EXHIBIT 1.1
3,000,000 Shares
SANDISK CORPORATION
Common Stock $.001 Par Value
UNDERWRITING AGREEMENT
__________, 1999
_____________, 1999
Xxxxxx Xxxxxxx & Co. Incorporated
First Union Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Xxxxx International
BancBoston Xxxxxxxxx Xxxxxxxx International Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
SANDISK CORPORATION, a Delaware corporation (the "Company") proposes to
sell to the several Underwriters 3,000,000 shares of the Common Stock, $.001 par
value, of the Company (the "Firm Shares"). The Shares (as defined below) will
have attached thereto rights (the "Rights") to purchase one one-hundredth of a
share of Series A Junior Participating Preferred Stock for $65.00 pursuant to
the terms of the Rights Agreement (as defined below). The Rights are to be
issued pursuant to a Rights Agreement (the "Rights Agreement") dated as of April
18, 1997 between the Company and Xxxxxx Trust and Savings Bank.
It is understood that, subject to the conditions hereinafter stated,
2,400,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United
1
States and Canadian Persons (as such terms are defined in the Agreement
Between U.S. and International Underwriters of even date herewith), and
600,000 Firm Shares (the "International Shares") will be sold to the several
International Underwriters named in Schedule II hereto (the "International
Underwriters") in connection with the offering and sale of such International
Shares outside the United States and Canada to persons other than United
States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated, First Union
Securities Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and
BancBoston Xxxxxxxxx Xxxxxxxx Inc., shall act as representatives (the "U.S.
Representatives") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co.
International Limited, Xxxxxxx Xxxxx International and BancBoston Xxxxxxxxx
Xxxxxxxx International Limited shall act as representatives (the
"International Representatives") of the several International Underwriters.
The U.S. Underwriters and the International Underwriters are hereinafter
collectively referred to as the Underwriters.
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional 450,000 shares of Common Stock, $.001
par value, (the "Additional Shares"), if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of common stock granted to the
U.S. Underwriters in Section 3 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares." The shares of
Common Stock, $.001 par value of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"Common Stock."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares and the Rights. The registration statement contains two prospectuses to
be used in connection with the offering and sale of the Shares: the U.S.
prospectus, to be used in connection with the offering and sale of Shares in the
United States and Canada to United States and Canadian Persons, and the
international prospectus, to be used in connection with the offering and sale of
the International Shares. The international prospectus is identical to the U.S.
prospectus except for the outside front cover page. The registration statement
as amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the U.S. prospectus and the international prospectus in the respective forms
first used to confirm sales of Shares are hereinafter collectively referred to
as the
2
"Prospectus." As used herein, the terms "Registration Statement," "Prospectus"
and "preliminary prospectus" shall include in each case the documents, if any,
incorporated by reference therein (the "Incorporated Documents") that the
Company has filed pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The terms "supplement," "amendment" and "amend" as used
herein shall include all documents deemed to be incorporated by reference in
the Prospectus that are filed subsequent to the date of the Prospectus by the
Company with the Commission pursuant to the Exchange Act. If the Company has
filed an abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Company meets the requirements for filing a Registration Statement
on Form S-3 and such Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) Each document filed or to be filed pursuant to the Exchange Act
and incorporated by reference in the Prospectus complied or will comply when so
filed in all material respects with the Exchange Act and the applicable rules
and regulations of the Commission thereunder; (ii) each part of the Registration
Statement, when such part became effective, did not contain and each such part,
as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph (b)
do not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
3
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company, free
and clear of all liens, encumbrances, equities or claims. Other than Sandisk
KK, none of the Company's subsidiaries are "significant subsidiaries" within the
meaning of Section 1.02(w) of Regulation S-X under the Rules and Regulations.
(e) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or 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 the Company and its subsidiaries; and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
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 the Company and its
subsidiaries, in each case except as described in or contemplated by the
Prospectus.
4
(f) This Agreement has been duly authorized, executed and delivered by the
Company.
(g) The authorized capital stock of the Company conforms to the
description thereof contained in the Prospectus.
(h) The shares of Common Stock outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and validly issued
and are fully paid and non-assessable. Except as set forth in the Prospectus
(as of the respective dates as to which information is given therein), the
Company does not have outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations, other than any options granted subsequent to such
dates pursuant to the Company's employee benefit plans. All outstanding shares
of capital stock and options and other rights to acquire capital stock have
been issued in compliance with the registration and qualification provisions
of all applicable securities laws and were not issued in violation of any
preemptive rights, rights of first refusal or other similar rights.
(i) The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not violate any preemptive or similar rights.
(j) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law (other than applicable state securities or Blue Sky
laws, as to which we express no opinion) or the certificate of incorporation or
by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as have been obtained under the Securities Act or the Exchange Act and except as
5
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(k) There has not occurred any material adverse change, or any development
that could reasonably be expected to cause a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(l) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) the Company and its
subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its consolidated subsidiaries, except in each
case as described in or contemplated by the Prospectus.
(m) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described, or any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(n) Each of the Company and its subsidiaries has all necessary consents,
authorizations, approvals, orders, certificates and permits of and from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts and
other tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except to the
extent that the failure to obtain or file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(o) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
6
pursuant to Rule 424 or Rule 462 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder. The Incorporated Documents
heretofore filed, when they were filed (or, if any amendment with respect to any
such document was filed, when such amendment was filed), conformed in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder; any further Incorporated Documents so
filed will, when they are filed, conform in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
(p) The Company is not, and after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(q) There is no owner of any securities of the Company who has any rights,
not effectively satisfied or waived, to require registration of any shares of
capital stock of the Company in connection with the filing of the Registration
Statement.
(r) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, except as described in or contemplated
by the Prospectus.
(s) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required
7
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(t) The costs or liabilities, if any, associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(u) Except as described in the Prospectus, the Company and each of its
subsidiaries owns or possesses or can acquire on reasonable terms all material
licenses or other rights to use all patents, copyrights, trademarks, service
marks, trade names, mask work rights, technology and know-how necessary to
conduct its business in the manner described in the Prospectus and, neither the
Company nor any of its subsidiaries has received any notice of infringement or
conflict with (and neither the Company nor any of its subsidiaries knows of any
infringement or conflict with) asserted rights of others with respect to any
patents, copyrights, trademarks, service marks, trade names, mask work rights,
technology or know-how which could result in any material adverse effect upon
the Company and its subsidiaries, taken as a whole; and, except as disclosed in
the Prospectus, the discoveries, inventions, products or processes of the
Company and its subsidiaries referred to in the Prospectus do not, to the best
knowledge of the Company or any of its subsidiaries, infringe or conflict with
any right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third party,
known to the Company or any of its subsidiaries which could have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(v) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings related to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of any
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries,
8
taken as a whole, except as described in or contemplated by the Prospectus.
(w) The Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) As of the date the Registration Statement becomes effective, the
Shares to be issued by the Company will be authorized for listing on the Nasdaq
National Market upon official notice of issuance.
(y) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.
(z) No material labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in or contemplated by the
Prospectus, or, to the knowledge of the Company, is imminent; and the Company is
not aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors that
could result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
(aa) The Company has reviewed its operations and that of its subsidiaries
to evaluate the extent to which the business or operations of the Company or any
of its subsidiaries will be affected by the Year 2000 Problem (that is, any
significant risk that the computer hardware or software applications used by the
Company and its subsidiaries will not, in the case of dates or time periods
occurring after December 31, 1999 function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000); as a result
of such review, (i) the Company has no reason to believe, and does not
believe, that (A) there are any issues related to the Company's preparedness
to address the Year 2000 Problem that are of a character required to be
described or referred to
9
in the Registration Statement or the Prospectus which have not been described
in the Registration Statement or the Prospectus and (B) the Year 2000 Problem
will have a material adverse effect on the condition, financial or otherwise,
or on the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, or result in any material loss or interference
with the business or operations of the Company and its subsidiaries, taken as
a whole; and (ii) the Company reasonably believes, after due inquiry, that the
suppliers, vendors, customers or other material third parties used or served
by the Company and such subsidiaries are addressing or will address the Year
2000 Problem in a timely manner, except to the extent that a failure to
address the Year 2000 Problem by any supplier, vendor, customer or material
third party would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business or operations of the
Company and its subsidiaries, taken as a whole.
(bb) The Rights Agreement has been duly authorized, executed and delivered
by the Company; the Rights have been duly authorized and validly issued by the
Company and the Series A Junior Participating Preferred Stock has been duly
authorized by the Company and validly reserved for issuance and upon exercise in
accordance with the terms of the Rights Agreement, will be validly issued, fully
paid and non-assessable.
10
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, to purchase from the Company at $______ a share
(the "Purchase Price") the respective number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears
the same proportion to the number of Firm Shares to be sold by such Seller as
the number of Firm Shares set forth in Schedules I and II hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 450,000
Additional Shares at the Purchase Price. If the U.S. Representatives, on behalf
of the U.S. Underwriters, elect to exercise such option, the U.S.
Representatives shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the U.S. Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of U.S. Firm Shares set forth in Schedule
II hereto opposite the name of such U.S. Underwriter bears to the total number
of U.S. Firm Shares.
The Company hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, (i) offer, pledge,
12
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, lend
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such 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)
the Shares to be sold hereunder, (B) the issuance by the Company of shares of
Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing, (C) transactions by any person other than the Company
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the offering of the Shares, (D) the sale of
Common Stock totaling up to 1,000,000 shares in the aggregate by Seagate
Technology, Inc. (E) the granting of stock options and/or restricted stock
units pursuant to the Company's existing employee benefit plans and to
directors in connection with their initial appointment to the board of
directors, provided that these options, other than director options, do not
become exercisable and these units do not vest during the 90-day period.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
US$___ a share (the "Public Offering Price") and to certain dealers selected by
you at a price that represents a concession not in excess of US$____ a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of US$___ a share, to any
Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares to be sold by
the Company shall be made in Federal or other funds immediately available in
New York City against delivery of such Firm Shares for the
13
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on ____________, 1999, or at such other time on the same or such other
date, not later than _________, 1999, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "Closing
Date."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the notice described in
Section 3 or at such other time on the same or on such other date, in any event
not later than _______, 1999, as shall be designated in writing by the U.S.
Representatives. The time and date of such payment are hereinafter referred to
as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:00 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any of the Company's securities by any "nationally
recognized
14
statistical rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
reasonably likely to cause a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date and on the
Option Closing Date, as the case may be:
(i) a certificate, dated the Closing Date or on the Option Closing Date,
as the case may be, and signed by the chief executive officer and the chief
financial officer of the Company, to the effect set forth in clause 6(a)(i)
above and to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date or on
the Option Closing Date, as the case may be, and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date or on the Option
Closing Date, as the case may be; and
(ii) a certificate, dated the Closing Date and signed by the Selling
Shareholder that the representations and warranties of the Selling Shareholder
contained in this Agreement are true and correct as of the Closing Date or on
the Option Closing Date, as the case may be, and that the Selling Shareholder
has complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing Date or
on the Option Closing Date, as the case may be.
The officers signing and delivering each such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company, dated the Closing
Date, to the effect that:
15
(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
(ii) the Company owns all of the shares of capital stock of each subsidiary
of the Company organized under the laws of any state of the United States (a
"Domestic Subsidiary") and each Domestic Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(iii) the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus;
(iv) the shares of Common Stock outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and validly issued
and, to our knowledge, are fully paid and non-assessable;
(v) all of the issued shares of capital stock of each Domestic Subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims;
16
(vi) the Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to (A) any preemptive rights arising under the
Company's restated certificate of incorporation or the Delaware General
Corporation Law or (B) to our knowledge, similar rights that entitle or will
entitle any person to acquire any shares of capital stock of the Company upon
the issuance and sale of the Shares by the Company;
(vii) the Company has corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
issued and sold by the Company;
(viii) this Agreement has been duly authorized, executed and delivered by
the Company;
(ix) the execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law (other than applicable state securities or Blue Sky
laws, as to which such counsel need not express an opinion) or the certificate
of incorporation or by-laws of the Company or, to such counsel's knowledge, any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole (with such agreements and instruments being set forth on a schedule to
such counsel's opinion), or, to such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except as
have been obtained under the Securities Act or the Exchange Act and except such
as may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares by the U.S. Underwriters;
(x) the statements (A) in the Prospectus under the captions "Risk Factors
-- Risks Relating to the Offering -- Anti-takeover provisions in our Charter
documents and in Delaware law could prevent a delay in change in control and, as
a result,
17
negatively impact out shareholders," "Business -- Strategic Manufacturing
Relationships," "Business -- Seagate Relationship," "United States Federal Tax
Considerations for Non-United States Holders" and "Underwriters" (to the
extent of a description of this Agreement) and (B) in the Registration
Statement in Item 15 and (C) in the Registration Statements on Form 8-A
relating to the Common Stock and the Rights filed under the Exchange Act, in
each case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly summarize the
matters referred to therein to the extent required by the Securities Act or
the Exchange Act or the Rules and Regulations;
(xi) such counsel does not know of any legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations, contracts
or other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required, as the case may be;
(xii) the Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
(xiii) to the knowledge of such counsel, there is no legal or beneficial
owner of any securities of the Company who has any rights, not effectively
satisfied or waived, to require registration of any shares of capital stock of
the Company in connection with the filing of the Registration Statement;
(xiv) nothing has come to the attention of such counsel that leads it to
believe that the Company and its subsidiaries (A) are not in compliance with any
and all applicable Environmental Laws, (B) have not received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (C) are not in compliance with all
terms and conditions of any such permit, license or approval,
18
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not, singly
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and
(xv) to such counsel's knowledge (A) the Registration Statement has
become effective under the Securities Act, (B) no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the
Securities Act and nothing has come to such counsel's attention to lead it to
believe that such proceedings are contemplated; and (C) any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b);
(xvi) the Shares to be sold under this Agreement to the Underwriters are
duly authorized for quotation on the Nasdaq National Market; and
(xvii) The Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized and validly
issued by the Company and the Series A Junior Participating Preferred Stock
has been duly authorized by the Company and validly reserved for issuance upon
the exercise in accordance with the terms of the Rights Agreement, will be
validly issued, fully paid and non-assessable.
(xviii) such counsel shall also state that (A) it believes that the
Registration Statement and Prospectus (except for financial statements and
schedules included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder, (B) nothing
has come to its attention that would cause it to believe that (except for
consolidated financial statements and schedules and the statistical data
included in the Registration Statement as to which such counsel need not express
any belief) the Registration Statement and the prospectus included therein at
the time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
19
and (C) nothing has come to its attention that would cause it to believe that
(except for consolidated financial statements and schedules and the
statistical data included in the Registration Statement as to which such
counsel need not express any belief) the Prospectus as of its date or as of
the Closing Date contained any untrue statement of a material fact or omitted
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.
20
(d) The Underwriters shall have received on the Closing Date an opinion of
Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Sections 5(c)(vi), 5(c)(viii), 5(c)(x) (but
only as to the statements in the Prospectus under "Underwriters") and
5(c)(xvii), 5(c)(xviii) above.
With respect to Section 6(c)(xvii), 6(c)(xviii) above, Xxxxxxx, Phleger &
Xxxxxxxx LLP and Xxxxx Xxxx & Xxxxxxxx may state that their opinion and belief
are based upon their participation in the preparation of the Registration
Statement and
21
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification,
except as specified.
The opinion of Xxxxxxx, Phleger & Xxxxxxxx LLP described in Section 5(c)
above, the opinion of Yuasa and Hara described in paragraph (e) below, and the
opinion of Majestic, Xxxxxxx, Xxxxxxx & Hsue described in paragraph (f) below
shall be rendered to the Underwriters at the request of the Company or the
Selling Shareholder, as the case may be, and shall so state therein.
(e) The Underwriters shall have received, on the Closing Date, a letter
dated the Closing Date, an opinion of Yuasa and Hara, special Japanese counsel
to the Company, dated the Closing Date, to the effect that SanDisk KK has been
duly incorporated, is validly existing as a corporation in good standing under
the laws of Japan, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(f) The Underwriters shall have received on the Closing Date an opinion of
Majestic, Xxxxxxx, Xxxxxxx & Xxxx, patent counsel to the Company, dated the
Closing Date, to the effect that:
(i) the Company is listed in the records of the United States Patent and
Trademark Office ("PTO") as the holder of record of the patent applications
listed in Exhibit A hereto (the "Patent Applications"). [Five] of such Patent
Applications, listed on Exhibit B hereto, have been allowed or indicated as
containing allowable subject matter. To the best of such counsel's knowledge,
written assignments to the Company of all ownership interests in the Patent
Applications have been duly authorized, executed and delivered by all of the
inventors in accordance with their terms. To the best of such counsel's
knowledge, there is no claim of any party
22
other than the Company to any ownership interest or lien with respect to any
of the Patent Applications except as noted on Exhibit A;
(ii) to such counsel's knowledge, other than in connection with
assertions or inquiries made by patent office examiners in the ordinary course
of the prosecution of the Company's Patent Applications and except as set
forth on Exhibit C hereto, there is not pending or threatened in writing any
action, suit, proceeding or claim by others (A) challenging the validity or
scope of the Patent Applications held by or licensed to the Company, or (B)
asserting that any third party patent is infringed by the activities of the
Company described in the Prospectus or by the manufacture, use or sale of any
of the Company's products or other items made and used according to the Patent
Applications held by or licensed to the Company;
(iii) to such counsel's knowledge and except as set forth on Exhibit C
hereto, there is not pending or threatened in writing any action, suit,
proceeding or claim by the Company asserting infringement on the part of any
third party of the Patent Applications; and
(iv) the statements in the Prospectus under the captions "Risk Factors --
Risks associated with patents, proprietary rights and related litigation" and
"Business -- Patents and Licenses" (the "Intellectual Property Portions"), to
the best of such counsel's knowledge, insofar as such statements relate to the
Patent Applications or any legal matters, documents and proceedings relating
thereto, fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein.
(g) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation special intellectual
property counsel to the Company, dated the Closing Date, to the effect that:
(i) the statements in the Prospectus under the captions "Risk Factors --
Risks associated with patents, proprietary rights and related litigation," and
"Business -- Patents and Licenses," to such counsel's knowledge, insofar as such
statements relate to the patents listed in Exhibit A (the "Patents") or any
legal matters,
23
documents and proceedings relating thereto, fairly present the information
called for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(ii) to such counsel's knowledge, other than in connection with
assertions or inquiries made by patent office examiners in the ordinary course
of the prosecution of the Company's Patent Applications and except as set
forth on Exhibit B hereto, there is not pending or threatened in writing any
action, suit, proceeding or claim by others (A) challenging the validity or
scope of the Patents held by or licensed to the Company, or (B) asserting that
any third party patent is infringed by the activities of the Company described
in the Prospectus or by the manufacture, use or sale of any of the Company's
products or other items made and used according to the Patents held by or
licensed to the Company;
(iii) to such counsel's knowledge and except as set forth on Exhibit C
hereto, there is not pending or threatened in writing any action, suit,
proceeding or claim by the Company asserting infringement on the part of any
third party of the Patents; and
(iv) the statements in the Prospectus under the heading "Business--Legal
Proceedings," insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein.
(h) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from Ernst
& Young LLP, independent public accountants, 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; provided
that such letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form of Exhibit D
hereto, between you and certain stockholders, officers and directors of the
Company relating to sales and certain other dispositions of shares of Common
Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(j) The Shares to be issued and sold by the Company shall have received
authorization for listing, upon official notice of issuance, on the Nasdaq
National Market.
24
(l) The Company shall have complied with the provisions of Section 5(a)
hereof with respect to the furnishing of prospectuses on the business day next
succeeding the date of this Agreement in such quantities as you may reasonably
request.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed in compliance with the provisions
hereof only if Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, shall be
reasonably satisfied that they comply in form and scope.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the Option Closing Date of such
documents as you may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares and other
matters related to the issuance of the Additional Shares and an opinion or
opinions of Xxxxxxx, Phleger & Xxxxxxxx, Majestic, Xxxxxxx, Xxxxxxx & Hsue,
Yuasa and Hara and Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx (to the extent of the
opinion rendered pursuant to subparagraph (g) above) in form and substance
satisfactory to Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters.
6. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge, prior
to 10:00 a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c) below, as many
copies of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.
25
(c) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus is
required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been sold by
you on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and to pay all expenses (including fees and disbursements of counsel) in
connection with such qualification and in connection with any review of the
offering of the Shares by the National Association of Securities Dealers, Inc.;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation in any jurisdiction where it is not now so registered
or qualified.
(e) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering the twelve-month period
ending December 31, 2000 that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
(f) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its stockholders and (ii) all reports, financial statements and proxy
or information statements filed by the Company with the Commission or any
national securities exchange.
(g) The Company will use its best efforts to obtain and maintain in effect
the quotation of the Shares to be issued and sold by the Company on the Nasdaq
National Market and will take all necessary steps to cause
26
the Shares to be included on the Nasdaq National Market as promptly as
practicable and to maintain such inclusion for a period of three years after
the date hereof or until such earlier date as the Shares shall be listed for
regular trading privileges on another national securities exchange.
(h) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(i) The Company agrees: (i) to enforce the terms of each Lock-up
Agreement and (ii) issue stop-transfer instructions to the transfer agent for
the Common Stock with respect to any transaction or contemplated transaction
that would constitute a breach of or default under any applicable Lock-up
Agreement. In addition, except with the prior written consent of Xxxxxx
Xxxxxxx, the Company agrees (i) not to amend or terminate, or waive any right
under, any Lock-up Agreement, or take any other action that would directly or
indirectly have the same effect as an amendment or termination, or waiver of any
right under, any Lock-up Agreement, that would permit any holder of shares of
Common Stock, or securities convertible into or exercisable or exchangeable for
Common Stock subject to a Lock-up Agreement, to sell, make any short sale of,
grant any option for the purchase of, or otherwise transfer or dispose of, any
of such shares of Common Stock or other securities prior to the expiration of 90
days after the date of the Prospectus, and (ii) not to consent to any sale,
short sale, grant of an option for the purchase of, or other disposition or
transfer of shares of Common Stock, or securities convertible into or
exercisable or exchangeable for Common Stock, subject to a Lock-up Agreement.
8. Expenses. The Company agrees, whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
to pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove specified, (ii)
all costs and expenses related to the transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon, (iii)
the cost of printing or producing any Blue Sky or Legal Investment memorandum
in connection with the offer and sale of the Shares
27
under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements
(including filing fees) of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the
National Association of Securities Dealers, Inc., (v) all costs and expenses,
if any, incident to listing the Shares on the Nasdaq National Market, (vi) the
cost of printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of
the Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, and (ix) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in Section 8 entitled "Indemnity and
Contribution", and the last paragraph of Section 10 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel, stock transfer taxes payable on resale of any of the Shares by
them and any advertising expenses connected with any offers they make.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and
holder harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, or is under common control with, or is
controlled by, any Underwriter from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
28
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein. The foregoing indemnity agreement provided in this
paragraph 8(a) with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter, or any person controlling such Underwriter,
from whom the person asserting any such losses, claims, damages, or
liabilities purchased Shares, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
Prospectus (as so amended or supplement) would have cured the defect given
rise to such loss, claim, damage or liability except that such provision shall
inure to the benefit of the Underwriters if the Company failed to deliver by
5:00 p.m. one day following the date hereof as many copies of any such
preliminary prospectus, the Prospectus or the Registration Statement as the
Underwriters may so request.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the directors of the
29
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
30
In the case of any such separate firm for the Underwriters and such control
persons of any Underwriters such firm shall be designated in writing by Xxxxxx
Xxxxxxx & Co. Incorporated. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a),
8(b) or 8(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 8(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements
31
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective number of Shares they
have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
32
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
9. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the later of (i) execution and delivery hereof by the parties
hereto and (ii) release of notification of the effectiveness of the Registration
Statement by the Commission.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I or Schedule II bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase
33
Firm Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter and the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
34
Very truly yours,
SANDISK CORPORATION
By:
-------------------------------------
Name:
Title:
35
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
First Union Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
-------------------------------------
Name:
Title:
36
Xxxxxx Xxxxxxx & Co.
International Limited
International Limited
Xxxxxxx Xxxxx International
BancBoston Xxxxxxxxx Xxxxxxxx
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By:
-------------------------------------
Name:
Title:
37
SCHEDULE I
U.S. UNDERWRITERS
Number of Firm Shares
Underwriter To Be Purchased
------------------------------------- ---------------------
Xxxxxx Xxxxxxx & Co. Incorporated......
First Union Securities Inc.............
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated....................
BancBoston Xxxxxxxxx Xxxxxxxx Inc...... _____________________
Total:..............................
=====================
SCHEDULE II
INTERNATIONAL UNDERWRITERS
Number of Firm Shares
Underwriter To Be Purchased
----------------------------------------------- ---------------------
Xxxxxx Xxxxxxx & Co. International Limited.....
Xxxxxxx Xxxxx International....................
BancBoston Xxxxxxxxx Xxxxxxxx International
Limited................................. _____________________
Total:......................................
======================
EXHIBIT A
PATENT APPLICATIONS
EXHIBIT C
LITIGATION
EXHIBIT D
[FORM OF LOCK-UP LETTER]
, 199_
Xxxxxx Xxxxxxx & Co. Incorporated
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
First Union Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with SanDisk Corporation, a Delaware corporation (the "Company"),
providing for the public offering (the "Public Offering") by the several
Underwriters, including Xxxxxx Xxxxxxx (the "Underwriters"), of ___ shares (the
"Shares") of the Common Stock, $.001 par value of the Company (the "Common
Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) 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, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) 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) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion
of the Public Offering, (c) the sale of Common Stock totaling up to 1,000,000
shares in the aggregate or (d) transfers of any equity securities to
wholly-owned subsidiaries of the undersigned provided that (i) prior to any such
transfer, such subsidiaries agree to be bound for the remainder of the period
for which the undersigned is bound and (ii) execute a form of this lock-up
agreement. In addition, the undersigned agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
In the event the Public Offering does not take place by December 31, 1999,
this letter agreement shall be of not further force and effect.
Very truly yours,
----------------------------------
(Name)
----------------------------------
(Address)
