EXHIBIT 1.1
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UTSTARCOM, INC.
(a Delaware corporation)
10,000,000 Shares of Common Stock
PURCHASE AGREEMENT
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Dated: February ___, 2002
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Table of Contents
Page
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SECTION 1. REPRESENTATIONS AND WARRANTIES ............................... 2
(a) Representations and Warranties by the Company ..................... 2
(i) Compliance with Registration Requirements .................... 3
(ii) Incorporated Documents ...................................... 3
(iii) Independent Accountants .................................... 4
(iv) Financial Statements ........................................ 4
(v) No Material Adverse Change in Business ....................... 4
(vi) Good Standing of the Company ................................ 5
(vii) Good Standing of Subsidiaries .............................. 5
(viii) Good Standing of Joint Venture ............................ 5
(ix) Capitalization .............................................. 6
(x) Authorization of Agreement and Registration Statement ........ 6
(xi) Authorization and Description of Securities ................. 6
(xii) Absence of Defaults and Conflicts .......................... 6
(xiii) Absence of Labor Dispute .................................. 7
(xiv) Absence of Proceedings ..................................... 7
(xv) Accuracy of Exhibits ........................................ 8
(xvi) Possession of Intellectual Property ........................ 8
(xvii) Absence of Further Requirements ........................... 8
(xviii) Possession of Licenses and Permits ....................... 8
(xix) Title to Property .......................................... 9
(xx) Repatriation of Dividends and Other Distributions ........... 9
(xxi) PRC Taxes .................................................. 9
(xxii) Taxes ..................................................... 10
(xxiii) Sovereign Immunity ....................................... 10
(xxiv) Choice of Law ............................................. 10
(xxv) Investment Company Act ..................................... 10
(xxvi) Environmental Laws ........................................ 10
(xxvii) Foreign Corrupt Practices Act ............................ 11
(xxviii) Registration Rights ..................................... 11
(b) Representations and Warranties by the Selling Stockholder ......... 11
(i) Accurate Disclosure ........................................... 11
(ii) Authorization of Agreements .................................. 11
(iii) Good and Marketable Title ................................... 12
(iv) Due Execution of Power of Attorney and Custody Agreement ..... 12
(v) Absence of Manipulation ....................................... 12
(vi) Absence of Further Requirements .............................. 12
(vii) Restriction on Sale of Securities ........................... 12
(viii) Certificates Suitable for Transfer ......................... 13
(ix) No Association with NASD ..................................... 13
(c) Officer's Certificates ............................................ 13
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING ................... 13
(a) Initial Securities ................................................ 13
(b) Option Securities ................................................. 13
(c) Payment ........................................................... 14
(d) Denominations; Registration ....................................... 14
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SECTION 3. COVENANTS OF THE COMPANY ..................................... 15
(a) Compliance with Securities Regulations and Commission Requests .... 15
(b) Filing of Amendments .............................................. 15
(c) Delivery of Registration Statements ............................... 15
(d) Delivery of Prospectuses .......................................... 15
(e) Continued Compliance with Securities Laws ......................... 16
(f) Blue Sky Qualifications ........................................... 16
(g) Rule 158 .......................................................... 16
(h) Use of Proceeds ................................................... 16
(i) Listing ........................................................... 16
(j) Restriction on Sale of Securities ................................. 17
(k) Reporting Requirements ............................................ 17
(l) No Amendment of 10b5-1 Plans. ..................................... 17
SECTION 4. PAYMENT AND EXPENSES ......................................... 17
(a) Expenses .......................................................... 17
(b) Termination of Agreement .......................................... 18
(c) Allocation of Expenses ............................................ 18
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS ...................... 18
(a) Effectiveness of Registration Statement ........................... 18
(b) Opinion of Counsel for the Company ................................ 19
(c) Opinion of PRC Counsel for the Company ............................ 22
(d) Opinion of Counsel for the Selling Stockholder .................... 27
(e) Opinion of Counsel for the Underwriters ........................... 28
(f) Officers' Certificate ............................................. 28
(g) Certificate of the Selling Stockholder ............................ 28
(h) Accountant's Comfort Letter ....................................... 28
(i) Bring-down Comfort Letter ......................................... 28
(j) No Objection ...................................................... 29
(k) Lockup Agreements ................................................. 29
(l) Conditions to Purchase of Option Securities ....................... 29
(i) Officers' Certificate ......................................... 29
(ii) Opinion of Counsel for the Company ........................... 29
(iii) Opinion of PRC Counsel for the Company ...................... 29
(iv) Opinion of Counsel for the Underwriters ...................... 29
(v) Bring-down Comfort Letter ..................................... 29
(m) Additional Documents .............................................. 29
(n) Termination of Agreement .......................................... 30
SECTION 6. INDEMNIFICATION .............................................. 30
(a) Indemnification of the Underwriters by the Company ................ 30
(b) Indemnification of the Underwriters by the Selling Stockholder .... 31
(c) Indemnification of the Company, Directors, Officers and the
Selling Stockholder .............................................. 32
(d) Actions Against Parties. Notification. ........................... 32
(e) Settlement Without Consent If Failure to Reimburse ................ 33
(f) Other Agreements with Respect to Indemnification .................. 33
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SECTION 7. CONTRIBUTION ................................................. 33
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY 34
SECTION 9. TERMINATION OF AGREEMENT ..................................... 35
(a) Termination; General .............................................. 35
(b) Liabilities ....................................................... 35
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS ................... 35
SECTION 11. DEFAULT BY THE SELLING STOCKHOLDER OR THE COMPANY ............ 36
SECTION 12. NOTICES ...................................................... 36
SECTION 13. PARTIES ...................................................... 37
SECTION 14. GOVERNING LAW AND TIME ....................................... 37
SECTION 15. THE HEADINGS ................................................. 37
SCHEDULES
Schedule A - Underwriters ................................... Sch A-1
Schedule B - Selling Stockholder ............................ Sch B-1
Schedule C - Pricing Information ............................ Sch C-1
Schedule D - Joint Venture and Ownership
Percentages Held by the Company ................ Sch D-1
EXHIBITS
Exhibit A Form of Opinion of Company's Counsel ............... A-1
Exhibit B Form of Opinion of Company's PRC Counsel ........... B-1
Exhibit C Form of Opinion of Selling Stockholder's Counsel ... C-1
Exhibit D Form of Lockup Agreement for Directors and Officers D-1
Exhibit E Form of Lockup Agreement for SOFTBANK CORP. ........ E-1
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UTSTARCOM, INC.
(a Delaware corporation)
10,000,000 Shares of Common Stock
(Par Value $.00125 Per Share)
PURCHASE AGREEMENT
February ___, 2002
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx Barney Inc.
Banc of America Securities LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
HSBC Securities (USA) Inc.
as Representatives of the several Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
UTStarcom, Inc., a Delaware corporation (the "Company"), and SOFTBANK
America Inc., a Delaware corporation (the "Selling Stockholder"), confirm their
respective agreements with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Xxxxxxx Xxxxx, Credit Suisse First Boston Corporation, Xxxxxxx
Xxxxx Barney Inc., Banc of America Securities LLC, U.S. Bancorp Xxxxx Xxxxxxx
Inc. and HSBC Securities (USA) Inc. are acting as representatives (in such
capacity, the "Representatives"), with respect to the (i) sale by the Selling
Stockholder and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $.00125
per share, of the Company ("Common Stock") set forth in said Schedules A and B
hereto and (ii) the grant by the Company to the Underwriters of the option
described in Section 2(b) hereof to purchase, acting severally and not jointly,
all or any part of 1,500,000 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 10,000,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the 1,500,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities."
The Company and the Selling Stockholder understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-82458) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to the Underwriters for use in connection with the offering
of the Securities is herein called the "Prospectus." For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
Section 1. Representations and Warranties. (a) Representations and
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Warranties by the Company. The Company represents and warrants to each
Underwriter as of the date hereof, as of the Closing Time referred to in Section
2(c) hereof, and as of each Date of Delivery (if any) referred to in Section
2(b) hereof, and agrees with each Underwriter, as follows:
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(i) Compliance with Registration Requirements. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information has
been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will 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 not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any
amendments or supplements were issued and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included
or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement or the Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and
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 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), did not and will 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 not misleading.
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(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included or incorporated
by reference in the Registration Statement are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations;
each of the Company, its subsidiaries and its Joint Venture (as defined
below) maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles ("GAAP") in China with a reconciliation to GAAP in the United
States; (C) access to assets is permitted only in accordance with
management's general or specific authorization; (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate actions taken with respect to any differences;
and (E) each of the Company, its subsidiaries and its Joint Venture has
made and kept books, records and accounts which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
assets of such entity and provide a sufficient basis for the preparation
of combined financial statements in accordance with Chinese GAAP, with a
reconciliation thereof to U.S. GAAP.
(iv) Financial Statements. The financial statements (including
any separate financial statements for any subsidiary or any joint
venture of the Company other than the Company and its consolidated
subsidiaries) included or incorporated by reference in the Registration
Statement and the Prospectus, together with the related schedules and
notes, present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with GAAP applied on a
consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The supporting schedules,
if any, included or incorporated by reference in the Registration
Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the
summary financial information included or incorporated by reference in
the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included or incorporated by reference in the Registration
Statement.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company,
its subsidiaries and its Joint Venture (as defined below), considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company, any of its subsidiaries or the
Joint Venture, other than those in the ordinary course of business,
which are material with respect to the Company, its subsidiaries and its
Joint Venture, considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock at any time.
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(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. UTStarcom China, Ltd.,
UTStarcom (Hangzhou) Communications Co., Ltd. and Advanced Communication
Devices Corporation (each, a "Subsidiary" and collectively, the
"Subsidiaries") are the only significant subsidiaries (as defined in
Rule 1-02 of Regulation S-X) of the Company, and each Subsidiary has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity;
with respect to each Subsidiary, none of the outstanding shares of
capital stock of the Subsidiary was issued in violation of the
preemptive rights of any securityholder of the Subsidiary pursuant to
the Subsidiary's charter documents or applicable law or any agreement or
instrument to which the Subsidiary is a party or by which the Subsidiary
is bound which has not otherwise been waived by such securityholder.
(viii) Good Standing of Joint Venture. Guangdong UTStarcom
Communications Co., Ltd. (the "Joint Venture") has been duly organized
and is validly existing as a limited liability company in good standing
under the laws of the People's Republic of China (the "PRC"), and its
business license is in full force and effect; the joint venture
contract, the articles of association and other corporate formation
documents of the Joint Venture comply with the requirements of PRC law
and are in full force and effect. The Company owns, directly or through
subsidiaries, an interest in the Joint Venture which ownership
percentage of the Company is listed in Schedule E hereto. The Joint
Venture has the power and authority under the laws of the PRC to own,
lease and operate its assets and properties in accordance with the terms
of its joint venture contract and its articles of association and to
conduct its business as currently conducted, as specified in its
business license and as described in the Prospectus. All registered
capital required to be paid by each of the Company and the Chinese
partner has been paid in full to the Joint Venture under the joint
venture contract and the articles of association for the Joint
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Venture. All of the equity interests of the Joint Venture have been duly
and validly authorized and issued, are fully paid and non-assessable,
and are owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. The liability of the Company with respect to its equity
interest in the Joint Venture is limited to its investments therein.
Neither the Company nor any of the Subsidiaries hold an interest in any
joint venture that is not a Joint Venture.
(ix) Capitalization. The authorized, issued and outstanding
capital stock of the Company, as of December 31, 2001, is as set forth
in the Prospectus under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities,
warrants or options referred to in the Prospectus). The shares of issued
and outstanding capital stock, including the Securities to be purchased
by the Underwriters from the Selling Stockholder, have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock, including the
Securities to be purchased by the Underwriters from the Selling
Stockholder, was issued in violation of any preemptive rights of any
securityholder of the Company pursuant to the Company's Certificate of
Incorporation or Bylaws or applicable law or any agreement or instrument
to which the Company is a party or by which the Company is bound which
has not otherwise been waived by such securityholder.
(x) Authorization of Agreement and Registration Statement. This
Agreement has been duly authorized, executed and delivered by the
Company. The Registration Statement and the Prospectus and the filing of
the Registration Statement and the Prospectus with the Commission have
been duly authorized by and on behalf of the Company, and the
Registration Statement has been duly signed by and on behalf of the
Company pursuant to such authorization.
(xi) Authorization and Description of Securities. Any Option
Securities purchased by the Underwriters from the Company have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be
validly issued, fully paid and non-assessable; the Common Stock conforms
in all material respects to all statements relating thereto contained in
the Prospectus and such description conforms in all material respects to
the rights set forth in the instruments defining the same; no holder of
the Securities will be subject to personal liability by reason of being
such a holder; and the issuance of the Securities is not subject to any
preemptive rights of any securityholder of the Company pursuant to the
Company's Certificate of Incorporation or Bylaws or applicable law or
any agreement or instrument to which the Company is a party or by which
the Company is bound which has not otherwise been waived by such
securityholder.
(xii) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries or the Joint Venture is in violation of its
articles, charter, by-laws or joint venture contract or in default in
the performance or observance of any obligation,
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agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries
or the Joint Venture is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
subsidiary or the Joint Venture is subject (collectively, "Agreements
and Instruments"), except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein and in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined below) 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 or the Joint Venture pursuant
to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the articles, charter, by-laws or joint venture
contract of the Company or any subsidiary or the Joint Venture or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to the Company of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any subsidiary or the Joint Venture or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary or the Joint Venture.
(xiii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary or the Joint Venture exists
or, to the knowledge of the Company, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of
any of its or any subsidiary's or the Joint Venture's principal
suppliers, manufacturers, customers or contractors, which, in either
case, may reasonably be expected to result in a Material Adverse Effect.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any company or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against the Company or any
subsidiary or the Joint Venture, which is required to be disclosed in
the Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary or the
Joint Venture is a party or of which any of their respective property or
assets is the subject which are
7
not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xvi) Possession of Intellectual Property. The Company, its
subsidiaries and the Joint Venture own or possess, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries nor the Joint Venture has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or
of any existing facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of
the Company or any of its subsidiaries or the Joint Venture therein, and
which infringement or, conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy singly or in
the aggregate, would result in a Material Adverse Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder in connection with the offering, issuance or
sale of the Securities or the consummation of the transactions
contemplated herein, except such as have been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xviii) Possession of Licenses and Permits. Except as otherwise
stated in the Prospectus and the Registration Statement, the Company,
its subsidiaries and the Joint Venture possess such permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local
or foreign regulatory agencies or bodies (including the PRC State
Council, the PRC Ministry of Information Industry, the State Development
Planning Commission, the State Economic and Trade Commission, the China
Securities Regulatory Commission (the "CSRC"), the Ministry of Foreign
Trade and Economic Cooperation ("MOF-TEC"), the Ministry of Land and
Resources, the State Administration of Foreign Exchange ("SAFE"), the
General Administration of Customs, the relevant Posts and
Telecommunications Administrations ("PTA") and the relevant Commodity
Pricing Administration Bureau) necessary to conduct the business now
operated by them; the Company, its subsidiaries and the Joint Venture
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the
8
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries nor the Joint Venture has received any notice of
proceedings relating to the revocation, suspension or modification of
any such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xix) Title to Property. The Company, its subsidiaries and the
Joint Venture have good and marketable title to all real property owned
by the Company, its subsidiaries and the Joint Venture and good title to
all other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectus or (b) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any of its
subsidiaries or the Joint Venture; and all of the leases and subleases
material to the business of the Company, its subsidiaries and the Joint
Venture, considered as one enterprise, and under which the Company or
any of its subsidiaries or the Joint Venture holds properties described
in the Prospectus, are in full force and effect, and neither the Company
nor any subsidiary or the Joint Venture has any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights
of the Company or any subsidiary or the Joint Venture under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary or the Joint Venture to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xx) Repatriation of Dividends and Other Distributions. All
dividends and other distributions declared and payable on the equity or
other interests in each of the Subsidiaries or the Joint Venture may,
under the laws and regulations of the PRC, be paid to the Company and
may be converted into foreign currency that may be freely transferred
out of the PRC, and except as disclosed in the Registration Statement
and the Prospectus, all such dividends and distributions will not be
subject to withholding or other taxes under the laws and regulations of
the PRC and are otherwise free and clear of any other tax, withholding
or deduction in the PRC and may be so paid without the necessity of
obtaining any governmental authorization, whether local, provincial or
national, in the PRC.
(xxi) PRC Taxes. Other than as described in the Prospectus, no
stamp or other issuance or transfer taxes or duties and no capital
gains, income, withholding or other taxes are payable by or on behalf of
the Company to the PRC or any political subdivision or taxing authority
thereof or therein in connection with the issuance, sale and delivery of
the Securities or the execution, delivery and performance of this
Agreement. No stamp or other issuance or transfer taxes or duties and no
capital gains, income or withholding other taxes are payable by or on
behalf of the Underwriters to the PRC or any political subdivision or
taxing authority thereof or therein in connection with the sale and
delivery of the Securities to the Underwriters or by the Underwriters to
the initial purchasers thereof, or the execution, delivery and
performance of this Agreement.
9
(xxii) Taxes. Each of the Company, its subsidiaries and the
Joint Venture has filed all reports or filings required thereof for
taxation purposes, including those required by the PRC or any political
subdivision thereof, and has paid all taxes required to be paid by it
and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or would not have a Material Adverse Effect.
(xxiii) Sovereign Immunity. Under the laws of the PRC, neither
the Company nor any of its subsidiaries nor the Joint Venture, or any of
their properties, assets or revenues are entitled to any right of
immunity on the grounds of sovereignty from any legal action, suit or
proceeding, from set-off or counterclaim, from the jurisdiction of any
court, from service of process, from attachment to or in aid of
execution of judgment or from other legal process or proceeding for the
giving of any relief or for the enforcement of any judgment.
(xxiv) Choice of Law. Under the laws of the PRC, the courts of
the PRC recognize and give effect to the choice of law provisions set
forth herein and enforce judgments of U.S. courts obtained against the
Company to enforce this Agreement, provided that the judgment (A) was
not obtained by fraud; (B) was final and conclusive; (C) in the opinion
of the relevant PRC court after the review of such judgment pursuant to
international treaties concluded or acceded to by the PRC government or
in accordance with the principle of reciprocity, or otherwise in
accordance with the Civil Procedure Law of the PRC, did not contradict
the basic principles of PRC law; and (D) in the opinion of the relevant
PRC court after its review of such judgment pursuant to international
treaties concluded or agreed to by the PRC government or in accordance
with the principle of reciprocity, or otherwise in accordance with the
Civil Procedure Law of the PRC, did not violate state sovereignty,
security or public interest.
(xxv) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxvi) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries nor the Joint Venture is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the
10
Company, its subsidiaries and the Joint Venture have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (C) there are
no pending or, to the Company's knowledge, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any
of its subsidiaries or the Joint Venture and (D) the Company is not
aware of any events or circumstances that might reasonably be expected
to form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private of or governmental body or agency,
against the Company or any of its subsidiaries or the Joint Venture
relating to Hazardous Materials or any Environmental Laws.
(xxvii) Foreign Corrupt Practices Act. Neither the Company, any
of its subsidiaries or the Joint Venture, nor any officer, director,
employee or agent thereof or any stockholder thereof acting on behalf of
the Company or any of its subsidiaries or the Joint Venture, has done
any act or authorized, directed or participated in any act, in violation
of any provision of the United States Foreign Corrupt Practices Act of
1977, as amended, applied to such entity or person.
(xxviii) Registration Rights. Except as described in the
Registration Statement or as have otherwise been waived in writing,
there are no persons with registration rights or other similar rights to
have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
(b) Representations and Warranties by the Selling Stockholder. The
Selling Stockholder represents and warrants to each Underwriter as of the date
hereof, as of the Closing Time and agrees with each Underwriter, as follows:
(i) Accurate Disclosure. To the actual knowledge of the Selling
Stockholder, the representations and warranties of the Company contained
in Section 1(a) hereof are true and correct; the Selling Stockholder has
read the contents of the Registration Statement and the Prospectus, and,
based on its actual knowledge, the Selling Stockholder has no reason to
believe that the Prospectus or any amendments or supplements thereto
includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
the Selling Stockholder is not prompted to sell the Securities to be
sold by the Selling Stockholder hereunder by any information concerning
the Company or any subsidiary of the Company or the Joint Venture which
is not set forth in the Prospectus.
(ii) Authorization of Agreements. The Selling Stockholder has
the full right, power and authority to enter into this Agreement and a
Custody Agreement (the "Custody Agreement") and to sell, transfer and
deliver the Securities to be sold by the Selling Stockholder hereunder.
The execution and delivery of this Agreement and the Custody Agreement
and the sale and delivery of the Securities to be sold by the Selling
Stockholder and the consummation of the transactions contemplated herein
and compliance by the Selling Stockholder with its obligations hereunder
have been duly
11
authorized by the Selling Stockholder and do not and will not, whether
with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any tax, lien, charge or encumbrance upon
the Securities to be sold by the Selling Stockholder or any property or
assets of the Selling Stockholder pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, license, lease
or other agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder may be bound, or to which any
of the property or assets of the Selling Stockholder is subject, nor
will such action result in any violation of the provisions of the
charter or by-laws or other organizational instrument of the Selling
Stockholder or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Selling Stockholder or any of its properties.
(iii) Good and Marketable Title. The Selling Stockholder has and
will at the Closing Time have good and marketable title to the
Securities to be sold by the Selling Stockholder hereunder, free and
clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Securities and payment of the
purchase price therefor as herein contemplated, assuming each such
Underwriter has no notice of any adverse claim, each of the Underwriters
will receive good and marketable title to the Securities purchased by it
from the Selling Stockholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
(iv) Due Execution of Custody Agreement. The Selling Stockholder
has duly executed and delivered, in the form heretofore furnished to the
Representatives, the Custody Agreement with Equiserve Trust Company,
N.A., as custodian (the "Custodian"); the Custodian is authorized to
deliver the Securities to be sold by the Selling Stockholder hereunder
and to accept payment therefor.
(v) Absence of Manipulation. The Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities.
(vi) Absence of Further Requirements. No filing with, or
consent, approval, authorization, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign, is necessary or required for the performance by the Selling
Stockholder of its obligations hereunder or in the Custody Agreement, or
in connection with the sale and delivery of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement,
except such as may have previously been made or obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or state or
foreign securities laws.
(vii) Restriction on Sale of Securities. The Selling Stockholder
has signed an agreement in the form of Exhibit E hereto. All the
Company's securities that are
12
"beneficially owned" by entities affiliated with SOFTBANK CORP. within
the meaning of Rule 13d-3 of the 1934 Act are held of record solely by
the Selling Stockholder.
(viii) Certificates Suitable for Transfer. Certificates for all
of the Securities to be sold by the Selling Stockholder pursuant to this
Agreement, in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank with
signatures guaranteed, have been placed in custody with the Custodian
with irrevocable conditional instructions to deliver such Securities to
the Underwriters pursuant to this Agreement.
(ix) No Association with NASD. Neither the Selling Stockholder
nor any of its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning of
Article I, Section 1(m) of the By-laws of the National Association of
Securities Dealers, Inc.), any member firm of the National Association
of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries or the Joint Venture delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby; and any certificate signed by or on behalf of the Selling
Stockholder as such and delivered to the Representatives or to counsel for the
Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by the Selling Stockholder to the Underwriters as to
the matters covered thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Selling Stockholder agrees to sell to each Underwriter, severally and
not jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Selling Stockholder, at the price per share set forth in Schedule C,
that proportion of the number of Initial Securities set forth in Schedule B
opposite the name of the Selling Stockholder which the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof, bears to
the total number of Initial Securities, subject, in each case, to such
adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional
securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 1,500,000 shares of Common
Stock at the price per share set forth in Schedule C, less an amount per share
equal to any dividends or distributions declared by the Company and payable on
the Initial Securities but not payable on the Option Securities. The option
hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
13
distribution of the Initial Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, or
at such other place as shall be agreed upon by the Representatives, the Company
and the Selling Stockholder, at 6:00 A.M. (California time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives, the Company and
the Selling Stockholder (such time and date of payment and delivery being herein
called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company and the Selling Stockholder by wire
transfer of immediately available funds to a bank account designated by the
Company and a bank account designated by the Custodian pursuant to the Custody
Agreement, as the case may be, against delivery to the Representatives for the
respective accounts of the Underwriters of certificates for the Securities to be
purchased by them. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial Securities and/or the Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least two full
business days before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
14
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
Section 3. Covenants of the Company. The Company covenants with each
------------------------
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
and will notify the Representatives immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)) or any amendment, supplement
or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish the Representatives with copies of
any such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably
15
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its security
holders as soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a) of the
1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and will
file with the Nasdaq National Market all documents and notices required by the
Nasdaq National Market of companies that have
16
securities that are traded in the over-the-counter market and quotations for
which are reported by the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectus (the "Lockup Period"), the Company will not, without
the prior written consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any ether agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) any Option Securities to be sold hereunder, (B)
any shares of Common Stock issued by the Company upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectus, (C) any shares of Common Stock issued or options
to purchase Common Stock granted pursuant to existing employee benefit plans of
the Company referred to in the Prospectus, (D) any shares of Common Stock issued
pursuant to any non-employee director stock plan or dividend reinvestment plan,
or (E) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock issued in connection with acquisitions (by purchase, merger or
otherwise) of other entities (or substantially all of the assets or operations
of other entities) if the recipients of such securities each executes a lockup
agreement with Xxxxxxx Xxxxx in form and substance substantially similar to the
lockup set forth in this Section 3(i).
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) No Amendment of 10b5-1 Plans. During the Lockup Period, the Company
will not permit the amendment of any 10b5-1 Plan unless such amendment does not
become effective until after the expiration of Lockup Period. For purposes of
this Agreement, a "10b5-1 Plan" is a contract adopted prior to the date hereof
under Rule 10b5-1 under the Exchange Act between the Company and any of its
executive officers or directors, a copy of which has been provided to Xxxxxxx
Xxxxx.
Section 4. Payment and Expenses.
--------------------
(a) Expenses. The Selling Stockholder will pay or cause to be paid all
expenses incident to the performance of the Company's and the Selling
Stockholder's obligations under this Agreement, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation, printing and delivery to the Underwriters of this Agreement,
any Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and
17
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors and
the Selling Stockholder's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of any transfer agent or registrar for the Securities, (ix) the filing
fees incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities, (x) any stamp duties, capital duties and stock transfer taxes, if
any, payable upon the sale of the Securities to the Underwriters and their
transfer between the Underwriters pursuant to an agreement between such
Underwriters and (xi) the fees and expenses incurred in connection with the
inclusion of the Securities in the Nasdaq National Market. It is understood that
the Selling Stockholder is not responsible for the payment of travel expenses
related to attending or hosting meetings with prospective purchasers of the
Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Selling Stockholder shall reimburse the Underwriters
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
(c) Allocation of Expenses. The provisions of this Section 4 shall not
affect any agreement that the Company and the Selling Stockholder may make for
the sharing of such costs and expenses.
Section 5. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholder
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary or the Joint Venture of the Company or on behalf of the
Selling Stockholder delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or post-effective amendment providing such
information shall have been filed and declared effective an accordance with the
requirements of Rule 430A).
18
(b) Opinion of Counsel for the Company. At Closing Time, the
Representatives shall have received the favorable opinion (a draft of which
opinion is attached as Exhibit A hereto), dated as of Closing Time, of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the Company, in
form and substance satisfactory to the Representatives and counsel for the
Underwriters, together with signed or reproduced copies of such letter for each
of the other Underwriters to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under this
Agreement.
(iii) The Company is qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
the Company owns or leases any material property or conducts any
material business.
(iv) The authorized, issued and outstanding capital stock of the
Company, as of December 31, 2001, is as set forth in the Prospectus
under the caption "Capitalization" (except for subsequent issuances, if
any, pursuant to this Agreement or pursuant to reservations, agreements
or employee benefit plans referred to in the Prospectus or pursuant to
the exercise of convertible securities or options referred to in the
Prospectus); the shares of issued and outstanding capital stock of the
Company, including the Securities to be purchased by the Underwriters
from the Selling Stockholder, have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in
violation of any preemptive rights of any securityholder of the Company
contained in the Company's Certificate of Incorporation or Bylaws, the
Delaware General Corporation Law or any written agreement or instrument
described in or referred to in the Registration Statement or filed as an
exhibit thereto.
(v) The Option Securities have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth in this Agreement, will be validly
issued, fully paid and non-assessable.
(vi) The issuance and sale of the Option Securities, if any, by
the Company and the sale of the Initial Securities by the Selling
Stockholder is not subject to preemptive rights of any security holder
of the Company contained in the Company's Certificate of Incorporation
or By-laws, the Delaware General Corporation Law or any agreement or
instrument described in or referred to in the Registration Statement or
filed as an exhibit thereto, which have not been waived by such
securityholder.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company.
19
(viii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1993 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending, or, to
the knowledge of such counsel, threatened by the Commission.
(ix) The form of certificate used to evidence the Common Stock
complies in all material respects with the Company's Certificate of
Incorporation and Bylaws and the requirements of the Nasdaq National
Market.
(x) To such counsel's knowledge, in the United States, there is
not pending or threatened any action, suit, proceeding, inquiry or
investigation, to which the Company or any subsidiary or the Joint
Venture is a party, or to which the property of the Company or any
subsidiary or the Joint Venture is subject, before or brought by any
U.S. court or governmental agency or body, which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of the transactions contemplated
in this Agreement or the performance by the Company of its obligations
hereunder.
(xi) The information in the Registration Statement under Item
15, to the extent that it constitutes matters of law, summaries of legal
matters, the Company's Certificate of Incorporation and Bylaws,
descriptions of the Company's capital stock, legal proceedings, or legal
conclusions, has been reviewed by such counsel and fairly summarizes the
information in all material respects.
(xii) To such counsel's knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(xiii) To such counsel's knowledge, the Company is not (i) in
violation of its Certificate of Incorporation or Bylaws, and (ii) no
default by the Company exists in the due performance or observance of
any material obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement.
(xiv) To such counsel's knowledge, no filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any U.S. court or governmental authority or
agency (other than under the 1933 Act and the 1933 Act Regulations,
which have been obtained, or as may be required under the securities or
blue
20
sky laws of the various states, as to which such counsel need express no
opinion) is necessary or required in connection with the due
authorization, execution and delivery of this Agreement or for the
offering, issuance or sale of the Securities.
(xv) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated in this Agreement
and in the Registration Statement (including the issuance and sale of
the Option Securities (if any) and the use of the proceeds from the sale
of the Option Securities (if any) as described in the Prospectus under
the caption "Use Of Proceeds") and compliance by the Company with its
obligations under this Agreement do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(xii) of this Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, described in or filed or incorporated by
reference as an exhibit to the Registration Statement or the Company's
Annual Report on Form 10-K for the year ended December 31, 2001, to
which the Company is a party or by which it may be bound, or to which
any of the property or assets of the Company is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect), nor will such action result
in any violation of the provisions of the Certificate of Incorporation
or By-laws of the Company, or any applicable U.S. law, statute, rule or
regulation known to such counsel to be customarily applicable to
transactions of this nature or any judgment, order, writ or decree,
known to such counsel, of any U.S. government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any of its properties, assets or operations.
(xvi) To such counsel's knowledge, except as described in the
Registration Statement or otherwise waived in writing, there are no
persons with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 0000 Xxx.
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the 1940 Act.
No facts have come to such counsel's attention that have caused such
counsel to believe that, (i) as of its effective date and as of the date hereof,
the Registration Statement or any amendment thereto (other than the financial
statements and related schedules and the financial data derived from such
financial statements or schedules, as to which such counsel need express no
opinion) contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or (ii) as of its issue date or as of the
date hereof, the Prospectus or any amendment or supplement thereto (other than
the financial statements and related schedules and the financial data derived
from such financial statements or schedules, as to which such counsel need
express no opinion) contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. In
addition, such counsel confirms that each of the Registration
21
Statement and the Prospectus, and each amendment or supplement thereto
(other than the financial statements and related schedules and the financial
data derived from such financial statements or schedules, as to which such
counsel need express no opinion) as of their respective effective or issue
dates, complied as to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations. Such counsel also confirms that the
documents incorporated by reference in the Prospectus (other than the financial
statements and related schedules and the financial data derived from such
financial statements or schedules, as to which such counsel need express no
opinion), when they were filed with the Commission complied as to form in all
material respects with the requirements of the 1934 Act and the 1934 Act
Regulations.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
(c) Opinion of PRC Counsel for the Company. At Closing Time, the
Representatives shall have received the favorable opinion (a draft of which
opinion is attached as Exhibit B hereto), dated as of Closing Time, of Xxx Xx
Law Offices, PRC counsel for the Company, in form and substance satisfactory to
the Representatives and counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect that:
(i) Each of UTStarcom China, Ltd. and UTStarcom (Hangzhou)
Communications Co., Ltd. (each, a "PRC Subsidiary" and collectively the
"PRC Subsidiaries") and the Joint Venture have been duly organized and
is validly existing and duly qualified as a foreign investment
enterprise with limited liability under PRC law, and its business
license is in full force and effect; the joint venture contract and the
articles of association of each of the PRC Subsidiaries and the Joint
Venture comply with the requirements of applicable PRC law and are in
full force and effect; each has full power and authority (corporate and
other) and has all consents, approvals, authorizations, orders,
registrations, clearances and qualifications of or with any court,
governmental agency or body having jurisdiction over it or any of its
properties required for the ownership or lease of property by it and the
conduct of its business, and has the legal right and authority to own,
use, lease and operate its assets and to conduct its business in the
manner presently conducted and as described in the Prospectus and by
representatives of the Company; each of the Company, the PRC
Subsidiaries and the Joint Venture can xxx and be sued in its own name
under the laws of the PRC;
(ii) The Company, as a foreign corporation for transaction of
business in the PRC, has all necessary licenses, consents,
authorizations, approvals, orders, certificates and permits of and from,
and has made all declarations and filings with all governmental agencies
to own, use or lease its properties and conduct business in the manner
presently conducted and as described in the Prospectus and by
representatives of the Company;
22
(iii) The equity interests of the Company in each of the PRC
Subsidiaries and the Joint Venture have been duly and validly authorized
and issued, are fully paid and nonassessable except the remaining part
of the price for acquisition of the remaining equity in HUTs (as defined
below) which, pursuant to the relevant agreement, shall be paid by the
Company within ten days following the future completion of registration
of such acquisition with the relevant local branch of the State
Administration of Industry and Commerce ("SAIC"), and are legally owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims; no additional governmental approval or
authorization of or filing with any governmental agency is required
under PRC law for the ownership by the Company of its equity interests
in each of the PRC Subsidiaries and the Joint Venture, except the
approval from or registration with the relevant governmental
authorities, including, without limitation, the relevant local branches
of the Ministry of Foreign Trade and Economic Cooperation ("MOF-TEC"),
the SAIC, the State Administration for Foreign Exchange ("SAFE"), the
State Administration of Taxation and the General Administration of
Customs, which has been obtained and is in full force and effect except
that UTStarcom (Hangzhou) Communications Co., Ltd. ("HUTs") is still in
the progress of making registrations with the relevant governmental
authorities of the Company's acquisition of the remaining equity
interests in HUTs, and we expect no material difficulty in completion of
such registrations; the liability of the Company in respect of its
equity interests in each of the PRC Subsidiaries and the Joint Venture
is limited to its investment therein;
(iv) Based on our general review of the title documents and
without independent check or verification thereof, the PRC Subsidiaries
and the Joint Venture have valid title to, or valid leasehold interests
in, all of their material real and personal property owned by them, in
each case free and clear of all liens, encumbrances, third party rights
or interests, defects or any other restrictions except such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by them; and any
real property and buildings held under lease by the PRC Subsidiaries and
the Joint Venture are held by them under valid and enforceable leases in
full force and effect, with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property
and buildings by them;
(v) To the best of our knowledge and other than as set forth in
the Prospectus, there are no pending actions, suits or proceedings by or
before any court or governmental agency, authority or body or any
arbitrator in the PRC to which any of the Company, the PRC Subsidiaries
and the Joint Venture is a party or of which any property of the
Company, the PRC Subsidiaries and the Joint Venture is subject which, if
determined adversely to the Company, the PRC Subsidiaries or the Joint
Venture, would individually or in the aggregate result in any material
adverse change or any event involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole; and, to the best of our
knowledge, no such actions, suits or proceedings are threatened or
contemplated;
23
(vi) The issue and sale of the Option Securities (if any) to be
sold by the Company and the execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to us to which any of the PRC Subsidiaries
and the Joint Venture is a party or by which any of the PRC Subsidiaries
and the Joint Venture is bound or to which any of the property or assets
of the PRC Subsidiaries and the Joint Venture is subject, nor will such
action result in any violation of the provisions of the joint venture
contract and articles of association or business licenses of any of the
PRC Subsidiaries and the Joint Venture or any law or statute or any
order, rule or regulation known to us of any governmental agency having
jurisdiction over the PRC Subsidiaries and the Joint Venture or any of
their properties;
(vii) No governmental authorization, approval or consent of or
filing with any governmental agency is required under PRC law for the
consummation by the Company of the transactions contemplated by this
Agreement;
(viii) Except as described in the Registration Statement or the
Prospectus, the PRC Subsidiaries and the Joint Venture have all
necessary licenses, consents, authorizations, approvals, orders,
certificates and permits of and from, and have made all declarations and
filings with all governmental agencies to own, lease, license and use
their properties and assets and conduct their business in the manner
presently conducted and as described in the Prospectus and by
representatives of the Company. Except as described in the Prospectus,
neither the Company nor any of the PRC Subsidiaries and the Joint
Venture has any reason to believe that the Ministry of Information
Industry or any other regulatory body is considering modifying,
suspending or revoking any such licenses, consents, authorizations,
approvals, orders, certificates or permits and each of the Company, the
PRC Subsidiaries and the Joint Venture is in compliance with the
provisions of all such licenses, consents, authorizations, approvals,
orders, certificates or permits in all material respects;
(ix) To the best of our knowledge, none of the PRC Subsidiaries
and the Joint Venture is in violation of its constituent documents
(including, without limitation, the joint venture contract and articles
of association) or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan, lease or other agreement or
instrument to which it is a party or by which it or any of its
properties may be bound; the business and operations conducted by the
PRC Subsidiaries and the Joint Venture are in compliance with any PRC
laws and regulations applicable to the PRC Subsidiaries and the Joint
Venture;
(x) Current PRC laws and regulations permit foreign investment
in the telecommunications services industry, subject to certain
ownership and geographic restrictions. After due inquiry, we have no
legal basis to form an opinion that any of the Company, the Subsidiaries
or the Joint Venture invests in, operates, or participates in the
24
operation of, any telecommunications services in the PRC as restricted
by current PRC laws and regulations;
(xi) All necessary licenses, approvals, certificates or permits
for the connection of products to telecommunications networks within the
PRC have been duly obtained for each of the products of the Company, the
PRC Subsidiaries and the Joint Venture sold, distributed and marketed in
the PRC for which such licenses, approvals, certificates or permits are
required, except such as described in the Prospectus;
(xii) The statements set forth in the Prospectus under the
captions "Risk Factors," "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," to the
extent such statements relate to matters of PRC law or regulation or to
the provisions of documents therein described, are fair summaries of
such matters and are correct in all material respects;
(xiii) No stamp or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable by
or on behalf of the Underwriters to the PRC or to any political
subdivision or taxing authority thereof or therein in connection with
(i) the sale and delivery by the Selling Stockholder and the Company of
the Securities to or for the respective accounts of the Underwriters or
(ii) the sale and delivery outside the PRC by the Underwriters of the
Securities to the initial purchasers thereof in the manner contemplated
in this Agreement;
(xiv) The entering into, performance and enforcement of this
Agreement in accordance with its terms and conditions will not subject
the Underwriters to a requirement to be licensed or otherwise qualified
to do business in the PRC, nor will any Underwriter be deemed to be
resident, domiciled, carrying on business through an establishment or
place in the PRC or in breach of any laws or regulations of the PRC by
reason of entering into, performance or enforcement of this Agreement;
(xv) All dividends and other distributions declared and payable
upon the equity interests in the PRC Subsidiaries and the Joint Venture
to the Company may be converted into foreign currency that may be freely
transferred out of the PRC, and all such dividends and other
distributions are not and, except as disclosed in the Registration
Statement and the Prospectus, will not be subject to withholding or
other taxes under the laws and regulations of the PRC and, except as
disclosed in the Registration Statement and the Prospectus, are
otherwise free and clear of any other tax, withholding or deduction
under PRC law, in each case without the necessity of obtaining any
governmental approval or authorization in the PRC, except such as have
been obtained;
(xvi) The Company's 1995 Stock Plan, 1997 Stock Plan and 2000
Employee Stock Purchase Plan and Advanced Communications Devices
Corporation's 1996 Stock Plan and 1997 Stock Plan and the sale, issuance
and grant of any securities under any of the aforementioned plans to the
date hereof, to the extent applicable to employees of any of the PRC
Subsidiaries or the Joint Venture, do not violate any provisions of the
foreign exchange laws and regulations of the PRC or any other applicable
PRC laws and regulations;
25
(xvii) Under the applicable PRC tax law, UTStarcom (China), Ltd.
is entitled to reduced taxes at the rate of 7.5% until the end of 2002;
UTStarcom (Hangzhou) Communication Co., Ltd. is entitled to reduced
taxes at the rate of 10% until the end of 2002. At the beginning of
2003, the tax rates of these entities will increase to 15%; to the best
of our knowledge, we are not aware of any event or circumstance which
may result in such rates being invalid or ineffective or capable of
being revoked;
(xviii) Insofar as matters of the law of the PRC are concerned,
the Registration Statement and the filing of the Registration Statement
with the Commission has been duly authorized by and on behalf of the
Company, and the Registration Statement has been executed pursuant to
such authorization by or on behalf of the Company;
(xix) Although we do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to
in the opinion in subsection (xii) of this opinion, nothing has come to
our attention that led us to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the
Company prior to the later date of the Closing Time and the last Date of
Delivery (other than the financial statements, as to which we need
express no opinion) 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, insofar as they relate to
matters of PRC laws and regulations and the provisions of the documents
entered into by each of the Company, the PRC Subsidiaries and the Joint
Venture in connection with the business conducted by each of them in the
PRC, not misleading or that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company prior to the
later date of the Closing Time and the last Date of Delivery (other than
the financial statements and related schedules therein, as to which we
need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, insofar as they relate to matters of PRC laws and
regulations and the provisions of the documents entered into by each of
the Company, the PRC Subsidiaries and the Joint Venture in connection
with the business conducted by each of them in the PRC, in the light of
the circumstances under which they were made, not misleading or that, as
of the later date of the Closing Time and the last Date of Delivery, the
Registration Statement, the Prospectus or any further amendment or
supplement thereto made by the Company prior to such date (other than
the financial statements and related schedules therein as to which we
need express no opinion) contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements
therein, insofar as they relate to matters of PRC laws and regulations
and the provisions of the documents entered into by each of the Company,
the PRC Subsidiaries and the Joint Venture in connection with the
business conducted by each of them in the PRC, in the light of the
circumstances under which they were made, not misleading;
(xx) Except as described in the Prospectus, insofar as matters
of PRC laws and regulations are concerned, each of the Company, the PRC
Subsidiaries and the Joint Venture owns, possesses, or otherwise has the
right to use, and has made all necessary registration and applications
with all governmental agencies to own, possess and use, the Intellectual
Property necessary to carry on the business currently operated by it or
26
presently employed by it and as described in the Prospectus, and to the
best of our knowledge, has not received any notice of infringement or
conflict with asserted rights of others with respect to any such
intellectual property rights that, if determined adversely to the
Company or any of the PRC Subsidiaries or the Joint Venture, would
individually or in the aggregate have a Material Adverse Effect.
(d) Opinion of Counsel for the Selling Stockholder. At Closing Time, the
Representatives shall have received the favorable opinion (a draft of which
opinion is attached as Exhibit C hereto), dated as of Closing Time, of Xxxxxxxx
& Xxxxxxxx, counsel for the Selling Stockholder, which shall be in form and
substance satisfactory to the Representatives and counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters to the effect that:
(i) No filing with, or consent, approval, authorization,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than the
issuance of the order of the Commission declaring the Registration
Statement effective and such authorizations, approvals or consents as
may be necessary under state securities laws or the National Association
of Securities Dealers, Inc., as to which such counsel need express no
opinion), is necessary or required to be obtained by the Selling
Stockholder for the performance by the Selling Stockholder of its
obligations under this Agreement or in the Power of Attorney and Custody
Agreement, or in connection with the offer, sale or delivery of the
Securities.
(ii) The Custody Agreement has been duly executed and delivered
by the Selling Stockholder and constitutes the valid and legally binding
obligation of the Selling Stockholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles; provided, however, that such counsel
-------- -------
need express no opinion with respect to the provisions thereof providing
for indemnification, to the extent such indemnification is contrary to
public policy.
(iii) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
(iv) To such counsel's knowledge, the execution, delivery and
performance of this Agreement and the Custody Agreement and the sale and
delivery of the Securities and the consummation of the transactions
contemplated in this Agreement and in the Registration Statement and
compliance by the Selling Stockholder with the Selling Stockholder's
obligations under this Agreement do not and will not result in any
violation of the provisions of the certificate of incorporation or
by-laws of the Selling Stockholder or any law, administrative
regulation, judgment or order of any governmental agency or body or any
administrative or court decree having jurisdiction over the Selling
Stockholder or any of its properties.
(v) Upon delivery of and payment for the Securities to be sold
by the Selling Stockholder as contemplated in this Agreement, each of
the Underwriters will be the registered owner of such Securities
purchased by it from the Selling Stockholder, free of
27
any adverse claim, assuming the Underwriters purchase such Securities
for value, in good faith and without notice of any adverse claim, as
such terms are defined in the Uniform Commercial Code in effect in the
State of California.
(e) Opinion of Counsel for the Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters, and such
counsel shall have received or been permitted access to such papers and
information as they may reasonably request to enable them to give such opinion.
(f) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company, its subsidiaries and the Joint Venture considered as one enterprise,
whether or not arising in ordinary course of business, and the Representatives
shall have received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the Company,
dated as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a) hereof
are true and correct in all material respects with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
in all material respects with all agreements and satisfied in all material
respects all conditions on its part to be performed or satisfied at or prior to
Closing Time and (iv) to the knowledge of such officers, based on due inquiry,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted by the
Commission.
(g) Certificate of the Selling Stockholder. At Closing Time, the
Representatives shall have received a certificate of the Selling Stockholder,
dated as of Closing Time, to the effect that (i) the representations and
warranties of the Selling Stockholder contained in Section 1(b) hereof are true
and correct in all respects with the same force and effect as though expressly
made at and as of Closing Time and (ii) the Selling Stockholder has complied in
all material respects with all agreements and all conditions on its part to be
performed under this Agreement at or prior to Closing Time.
(h) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(i) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (h) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
28
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lockup Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit D hereto from each of the Company's directors and officers and an
agreement substantially in the form of Exhibit E hereto from the Selling
Stockholder.
(l) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct in all material respects as of each Date of Delivery and, at the
relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section
5(f) hereof remains true and correct as of such Date of Delivery;
(ii) Opinion of Counsel for the Company. The favorable opinion
of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel
for the Company, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of PRC Counsel for the Company. The favorable
opinion of Xxx Xx Law Offices, PRC counsel for the Company, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(iv) Opinion of Counsel for the Underwriters. The favorable
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be proposed
on such Date of Delivery and otherwise to the same effect as the opinion
required Section 5(e) hereof.
(v) Bring-down Comfort Letter. A letter from
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the
same form and substance as the letter furnished to the Representatives
pursuant to Section 5(h) hereof, except that the "specified date" in the
letter furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(m) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or
29
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Stockholder in connection with the issuance
and sale of the Securities as herein contemplated shall be satisfactory in form
and substance to the Representatives and counsel for the Underwriters.
(n) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
Section 6. Indemnification.
---------------
(a) Indemnification of the Underwriters by the Company. The Company
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject to
Section 6(e) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
30
provided, however, that the indemnity agreement contained in this
-------- -------
Section 6(a) shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus or any
preliminary prospectus (or any amendments or supplement thereto),
including the Rule 430A Information.
(b) Indemnification of the Underwriters by the Selling Stockholder. The
Selling Stockholder agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject to
Section 6(e) below) any such settlement is effected with the written
consent of the Selling Stockholder; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that the indemnity agreement contained in this
-------- -------
Section 6(b) shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus or any
preliminary prospectus (or any amendments or supplement thereto),
including the Rule 430A Information; and provided, further, that the
liability under this subsection of the Selling Stockholder shall be
limited to
31
an amount equal to the aggregate net proceeds to the Selling Stockholder
from the sale of Securities sold by the Selling Stockholder hereunder.
Notwithstanding the foregoing, the Selling Stockholder shall not be
required to provide indemnification under this Section unless (1) the
Underwriters or other indemnified party shall have made a demand for payment to
the Company with respect to the loss, liability, claim, damage or expense and
(2) payment shall not have been received from the Company within 30 calendar
days after making such demand on the Company. The indemnified parties shall,
however, be relieved of their obligation to first demand payment from the
Company or to wait such 30 calendar days if (i) the Company files a petition for
relief under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii) an
order for relief is entered against the Company in an involuntary case under the
Bankruptcy Code, (iii) the Company makes an assignment for the benefit of its
creditors, or (iv) any court orders or approves the appointment of a receiver or
custodian for the Company or a substantial portion of its assets.
(c) Indemnification of the Company, Directors, Officers and the Selling
Stockholder. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act and the Selling
Stockholder and each person, if any, who controls the Selling Stockholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsections (a) and (b) of this Section, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Registration Statement (or any amendment
thereto), the Prospectus or any preliminary prospectus (or any amendments or
supplement thereto), including the Rule 430A Information, in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto), the Prospectus or any preliminary
prospectus (or any amendments or supplement thereto), including the Rule 430A
Information.
(d) Actions Against Parties. Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to subsections (a) and
(b) above, counsel to the indemnified parties shall be selected by Xxxxxxx
Xxxxx, and, in the case of parties indemnified pursuant to Section 6(c) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written
32
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(e) Settlement Without Consent If Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Sections 6(a)(ii) and 6(b)(ii) above effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(f) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Stockholder with respect to indemnification.
Section 7. Contribution. If the indemnification provided for in Section
------------
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholder on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholder on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other hand in connection
with the offering of the Securities pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholder and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, bear to the aggregate public offering price of the
Securities as set forth on such cover.
33
The relative fault of the Company and the Selling Stockholder on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Stockholder or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 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 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 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or the
Selling Stockholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
the Selling Stockholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
Section 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
--------
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholder submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or an behalf of the
Company or the Selling Stockholder, and shall survive delivery of the Securities
to the Underwriters.
34
Section 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholder, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus (exclusive of any supplement thereto), any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, its subsidiaries and the Joint
Venture considered as one enterprise, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any material adverse change in
the financial markets in the United States, China or in the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any governmental authority,
or a material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States, (iv) if a banking
moratorium has been declared by Federal or New York or PRC authorities, (v) if a
change or development involving a prospective change in United States or PRC
taxation affecting the Company or the Securities or the transfer thereof or the
imposition of exchange controls by the United States or any change or
development involving a prospective change in the PRC exchange controls would
materially and adversely affect the financial markets or the market for the
Securities and other equity securities, or (vi) if the outbreak or escalation of
hostilities involving the United States or the PRC or the declaration by the
United States or the PRC of a national emergency or war makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at such Date of Delivery on the terms and in the
manner contemplated in this Agreement and the Prospectus, or (vii) if the
occurrence of any material adverse change in the existing financial, political
or economic conditions in the United States or the PRC or elsewhere which, in
the judgment of the Representatives would materially and adversely affect the
financial markets or the market for the Securities and other equity securities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
Section 10. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if,
35
however, the Representatives shall not have completed such arrangements within
such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Representatives or (ii) the Company and the
Selling Stockholder together shall have the right to postpone Closing Time and
the Company shall have the right to postpone the relevant Date of Delivery, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
Section 11. Default by the Selling Stockholder or the Company. (a) If
-------------------------------------------------
the Selling Stockholder shall fail at Closing Time to sell the number of
Securities that it is obligated to sell hereunder, then this Agreement shall
terminate without any liability on the part of any Section 11 nondefaulting
party; provided, however, that the provisions of Sections 1, 4, 6, 7 and 8 shall
remain in full force and effect. No action taken pursuant to this Section 11(a)
shall relieve the Selling Stockholder from liability, if any, in respect of such
default.
(b) If the Company shall fail at a Date of Delivery to sell the number
of Option Securities that it is obligated to sell hereunder, then this Agreement
shall terminate without any liability on the part of any nondefaulting party;
provided, however, that the provisions of Sections 1, 4, 6, 7 and 8 shall remain
in full force and effect. No action taken pursuant to this Section 11(b) shall
relieve the Company from liability, if any, in respect of such default.
Section 12. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Xxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, attention of Legal Department,
with a copy to the Representatives at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, attention of Legal Department; and notices to the
Company shall be
36
directed to it at UTStarcom, Inc., 0000 Xxxxxx Xxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000, attention of Xxxx Xx, with a copy to Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, attention of Xxxxxx
Xxxxx; and notices to the Selling Stockholder shall be directed to Xxxxxxxx &
Xxxxxxxx, 0000 Xxxxxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, attention of Xxxx
Xxxxx.
Section 13. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the Underwriters, the Company and the Selling Stockholder
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Selling
Stockholder and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives any legal or equitable right, remedy or claim under or in
respect 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 Underwriters, the Company and the Selling Stockholder
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
Section 14. Governing Law And Time. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
Section 15. The Headings. The Article and Section headings herein and
------------
the Table of Contents are for convenience only and shall not affect the
construction hereof.
37
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Selling Stockholder a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between the Underwriters, the Company and the Selling
Stockholder in accordance with its terms.
Very truly yours,
UTSTARCOM, INC.
By:
------------------------------------------
Name: Hong Xxxxx Xx
Title: President and Chief Executive Officer
SOFTBANK AMERICA INC.
By:
---------------------------------------------
Name:
Title:
38
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX XXXXX BARNEY INC.
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP XXXXX XXXXXXX INC.
HSBC SECURITIES (USA) INC.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
---------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
39
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Securities Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx Incorporated ......
Credit Suisse First Boston Corporation ............................
Xxxxxxx Xxxxx Barney Inc. .........................................
Banc of America Securities LLC ....................................
U.S. Bancorp Xxxxx Xxxxxxx Inc. ...................................
HSBC Securities (USA) Inc. ........................................
----------
Total .................................................... 10,000,000
==========
Sch A-1
SCHEDULE B
Number of Maximum
Initial Number of
Securities to be Option Securities
Sold to Be Sold
---------------- -----------------
Selling Stockholder:
Sch B-1
SCHEDULE C
UTSTARCOM, INC.
10,000,000 Shares of Common Stock
(Par Value $.00125 Per Share)
1. The public offering price per share for the Securities, determined as
provided in said Section 2, shall be $_____.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $_____, being an amount equal to the public
offering price set forth above less $_____ per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
Sch C-1
SCHEDULE D
Joint Venture and Ownership Percentages Held by the Company
% Owned
Joint Venture by Company
------------- ----------
Guangdong UTStarcom Communications Co., Ltd. .......... 51%
Sch D-1
EXHIBIT A
Form of Opinion of Company's Counsel
A-1
EXHIBIT B
Form of Opinion of Company's PRC Counsel
B-1
EXHIBIT C
Form of Opinion of Selling Stockholder's Counsel
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EXHIBIT D
Form of Lockup Agreement for Executive Officers and Directors
Dated as of _________, 2002
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by UTStarcom, Inc.
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Ladies and Gentlemen:
The undersigned, a stockholder of UTStarcom, Inc., a Delaware
corporation (the "Company"), understands that Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and other
underwriters to be named therein propose to enter into a Purchase Agreement (the
"Purchase Agreement") with the Company and one or more selling stockholders to
be named therein providing for the public offering (the "Offering") of shares of
the Company's common stock, par value $0.0025 per share (the "Common Stock"). In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreement
that, during a period commencing on _________, 2002 and ending on the date 90
days after the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of Xxxxxxx Xxxxx, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option to contact to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Notwithstanding the foregoing, such restrictions shall not apply to: (i) shares
of Common Stock disposed of by the undersigned as bona fide gifts, provided that
the donee thereof agrees in writing to be bound by the provisions hereof; (ii) a
pledge of shares of Common Stock by the undersigned for the purposes of securing
a loan or similar obligation from the Company to the holder; (iii) shares of
Common Stock distributed to partners, members or stockholders of the
undersigned, provided that each distributee agrees in writing to be bound by
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the provisions hereof; and (iv) shares of Common Stock purchased by the
undersigned in the Offering or on the Nasdaq National Market after the date of
the Offering. Notwithstanding the foregoing, beginning two weeks following the
date of the Purchase Agreement, the undersigned may sell his or her shares of
Common Stock that are subject to a contract that was adopted prior to the date
hereof under Rule 10b5-1 under the Securities and Exchange Act of 1934 (the
"10b5-1 Plan"), a copy of which was previously provided to Xxxxxxx Xxxxx or its
counsel. In addition, beginning two weeks following the date of the Purchase
Agreement, the undersigned may sell his or her shares of Common Stock that
otherwise could have been sold pursuant to the 10b5-1 Plan, but for the
enumerated restrictions above, during the period beginning on ________, 2002,
and ending on the date that is two weeks following the Purchase Agreement Date.
In furtherance of the foregoing, the undersigned hereby authorizes the
Company and its transfer agent and registrar to decline to make any transfer of
shares of Common Stock if such transfer would constitute a violation or breach
of this agreement.
This agreement shall be binding on the undersigned and their respective
successors, heirs, personal representatives and assigns of the undersigned.
Very truly yours,
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Name of stockholder or optionholder
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Signature
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Print Name
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Title
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Address
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EXHIBIT E
Form of Lockup Agreement for SOFTBANK America Inc.
February __, 2002
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by UTStarcom, Inc.
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Ladies and Gentlemen:
The undersigned, a stockholder of UTStarcom, Inc., a Delaware
corporation (the "Company"), understands that Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and other
underwriters to be named therein propose to enter into a Purchase Agreement (the
"Purchase Agreement") with the Company and one or more selling stockholders to
be named therein providing for the public offering (the "Offering") of shares of
the Company's common stock, par value $0.0025 per share (the "Common Stock"). In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreement
that, during a period of 180 days from the date of the Purchase Agreement, the
undersigned will not, without the prior written consent of Xxxxxxx Xxxxx,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option to contact to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise. Notwithstanding the foregoing, such
restrictions shall not apply to: (i) shares of Common Stock disposed of by the
undersigned as bona fide gifts, provided that the donee thereof agrees in
writing to be bound by the provisions hereof; (ii) a pledge of shares of Common
Stock by the undersigned for the purposes of securing a loan or similar
obligation from the Company to the holder; (iii) shares of Common Stock
distributed to partners, members or stockholders of the undersigned, provided
that each distributee agrees in writing to be bound by the provisions hereof;
(iv) shares of Common Stock distributed to subsidiaries of the undersigned,
provided that each distributee
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agrees in writing to be bound by the provisions hereof; and (v) shares of Common
Stock purchased by the undersigned in the Offering or on the Nasdaq National
Market after the date of the Offering.
In furtherance of the foregoing, the undersigned hereby authorizes the
Company and its transfer agent and registrar to decline to make any transfer of
shares of Common Stock if such transfer would constitute a violation or breach
of this agreement.
This agreement shall be binding on the undersigned and their respective
successors, heirs, personal representatives and assigns of the undersigned.
Very truly yours,
SOFTBANK AMERICA INC.
By:
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Name:
Title:
Address:
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