INTELLECTUAL PROPERTY RIGHTS
TRADEMARKS/SERVICEMARKS
1. Trademark in the name "inSilicon"
2. TymeWare/TymeWare logo (ITU Filed: U.S.)
3. SmartBridge (ITU Filed: U.S.)
4. Virtual Chips (Serial No.75/443,757 )
5. USBAccess (U.S Reg. No. 2,223,403)
6. FireACCESS (U.S. Serial No. 75/401,291)
7. PlugWorks (commaon law xxxx)
8. Rapidscript (Serial no. 75-371736)
9. "Are You inSilicon?" (ITU Filed: U.S.)
PATENTS/PATENT APPLICATIONS
10. Dynamic Software Model for Hardware (U.S. 5,715,433)
11. Method for Performance Optimization of Integrated Circuit Design (U.S.
5, 752, 002)
12. Communication Interface Between Two Finite State Machines Operating at
Different Clock Domains (Asynchronious PCI) (Serial Xx. 00/000, 000
(xxxxxxx))
13. Selective Data Transfer Between Storage Media Using Dynamic Memory
Allocation (Serial Xx. 00/ 000, 000)
00. Xxxxxx for Compressing System Read (Serial No. 08/ 987, 177)
15. Test Environment for Device and a Protocol (Serial Xx. 00/ 000, 000)
00. Xxxxxxxx MAC 110 Core (Serial No. 09/387,558)
17. Power saving in USB Peripherals (To be Assigned by USPTO)
18. Virtual Component On-Chip Interface (Application in draft)
19. On Chip Bus Interface (Application in draft)
20. SOC Verification Framework (Application in draft)
Schedule B
EXHIBIT A
LOCK-UP AGREEMENT
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Prudential Securities Incorporated
Xxxxxxx & Company, Inc.
As Representatives of the Several Underwriters
c/o FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: INSILICON CORPORATION (THE "COMPANY")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock) or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives (the "Representatives") of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) as a distribution to partners or shareholders of such
person, provided that the distributees thereof agree in writing to be bound by
the terms of this restriction, (iii) with respect to sales or purchases of
Common Stock acquired on the open market or (iv) with the prior written consent
of FleetBoston Xxxxxxxxx Xxxxxxxx Inc. The foregoing restrictions will terminate
after the close of trading of the Common Stock on the 180th day of (and
including) the day the Common Stock commenced trading on the Nasdaq National
Market (the "Lock-Up" Period). The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that included, relates to or derives any significant
part of its value from Securities. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
A-1
registrar against the transfer of shares of Common Stock or Securities held by
the undersigned except in compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned. In the event the Offering has not occurred on or before
____________, this Lock-Up Agreement shall be of no further force or effect.
Dated:
----------------------------------------
----------------------------------------------
PRINTED NAME OF HOLDER
By:
-------------------------------------------
SIGNATURE
----------------------------------------------
PRINTED NAME OF PERSON SIGNING*
*(AND INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF OF
AN ENTITY)
A-2
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF COMPANY COUNSEL
(i) Each of the Company and each of its Significant Subsidiaries (as
that term is defined in Regulation S-X of the Act) has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. Phoenix has been
duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. The Company and
each of its Significant Subsidiaries has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus;
(ii) To our knowledge, the Company does not directly or indirectly,
own more than 50% of the outstanding voting securities of any corporation,
association or other entity other than [list subsidiaries];
(iii) The Company and each of its Significant Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction, if any, in which the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or be in good standing would
not have a Material Adverse Effect;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein, the issued and outstanding
shares of capital stock of the Company have been duly and validly issued
and are fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive right arising under the
certificate of incorporation or Delaware General Corporation Law, or to
such counsel's knowledge any co-sale right, registration right, right of
first refusal or other similar right;
(v) All issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and have not been issued in violation of or subject to any
preemptive right arising under the certificate of incorporation or Delaware
General Corporation Law or, to such counsel's knowledge, after inquiry,
co-sale right, registration right, right of first refusal or other similar
right;
(vi) All issued and outstanding shares of capital stock of each
Significant Subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and have not been issued in
violation of or subject to any preemptive right arising under the
certificate of incorporation or the General Corporation Law of such
Subsidiary's jurisdiction of incorporation, or to such counsel's knowledge,
after inquiry, any co-sale right, right of first refusal or other similar
right;
(vii) It is not necessary in connection with the sale of the Series A
Preferred Shares from the Company to Phoenix or the conversion of the
Series A Preferred
B-1
Shares into Common Shares at the closing of the offering to register either
the Series A Preferred Shares or the underlying Common Shares under the
Securities Act or to qualify the offer or sale thereof under the California
Corporate Securities Law;
(viii) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been
duly authorized and, upon issuance and delivery against payment therefor in
accordance with the terms of the Underwriting Agreement, will be duly and
validly issued and fully paid and nonassessable, and will not have been
issued in violation of or subject to any preemptive right arising under the
certificate of incorporation or Delaware General Corporation Law, or to
such counsel's knowledge, after inquiry, any co-sale right, registration
right, right of first refusal or other similar right;
(ix) Each of the Company and Phoenix has the corporate power and
authority to enter into the Underwriting Agreement and each of the
Intercompany Agreements (as defined in the Underwriting Agreement) and to
perform their obligations thereunder, including, in the case of the
Company, the corporate power and authority to issue, sell and deliver to
the Underwriters the Shares to be issued and sold by it under the
Underwriting Agreement;
(x) Each of the Underwriting Agreement and the Intercompany Agreements
has been duly authorized by all necessary corporate action on the part of
the Company and Phoenix and has been duly executed and delivered by the
Company and Phoenix and (assuming, in the case of the Underwriting
Agreement, due authorization, execution and delivery by you) is a valid and
binding agreement of the Company and Phoenix, enforceable against each of
them in accordance with its terms, except as rights to indemnification
under the Underwriting Agreement, the Registration Rights Agreement and the
Initial Public Offering Agreement for liability arising under the federal
securities laws may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally or by general equitable principles (whether relief is sought in a
proceeding at law or equity);
(xi) The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;
(xii) The 8-A Registration Statement complied as to form in all
material respects with the requirements of the Exchange Act; the 8-A
Registration Statement has become effective under the Exchange Act; and the
Firm Shares or the Option Shares have been validly registered under the
Securities Act and the Rules and Regulations of the Exchange Act and the
applicable rules and regulations of the Commission thereunder;
(xiii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements
(including supporting schedules) and financial data derived therefrom as to
which such counsel need express no opinion),
B-2
as of the effective date of the Registration Statement, complied as to form
in all material respects with the requirements of the Act and the
applicable Rules and Regulations;
(xiv) The information in the Prospectus under the caption "Description
of Capital Stock" and "Arrangements Between inSilicon Corporation and
Phoenix Technologies Ltd." to the extent that it constitutes matters of law
or legal conclusions, has been reviewed by such counsel and is a fair
summary of such matters and conclusions; and the forms of certificates
evidencing the Common Stock and filed as exhibits to the Registration
Statement comply with Delaware law;
(xv) The description in the Registration Statement and the Prospectus
of the charter and bylaws of the Company and of statutes are accurate and
fairly present the information required to be presented by the Securities
Act;
(xvi) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required
to be described or referred to in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement which are not
described or referred to therein or filed as required;
(xvii) The execution, delivery and performance of each of the
Underwriting Agreement and the Intercompany Agreements and the consummation
of the transactions contemplated therein (other than performance of the
indemnification obligations under the Underwriting Agreement, the
Registration Rights Agreement and the Initial Public Offering Agreement for
liability arising under the federal securities laws, concerning which no
opinion need be expressed) by each of the Company and Phoenix will not (a)
result in any violation of the charter or bylaws of the Company or Phoenix
or (b) result in a material breach or violation of any of the terms and
provisions of, or constitute a default under, or require the consent of any
other party to, any licensing agreement, service and maintenance agreement
or limited use agreement, or any bond, debenture, note or other evidence of
indebtedness, or any lease, indenture, mortgage, deed of trust, loan
agreement or joint venture agreement, or any other contract, agreement or
instrument, in each case to which the Company or Phoenix is a party or by
which their properties are bound, and that is (1) listed as material in the
Officers' Certificates of Phoenix and the Company attached to such opinion
or (2) otherwise known to such counsel, except for such third-party
consents as have been obtained, or (c) result in any material violation of
any applicable statute, rule or regulation known to such counsel or, (d)
result in any violation of any order, writ or decree of any court,
government or governmental agency or body having jurisdiction over the
Company or Phoenix or over any of their properties or operations that is
(1) listed in the Officers' Certificates of Phoenix and the Company
attached to such opinion or (2) otherwise known to such counsel;
(xviii) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body
having jurisdiction over the Company or Phoenix, or over any of their
properties or operations is necessary in connection with the consummation
by the Company or Phoenix of the transactions contemplated by the
Underwriting Agreement and the Intercompany Agreements (other than the
Technology Distributor Agreement), except (i) such as have been obtained
under the Securities Act, (ii) such as may be required under state or other
securities or
B-3
Blue Sky laws in connection with the purchase and the distribution of the
Shares by the Underwriters, (iii) such as may be required by the NASD and
(iv) such as may be required under the federal or provincial securities
laws of Canada or other foreign jurisdictions in which the Shares are
offered and sold;
(xix) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company of a character
required to be disclosed in the Registration Statement or the Prospectus by
the Securities Act, other than those described therein;
(xx) To such counsel's knowledge, neither the Company nor Phoenix is
presently (a) in material violation of its charter or bylaws, or (b) in
material breach of any applicable statute, rule or regulation known to such
counsel or any order, writ or decree of any court or governmental agency or
body having jurisdiction over the Company, or over any of its properties or
operations;
(xxi) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Company Shares or
other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights known to such counsel to registration of such shares of Company
Shares or other securities, because of the filing of the Registration
Statement by the Company have, with respect to the offering contemplated
thereby, waived such rights or such rights have expired by reason of lapse
of time following notification of the Company's intent to file the
Registration Statement or have included securities in the Registration
Statement pursuant to the exercise of and in full satisfaction of such
rights; and
(xxii) Each of the Company and Phoenix is not and, after giving effect
to the offering and the sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the First Closing Date or Second Closing Date, as the case may be, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including supporting schedules and other financial and
statistical information derived therefrom, as to which such counsel need express
no comment) 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 at the First Closing Date or the Second
Closing Date, as the case may be, the Registration Statement, the Prospectus and
any amendment or supplement thereto
B-4
(except as aforesaid) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
B-5
EXHIBIT C
MATTERS TO BE COVERED IN THE OPINION OF
INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY
Such counsel are familiar with the technology used by the Company in its
business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to patents, trade secrets,
trademarks, service marks or other proprietary information or materials and:
(i) As to the statements under the captions "Risk Factors--Our business
will suffer if we are not able to protect our intellectual property adequately,"
"--Third parties may claim we are infringing their intellectual property rights,
and we could suffer significant litigation or licensing expenses or be prevented
from selling products," and "Business--Proprietary Technology and Intellectual
Property," nothing has come to the attention of such counsel which caused them
to believe that the above-mentioned sections of the Registration Statement and
any amendment or supplement thereto made available and reviewed by such counsel,
at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the Closing Date and on any later date on which
Option Stock are to be purchased, 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, in light of the circumstances under
which they were made, not misleading;
(ii) Such counsel knows of no material action, suit, claim or proceeding
relating to patents, patent rights or licenses, trademarks or trademark rights,
copyrights, collaborative research, licenses or royalty arrangements or
agreements or trade secrets, know-how or proprietary techniques, including
processes and substances, owned by or affecting the business or operations of
the Company which are pending or threatened against the Company or any of its
officers or directors;
(iii) The Company is listed in the records of the United States Patent and
Trademark Office as the holder of record of the patents listed on a schedule to
such opinion (the "Patents") and each of the applications listed on a schedule
to such opinion (the "Applications"). To the knowledge of such counsel, there
are no claims of third parties to any ownership interest or lien with respect to
any of the Patents or Applications. Such counsel is not aware of any material
defect in form in the preparation or filing of the Applications on behalf of the
Company. To the knowledge of such counsel, the Applications are being pursued by
the Company. To the knowledge of such counsel, the Company owns as its sole
property the Patents and pending Applications;
(iv) The Company is listed in the records of the appropriate foreign
offices as the sole holder of record of the foreign patents listed on a schedule
to such opinion (the "Foreign Patents.) and each of the applications listed on a
schedule to such opinion (the "Foreign Applications"). Such counsel knows of no
claims of third parties to any ownership interest or lien with respect to the
Foreign Patents or Foreign Applications. Such counsel is not aware of any
material defect of form in the preparation or filing of the Foreign Applications
on behalf of the Company. To the knowledge of such counsel, the Foreign
Applications are being pursued by the Company. To the knowledge of such counsel,
the Company owns as its sole property the Foreign Patents and pending Foreign
Applications;
C-1
(v) Such counsel knows of no reason why the Patents or Foreign Patents are
not valid as issued. Such counsel has no knowledge of any reason why any patent
to be issued as a result of any Application or Foreign Application would not be
valid or would not afford the Company useful patent protection with respect
thereto;
(vi) All of the licenses [described in Section __ of the Contribution
Agreement][identified in Schedule __ to the Contribution Agreement] have been
validly and effectively assigned to the Company. [Note: Company counsel to
complete];
(vii) No consent, approval, authorization or order of or qualification with
any court, government or governmental agency or body having jurisdiction over
the Company or Phoenix, or over any of their properties or operations is
necessary in connection with the consummation by the Company or Phoenix of the
transactions contemplated by the Technology Distributor Agreement, except (i)
such as have been obtained under the Securities Act, (ii) such as may be
required under state or other securities or Blue Sky laws in connection with the
purchase and the distribution of the Shares by the Underwriters, (iii) such as
may be required by the NASD and (iv) such as may be required under the federal
or provincial laws of Canada; and
(viii) The Company owns or possesses sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and other similar
rights (collectively, "Intellectual Property Rights") reasonably necessary to
conduct its business as now conducted, including, without limitation, a
trademark in the name "inSilicon"; and the expected expiration of any such
Intellectual Property Rights would not result in a Material Adverse Effect. To
such counsel's knowledge, after inquiry, the Company has not received any notice
of infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Effect. To such counsel's
knowledge, the Company's discoveries, inventions, products, or processes
referred to in the Registration Statement or Prospectus do not infringe or
conflict with any right or patent which is the subject of a patent application
known to the Company.
C-2
