EXHIBIT 1.1
WSGR DRAFT -- 4/8/98
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6,000,000 Shares
ISE LABS, INC.
Common Stock
UNDERWRITING AGREEMENT
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____________, 1998
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
BT ALEX. XXXXX INCORPORATED
As representatives of the several Underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
ISE LABS, INC., a California corporation (the "COMPANY"), proposes to issue
and sell to the several underwriters named in Schedule I hereto (the
"UNDERWRITERS"), and the shareholders of the Company named in Schedule II hereto
(the "SELLING SHAREHOLDERS") severally propose to sell to the several
Underwriters, an aggregate of 6,000,000 shares of the common stock, par value
$0.001 per share of the Company (the "FIRM SHARES"), of which 5,000,000 shares
are to be issued and sold by the Company and 1,000,000 shares are to be sold by
the Selling Shareholders, each Selling Shareholder selling the amount set forth
opposite such Selling Shareholder's name in Schedule II hereto. The Company also
proposes to issue and sell to the several Underwriters not more than an
additional 900,000 shares of its common stock, par value $0.001 per share (the
"ADDITIONAL SHARES") if requested by the Underwriters as provided in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter referred to
collectively as the "SHARES". The shares of common stock of the Company to be
outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the "COMMON STOCK". The Company and the Selling Shareholders are
hereinafter sometimes referred to collectively as the "SELLERS."
SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act, is
hereinafter referred to as the "REGISTRATION STATEMENT"; and the prospectus in
the form first used to confirm sales of Shares is hereinafter referred to as the
"PROSPECTUS". If the Company has filed or is required pursuant to the terms
hereof to file a registration statement pursuant to Rule 462(b) under the Act
registering additional shares of Common Stock (a "RULE 462(b) REGISTRATION
STATEMENT"), then, unless otherwise specified, any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement.
SECTION 2. AGREEMENTS TO SELL AND PURCHASE AND LOCK-UP AGREEMENTS. On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, (i) the Company agrees to issue and sell
5,000,000 Firm Shares, (ii) each Selling Shareholder agrees, severally and not
jointly, to sell the number of Firm Shares set forth opposite such Selling
Shareholder's name in Schedule II hereto and (iii) each Underwriter agrees,
severally and not jointly, to purchase from each Seller at a price per Share of
[$________] (the "PURCHASE PRICE") the number of Firm Shares that bears the same
proportion to the total number of Firm Shares to be sold by such Seller as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedules I hereto bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to 900,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof, which date shall be
a business day (i) no earlier than two business days after such notice has been
given (and, in any event, no earlier than the Closing Date (as hereinafter
defined)) and (ii) no later than five business days after such notice has been
given. If any Additional Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares which bears the same proportion to the total number of
Additional Shares to be purchased from the Company as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Shares.
Each Seller hereby agrees not to (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (including,
without limitation, shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Commission) or (ii) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any Common Stock (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Common
Stock, or such other securities, in cash or otherwise), except to the
Underwriters pursuant to this Agreement, for a period of 180 days after the date
of the Prospectus, without the prior written consent of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation ("DLJ"); provided however, that notwithstanding
the foregoing, during such period (a) the Company may grant stock options or
issue shares of Common Stock to service providers as permitted by the terms of
the Company's existing stock option plan or stock purchase plans; (b) the
Company may issue shares of Common Stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof; (c) if
the Seller is an individual, he or she may transfer any of his or her shares
either during his or her lifetime or on death by gift, will or intestacy to his
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or her immediate family or to a trust the beneficiary of which is exclusively
such individual and/or members of his or her immediate family; (d) if the Seller
is a partnership, the partnership may transfer any of its shares to a partner of
such partnership as of the date such partner executed a lock-up agreement in
connection herewith, or a retired partner of such partnership who retires after
the date hereof, to the estate of any such partner or retired partner, and any
partner who is an individual may transfer any of his or her shares by gift, will
or intestacy to his or her immediate family or to a trust the beneficiary of
which is exclusively such partner and/or members of his or her immediate family;
and (e) if the Seller is a trust, the trust may transfer any of its shares to
any beneficiary of such trust as of the date such Seller executed a lock-up
agreement in connection herewith or to the estate of any such beneficiary, and
any beneficiary who is an individual may transfer any such shares by gift, will
or intestacy to his or her immediate family or to a trust the beneficiaries of
which are exclusively the beneficiary and/or members of his or her immediate
family; provided, that, in any case, it shall be a condition to the transfer
that the transferee execute an agreement stating that the transferee is
receiving and holding the Seller's shares subject to the provisions hereof and
subject to a lock-up agreement in connection herewith, and there shall be no
further transfer of the Seller's shares except in accordance with the provisions
hereof and thereof. For the purposes of the foregoing, "immediate family" shall
mean spouse, lineal descendant, father, mother, brother or sister of the
transferor. Other than the filing of a registration statement on Form S-8 with
the Commission, the Company also agrees not to file any registration statement
with respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock for a period of 30 days after the
date of the Prospectus without the prior written consent of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation. In addition, each Selling Shareholder agrees
that, for a period of 180 days after the date of the Prospectus without the
prior written consent of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, it
will not make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock. The Company shall, prior to or
concurrently with the execution of this Agreement, deliver an agreement executed
by (i) each Selling Shareholder, (ii) each of the directors and officers of the
Company who is not a Selling Shareholder and (iii) each shareholder listed on
Annex I hereto to the effect that such person will not, during the period
commencing on the effective date of the Prospectus and ending 180 days after the
effective date of the Prospectus, without the prior written consent of
Xxxxxxxxx, Lufkin & Xxxxxxxx Corporation, and other than the filing of a
registration statement on Form S-8 with the Commission, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
SECTION 3. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. DELIVERY AND PAYMENT. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 9:00 A.M., New York City time, on
__________ , 1998 (the "CLOSING DATE") at the offices of Xxxxxxx, Phleger &
Xxxxxxxx, LLP, 2200 Geng Road, Xxx Xxxxxxxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, or such other place as you shall designate. The Closing Date and the
location of delivery of and payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at such place as you shall designate
at 9:00 A.M., New York City time, on the date specified in the applicable
exercise notice given by you pursuant to Section 2 (an "OPTION CLOSING DATE").
Any such Option Closing Date and the location of delivery of and payment for
such Additional Shares may be varied by agreement between you and the Company.
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The Company authorizes DLJ to register the Shares in the name of Cede &
Co., a nominee of the Depositary Trust Company ("DTC") or such other name as DLJ
shall determine prior to the Closing Date or an Option Closing Date, as the case
may be. On the Closing Date or the applicable Option Closing Date, as the case
may be, with any transfer tax thereon duly paid by the Sellers against payment
to the Sellers by the several Underwriters of the Purchase Price for the Shares
in same day funds, the Company will cause DTC to credit the Shares to the
account of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation at DTC for the
benefit of the several Underwriters. The Shares shall be made available to DLJ
for inspection not later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.
SECTION 5. AGREEMENTS OF THE COMPANY. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such advice
in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become effective and
(v) of the happening of any event during the period referred to in Section 5(d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, the Company
will use its best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
(b) To furnish to you three (3) signed copies of the Registration Statement
as first filed with the Commission and of each amendment to it, including all
exhibits, and to furnish to you and each Underwriter designated by you such
number of conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the
Commission within the applicable period specified in Rule 424(b) under the Act;
during the period specified in Section 5(d) below, not to file any further
amendment to the Registration Statement and not to make any amendment or
supplement to the Prospectus of which you shall not previously have been advised
or to which you shall reasonably object after being so advised; and, during such
period, to prepare and file with the Commission, promptly upon your reasonable
request, any amendment to the Registration Statement or amendment or supplement
to the Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
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(e) If during the period specified in Section 5(d), any event shall occur
or condition shall exist as a result of which, in the opinion of 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 when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so that the
statements in 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 applicable law, and to furnish to each
Underwriter and to any dealer as many copies thereof as such Underwriter or
dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you and
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company and its
subsidiaries shall not be required in connection therewith to qualify as a
foreign corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service of
process or taxation other than as to matters and transactions relating to the
Prospectus, the Registration Statement, any preliminary prospectus or the
offering or sale of the Shares, in any jurisdiction in which it is not now so
subject.
(g) To make generally available to its shareholders as soon as practicable
an earnings statement covering the twelve-month period ending April 30, 1999
that shall satisfy the provisions of Section 11(a) of the Act, and to advise you
in writing when such statement has been so made available.
(h) During the period of three years after the date of this Agreement, to
furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request in writing.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Sellers' obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel, the Company's accountants and any Selling Shareholder's counsel (in
addition to the Company's counsel) in connection with the registration and
delivery of the Shares under the Act and all other fees and expenses in
connection with the preparation, printing, filing and distribution of the
Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to any
of the foregoing, including the mailing and delivering of copies thereof to the
Underwriters and dealers in the quantities specified herein, (ii) all costs and
expenses related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Shares, (iv) all
expenses in connection with the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several states and
all costs of printing or producing any Preliminary and Supplemental Blue Sky
Memoranda in connection therewith (including the filing fees and reasonable fees
and disbursements of counsel for the Underwriters in connection with such
registration or qualification and memoranda relating thereto), (v) the filing
fees and disbursements of counsel (but not counsel's fees) for the Underwriters
in connection with the review and clearance of the offering of the Shares by the
National
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Association of Securities Dealers, Inc., (vi) all fees and expenses in
connection with the preparation and filing of the registration statement on Form
8-A relating to the Common Stock and all costs and expenses incident to the
listing of the Shares on the Nasdaq National Market, (vii) the cost of printing
certificates representing the Shares, (viii) the costs and charges of any
transfer agent, registrar and/or depositary, (ix) a nonaccountable expense
allowance in the amount of $750,000 payable to DLJ upon the Closing Date, the
payment of which will not require DLJ to provide any accounting therefor and (x)
all other costs and expenses incident to the performance of the obligations of
the Company and the Selling Shareholders hereunder for which provision is not
otherwise made in this Section. The provisions of this Section shall not
supersede or otherwise affect any agreement that the Company and the Selling
Shareholders may otherwise have for allocation of such expenses among
themselves.
(j) To use its best efforts to list for quotation the Shares on the Nasdaq
National Market and to use its best efforts to maintain the listing of the
Shares on the Nasdaq National Market for a period of three years after the date
of this Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of this
Agreement does not cover all of the Shares, to file a Rule 462(b) Registration
Statement with the Commission registering the Shares not so covered in
compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 P.M.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement (other than any Rule 462(b) Registration
Statement to be filed by the Company after the effectiveness of this Agreement),
when it became effective, did not contain and, as amended, if applicable, 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, (ii) the Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement) and the Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Act, (iii) if the
Company is required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, such Rule 462(b) Registration Statement and any
amendments thereto, when they become effective (A) 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 and
(B) will comply in all material respects with the Act and (iv) the Prospectus
does not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions
in the
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Registration Statement, the Prospectus or any amendments or supplements thereto
based upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration statement
as originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the Act, complied when so filed in all material respects with the
Act, and did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in any preliminary
prospectus or any amendments thereto based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(d) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 of the Registration Statement. Each of the Company and its
subsidiaries has been duly incorporated, is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in the
Prospectus and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(e) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or any of its subsidiaries
on the other hand, which is required by the Act to be described in the
Registration Statement or the Prospectus which is not so described.
(f) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement or option offers pursuant to outstanding employment offers.
(g) All the outstanding shares of capital stock of the Company (including
the Shares to be sold by the Selling Shareholders) have been duly authorized and
validly issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights except as otherwise disclosed in the Registration
Statement; and the Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor as provided by this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights.
(h) All of the outstanding shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature except as otherwise disclosed in
the Registration Statement.
(i) The authorized, issued and outstanding capital stock of the Company
conforms as to legal matters to the description thereof contained in the
Prospectus.
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(j) Neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, except in each case where
failure to be so in compliance would not have a material adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(k) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby and by the Prospectus will
not (i) require any material consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency (except such as
may be required under the securities or Blue Sky laws of the various states, the
Exchange Act or the rules and regulations promulgated by the National
Association of Securities Dealers, Inc.), (ii) materially conflict with or
constitute a material breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, (iii) materially violate
or materially conflict with any applicable law or any rule, regulation,
judgment, order or decree of any court or any governmental body or agency having
jurisdiction over the Company, any of its subsidiaries or their respective
property or (iv) result in the suspension, termination or revocation of any
material Authorization (as defined below) of the Company or any of its
subsidiaries or any other impairment of the rights of the holder of any such
material Authorization.
(l) To the Company's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(m) To the Company's knowledge, neither the Company nor any of its
subsidiaries has violated any federal, state or local law or regulation relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS") or
any provisions of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a material adverse
effect on the business, financial condition or results of operation of the
Company and its subsidiaries, taken as a whole.
(n) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all material filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect in all material respects and each of the Company and its
subsidiaries is in compliance in all material respects with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having
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jurisdiction with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after notice
or lapse of time or both, would result in any other impairment of the rights of
the holder of any such Authorization, except where such failure to be valid and
in full force and effect or to be in compliance or the occurrence of any such
event would not, singly or in the aggregate, have a material adverse effect on
the business, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole.
(o) There are no material costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
(p) To the Company's knowledge, there is no (i) significant unfair labor
practice complaint, grievance or arbitration proceeding pending or threatened
against the Company or any of its subsidiaries before the National Labor
Relations Board or any state or local labor relations board, (ii) strike, labor
dispute, slowdown or stoppage pending or threatened against the Company or any
of its subsidiaries or (iii) union representation question existing with respect
to the employees of the Company and its subsidiaries, except for such actions
specified in clause (i) , (ii) or (iii) above, which, singly or in the
aggregate, would not have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole. To the Company's knowledge, no collective bargaining organizing
activities are taking place with respect to the Company or any of its
subsidiaries.
(q) This Agreement has been duly authorized, executed and delivered by the
Company.
(r) Price Waterhouse LLP are independent public accountants with respect to
the Company and its subsidiaries as required by the Act.
(s) The execution and delivery of the Business Sales Agreement dated as of
August 21, 1997 (the "SALES AGREEMENT") between Alphatec USA, Inc. ("ALPHATEC")
and the Company, effecting the acquisition of certain of the assets of Alphatec,
including 100% of the stock of Digital Testing Services, Inc. ("DTS") and
selected assets of Alphatec in Manteca, California, was duly authorized by all
necessary corporate action on the part of the Company, and all governmental and
third party consents or approvals necessary to effect the transactions
contemplated by sale of the assets have been waived, indemnified against or
obtained, except where failure to so obtain such consents or approvals would not
have a material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole. The
Company had as of the date of the Sales Agreement all corporate power and
authority to execute and deliver the Sales Agreement and to consummate the sale
of the assets contemplated by the Sales Agreement, and the Sales Agreement at
the time of execution constituted a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally or by general equitable
principles.
(t) The audited financial statements of each of the Company and Alphatec
individually, and any financial statements presenting such entities on a
combined basis, included in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), together with related schedules and notes,
present fairly the financial position, results of operations and changes in
financial position of the Company and Alphatec on the basis stated therein at
the respective dates or for the respective periods to which they apply; such
statements and related schedules and notes and the unaudited financial
information of the Company filed as part of the
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Registration Statement and the prospectus (and any amendment or supplement
thereto) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and Alphatec, as applicable.
(u) The Company and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(v) The Company is not and, after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(w) Any and all contracts, agreements or understandings between the Company
and any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Shares
registered pursuant to the Registration Statement have been satisfied or validly
waived.
(x) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change in the condition, financial
or otherwise, or the business or operations of the Company and its subsidiaries,
taken as a whole, (ii) there has not been any material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
and (iii) neither the Company nor any of its subsidiaries has incurred any
liability or obligation, except liabilities and obligations incurred by the
Company in the ordinary course of business.
(y) The Company and its subsidiaries own or possess, or, to the Company's
knowledge, can acquire on reasonable terms, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names ("INTELLECTUAL
PROPERTY") currently employed by them in connection with the business now
operated by them except where the failure to own or possess or otherwise be able
to acquire such Intellectual Property would not, singly or in the aggregate,
have a material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole; and neither
the Company nor any of its subsidiaries has received any written notice of
infringement of or conflict with asserted rights of others with respect to any
of such Intellectual Property which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole.
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(z) All material tax returns required to be filed by the Company and each
of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith or for which adequate reserves have been provided.
(aa) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged; and
neither the Company nor any of its subsidiaries (i) has received written notice
from any insurer or agent of such insurer that substantial capital improvements
or other material expenditures will have to be made in order to continue such
insurance or (ii) has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers at a cost that would not have a material
adverse effect on the business, financial conditions or results of operations of
the Company and its subsidiaries, taken as a whole.
(bb) The Company has good and marketable title to all the physical
properties and assets reflected as owned in the financial statements hereinabove
described (or elsewhere in the Prospectus), subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except (i) those, if any, reflected in
such financial statements or elsewhere in the Registration Statement, or (ii)
those which are not material in amount and do not materially adversely affect
the use made and proposed to be made of such property by the Company. The
Company holds its leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of the
Company and its subsidiaries, taken as a whole, and except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles. Except as disclosed in the Registration
Statement, the Company owns or leases all such properties as are necessary to
its operations as now conducted.
(cc) Each certificate signed by any officer of the Company and delivered
to the Underwriters or counsel for the Underwriters in accordance herewith shall
be deemed to be a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder represents and warrants as to itself only to each
Underwriter that:
(a) such Selling Shareholder is the lawful owner of the Shares to be sold
by such Selling Shareholder pursuant to this Agreement and has, and on the
Closing Date will have, good and clear title to such Shares, free of all
restrictions on transfer, liens, encumbrances, security interests, equities and
claims whatsoever, other than pursuant to this Agreement and the Registration
Statement.
(b) To such Selling Shareholders knowledge, the Shares to be sold by such
Selling Shareholder have been duly authorized and are validly issued, fully paid
and non-assessable.
(c) Such Selling Shareholder has, and on the Closing Date will have, the
legal right, power and authority, and all authorization and approval required by
law, to enter into this Agreement, the Custody Agreement signed by such Selling
Shareholder and Boston Equiserve LLP, as Custodian, relating to the deposit of
the Shares to be sold by
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such Selling Shareholder (the "CUSTODY AGREEMENT") and the Power of Attorney of
such Selling Shareholder appointing certain individuals as such Selling
Shareholder's attorneys-in-fact (the "ATTORNEYS") to the extent set forth
therein, relating to the transactions contemplated hereby and by the
Registration Statement and the Custody Agreement (the "POWER OF ATTORNEY") and
to sell, assign, transfer and deliver the Shares to be sold by such Selling
Shareholder in the manner provided herein and therein.
(d) This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder.
(e) The Custody Agreement of such Selling Shareholder has been duly
authorized, executed and delivered by such Selling Shareholder and is a valid
and binding agreement of such Selling Shareholder, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general equitable principles.
(f) The Power of Attorney of such Selling Shareholder has been duly
authorized, executed and delivered by such Selling Shareholder and is a valid
and binding instrument of such Selling Shareholder, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general equitable principles.
Pursuant to such Power of Attorney, such Selling Shareholder has, among other
things, authorized the Attorneys, or any one of them, to execute and deliver on
such Selling Shareholder's behalf this Agreement and any other document that
they, or any one of them, may deem necessary or desirable in connection with the
transactions contemplated hereby and thereby and to deliver the Shares to be
sold by such Selling Shareholder pursuant to this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, valid and marketable title to such
Shares will pass to the Underwriters, free of all restrictions on transfer,
liens, encumbrances, security interests, equities and claims whatsoever.
(h) The execution, delivery and performance of this Agreement and the
Custody Agreement and Power of Attorney of such Selling Shareholder by or on
behalf of such Selling Shareholder, the compliance by such Selling Shareholder
with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any material
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states, the Exchange Act or the rules
and regulations promulgated by the National Association of Securities Dealers,
Inc.), (ii) materially conflict with any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which such Selling Shareholder is a
party or by which such Selling Shareholder or any property of such Selling
Shareholder is bound or (iii) to such Selling Shareholder's knowledge, violate
or conflict with any applicable material law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over such Selling Shareholder or any property of such Selling
Shareholder.
(i) Such Selling Shareholder has reviewed the information contained in the
Registration Statement and, based on such review and such Selling Shareholder's
knowledge of the industry, the Company and its
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business (but without further investigation), nothing has come to such Selling
Shareholder's attention that would lead such Selling Shareholder to believe
that, at the time the Registration Statement became or becomes, as the case may
be, effective and at all times subsequent thereto up to and on the Closing Date
and on any later date on which Additional Shares are to be purchased, (i) the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained or will contain any untrue stattement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, and any amendments or supplements thereto effective on or prior to
the Closing Date or any Option Closing Date, contained or will contain any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(j) At any time during the period described in Section 5(d), if there is
any change in the information referred to in Section 7(i), such Selling
Shareholder will immediately notify you of such change.
(k) Each certificate signed by or on behalf of such Selling Shareholder and
delivered to the Underwriters or counsel for the Underwriters in accordance
herewith shall be deemed to be a representation and warranty by such Selling
Shareholder to the Underwriters as to the matters covered thereby.
(l) Such Selling Shareholder has reviewed the representations and
warranties of the Company contained in this Agreement. Based on the foregoing,
such Selling Shareholder has no reason to actually believe and does not actually
believe that such representations and warranties (other than those set forth in
Sections 6(b) and (c), as to which no representation or warranty is being made
by any Selling Shareholder) of the Company contained in Section 6 of this
Agreement are not true and correct in all material respects.
SECTION 8. INDEMNIFICATION. (a) The Sellers, jointly and severally,
agree to indemnify and hold harmless each Underwriter, its directors, its
officers and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto effective on or prior to the Closing Date or
any Option Closing Date), the Prospectus (or any amendment or supplement thereto
effective on or prior to the Closing Date or any Option Closing Date) or any
preliminary prospectus, 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, except insofar as such losses, claims,
damages, liabilities or judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter furnished in writing to the Company by such Underwriter
directly or through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter who failed to deliver a Prospectus
(as then amended or
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supplemented, provided by the Company to the several Underwriters in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the Closing Date) to the person asserting any losses, claims, damages and
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, 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, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and the delivery of such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each Selling
Shareholder and each person, if any, who controls such Selling Shareholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Sellers to such Underwriter
but only with reference to information relating to such Underwriter furnished in
writing to the Company by such Underwriter directly or through you expressly for
use in the Registration Statement (or any amendment thereto), the Prospectus (or
any amendment or supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as soon as possible
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Underwriter shall not be
required to assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of such Underwriter). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of attorneys
(in addition to any local
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counsel) for all Underwriters, if any, who control any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, (ii)
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and all persons, if any, who control the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all
Selling Shareholders and all persons, if any, who control any Selling
Shareholder within the meaning of either such Section, and all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons of any Underwriters,
such firm shall be designated in writing by Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation. In the case of any such separate firm for the Company
and control persons of the Company, such firm shall be designated in writing by
the Company. In the case of any such separate firm for the Selling Shareholders
and such control persons of any Selling Shareholders, such firm shall be
designated in writing by the Attorneys. The indemnifying party shall indemnify
and hold harmless the indemnified party from and against any and all losses,
claims, damages, liabilities and judgments by reason of any settlement of any
action effected with its written consent. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action 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 the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Sellers on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on the
one hand and the Underwriters on the other hand shall be deemed to be, to the
extent the amount to be indemnified is less than or equal to the total net
proceeds from the offering, in the same proportion as the total net proceeds
from the offering (after deducting underwriting discounts and commissions and
the nonaccountable expense allowance (referred to in Section 5(i)(ix) hereof),
but before deducting expenses) received by the Sellers, and the total
underwriting discounts and commissions and the nonaccountable expense allowance
(referred to in Section 5(i)(ix) hereof) received by the Underwriters, bear to
the total price to the public of the Shares, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Sellers on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Shareholders on
the one hand or the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
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The Sellers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) 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 in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) Notwithstanding anything in this Agreement to the contrary, no claim
for indemnification shall be made against any Selling Shareholder pursuant to
this Agreement until a claim shall first have been made against the Company by
an Underwriter and either (i) the Company shall have refused to pay any material
portion of the amount claimed or (ii) two (2) years shall have elapsed from the
date of such claim against the Company.
(g) Notwithstanding anything in this Agreement to the contrary, the
liability of each Selling Shareholder under the representations, warranties,
covenants and agreements contained herein and under the indemnity agreements
contained in the provisions of this Agreement shall be limited to an amount
equal to the net proceeds received by such Selling Shareholder upon the sale of
the Firm Shares by such Selling Shareholder to the Underwriters.
SECTION 9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on the Closing Date
with the same force and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement shall have become effective by 10:00 P.M., New York City time, on the
date of this Agreement; and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or threatened by
the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Xxxxx X. Xxxxx and Xxx Xxxxxxx, in their respective
capacities as the Chief Executive Officer and Chief Financial Officer of the
Company, confirming the matters set forth in Sections 6(x), 9(a) and 9(b) and
that the
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Company has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by the
Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change in the financial condition, business,
or operations of the Company and its subsidiaries, taken as a whole, (ii) there
shall not have been any change in the capital stock or in the long-term debt of
the Company or any of its subsidiaries and (iii) neither the Company nor any of
its subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of each Selling Shareholder
contained in this Agreement shall be true and correct in all material respects
on the Closing Date with the same force and effect as if made on and as of the
Closing Date and you shall have received on the Closing Date a certificate dated
the Closing Date from each Selling Shareholder to such effect and to the effect
that such Selling Shareholder has complied with all of the agreements and
satisfied all of the conditions herein contained and required to be complied
with or satisfied by such Selling Shareholder on or prior to the Closing Date.
(f) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for the Underwriters), dated the Closing Date, of Xxxxxxx,
Phleger & Xxxxxxxx, LLP, counsel for the Company and the Selling Shareholders,
to the effect that:
(i) each of the Company and DTS has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
California and has the corporate power and authority to carry on its business as
described in the Prospectus and to own, lease and operate its properties;
(ii) to such counsel's knowledge, each of the Company and DTS is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole;
(iii) all the outstanding shares of capital stock of the Company
outstanding prior to the issuance of the Shares (including the Shares to be sold
by the Selling Shareholders) have been duly authorized and validly issued and
are fully paid, non-assessable and, to such counsel's knowledge, not subject to
any preemptive or similar rights;
(iv) the Shares to be issued and sold by the Company hereunder have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will be validly issued, fully
paid and non-assessable, and the issuance of such Shares and, to such counsel's
knowledge, will not be subject to any preemptive or similar rights;
(v) all of the outstanding shares of capital stock of DTS have been
duly authorized and validly issued and are fully paid and non-assessable, and
are owned by the Company, directly or indirectly, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature, except as
set forth in the Registration Statement;
-17-
(vi) this Agreement has been duly authorized, executed and delivered
by the Company and by or on behalf of each Selling Shareholder;
(vii) the authorized, issued and outstanding capital stock of the
Company is as set forth under the heading "Actual" under the caption
"Capitalization" in the Prospectus;
(viii) the Registration Statement has become effective under the Act,
no stop order suspending its effectiveness has been issued and no proceedings
for that purpose are, to such counsel's knowledge after due inquiry, pending
before or threatened in writing by the Commission;
(ix) the statements under the captions "Risk Factors-Shares Eligible
for Future Sale," "Management-Compensation Plans," "Shares Eligible for Future
Sale," "Description of Capital Stock" and "Underwriting" in the Prospectus,
insofar as such statements constitute a summary of the legal matters, documents
or proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings;
(x) the execution, delivery and performance of this Agreement by the
Company do not (A) require any material consent, approval, authorization or
other order of, or qualification with, any court or governmental body or agency
applicable to the Company, (B) conflict with or constitute a breach of any of
the material terms or provisions of, or a default under, any material provision
of the charter or by-laws of the Company or any material provision of any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company is a party or by which the Company or its property is bound as set forth
on the list of Exhibits set forth in the Registration Statement or (C) violate
or conflict with any material provision of applicable California or federal
securities law or any rule, regulation (except such as will have been obtained
under the Securities Act and the Exchange Act and such as may be required under
the securities or Blue Sky laws of the various states, as for which such counsel
need not express any opinion), judgment, order or decree known to such counsel
of any court or any governmental body or agency having jurisdiction over the
Company;
(xi) such counsel has no knowledge of any legal or governmental
proceedings pending or threatened to which the Company is a party that is
required to be described in the Registration Statement or the Prospectus and are
not so described, or of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are
not so described or filed as required;
(xii) to such counsel's knowledge, any and all contracts, agreements
or understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the Registration
Statement have been satisfied or validly waived;
(xiii) to such counsel's knowledge, based on a Certificate provided
by such Selling Shareholder and relied upon by such counsel, each Selling
Shareholder has the right, power and authority, and the authorization and
approval required by law, to enter into this Agreement, the Custody Agreement
and the Power of Attorney of such Selling Shareholder and to sell, assign,
transfer and deliver the Shares to be sold by such Selling Shareholder in the
manner provided herein and therein;
-18-
(xiv) to such counsel's knowledge, based on a Certificate provided by
such Selling Shareholder and relied upon by such counsel, the Custody Agreement
of each Selling Shareholder has been duly authorized, executed and delivered by
such Selling Shareholder and is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms;
(xv) to such counsel's knowledge, based on a Certificate provided by
such Selling Shareholder and relied upon by such counsel, the Power of Attorney
of each Selling Shareholder has been duly authorized, executed and delivered by
such Selling Shareholder and is a valid and binding instrument of such Selling
Shareholder, enforceable in accordance with its terms and, pursuant to such
Power of Attorney, such Selling Shareholder has, among other things, authorized
the Attorneys, or either one of them, to execute and deliver on such Selling
Shareholder's behalf this Agreement and any other document they, or any one of
them, may deem necessary or desirable in connection with the transactions
contemplated hereby and thereby and to deliver the Shares to be sold by such
Selling Shareholder pursuant to this Agreement;
(xvi) to such counsel's knowledge, based on a Certificate provided by
such Selling Shareholder and relied upon by such counsel, upon delivery of and
payment for the Shares to be sold by each Selling Shareholder pursuant to this
Agreement, each of the Underwriters will receive valid and marketable title to
the Shares purchased by it from such Selling Shareholder, free of any adverse
claim, assuming the Underwriters purchase such Shares for value, in good faith
and without notice of any adverse claim, as such terms are defined in the
Uniform Commercial Code in effect in the State of New York.
(xvii) the execution, delivery and performance of this Agreement, the
Custody Agreement and Power of Attorney of each Selling Shareholder by such
Selling Shareholder and the consummation of the transactions contemplated hereby
and thereby will not (A) to such counsel's knowledge require any material
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency, (B) to such counsel's knowledge, conflict
with or constitute a breach of any material provision of, or a default under,
any material provision of any indenture, loan agreement, mortgage, lease or
other agreement or instrument to which such Selling Shareholder is a party or by
which any property of such Selling Shareholder is bound or (C) violate or
conflict with any applicable material law or, to such counsel's knowledge, any
rule, regulation (except such as may be required under the securities or Blue
Sky laws of the various states, as for which such counsel need not express any
opinion), judgment, order or decree of any court or any governmental body or
agency having jurisdiction over such Selling Shareholder.
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 Closing Date and on any later date on which
Additional Shares are to be purchased, the Registration Statement and any
amendment or supplement thereto filed on or prior to the Closing Date (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 Closing Date or any later date on
which the
-19-
Additional Shares are to be purchased, as the case may be, the Registration
Statement, the Prospectus and any amendment or supplement thereto filed on or
prior to the Closing Date (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 (collectively, a "NEGATIVE ASSURANCES REPRESENTATION").
The opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP described in Section 9(f)
above shall be rendered to you at the request of the Company and the Selling
Shareholders and shall so state therein.
(g) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Underwriters, as to the matters referred to in Sections
9(f)(iv), 9(f)(vi) (but only with respect to the Company), 9(f)(ix) (but only
with respect to the statements under the caption "Description of Capital Stock"
and "Underwriting"), and including a Negative Assurances Representation
substantially similar to that set forth in this Section 9.
In giving such opinions with respect to the matters covered by Section
9(f)(xix), counsel for the Company and the Selling Shareholders and counsel for
the Underwriters may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification except as
specified.
(h) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you and to Price Waterhouse LLP, independent
accountants, from Price Waterhouse LLP, independent accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to Underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(i) The Company shall have delivered to you the agreements specified in
Section 2 hereof, which agreements shall be in full force and effect on the
Closing Date.
(j) The Shares shall have been approved and duly listed for quotation on
the Nasdaq National Market.
(k) The Company and the Selling Shareholders shall not have failed on or
prior to the Closing Date to perform or comply with any of the material
agreements herein contained and required to be performed or complied with by the
Company or the Selling Shareholders, as the case may be, on or prior to the
Closing Date.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
SECTION 10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United
-20-
States or elsewhere that, in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, (v)
the declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each non-
defaulting Underwriter shall be obligated severally, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided, that, in no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any Underwriter has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you,
the Company and the Selling Shareholders for purchase of such Firm Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders, except to the extent provided in Section 8 hereof.
In any such case which does not result in termination of this Agreement, either
you or the Sellers shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such date, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase such Additional Shares or
(ii) purchase not less than the number of Additional Shares that such non-
defaulting Underwriters would have been obligated to purchase on such date in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
any such Underwriter under this Agreement.
SECTION 11. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder agrees with you and the Company to pay or to cause to be paid all
transfer taxes payable in connection with the transfer of the Shares to be sold
by such Selling Shareholder to the Underwriters.
-21-
SECTION 12. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company or the
Selling Shareholders, to ISE Labs, Inc., 0000 Xxxxxxxx Xxxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, Attn: Xxxxx Xxxxx, with a copy to: Xxxxxxx, Phleger &
Xxxxxxxx, LLP, 2200 Geng Road, Xxx Xxxxxxxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, Attn: Xxxxxx X. Xxxxxxx, Esq.; and (ii) if to any Underwriter or to you,
to you, c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department, with a copy
to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx X. Xxxxxx, Esq., or in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling any Underwriter, the
Company, the officers or directors of the Company, any person controlling the
Company, any Selling Shareholder or any person controlling such Selling
Shareholder and (ii) acceptance of the Shares and payment for them hereunder.
If for any reason the Shares are not delivered by or on behalf of any
Seller as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), the Company shall reimburse the several
Underwriters for all reasonable out-of-pocket expenses (including reasonable
fees and disbursements of counsel) incurred by them. Notwithstanding any
termination of this Agreement, the Company shall be liable for all expenses
which it has agreed to pay pursuant to Section 5(i) hereof.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Selling
Shareholders, the Underwriters, the Underwriters', any controlling persons
referred to herein, the Company's directors and the Company's officers who sign
the Registration Statement and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include a purchaser of any of the Shares from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
-22-
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
ISE LABS, INC.
By:____________________________________
Title:_________________________________
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE II HERETO, ACTING SEVERALLY
By:____________________________________
Attorney-in-fact
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
BT ALEX. XXXXX INCORPORATED
Acting severally on behalf of themselves
and the several other Underwriters named in
Schedule I hereto
By: XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By:__________________________________
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SCHEDULE I
----------
Underwriters Number of Firm Shares
to be Purchased
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation
BT Alex. Xxxxx Incorporated
---------
Total 6,000,000
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SCHEDULE II
-----------
Selling Shareholders
--------------------
Name Number of Firm
Shares Being Sold
Xxxxx X. Xxxxx....................... 271,600
Xxxxxxxx X. Xxxxxxx.................. 271,600
Xxxx X. Xxxxxxx...................... 271,600
Xxxxx Xxxxx.......................... 90,100
Xxxxxxx Xx........................... 90,100
Xxxxxx Xxxxx......................... 5,000
---------
Total................................ 1,000,000
-25-
Annex I
Xxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx Xx
Xxxxxx Xxxxx
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