EXHIBIT 1.2
$70,000,000 AGGREGATE PRINCIPAL AMOUNT
KOMAG, INCORPORATED
__% CONVERTIBLE SUBORDINATED NOTES DUE 2024
UNDERWRITING AGREEMENT
January __, 2004
BEAR, XXXXXXX & CO. INC.
Xxxxx Xxxxxxx & Co.
Xxxxxxx & Company, Inc.
Xxxxxx Xxxxxx Partners LLC
As Representatives of the
several Underwriters named in
Schedule I attached hereto (the "Representative(s)")
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies/Gentlemen:
Komag, Incorporated, a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") $70,000,000 aggregate principal amount of its __%
Convertible Subordinated Notes due 2024 (the "Firm Securities") and at the
option of the Underwriters, up to an additional $10,500,000 aggregate principal
amount of its __% Convertible Subordinated Notes due 2024 (the "Additional
Securities"). The Securities and any Additional Securities purchased by the
Underwriters are referred to herein as the "Securities". The Securities will be
issued pursuant to an Indenture dated as of January __, 2004 (the "Indenture")
to be entered into by and between the Company and U.S. Bank National
Association, as trustee thereunder (the "Trustee"). Bear, Xxxxxxx & Co. Inc.
("Bear Xxxxxxx"), Xxxxx Xxxxxxx & Co., Xxxxxxx & Company, Inc., and Xxxxxx
Xxxxxx Partners LLC, are acting as lead managers (the "Lead Managers") in
connection with the offering and sale of the Securities contemplated herein (the
"Offering"). This is to confirm the agreement among the Company and the
Underwriters concerning the offering, issuance and sale of the Securities.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-110182), and
amendments thereto, and related preliminary prospectuses for the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of the
Securities which registration statement, as so amended, has been declared
effective by the Commission and copies of which have heretofore been delivered
to the Underwriters. The registration statement, as amended at the time it
became effective, including the prospectus, financial statements, schedules,
exhibits and other information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A or 434(d) under the
Securities Act, is hereinafter referred to as the "Registration Statement." If
the Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional Securities (a "Rule 462(b) Registration Statement"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
Other than a Rule 462(b) Registration Statement, which, if filed, becomes
effective upon filing, no other document with respect to the Registration
Statement has heretofore been filed with the Commission. All of the Securities
have been registered under the Securities Act pursuant to the Registration
Statement or, if any Rule 462(b) Registration Statement is filed, will be duly
registered under the Securities Act with the filing of such Rule 462(b)
Registration Statement. No stop order suspending the effectiveness of either the
Registration Statement or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or threatened
by the Commission. The Company, if required by the Securities Act and the rules
and regulations of the Commission (the "Rules and Regulations"), proposes to
file the Prospectus with the Commission pursuant to Rule 424(b) under the
Securities Act ("Rule 424(b)"). The prospectus, in the form in which it is to be
filed with the Commission pursuant to Rule 424(b), or, if the prospectus is not
to be filed with the Commission pursuant to Rule 424(b), the prospectus in the
form included as part of the Registration Statement at the time the Registration
Statement became effective, is hereinafter referred to as the "Prospectus,"
except that if any revised prospectus or prospectus supplement shall be provided
to the Underwriters by the Company for use in connection with the Offering which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b)), the term "Prospectus" shall also refer to such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement or filed
with the Commission pursuant to Rule 424 under the Securities Act is hereafter
called a "Preliminary Prospectus." Any reference herein to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Exchange Act (as defined below) on or
before the effective date of the Registration Statement, the date of such
Preliminary Prospectus or the date of the Prospectus, as the case may be, and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include (i) the filing of any
document under the Exchange Act after the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated therein by reference and
(ii) any such document so filed. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a Preliminary
Prospectus and the Prospectus, or any amendments or supplements to any of the
foregoing shall be deemed to include any copy thereof filed with the
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Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
(b) At the time of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 under the
Securities Act ("Rule 434"), when any supplement to or amendment of the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed and at the Closing Date and the Additional Closing
Date, if any (as hereinafter respectively defined), the Registration Statement
and the Prospectus and any amendments thereof and supplements thereto complied
or will comply in all material respects with the applicable provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the Rules and Regulations and did not and will not contain an untrue
statement of a material fact and did not and will not omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein (i) in the case of the Registration Statement, not misleading and (ii)
in the case of the Prospectus or any related Preliminary Prospectus in light of
the circumstances under which they were made, not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Securities or any
amendment thereto or pursuant to Rule 424(a) under the Securities Act) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the Rules and Regulations and did not
contain an untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Lead Managers specifically for use therein. The
parties acknowledge and agree that such information provided by or on behalf of
any Underwriter consists solely of the material included in paragraphs
under the caption "Underwriting" in the Prospectus.
(c) KPMG LLP and Ernst & Young LLP, who have certified the
financial statements and supporting schedules and information of the Company and
its subsidiaries that are included or incorporated by reference in the
Registration Statement each are independent public accountants as required by
the Securities Act, the Exchange Act and the Rules and Regulations.
(d) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as disclosed
in the Registration Statement and the Prospectus, the Company has not declared,
paid or made any dividends or other distributions of any kind on or in respect
of its capital stock and there has been no material adverse change or any
development involving a prospective material adverse change, whether or not
arising from transactions in the ordinary course of business, in or affecting
(i) the business, condition (financial or otherwise), results of operations,
stockholders' equity or properties
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of the Company and each subsidiary of the Company listed on Exhibit A
hereto (the "Subsidiaries"), individually or taken as a whole; (ii) the
long-term debt or capital stock of the Company or any of its Subsidiaries; or
(iii) the Offering or consummation of any of the other transactions contemplated
by this Agreement, the Registration Statement or the Prospectus (a "Material
Adverse Change"). Since the date of the latest balance sheet presented, or
incorporated by reference, in the Registration Statement and the Prospectus,
neither the Company nor any Subsidiary has incurred or undertaken any
liabilities or obligations, whether direct or indirect, liquidated or
contingent, matured or unmatured, or entered into any transactions, including
any acquisition or disposition of any business or asset, which are material to
the Company and the Subsidiaries individually or taken as a whole, except for
liabilities, obligations and transactions which are disclosed in the
Registration Statement and the Prospectus.
(e) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column headed "Actual"
under the caption "Capitalization," as adjusted to reflect the sale by the
Company of idle property is as set forth in the column headed "As Adjusted"
under the caption "Capitalization," and after giving effect to the Offering and
the other transactions contemplated by this Agreement, the Indenture, the
Registration Statement and the Prospectus, and the proposed concurrent offering
by the Company of shares of common stock, par value $0.01 per share (the "Common
Stock"), will be as set forth in the column headed "As Further Adjusted" under
the caption "Capitalization". All of the issued and outstanding shares of
capital stock of the Company are fully paid and non-assessable and have been
duly and validly authorized and issued, in compliance with all applicable state,
federal and foreign securities laws and not in violation of or subject to any
preemptive or similar right that does or will entitle any person, upon the
issuance or sale of any security, to acquire from the Company or any Subsidiary
any Common Stock or other security of the Company or any Subsidiary or any
security convertible into, or exercisable or exchangeable for, Common Stock or
any other such security (any "Relevant Security"), except for such rights as may
have been fully satisfied or waived prior to the effectiveness of the
Registration Statement.
(f) The Securities have been duly and validly authorized by
the Company and, when the Securities are executed, authenticated and issued in
accordance with the terms of the Indenture and delivered to and paid for by the
Underwriters in accordance with this Agreement, assuming due authentication of
the Securities by the Trustee, such Securities will constitute legally valid and
binding obligations of the Company, will be enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and will not
have been issued in violation of or subject to any preemptive or similar right
that does or will entitle any person to acquire Securities from the Company or
any Subsidiary. The Securities will be entitled to the benefits of the
Indenture. When the Securities are delivered and paid for pursuant to this
Agreement on each Closing Date, such Securities will be convertible into shares
of Common Stock ("Underlying Shares") in accordance with the terms of the
Securities and the Indenture. The Underlying Shares initially issuable upon
conversion of the Securities have been duly authorized and reserved for issuance
upon such conversion and, when issued upon such
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conversion in accordance with the terms of the Indenture, will be validly
issued, fully paid and nonassessable and will not be in violation of or subject
to any preemptive or similar right that does or will entitle any person to
acquire from the Company or any Subsidiary any Common Stock or any Relevant
Security, except for such rights as may have been fully satisfied or waived
prior to the effectiveness of the Registration Statement. The Securities will
conform, when issued, in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. Except as disclosed
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has outstanding warrants, options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, or any contracts or
commitments to issue or sell, any Relevant Security.
(g) The Subsidiaries are the only subsidiaries of the Company
within the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries and as otherwise disclosed in the Registration Statement and the
Prospectus, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity. The Company owns, directly or indirectly through other
Subsidiaries, 100% of the outstanding capital stock or other securities
evidencing equity ownership of each Subsidiary free and clear of any lien,
charge, mortgage, pledge, security interest, claim, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any kind
whatsoever (any "Lien") other than the liens granted pursuant to the Loan and
Security Agreement, dated as of June 30, 2002, among the Company, the lenders
party thereto and Ableco Finance LLC, as administrative agent and collateral
agent, as amended (the "Loan Agreement") and the Indenture, dated as of June 30,
2002 between the Company and The Bank of New York, as trustee, as supplemented
(the "Senior Indenture"); and all of such securities have been duly and validly
authorized and issued and are fully paid and non-assessable and were not issued
in violation of any preemptive or similar rights that does or will entitle any
person, upon the issuance or sale of any security, to acquire from the Company
or any Subsidiary any Relevant Security, except for such rights as may have been
fully satisfied or waived prior to the effectiveness of the Registration
Statement.
(h) Komag USA (Malaysia) Sdn., a Malaysian corporation (the
"Significant Subsidiary") is the Company's only "significant subsidiary" within
the meaning of Rule 405 under the Securities Act. Each of the Company and the
Subsidiaries has been duly organized and validly exists as a corporation,
partnership or limited liability company in good standing under the laws of its
jurisdiction of organization. Each of the Company and the Subsidiaries has all
requisite power and authority to carry on its business as it is currently being
conducted and as described in the Prospectus, and to own, lease and operate its
respective properties. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which (individually and in
the aggregate) could not reasonably be expected to have a material adverse
effect on (i) the business, condition (financial or otherwise), results of
operations, stockholders' equity, properties or prospects of the Company and the
Subsidiaries, individually or taken as a whole; (ii) the long-term debt or
capital stock of the Company or any Subsidiary; or (iii) the Offering or
consummation of any of the other
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transactions contemplated by this Agreement, the Indenture, the Registration
Statement or the Prospectus (any such effect being a "Material Adverse Effect").
(i) Each of the Company and the Significant Subsidiary has all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all judicial,
regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (each, a "Consent" and collectively, the
"Consents"), to own, lease and operate its properties and conduct its business
as it is now being conducted and as disclosed in the Registration Statement and
the Prospectus, and each such Consent is valid and in full force and effect
except for such failures as could not reasonably be expected to have a Material
Adverse Effect, and neither the Company nor the Significant Subsidiary has
received notice of any investigation or proceedings which results in or, if
decided adversely to the Company or the Significant Subsidiary, could reasonably
be expected to result in, the revocation of, or imposition of a materially
burdensome restriction on, any Consent. Each of the Company and the Significant
Subsidiary is in compliance with all applicable laws, rules, regulations,
ordinances, directives, judgments, decrees and orders, foreign and domestic,
except where failure to be in compliance could not reasonably be expected to
have a Material Adverse Effect. No Consent contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and the
Prospectus.
(j) The Company has full right, power and authority to execute
and deliver this Agreement and the Indenture, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by this
Agreement, the Indenture, the Registration Statement and the Prospectus. This
Agreement and the Indenture and the transactions contemplated by this Agreement,
the Indenture, the Registration Statement and the Prospectus have been duly and
validly authorized by the Company. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Indenture will, when filed with the Commission, be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and conform in all material respects to the requirements of the
Trust Indenture Act. The Indenture will conform, when executed and delivered, in
all material respects, to the description thereof contained in the Prospectus.
The Indenture, when duly executed and delivered by the Company, assuming due
authorization, execution and delivery of the Indenture by the Trustee, will
constitute the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(k) The execution, delivery, and performance of this Agreement
and the Indenture and consummation of the transactions contemplated by this
Agreement, the Indenture, the Registration Statement and the Prospectus do not
and will not (i) conflict with, require consent under or result in a breach of
any of the terms and provisions of, or constitute a
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default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement, instrument, franchise, license or permit to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or their respective properties, operations or assets may be bound, except (1)
under the Loan Agreement, which will be terminated by the Company on or prior to
the Closing Date and (2) a confirmation from the trustee under the Senior
Indenture that the Securities will be subordinated to the Company's Senior
Secured Notes due 2007 on terms reasonably acceptable to such trustee, (ii)
violate or conflict with any provision of the certificate or articles of
incorporation, by-laws, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents of the
Company or any Subsidiary, or (iii) violate or conflict with any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign,
except (in the case of clauses (i) and (iii) above) as could not reasonably be
expected to have a Material Adverse Effect.
(l) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance of this
Agreement or consummation of the transactions contemplated by this Agreement,
the Indenture, the Registration Statement and the Prospectus, including the
issuance, sale and delivery of the Securities to be issued, sold and delivered
hereunder, except the registration under the Securities Act of the Securities,
which has become effective, the qualification of the Indenture under the Trust
Indenture Act, and such Consents as may be required under state securities or
blue sky laws or the by-laws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") or NASD Regulation, Inc. ("NASDR") in connection with
the purchase and distribution of the Securities by the Underwriters, each of
which has been obtained and is in full force and effect.
(m) Except as disclosed in the Registration Statement and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; to the best of the Company's knowledge, no such
proceeding, litigation or arbitration is threatened or contemplated; and the
defense of all such proceedings, litigation and arbitration against or involving
the Company or any Subsidiary could not reasonably be expected to have a
Material Adverse Effect.
(n) The financial statements and pro forma data, including the
notes thereto, and the supporting schedules included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in all
material respects the financial position as of the dates indicated and the cash
flows and results of operations for the periods specified of the Company and its
consolidated subsidiaries and the other entities for which financial statements
are included or incorporated by reference; except as otherwise stated in the
Registration Statement and the Prospectus, said financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis throughout
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the periods involved; and the supporting schedules included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in all
material respects the information required to be stated therein. All non-GAAP
financial information included or incorporated by reference in the Registration
Statement and Prospectus complies with the requirements of Regulation G and Item
10 of Regulation S-K under the Securities Act. No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The other financial and statistical information included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in all
material respects the information included therein and have been prepared on a
basis consistent with that of the financial statements that are included or
incorporated by reference in the Registration Statement and the Prospectus and
the books and records of the respective entities presented therein.
(o) There are no pro forma or as adjusted financial statements
which are required to be included or incorporated by reference in the
Registration Statement and the Prospectus in accordance with Regulation S-X.
(p) The statistical, industry-related and market-related data
included in the Registration Statement and the Prospectus are based on or
derived from sources which the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from which they are
derived.
(q) The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and files reports with the Commission on
the XXXXX System. The Common Stock is registered pursuant to Section 12(b) of
the Exchange Act and the outstanding shares of Common Stock (including the
shares of Common Stock issuable upon conversion of the Securities) are listed
for quotation on the Nasdaq (as defined in Section 11(b) below) and the Company
has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or de-listing the
Common Stock from the Nasdaq, nor has the Company received any notification that
the Commission or the Nasdaq is contemplating terminating such registration or
listing.
(r) The Company and each Subsidiary maintains a system of
internal accounting and other controls sufficient to provide reasonable
assurances 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 United States
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accounting for assets
is compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(s) Neither the Company nor any of its affiliates that it
controls (within the meaning of Rule 144 under the Securities Act) has taken,
directly or indirectly, any action which constitutes or is designed to cause or
result in, or which could reasonably be expected to constitute, cause or result
in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Securities.
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(t) Neither Company nor any of its affiliates that it controls
has, prior to the date hereof, made any offer or sale of any securities which
could be "integrated" for purposes of the Securities Act or the Rules and
Regulations with the offer and sale of the Securities pursuant to the
Registration Statement. Except as disclosed in the Registration Statement and
the Prospectus, neither Company nor any of its affiliates has sold or issued any
Relevant Security during the six-month period preceding the date of the
Prospectus, including but not limited to any sales pursuant to Rule 144A or
Regulation D or S under the Securities Act, other than shares of Common Stock
issued pursuant to employee benefit plans, qualified stock option plans or the
employee compensation plans or pursuant to outstanding options, rights or
warrants as described in the Registration Statement and the Prospectus.
(u) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Securities contemplated hereby, and
any such rights so disclosed have either been fully complied with by the Company
or effectively waived by the holders thereof, and any such waivers remain in
full force and effect.
(v) The conditions for use of Form S-3 to register the
Offering under the Securities Act, as set forth in the General Instructions to
such Form, have been satisfied.
(w) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the Securities Act, the Exchange Act and the Rules and
Regulations, and, when read together with the other information in the
Prospectus, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(x) The Company is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, and after giving effect to the
application of the net proceeds of the Offering, will not be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended, and is not and will not be an entity "controlled" by an
"investment company" within the meaning of such act.
(y) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act, the Exchange Act or the Rules and
Regulations and which have not been so described or filed.
(z) No relationship, direct or indirect, exists between or
among any of the Company or any affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement or the Prospectus which is not so described and
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described as required. There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus. The Company has not,
in violation of the Xxxxxxxx-Xxxxx Act, directly or indirectly, including
through a Subsidiary, extended or maintained credit, arranged for the extension
of credit, or renewed an extension of credit, in the form of a personal loan to
or for any director or executive officer of the Company.
(aa) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, shareholders, partners,
employees, Subsidiaries or affiliates that may affect the Underwriters'
compensation as determined by the NASD.
(bb) The Company and each Subsidiary owns or leases all such
properties as are necessary to the conduct of its business as presently operated
and as proposed to be operated as described in the Registration and the
Prospectus. The Company and the Subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all Liens except such as
are described in the Registration Statement and the Prospectus or such as do not
(individually or in the aggregate) materially affect the value of such property
or materially interfere with the use made or proposed to be made of such
property by the Company and the Subsidiaries; and any real property and
buildings held under lease or sublease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material to, and do not materially interfere with, the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries. Neither the Company nor any Subsidiary has received any notice of
any claim adverse to its ownership of any real or personal property or of any
claim against the continued possession of any real property, whether owned or
held under lease or sublease by the Company or any Subsidiary.
(cc) The Company and each Subsidiary (i) owns, possesses or
can obtain on commercially reasonable terms adequate right to use all patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses, formulae,
customer lists, and know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, "Intellectual Property") necessary for the
conduct of their respective businesses as being conducted and as described in
the Registration Statement and Prospectus except where the failure to own or
possess such rights could not be reasonably expected to result in a Material
Adverse Effect and (ii) have no reason to believe that the conduct of their
respective businesses does or will conflict with, and have not received any
notice of any claim of conflict with, any such right of others. To the best of
the Company's knowledge, all material technical information developed by and
belonging to the Company or any Subsidiary
10
which has not been patented has been kept confidential. Neither the Company nor
any Subsidiary has granted or assigned to any other person or entity any right
to manufacture, have manufactured, assemble or sell the current products and
services of the Company and its Subsidiaries or those products and services
described in the Registration Statement and Prospectus. To the Company's
knowledge, there is no infringement by third parties of any such Intellectual
Property; there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's or any
Subsidiary's rights in or to any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such claim; and
there is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others that the Company or any Subsidiary infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other fact which
would form a reasonable basis for any such claim.
(dd) The Company and the Significant Subsidiary maintains
insurance in such amounts and covering such risks as the Company reasonably
considers adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries, all of which insurance is in full force and effect, except
where the failure to maintain such insurance could not reasonably be expected to
have a Material Adverse Effect. There are no material claims by the Company or
the Significant Subsidiary under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause. The Company reasonably believes that it will be able to renew its
existing insurance as and when such coverage expires or will be able to obtain
replacement insurance adequate for the conduct of the business and the value of
its properties at a cost that could not reasonably be expected to have a
Material Adverse Effect.
(ee) The Company has in effect insurance covering the Company,
its directors, officers and the Underwriters for liabilities or losses arising
in connection with this Offering, including, without limitation, liabilities or
losses arising under the Securities Act, the Exchange Act, the Rules and
Regulations and applicable foreign securities laws.
(ff) Each of the Company and the Subsidiaries has accurately
prepared and timely filed all federal, state, foreign and other tax returns that
are required to be filed by it and has paid or made provision for the payment of
all taxes, assessments, governmental or other similar charges, including without
limitation, all sales and use taxes and all taxes which the Company or
Subsidiary is obligated to withhold from amounts owing to employees, creditors
and third parties, with respect to the periods covered by such tax returns
(whether or not such amounts are shown as due on any tax return) except for any
assessments, fines or penalties that are currently being contested in good
faith. No deficiency assessment with respect to a proposed adjustment of the
Company's or the Subsidiary's applicable federal, state, local or foreign taxes
is pending or, to the best of the Company's knowledge, threatened. The accruals
and reserves on the books and records of each of the Company and the
Subsidiaries in respect of tax liabilities for any taxable period not finally
determined are adequate to meet any assessments and related liabilities for any
such period and, since December 29, 2002, each of the Company and Subsidiary
have not incurred any liability for taxes other than in the ordinary course of
its business. There is no tax lien, whether imposed by any federal, state,
foreign or other taxing
11
authority, outstanding against the assets, properties or business of each of the
Company or the Subsidiaries.
(gg) No labor disturbance by the employees of the Company or
the Significant Subsidiary exists or, to the best of the Company's knowledge, is
imminent and the Company is not aware of any existing or imminent labor
disturbances by the employees of any of its or the Significant Subsidiary's
principal suppliers, manufacturers', customers or contractors, which, in either
case (individually or in the aggregate), could reasonably be expected to have a
Material Adverse Effect.
(hh) No "prohibited transaction" (as defined in either Section
406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")), "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or other event of the kind described in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under Section
4043 of ERISA has been waived) has occurred with respect to any employee benefit
plan for which the Company or any Subsidiary would have any liability which
could (individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect; each employee benefit plan for which the Company or any
Subsidiary would have any liability is in compliance in all material respects
with applicable law, including (without limitation) ERISA and the Code, except
for any failure to so comply that could not result in a Material Adverse Effect;
the Company has not incurred and does not expect to incur liability under Title
IV of ERISA with respect to the termination of, or withdrawal from any "pension
plan"; and each plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or by failure to act, which could cause
the loss of such qualification.
(ii) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company or any Subsidiary (or, to the Company's knowledge, any other entity
for whose acts or omissions the Company is or may be liable) upon any other
property now or previously owned or leased by the Company or any Subsidiary, or
upon any other property, which would be a violation of or give rise to any
liability under any applicable law, rule, regulation, order, judgment, decree or
permit relating to pollution or protection of human health and the environment
("Environmental Law"), except for violations and liabilities which, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. There has been no disposal discharge, emission or other release of any
kind onto such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which the
Company or any Subsidiary has knowledge, except as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any Subsidiary has agreed to assume, undertake or provide
indemnification for any liability of any other person under any Environmental
Law, including any obligation for cleanup or remedial action, except as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There is no pending or, to the best of the Company's knowledge,
threatened administrative, regulatory
12
or judicial action, claim or notice of noncompliance or violation, investigation
or proceedings relating to any Environmental Law against the Company or any
Subsidiary.
(jj) Neither the Company, any Subsidiary nor, to the Company's
knowledge, any of its employees or agents has at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States of any jurisdiction
thereof.
(kk) Neither the Company nor any Subsidiary (i) is in
violation of its certificate or articles of incorporation, by-laws, certificate
of formation, limited liability company agreement, partnership agreement or
other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute a default
under or result in the creation or imposition of any lien, charge or encumbrance
upon any of its property or assets pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal
or governmental agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that could not (individually or in
the aggregate) reasonably be expected to have a Material Adverse Effect and
except (in the case of clause (ii) alone) for any lien, charge or encumbrance
disclosed in the Registration Statement and the Prospectus.
(ll) The Company is in compliance in all material respects
with applicable provisions of the Xxxxxxxx-Xxxxx Act that are effective and is
actively taking steps to ensure that it will be in compliance in all material
respects with other applicable provisions of the Xxxxxxxx-Xxxxx Act upon the
effectiveness of such provisions.
(mm) The Company has established and maintains "disclosure
controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the
Exchange Act); the Company's "disclosure controls and procedures" are reasonably
designed to ensure that all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Rules and Regulations, and that all such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the Chief Executive Officer and Chief Financial Officer of
the Company required under the Exchange Act with respect to such reports.
(nn) Since the date of the filing of the Company's Annual
Report on Form 10-K for the year ended December 29, 2002, the Company's auditors
and the audit committee of the board of directors of the Company (or persons
fulfilling the equivalent function) have not been advised of (i) any significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company's ability to record, process, summarize and report
financial data nor any material weaknesses in internal controls; (ii) any
13
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls.
(oo) Since the date of the filing of the Company's Annual
Report on Form 10-K for the year ended December 29, 2002, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
(pp) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operation - Critical Accounting
Policies" included or incorporated by reference in the Registration Statement
and the Prospectus accurately and fully describes (i) accounting policies which
the Company believes are the most important in the portrayal of the financial
condition and results of operations of the Company and its consolidated
subsidiaries and which require management's most difficult, subjective or
complex judgments ("critical accounting policies"); (ii) judgments and
uncertainties affecting the application of critical accounting policies; and
(iii) explanation of the likelihood that materially different amounts would be
reported under different conditions or using different assumptions.
(qq) The Company's board of directors, senior management and
audit committee have reviewed and agreed with the selection, application and
disclosure of critical accounting policies and have consulted with their legal
advisers and independent accountants with regard to such disclosure.
(rr) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" in the Registration Statement and the Prospectus accurately
and fully describes (i) all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the Company
believes would materially affect liquidity and are reasonably likely to occur;
and (ii) all off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on the financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources of the Company and the Subsidiaries
taken as a whole.
(ss) Except as disclosed in the Registration and the
Prospectus, there are no outstanding guarantees or other contingent obligations
of the Company or any Subsidiary that could reasonably be expected to have a
Material Adverse Effect.
(tt) No event or circumstance has occurred or arisen that
could reasonably be expected to give rise to a requirement that the Company make
additional disclosure on Form 8-K and has not been so disclosed.
(uu) No event or circumstance has occurred or arisen which,
had the Securities been issued on the date hereof, would constitute a default or
event of default under the Indenture as summarized in the Prospectus.
(vv) The statements made in the Prospectus under the caption
"Description of Notes," insofar as such statements purport to constitute
summaries of the
14
Indenture and the Securities, constitute accurate summaries of the matters
described therein in all material respects.
Any certificate signed by or on behalf of the Company and delivered
to the Representatives or to counsel for the Underwriters' shall be deemed to be
a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of __% of the principal amount thereof, the aggregate principal amount of
Firm Securities set forth opposite their respective names on Schedule I hereto
together with any additional number of Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates representing, the Securities shall be made at the office of
Xxxxxxxx & Xxxxxxxx, LLP ("Underwriters' Counsel"), or at such other place as
shall be agreed upon by the Lead Managers and the Company, at 10:00 A.M., New
York City time, on the third or (as permitted under Rule 15c6-1 under the
Exchange Act) fourth business day (unless postponed in accordance with the
provisions of Section 9 hereof) following the date of the effectiveness of the
Registration Statement (or, if the Company has elected to rely upon Rule 430A
under the Securities Act, the third or (as permitted under Rule 15c6-1 under the
Exchange Act) fourth business day after the determination of the public offering
price of the Securities), or such other time not later than ten business days
after such date as shall be agreed upon by the Lead Managers and the Company
(such time and date of payment and delivery being herein called the "Closing
Date").
Payment of the purchase price for the Firm Securities shall be made
by wire transfer in same day funds to or as directed by the Company upon
delivery of the Securities to the Representatives in the form of one or more
permanent global certificates (the "Global Securities"), registered in the name
of Cede & Co., as nominee for The Depository Trust Company for the respective
accounts of the several Underwriters. Upon delivery, the Firm Securities shall
be registered in such name or names and shall be in such denominations as the
Lead Managers may request at least two business days before the Closing Date.
The Company will permit the Lead Managers to examine the Global Securities at
least one full business day prior to the Closing Date.
(c) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants to the Underwriters,
acting severally and not jointly, the option to purchase up to $10,500,000
aggregate principal amount of Additional Securities (the "Option") at the same
purchase price to be paid by the Underwriters for the Firm Securities as set
forth in Section 2(a) above. The Underwriters may exercise the Option in whole
or from time to time in part on one or more occasions, on or before the
thirtieth day following the date of the Prospectus, by giving written notice
(the "Option Exercise Notice") of each election to exercise
15
the Option after the date of this Agreement. Any Option Exercise Notice shall
specify the principal amount of Additional Securities to be purchased by the
Underwriters and the date on which such Additional Securities are to be
purchased. Each purchase date must be at least two business days after the
written notice is given, and may not be earlier than the closing date for the
Firm Securities.
(d) Payment of the purchase price for, and delivery of Global
Securities representing, the Additional Securities shall be made at the office
of Underwriters' Counsel, or at such other place as shall be agreed upon by the
Lead Managers and the Company, at 10:00 A.M., New York City time, on the
Additional Closing Date (unless postponed in accordance with the provisions of
Section 9 hereof), or such other time as shall be agreed upon by Bear Xxxxxxx
and the Company.
Payment of the purchase price for the Additional Securities shall be
made by wire transfer in same day funds to or as directed by the Company upon
delivery of certificates for the Additional Securities to the Representatives
registered in the name of Cede & Co., as nominee for The Depository Trust
Company for the respective accounts of the several Underwriters. Upon delivery,
the Additional Securities shall be registered in such name or names and shall be
in such denominations as the Lead Managers may request at least two business
days before the Additional Closing Date. The Company will permit the Lead
Managers to examine the Global Securities representing the Additional Securities
at least one full business day prior to the Additional Closing Date.
3. Offering. Upon authorization of the release of the Firm
Securities by the Lead Managers, the Underwriters propose to offer the
Securities for sale to the public upon the terms and conditions set forth in the
Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
the Underwriters that:
(a) The Registration Statement and any amendments thereto have
been declared effective, and if Rule 430A is used or the filing of the
Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will
file the Prospectus (properly completed if Rule 430A has been used) pursuant to
Rule 424(b) within the prescribed time period and will provide evidence
satisfactory to the Lead Managers of such timely filing. If the Company elects
to rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434, and the Prospectus shall not be
"materially different" (as such term is used in Rule 434) from the Prospectus
included in the Registration Statement at the time it became effective.
The Company will notify you immediately (and, if requested by
the Lead Managers, will confirm such notice in writing) (i) when the
Registration Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
Company's intention to file or prepare any supplement or amendment to the
Registration Statement or the Prospectus, (iv) of the mailing or the delivery to
the Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the
Securities Act, (v) of the issuance
16
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, it being understood
that the Company shall make every reasonable effort to avoid the issuance of any
such stop order, (vi) of the receipt of any comments from the Commission, and
(vii) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for that purpose. If the
Commission shall propose or enter a stop order at any time, the Company will
make every reasonable effort to prevent the issuance of any such stop order and,
if issued, to obtain the lifting of such order as soon as possible. The Company
will not file any amendment to the Registration Statement or any amendment of or
supplement to the Prospectus (including the prospectus required to be filed
pursuant to Rule 424(b) or Rule 434) that differs from the prospectus on file at
the time of the effectiveness of the Registration Statement or file any document
under the Exchange Act if such document would be deemed to be incorporated by
reference into the Prospectus to which the Lead Managers shall object in writing
after being timely furnished in advance a copy thereof. The Company will provide
the Lead Managers with copies of all such amendments, filings and other
documents a sufficient time prior to any filing or other publication thereof to
permit the Lead Managers a reasonable opportunity to review and comment thereon.
(b) The Company shall comply with the Securities Act and the
Exchange Act to permit completion of the distribution as contemplated in this
Agreement, the Registration Statement and the Prospectus. If at any time when a
prospectus relating to the Securities is required to be delivered under the
Securities Act or the Exchange Act in connection with the sales of Securities,
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would, in the judgment of the Underwriters or the
Company, include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances existing at the time of delivery to
the purchaser, not misleading, or if to comply with the Securities Act, the
Exchange Act or the Rules and Regulations it shall be necessary at any time to
amend or supplement the Prospectus or Registration Statement, or to file any
document incorporated by reference in the Registration Statement or the
Prospectus or in any amendment thereof or supplement thereto, the Company will
notify you promptly and prepare and file with the Commission, subject to Section
4(a) hereof, an appropriate amendment or supplement (in form and substance
satisfactory to the Lead Managers) which will correct such statement or omission
or which will effect such compliance and will use its best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to each of you and
Underwriters' Counsel a signed or conformed copy of the Registration Statement,
as initially filed and all amendments thereto, including all consents and
exhibits filed therewith, and will maintain in the Company's files manually
signed copies of such documents for at least five years after the date of
filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any Preliminary Prospectus, the Prospectus, the Registration
Statement, all amendments of and supplements to such documents, if any, and all
documents incorporated by reference in the Registration Statement and Prospectus
or any amendment thereof or supplement thereto as you may reasonably request.
Prior to 10:00 A.M., New York time, on the business day next succeeding the date
of this Agreement and from time to time thereafter, the Company will
17
furnish the Underwriters with copies of the Prospectus in New York City in such
quantities as you may reasonably request.
(d) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430 and
Section 5(b) of the Securities Act.
(e) The Company will use its reasonable efforts, in
cooperation with the Lead Managers, at or prior to the time of effectiveness of
the Registration Statement, to qualify the Securities for offering and sale
under the securities laws relating to the offering or sale of the Securities of
such jurisdictions, domestic or foreign, as the Lead Managers may designate and
to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(f) The Company will make generally available to its security
holders and to the Underwriters, to the extent not available on XXXXX, as soon
as practicable, but in any event not later than twelve months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), an earnings statement of the Company and the Subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company, Rule
158).
(g) During the period of 90 days from the date of the
Prospectus, without the prior written consent of the Lead Managers the Company
(i) will not, directly or indirectly, issue, offer, sell, agree to issue, offer
or sell, solicit offers to purchase, grant any call option, warrant or other
right to purchase, purchase any put option or other right to sell, pledge,
borrow or otherwise dispose of any United States dollar-denominated debt
securities issued or guaranteed by the Company and having a maturity of more
than one year from the date of issue or any Relevant Security, or make any
announcement of any of the foregoing, (ii) will not establish or increase any
"put equivalent position" or liquidate or decrease any "call equivalent
position" (in each case within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder) with respect to any Relevant
Security, and (iii) will not otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of a Relevant Security, whether or not such
transaction is to be settled by delivery of Relevant Securities, other
securities, cash or other consideration, other than the sale of Securities as
contemplated by this Agreement and the Company's issuance of Underlying Shares
upon conversion of Securities or the Company's issuance of Common Stock upon (x)
the exercise of currently outstanding warrants; and (y) the grant and exercise
of options under, or the issuance and sale of shares pursuant to, employee stock
option plans in effect on the date hereof, each as described in the Registration
Statement and the Prospectus. The Company will not file a registration statement
under the Securities Act in connection with any transaction by the Company or
any person that is prohibited pursuant to the foregoing, except for registration
statements on Form S-8 relating to employee benefit plans.
(h) During the period of five years from the effective date of
the Registration Statement, the Company will furnish to you, to the extent not
available on XXXXX,
18
copies of all reports or other communications (financial or other) furnished to
security holders or from time to time published or publicly disseminated by the
Company, and will deliver to you, to the extent not available on XXXXX, (i) as
soon as they are available, copies of any reports, financial statements and
proxy or information statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial information to be on a consolidated basis to the extent
the accounts of the Company and the Subsidiaries are consolidated in reports
furnished to its security holders generally or to the Commission).
(i) The Company will apply the net proceeds from the sale of
the Securities as set forth under the caption "Use of Proceeds" in the
Prospectus.
(j) The Company will use its reasonable efforts to list the
shares of Common Stock issuable upon conversion of the Securities for quotation
on the Nasdaq and maintain the listing of the shares of Common Stock issuable
upon conversion of the Securities on the Nasdaq.
(k) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to the
Securities Act, the Exchange Act and the Rules and Regulations within the time
periods required thereby.
(l) The Company will use its best efforts to do and perform
all things required to be done or performed under this Agreement by the Company
prior to the Closing Date or the Additional Date, as the case may be, and to
satisfy all conditions precedent to the delivery of the Firm Securities and the
Additional Securities.
(m) The Company will not take, and will cause its affiliates
that it controls (within the meaning of Rule 144 under the Securities Act) not
to take, directly or indirectly, any action which constitutes or is designed to
cause or result in, or which could reasonably be expected to constitute, cause
or result in, the stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Securities or Underlying Shares issuable
upon conversion of Securities.
(n) The Company will execute and deliver the Indenture in the
form and substance satisfactory to the Lead Managers and the Company.
(o) The Company will use its best efforts to cause the
Securities to be accepted for clearance and settlement through the facilities of
DTC.
(p) The Company will take such steps as shall be necessary to
ensure that neither the Company nor any of its Subsidiaries becomes an
"investment company" as defined, and subject to regulation, under the Investment
Company Act.
5. Payment of Expenses. Whether or not the transactions contemplated by
this Agreement, the Registration Statement and the Prospectus are consummated or
this Agreement is terminated, the Company hereby agrees to pay all costs and
expenses incident to
19
the performance of its obligations hereunder, including the following: (i) all
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and any
and all amendments and supplements thereto and the mailing and delivering of
copies thereof to the Underwriters and dealers; (ii) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Securities Act and the Offering and the
fees and expenses (including fees and expenses of counsel) of the Company, the
Trustee and the costs and charges of any registrar and paying agent under the
Indenture; (iii) the cost of producing this Agreement, the Indenture and any
agreement among Underwriters, blue sky survey, closing documents and other
instruments, agreements or documents (including any compilations thereof) in
connection with the Offering; (iv) all expenses in connection with the
qualification of the Securities for offering and sale under state or foreign
securities or blue sky laws as provided in Section 4(e) hereof, including the
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with any blue sky survey; (v) the filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, securing any required review by the NASD of the terms of the
Offering; (vi) all fees and expenses in connection with any rating of the
Securities, listing of the Underlying Shares issuable upon conversion of the
Securities on the Nasdaq National Market; and (vii) all travel expenses of the
Company's officers and employees and any other expense of the Company incurred
in connection with attending or hosting meetings with prospective purchasers of
the Securities. The Company also will pay or cause to be paid: (x) the cost of
preparing certificates representing the Securities; (y) the cost and charges of
any transfer agent or registrar for the Securities; and (z) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 5. It is understood,
however, that except as provided in this Section, and Sections 7, 8 and 11
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel. Notwithstanding anything to the contrary in this
Section 5, in the event that this Agreement is terminated pursuant to Section 6
or 11(b) hereof, or subsequent to a Material Adverse Change, the Company will
pay all out-of pocket expenses of the Underwriters (including but not limited to
fees and disbursements of counsel to the Underwriters) incurred in connection
herewith.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Securities and the Additional
Securities, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company herein contained, as of the date
hereof and as of the Closing Date (for purposes of this Section 6 "Closing Date"
shall refer to the Closing Date for the Firm Securities and any Additional
Closing Date, if different, for the Additional Securities), to the absence from
any certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
each of the following additional conditions:
(a) The Registration Statement shall have become effective and
all necessary regulatory or stock exchange approvals shall have been received
not later than 5:30 P.M., New York time, on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by the Lead
Managers; if the Company shall have elected to rely upon Rule 430A or Rule 434
under the Securities Act, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof and a form
of the
20
Prospectus containing information relating to the description of the Securities
and the method of distribution and similar matters shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time period; and,
at or prior to the Closing Date no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the favorable
written opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx Professional Corporation,
counsel for the Company, dated the Closing Date addressed to the Underwriters in
the form attached hereto as Annex I.
(c) At the Closing Date you shall have received the favorable
written opinion of Malaysian counsel for the Significant Subsidiary, dated the
Closing Date addressed to the Underwriters in form and substance satisfactory to
the Underwriters.
(d) All proceedings taken in connection with the sale of the
Firm Securities and the Additional Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Lead Managers and to
Underwriters' Counsel, and the Underwriters shall have received from
Underwriters' Counsel a favorable written opinion, dated as of the Closing Date,
with respect to the issuance and sale of the Securities, the Registration
Statement and the Prospectus and such other related matters as the Lead Managers
may require, and the Company shall have furnished to Underwriters' Counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters.
(e) At the Closing Date you shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company, dated
the Closing Date to the effect that (i) the condition set forth in subsection
(a) of this Section 6 has been satisfied, (ii) as of the date hereof and as of
the Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company and the Subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, (v) no stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings therefor
have been initiated or threatened by the Commission, (vi) there are no pro forma
or as adjusted financial statements that are required to be included in the
Registration Statement and the Prospectus pursuant to the Rules and Regulations
that have not been included as required and (vii) subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus there has not been any material adverse change or any development
involving a prospective material adverse change, whether or not arising from
transactions in the ordinary course of business, in or affecting (x) the
business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and the
Subsidiaries, individually or taken as a whole; (y) the long-term debt or
capital stock of the Company or any of its Subsidiaries; or (z) the Offering or
21
consummation of any of the other transactions contemplated by this Agreement,
the Indenture, the Registration Statement and the Prospectus except, with
respect to clause (vii), as set forth or contemplated in the Prospectus or as
described in such certificate.
(f) At the time this Agreement is executed and at the Closing
Date, you shall have received a comfort letter, from KPMG LLP and Ernst & Young
LLP, independent public accountants for the Company, dated, respectively, as of
the date of this Agreement and as of the Closing Date addressed to the
Underwriters and in form and substance satisfactory to the Underwriters and
Underwriters' Counsel.
(g) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any Subsidiary or any change or
development involving a change, whether or not arising from transactions in the
ordinary course of business, in the business, condition (financial or
otherwise), results of operations, stockholders' equity or properties of the
Company and the Subsidiaries, individually or taken as a whole, including but
not limited to the occurrence of any fire, flood, storm, explosion, accident or
other calamity at any of the properties owned or leased by the Company or any of
its Subsidiaries, the effect of which, in any such case described above, is, in
the judgment of the Lead Managers, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any supplement).
(h) No downgrading shall have occurred in the Company's
corporate credit rating or the rating accorded the Company's debt securities or
preferred stock by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Securities Act) and no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities.
(i) You shall have received a duly executed lock-up agreement
from each person who is a director or officer of the Company and each
stockholder listed on Schedule II hereto, in each case substantially in the
forma attached hereto as Annex II.
(j) At the Closing Date, the shares of common stock issuable
upon conversion of the Securities shall have been approved for quotation on the
Nasdaq.
(k) At the Closing Date, the NASD shall have confirmed that it
has not raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(l) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the
Closing Date, prevent the issuance or sale of the Securities; and no injunction
or order of any federal, state or foreign court shall have been issued that
would, as of the Closing Date, prevent the issuance or sale of the Securities.
22
(m) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
(n) The Indenture, in form and substance satisfactory to the
Underwriters, shall have been duly executed and delivered by the Company and the
Trustee, and the Securities shall have been duly executed and delivered by the
Company and duly authenticated by the Trustee.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be satisfactory in
form and substance to the Lead Managers and to Underwriters' Counsel, all
obligations of the Underwriters hereunder may be cancelled by the Lead Managers
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Securities may be cancelled by the Lead
Managers at, or at any time prior to, the Additional Closing Date. Notice of
such cancellation shall be given to the Company in writing, or by telephone. Any
such telephone notice shall be confirmed promptly thereafter in writing.
7. Indemnification.
(a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
(A) the Registration Statement, as originally filed or any amendment thereof, or
any related Preliminary Prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Securities, including any road show or investor
presentations made to investors by the Company (whether in person or
electronically) ("Marketing Materials"), or (ii) the omission or alleged
omission to state in the Registration Statement, as originally filed or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or in any Marketing Materials, a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Lead Managers expressly for use
23
therein. The parties agree that such information provided by or on behalf of any
Underwriter through the Lead Managers consists solely of the material referred
to in the last sentence of Section 1(b) hereof. This indemnity agreement will be
in addition to any liability which the Company may otherwise have, including but
not limited to other liability under this Agreement.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Lead Managers specifically for use
therein; provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Securities to be purchased by such Underwriter hereunder. The parties agree
that such information provided by or on behalf of any Underwriter through the
Lead Managers consists solely of the material referred to in the last sentence
of Section 1(b) hereof. This indemnity will be in addition to any liability
which any Underwriter may otherwise have, including but not limited to other
liability under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claims or the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 7 to the extent that it is not materially prejudiced as a result
thereof, and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in the
defense of such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also
24
be counsel to the indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 7 or Section 8 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
8. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company) as incurred to which the Company and one or more
of the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the Offering or, if such allocation is not permitted by applicable law, in such
proportions as are appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as (x) the
total proceeds from the Offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company bears to (y) the
underwriting discount or commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of each
25
of the Company and of the Underwriters 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 Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 8,
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Securities
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of the immediately preceding sentence. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 8 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
Section 8 are several in proportion to the respective number of Securities to be
purchased by each of the Underwriters hereunder and not joint.
9. Underwriter Default.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Securities or Additional Securities hereunder,
and if the Firm Securities or Additional Securities with respect to which such
default relates (the "Default Securities") do not (after giving effect to
arrangements, if any, made by the Lead Managers pursuant to subsection (b)
below) exceed in the aggregate 10% of the number of Firm Securities or
Additional Securities, each non-defaulting Underwriter, acting severally and not
jointly, agrees to purchase from the Company that number of Default Securities
that bears the same proportion of the total number of Default Securities then
being purchased as the number of Firm
26
Securities set forth opposite the name of such Underwriter in Schedule I hereto
bears to the aggregate number of Firm Securities set forth opposite the names of
the non-defaulting Underwriters, subject, however, to such adjustments to
eliminate fractional shares as the Lead Managers in their sole discretion shall
make.
(b) In the event that the aggregate number of Default
Securities exceeds 10% of the number of Firm Securities or Additional
Securities, as the case may be, the Lead Managers may in their discretion
arrange for itself or for another party or parties (including any non-defaulting
Underwriter or Underwriters who so agree) to purchase the Default Securities on
the terms contained herein. In the event that within five calendar days after
such a default the Lead Managers do not arrange for the purchase of the Default
Securities as provided in this Section 9, this Agreement or, in the case of a
default with respect to the Additional Securities, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Securities
shall thereupon terminate, without liability on the part of the Company with
respect thereto (except in each case as provided in Sections 5, 7, 8, 10 and
11(d)) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to the
other Underwriters and the Company for damages occasioned by its or their
default hereunder.
(a) In the event that any Default Securities are to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, the Lead Managers or the Company shall have the
right to postpone the Closing Date or Additional Closing Date, as the case may
be for a period, not exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees to
file promptly any amendment or supplement to the Registration Statement or the
Prospectus which, in the opinion of Underwriters' Counsel, may thereby be made
necessary or advisable. The term "Underwriter" as used in this Agreement shall
include any party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Securities
and Additional Securities.
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement or in certificates of officers of the Company or any
Subsidiary submitted pursuant hereto, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Securities to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 10 and 11 hereof shall survive any termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the execution
of this Agreement. Notwithstanding any termination of this Agreement, the
provisions of this Section
27
11 and of Sections 1, 5, 7, 8 and 12 through 17, inclusive, shall remain in full
force and effect at all times after the execution hereof.
(b) The Lead Managers shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Securities at any time prior to
the Additional Closing Date, as the case may be, if (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Lead Managers will in the immediate future materially disrupt,
the market for the Company's securities or securities in general; or (ii)
trading on The New York Stock Exchange (the "NYSE") or The Nasdaq National
Market (the "Nasdaq") shall have been suspended or been made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the NYSE
or the Nasdaq or by order of the Commission or any other governmental authority
having jurisdiction; or (iii) a banking moratorium has been declared by any
state or federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred; or (iv) (A)
there shall have occurred any outbreak or escalation of hostilities or acts of
terrorism involving the United States or there is a declaration of a national
emergency or war by the United States or (B) there shall have been any other
calamity or crisis or any change in political, financial or economic conditions
if the effect of any such event in (A) or (B), in the judgment of the Lead
Managers, makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Securities or the Additional Securities, as the
case may be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than pursuant to (i) notification by the Lead
Managers as provided in Section 11(a) hereof or (ii) Section 9(b) hereof), or if
the sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Lead Managers, reimburse the Underwriters
for all out-of-pocket expenses (including the fees and expenses of their
counsel), incurred by the Underwriters in connection herewith.
28
12. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co.
Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Parish,
Senior Managing Director, Equity Capital Markets, with a copy to Underwriter's
Counsel at Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, Attention: Xxxxxx X. Xxxxxxx, Esq.;
(b) if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to the Company and its counsel at the addresses
set forth in the Registration Statement;
provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to Bear Xxxxxxx, which address
will be supplied to any other party hereto by Bear Xxxxxxx upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
13. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and said
controlling persons and their respective successors, officers, directors, heirs
and legal representatives, and it is not for the benefit of any other person,
firm or corporation. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Securities from any of the Underwriters.
14. Governing Law and Jurisdiction; Waiver of Jury Trial. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. The Company irrevocably (a) submits to the jurisdiction of
any court of the State of New York or the United State District Court for the
Southern District of the State of New York for the purpose of any suit, action,
or other proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus (each, a "Proceeding"), (b) agrees that all claims in respect of any
Proceeding may be heard and determined in any such court, (c) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the fullest extent
permitted by law, any claim that such Proceeding is brought in an inconvenient
forum. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY
LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
29
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
16. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
17. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
30
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
KOMAG, INCORPORATED
By:
---------------------------
Name:
Title:
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXX XXXXXXX & CO.
XXXXXXX & COMPANY, INC.
XXXXXX XXXXXX PARTNERS LLC
By:
---------------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
pa-846213
SCHEDULE I
Amount of Additional
Total Amount of Firm Securities to be
Underwriter Securities to be Purchased Purchased if Option is Fully Exercised
----------- -------------------------- --------------------------------------
Bear, Xxxxxxx & Co. Inc.
Xxxxx Xxxxxxx & Co.
Xxxxxxx & Company, Inc.
Xxxxxx Xxxxxx Partners LLC
[Names of other Underwriters]
Total...............
========================== ======================================
SCHEDULE II
Stockholders subject to the lock-up provision
EXHIBIT A
Subsidiaries
Komag (Bermuda) Ltd., a Bermuda corporation
Komag Netherlands Antilles N.V., a Netherlands Antilles corporation
Komag Technology (N) B.V., a Netherlands corporation
Komag USA (Malaysia) Sdn., a Malaysian corporation
ANNEX I
Form of Opinion of Xxxxxx Xxxxxxx Xxxxxxxx and Xxxxxx Professional Corporation
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus.
2. The Company is duly qualified as a foreign corporation for the transaction
of business and is in good standing in the States of [insert names of
States].
3. The Company has, as of the dates specified in the Prospectus, an
authorized capitalization as set forth under the caption "Capitalization"
in the Prospectus; and the shares of Common Stock initially issuable upon
conversion of the Securities have been duly authorized and reserved for
issuance and, when issued and delivered in accordance with the provisions
of the Securities and the Indenture, will be duly and validly issued and
fully paid and non-assessable and will not be subject to any preemptive
right under the Company's charter or bylaws, the DGCL or any Reviewed
Agreement. The Common Stock conforms as to legal matters in all material
respects to the description thereof set forth in the Prospectus.
4. To our knowledge, there are no legal or governmental proceedings pending
against the Company or the Significant Subsidiary required to be disclosed
in the Registration Statement or Prospectus by the Act or the rules and
regulations of the Commission thereunder, other than those described
therein.
5. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
6. The Indenture has been duly authorized, executed and delivered by the
Company and constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms; and
the Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended.
7. The Securities being issued on the date hereof have been duly authorized
by the Company and, when executed by the Company and authenticated by the
Trustee in the manner provided for in the Indenture and issued and
delivered to the underwriters against payment of the purchase price
therefor specified in the Underwriting Agreement in accordance with the
Underwriting Agreement, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance
with their terms, and entitled to the benefits provided by the Indenture.
8. The issue and sale of the Securities being delivered on the date hereof
and the compliance by the Company with all of the provisions of the
Securities, the Indenture, Underwriting Agreement and the consummation of
the transactions therein contemplated will not conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute
an event of default (or an event which with notice or lapse of time or
both, would constitute an event of default) under, or result in the
creation or imposition of any lien, charge or encumbrance on any
properties or assets of the Company or any of its Subsidiaries pursuant
to, any Reviewed Agreement, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or Bylaws of the
Company or any U.S. federal or California state statute or the DGCL or any
order, rule or regulation known to us of any U.S. federal or California or
Delaware (under the DGCL) state court or governmental agency or body
having jurisdiction over the Company or any of its properties.
9. No consent, approval, authorization, order, registration or qualification
of or with any U.S. federal or California or Delaware (under the DGCL)
state court or governmental agency or body is required for the issue and
sale of the Securities or the consummation by the Company of the
transaction contemplated by the Underwriting Agreement or the Indenture,
except such as have been made or obtained under the Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters and the
issuance of the Common Stock upon conversion of the Securities (as to
which we express no opinion).
10. The statements set forth in the Prospectus under the caption "Description
of Notes," insofar as they purport to constitute a summary of the terms of
the Securities, fairly summarizes in all material respects such terms.
11. The statements set forth in the Prospectus under the caption "United
States Federal Tax Considerations," insofar as they purport to summarize
the United States federal tax laws referred to therein, fairly summarizes
in all material respects such laws.
12. The Company is not an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended.
13. The Registration Statement has been declared effective under the
Securities Act, and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and all
filings required by Rule 424(b) under the Act have been made.
14. Except as disclosed in the Prospectus or otherwise expressly waived in
writing, there are no contracts, agreements or understandings known to us
between the Company and any person granting such person the right to
require the Company to include any securities of the Company owned by such
person in the Registration Statement.
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15. The Registration Statement and the Prospectus and any further amendments
and supplements thereto made by the Company prior to the date hereof (it
being understood that we are not called upon and do not comment with
respect to any financial statements and related schedules and other
information of an accounting or financial nature included therein or
omitted therefrom or the Form T-1) comply on their face as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder.
-------------------------
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with the Company, the Company's counsel, certain
officers and other representatives of the Company, and the independent certified
public accountants of the Company, at which conferences the contents of the
Registration Statement and Prospectus and related matters were discussed.
Although such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus, except as set forth in paragraphs 10 and 11 above, no
facts have come to such counsel's attention that caused such counsel to believe
(i) that the Registration Statement, as of its effective date, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(it being understood that such counsel are not called upon and do not comment
with respect to any financial statements and the notes thereto and related
schedules and other information of an accounting or financial nature included
therein or omitted therefrom or the Form T-1) or that the Prospectus, as of its
date or the date hereof, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel is not called upon
and do not comment with respect to any financial statements and the notes
thereto and related schedules and other information of an accounting or
financial nature included therein or omitted therefrom), or (ii) that any
amendment to the Registration Statement was required to be filed at or prior to
the date hereof or that there were any contracts or other documents of a
character required to be filed as an Exhibit to the Registration Statement or
required to be described in the Registration Statement or Prospectus which were
not filed or described in all material respects as required misleading (it being
understood that such counsel is not called upon and do not comment with respect
to any financial statements and the notes thereto and related schedules and
other information of an accounting or financial nature included therein or
omitted therefrom or the Form T-1).
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ANNEX II
Form of Lock-Up Agreement
[Date]
Bear, Xxxxxxx & Co. Inc.
Xxxxx Xxxxxxx & Co.
Xxxxxxx & Company, Inc.
Xxxxxx Xxxxxx Partners LLC
As Representatives of the several
Underwriters referred to below
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
Komag, Incorporated Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed
public offering (the "Offering") by Komag, Incorporated, a Delaware corporation
(the "Company"), of its common stock, $.01 par value (the "Stock").
In order to induce you and the other underwriters for which you act as
representatives (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, Xxxxxxx & Co.
Inc. ("Bear Xxxxxxx"), during the period from the date hereof until ninety (90)
days from the date of the final prospectus for the Offering (the "Lock-Up
Period"), the undersigned (a) will not, directly or indirectly, offer, sell,
agree to offer or sell, solicit offers to purchase, grant any call option or
purchase any put option with respect to, pledge, borrow or otherwise dispose of
any Relevant Security (as defined below), and (b) will not establish or increase
any "put equivalent position" or liquidate or decrease any "call equivalent
position" with respect to any Relevant Security (in each case within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder), or otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in
whole or in part, any economic consequence of ownership of a Relevant Security,
whether or not such transaction is to be settled by delivery of Relevant
Securities, other securities, cash or other consideration. As used herein
"Relevant Security" means the Stock, any other equity security of the Company or
any of its subsidiaries and any security convertible into, or exercisable or
exchangeable for, any Stock or other such equity security.
The undersigned hereby authorizes the Company during the Lock-Up Period to
cause any transfer agent for the Relevant Securities to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the
undersigned is the beneficial but not the record holder, agrees during the
Lock-Up Period to cause the record holder to cause the relevant transfer agent
to decline to transfer, and to note stop transfer restrictions on the stock
register and other records relating to, such Relevant Securities. The
undersigned hereby further agrees that, without the prior written consent of
Bear Xxxxxxx, during the Lock-up Period the undersigned (x) will not file or
participate in the filing with the Securities and Exchange Commission of any
registration statement, or circulate or participate in the circulation of any
preliminary or final prospectus or other disclosure document with respect to any
proposed offering or sale of a Relevant Security and (y) will not exercise any
rights the undersigned may have to require registration with the Securities and
Exchange Commission of any proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Agreement and that this
Agreement constitutes the legal, valid and binding obligation of the
undersigned, enforceable in accordance with its terms. Upon request, the
undersigned will execute any additional documents necessary in connection with
enforcement hereof. Any obligations of the undersigned shall be binding upon the
successors and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _____________________________
Print Name: _______________________
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