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EXHIBIT 1.1
5,000,000 Shares
WEBSIDESTORY, INC.
Common Stock
UNDERWRITING AGREEMENT
[______], 2000
LEHMAN BROTHERS INC.
U.S. BANCORP PIPER JAFFRAY INC.
WILLIAM BLAIR & COMPANY, L.L.C.
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
U.S. BANCORP PIPER JAFFRAY INC.
WILLIAM BLAIR & COMPANY, L.L.C.
As Representatives of the several
Underwriters named in Schedule 2,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
WebSideStory, Inc., a Delaware corporation (the "Company"),
proposes to sell 5,000,000 shares (the "Firm Stock") of the Company's Common
Stock, par value $0.001 per share (the "Common Stock").
It is understood that, subject to the conditions hereinafter
stated, [_______] shares of the Firm Stock (the "U.S. Firm Stock") will be sold
to the several U.S. Underwriters named in Schedule 1 hereto (the "U.S.
Underwriters") in connection with the offering and sale of such U.S. Firm Stock
in the United States and Canada to United States and Canadian Persons (as such
terms are defined in the Agreement Between U.S. and International Underwriters
of even date herewith), and [_____] shares of the Firm Stock (the "International
Firm Stock") will be sold to the several International Underwriters named in
Schedule 2 hereto (the "International Underwriters") in connection with the
offering and sale of such International Firm Stock outside the United States and
Canada to persons other than United States and Canadian Persons. Lehman Brothers
Inc., U.S. Bancorp Piper Jaffray Inc., and William Blair & Company, L.L.C. shall
act as representatives (the "U.S. Representatives") of the several U.S.
Underwriters, and Lehman Brothers International (Europe), U.S. Bancorp Piper
Jaffray Inc., and William Blair &
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Company, L.L.C. 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 U.S. Representatives and the
International Representatives are hereinafter collectively referred to as the
"Representatives."
Of the 5,000,000 shares of Firm Stock, 250,000 shares (the
"Directed Shares") are being sold to certain employees, officers, directors, and
other parties associated with the Company. In addition, the Company proposes to
grant to the U.S. Underwriters an option to purchase up to an additional 750,000
shares of the Common Stock on the terms and for the purposes set forth in
Section _ (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
Section 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Stock has
(i) been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the Securities Act.
The registration statement contains two prospectuses to be used in connection
with the offering and sale of the Stock: the U.S. prospectus, to be used in
connection with the offering and sale of Stock 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 Stock outside the United States
and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. Copies of such registration statement and each of the
amendments thereto have been delivered by the Company to you. As used in this
Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including all information contained
in the final prospectus filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations and deemed to be a part of the registration statement as
of the Effective Time pursuant to Rule 430A of the Rules and Regulations; and
"Prospectus" means the U.S. prospectus and the international prospectus in the
respective forms first used to confirm sales of Stock. 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. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
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(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations and do not and will not, as of the applicable
effective date (as to the Registration Statement and any amendment thereto) and
as of the applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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; provided that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in Section 15)
have been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective properties and
to conduct the businesses in which they are engaged; and none of the
subsidiaries of the Company is a "significant subsidiary," as such term is
defined in Rule 405 of the Rules and Regulations.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus; and all of
the issued shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims.
(e) The shares of the Stock to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor in accordance with this Agreement will be
duly and validly issued, fully paid and non-assessable; and the Stock will
conform to the descriptions thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered by
the Company.
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby and thereby
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 to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or
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regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets; and
except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby and thereby.
(h) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has not sold or
issued any shares of Common Stock during the six (6)-month period preceding the
date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in the Prospectus,
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus; and, since such date, there has not
been any change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries (a
"Material Adverse Effect"), otherwise than as set forth or contemplated in the
Prospectus.
(k) The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement or included in the
Prospectus present fairly the financial condition and results of operations of
the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(l) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who have
delivered one the initial letters referred to in Section 7(e) hereof, are
independent public accountants as required by the Securities Act and the Rules
and Regulations.
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(m) The Company and each of 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, 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 materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and all assets 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.
(n) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar businesses in similar
industries.
(o) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective businesses
will conflict with, and have not received any notice of any claim of conflict
with, any such rights of others.
(p) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, might have a Material Adverse Effect; and to the best of
the Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(q) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration Statement.
(r) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent, which might be expected to have a
Material Adverse Effect.
(t) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and
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does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(u) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes due thereon, and no tax deficiency has been determined adversely to
the Company or any of its subsidiaries which has had (nor does the Company have
any knowledge of any tax deficiency which, if determined adversely to the
Company or any of its subsidiaries, might have) a Material Adverse Effect.
(v) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable assurance that
(A) transactions are executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing assets at
reasonable intervals.
(x) Neither the Company nor any of its subsidiaries (i) is in violation
of its charter or by-laws, (ii) is in default in any material respect, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its properties or assets is subject or (iii) is in
violation in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be subject
or has failed to obtain any material license, permit, certificate, franchise or
other governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business.
(y) Neither the Company nor any of its subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
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(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes," "toxic
wastes," "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(aa) Neither the Company nor any subsidiary is an "investment company"
as defined in the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission promulgated thereunder.
(bb) None of the Directed Shares distributed in connection with the
Directed Share Program will be offered or sold outside of the United States.
(cc) The execution and delivery of the Agreement and Plan of Merger
effective as of __________, 2000 (the "Merger Agreement") between WebSideStory,
Inc., a California corporation (the "California Corporation"), and the Company,
effecting the reincorporation of the California Corporation under the laws of
the State of Delaware (the "Reincorporation"), were duly authorized by all
necessary corporate action on the part of each of the California Corporation and
the Company; and each of the California Corporation and the Company had all
corporate power and authority to execute and deliver the Merger Agreement and
the Certificate of Merger and Agreement of Merger attached as exhibits thereto
to which they are a party, to file such Certificate of Merger with the Secretary
of State of the State of Delaware, to file such Articles of Merger with the
Secretary of State of the State of California and to consummate the
Reincorporation contemplated by the Merger Agreement, and the Merger Agreement
at the time of execution and immediately prior to the effectiveness of the
Reincorporation constituted a valid and binding obligation of each of the
California Corporation and the Company, subject to the effect of (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar federal or
state laws affecting the rights of creditors and (ii) general principles of
equity.
Section 2. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell [______] shares of the
Firm Stock to the several
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Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set forth opposite that
Underwriter's name in Schedule 1 and 2 hereto. The respective purchase
obligations of the Underwriters with respect to the Firm Stock shall be rounded
among the Underwriters to avoid fractional shares, as the Representatives may
determine.
In addition, the Company grants to the U.S. Underwriters an
option to purchase up to [______] shares of Option Stock. Such option is granted
for the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally for the account of the U.S. Underwriters in proportion to
the number of shares of Firm Stock set forth opposite the name of such U.S.
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
U.S. Underwriter with respect to the Option Stock shall be adjusted by the U.S.
Representatives so that no U.S. Underwriter shall be obligated to purchase
Option Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock shall be
$[_______] per share.
The Company shall not be obligated to deliver any of the Stock to
be delivered on any Delivery Date (as hereinafter defined), except upon payment
for all the Stock to be purchased on such Delivery Date as provided herein.
Section 3. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the
Firm Stock, the several Underwriters propose to offer the Firm Stock for sale
upon the terms and conditions set forth in the Prospectus.
Section 4. It is understood that approximately 250,000 Directed Shares
will initially be reserved by the Underwriters for offer and sale to employees,
officers, and directors, and other persons having business relationships with
the Company and its subsidiaries ("Directed Share Participants") upon the terms
and conditions set forth in the Prospectus and in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. Under no
circumstances will Lehman Brothers or any Underwriter be liable to the Company
or to any Directed Share Participant for any action taken or omitted to be taken
in good faith in connection with such Directed Share Program. To the extent that
any Directed Shares are not affirmatively reconfirmed for purchase by any
Directed Share Participant on or immediately after the date of this Agreement,
such Directed Shares may be offered to the public as part of the public offering
contemplated hereby.
The Company agrees to pay all fees and disbursements incurred by
the Underwriters in connection with the Directed Share Program, including
counsel fees and any stamp duties or other taxes incurred by the Underwriters in
connection with the Directed Share Program.
In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless Lehman Brothers and the
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other Underwriters from and against any loss, claim, damage, expense, liability
or action which (i) arises out of, or is based upon, any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the approval of the Company for distribution to Directed Share
Participants in connection with the Directed Share Program or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) arises out of
the failure of any Directed Share Program participant to pay for and accept
delivery of Directed Shares that the Participant agreed to purchase or (iii) is
otherwise related to the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted directly from the bad faith or gross
negligence of Lehman Brothers.
Section 5. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the offices of Brobeck, Phleger &
Harrison LLP, 38 Technology Drive, Irvine, California 92618, at [10:00 A.M., New
York City time], on the fourth (4th) full business day following the date of
this Agreement or at such other date or place as shall be determined by
agreement between the Representatives and the Company. This date and time are
sometimes referred to as the "First Delivery Date." On the First Delivery Date,
the Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Representatives for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer in immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Firm Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two (2) full business
days prior to the First Delivery Date. For the purpose of expediting the
checking and packaging of the certificates for the Firm Stock, the Company shall
make the certificates representing the Firm Stock available for inspection by
the Representatives in New York, New York, not later than 2:00 P.M., New York
City time, on the business day prior to the First Delivery Date.
The option granted in Section 2 will expire thirty (30) days
after the date of this Agreement and may be exercised in whole or in part from
time to time by written notice being given to the Company by the U.S.
Representatives. Such notice shall set forth the aggregate number of shares of
Option Stock as to which the option is being exercised, the names in which the
shares of Option Stock are to be registered, the denominations in which the
shares of Option Stock are to be issued and the date and time, as determined by
the U.S. Representatives, when the shares of Option Stock are to be delivered;
provided, however, that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second (2nd) business day after the date on
which the option shall have been exercised nor later than the fifth (5th)
business day after the date on which the option shall have been exercised. The
date and time the shares of Option Stock are delivered are sometimes referred to
as a "Second Delivery Date" and the First Delivery Date and any Second Delivery
Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the U.S.
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Stock to
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the U.S. Representatives for the account of each U.S. Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer in immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each U.S. Underwriter hereunder. Upon delivery,
the Option Stock shall be registered in such names and in such denominations as
the U.S. Representatives shall request in the aforesaid written notice. For the
purpose of expediting the checking and packaging of the certificates for the
Option Stock, the Company shall make the certificates representing the Option
Stock available for inspection by the U.S. Representatives in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
such Second Delivery Date.
Section 6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than Commission's close of business on the second (2nd) business day
following the execution and delivery of this Agreement or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to
make no further amendment or any supplement to the Registration Statement or to
the Prospectus except as permitted herein; to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of the
Stock for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Stock or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the
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Prospectus in order to comply with the Securities Act, to notify the
Representatives and, upon their request, to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five (5) years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the Company
to its stockholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(i) For a period of one hundred eighty (180) days from the date of the
Prospectus, not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Stock and shares issued pursuant
to employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof), or (2) enter into any swap or
other derivatives
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transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case without the
prior written consent of Lehman Brothers Inc. on behalf of the Underwriters; and
to cause each stockholder, officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters,
substantially in the form of Exhibit A hereto or a substantially similar form
that is acceptable to the Representatives, pursuant to which each such person
shall agree not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case for a
period of one hundred eighty (180) days from the date of the Prospectus, without
the prior written consent of Lehman Brothers Inc. on behalf of the Underwriters;
(j) To apply for the listing for quotation of the Stock on the National
Association of Securities Dealers Automated Quotations National Market (the
"Nasdaq National Market"), and to use its best efforts to complete that listing,
subject only to official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock being sold by
the Company as set forth in the Prospectus;
(l) To take such steps as shall be necessary to ensure that neither the
Company nor any subsidiary shall become an "investment company" as defined in
the Investment Company Act of 1940, as amended, and the rules and regulations of
the Commission promulgated thereunder; and
(m) In connection with the Directed Share Program, to ensure that the
Directed Shares will be restricted to the extent required by the National
Association of Securities Dealers, Inc. or the rules of such association from
sale, transfer, assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration Statement, and
Lehman Brothers Inc. will notify the Company as to which Participants will need
to be so restricted. At the request of Lehman Brothers Inc., the Company will
direct the transfer agent to place stop transfer restrictions upon such
securities for such period of time.
Section 7. Expenses. The Company agrees to pay (a) the costs incident to
the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement, the Agreement Between
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<PAGE> 13
U.S. Underwriters and International Managers, any Supplemental Agreement Among
U.S. Underwriters and any other related documents in connection with the
offering, purchase, sale and delivery of the stock; (e the filing fees incident
to securing the review by the National Association of Securities Dealers, Inc.
of the terms of sale of the Stock; (f) any applicable listing or other fees;
(e.g., the fees and expenses of qualifying the Stock under the securities laws
of the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriters); (h) all costs and expenses of the
Underwriters, including the fees and disbursements of counsel for the
Underwriters, incident to the Directed Share Program described in Section 3; (i)
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
Stock, 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 roadshow and (j) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement; provided
that, except as provided in this Section 6 and in Section 11 the Underwriters
shall pay their own costs and expenses, including the costs and expenses of
their counsel, any transfer taxes on the Stock which they may sell and the
expenses of advertising any offering of the Stock made by the Underwriters.
Section 8. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a); no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company on
or prior to such Delivery Date that the Registration Statement or the Prospectus
or any amendment or supplement thereto contains an untrue statement of material
fact or omits to state a material fact that, in the opinion of Brobeck, Phleger
& Harrison LLP, counsel for the Underwriters, is required to be stated therein
or is necessary to make the statements therein not misleading; provided,
however, the Company shall have the opportunity to cure such defect by filing a
Post-Effective Amendment to the Registration Statement (and/or such other action
as may be required under the Securities Act) prior to such Delivery Date.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement, the transactions contemplated hereby and the Transaction shall be
reasonably satisfactory in all material respects to counsel for the
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Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(d) Gray Cary Ware & Freidenrich LLP shall have furnished to the
Representatives their written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification and have all power and authority necessary to own or
hold their respective properties and conduct the businesses in which
they are engaged;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description thereof contained in
the Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid, non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims. To such
counsel's knowledge, there are no authorized on outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity to debt securities convertible into or exchangeable
for, any capital stock of the Company other than as accurately described
in the Prospectus;
(iii) The shares of the Stock being delivered on such Delivery
Date to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor will be duly and
validly issued, fully paid and non-assessable;
(iv) Except as described in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of the Stock
pursuant to the Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(v) The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver to the Underwriters
the Stock to be issued and sold by it hereunder;
(vi) The execution and delivery of the documents effecting the
Reincorporation (the "Reincorporation Documents") of the California
Corporation under the laws of the State of Delaware have been duly
authorized by all necessary corporate action on the part of each of the
Company and the California Corporation;
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<PAGE> 15
(vii) Each of the California Corporation and the Company had all
corporate power and authority necessary to execute and deliver the
Reincorporation Documents, to execute and file the applicable
Reincorporation Document with the Secretary of State of the State of
California and the applicable Reincorporation Document with the
Secretary of State of the State of Delaware and to consummate the
Reincorporation contemplated by the Reincorporation Documents, and the
Reincorporation Documents at the time of execution and immediately prior
to the effectiveness of the Reincorporation constituted a valid and
binding obligation of each of the California Corporation and the
Company, subject to the effect of (x) bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or other
similar federal or state laws affecting the rights of creditors and (y)
to general principles of equity;
(viii) The Reincorporation Documents have been filed with the
Secretaries of State of the State of California and the State of
Delaware, and to such counsel's knowledge are in effect without
amendment thereto on the date hereof;
(ix) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, might have a Material Adverse
Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(x) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) of the Rules and Regulations specified in such opinion on
the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(xi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (except for the financial statements and financial
schedules and other financial and statistical data included therein, as
to which such counsel need express no belief) comply as to form in all
material respects with the requirements of the Securities Act and the
Rules and Regulations;
(xii) The statements contained in the Prospectus under the
caption "Description of Capital Stock," insofar as they describe federal
statutes, rules and regulations, constitute an accurate summary thereof
and the opinion of such counsel filed as Exhibit 5.1 to the Registration
Statement is confirmed and the Underwriters may rely upon such opinion
as if it were addressed to them;
(xiii) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the
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<PAGE> 16
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to the
Registration Statement;
(xiv) This Agreement has been duly authorized, executed and
delivered by the Company;
(xv) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company pursuant to this Agreement and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated hereby 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 filed as
an exhibit to the Registration Statement and to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any statute or any order, rule
or regulation known to such counsel of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties or assets; and, except for the registration
of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated hereby, except for
such consents, approvals, authorizations, orders, filings or
registrations as have been obtained or made;
(xvi) Except as described in the Prospectus, to the best of such
counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act;
(xvii) The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Code; and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification;
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(xviii)There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the Company,
any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or its
subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any of
its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or
would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and
(xix) Neither the Company nor any subsidiary is an "investment
company" as defined in the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of California and the General Corporation Law
of the State of Delaware. Such opinion shall also be to the effect that (x) such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statement and (y) based on the foregoing, no facts have come
to the attention of such counsel which lead them to believe that the
Registration Statement (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to which
such counsel need express no belief) as of the Effective Date, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus (except as stated above) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (other than as set forth in clause (viii) above).
(e) The Representatives shall have received from Heller Ehrman White &
McAuliffe LLP, intellectual property counsel for the Company, an opinion, dated
such Delivery Date, substantially in the form of Exhibit B attached hereto.
(f) The Representatives shall have received from Brobeck, Phleger &
Harrison LLP, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to
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<PAGE> 18
the issuance and sale of the Stock, the Registration Statement, the Prospectus
and other related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter or letters, in form
and substance satisfactory to the Representatives, addressed to the Underwriters
and dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five (5) days prior to the date hereof),
the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants' "comfort
letters" to underwriters in connection with registered public offerings.
(h) With respect to the letter or letters of PricewaterhouseCoopers LLP
referred to in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "initial letters"), the
Company shall have furnished to the Representatives a letter (the "bring-down
letter") of such accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five (5) days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letters and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letters.
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 7(a), 7(i) and 7 (j) have been
fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.
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(j) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus (A) any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus or (B) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (A) or (B), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(l) The Nasdaq National Market shall have approved the Stock to list for
quotation, subject only to official notice of issuance.
(m) The closing and the sale of the Directed Shares shall have been
completed or will be completed concurrent with the consummation of the sale of
the Firm Stock pursuant to this Agreement; including receipt by the Company of
payment in full for the Directed Shares at or prior to the purchase of the Firm
Stock.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 9. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any
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action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any materials or information provided to investors
by, or with the approval of, the Company in connection with the marketing of the
offering of the Stock ("Marketing Materials"), including any roadshow or
investor presentations made to investors by the Company (whether in person or
electronically),(ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Marketing Materials, any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (iii) any act or failure to act or any alleged act or failure
to act by any Underwriter in connection with, or relating in any manner to, the
Stock or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Underwriter,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred.
The Company agrees to indemnify and hold harmless Lehman Brothers
Inc. (including its officers and employees) and each person, if any, who
controls Lehman Brothers Inc. within the meaning of the Securities Act ("Lehman
Brothers Entities"), from and against any loss, claim, damage or liability or
any action in respect thereof to which any of the Lehman Brothers Entities may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon (i) the
failure of any Participant to pay for and accept delivery of the Directed Shares
sold pursuant to the Directed Share Program which, immediately following the
effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase or (ii) the Directed Share Program, provided
that, the Company shall not be responsible under this subparagraph (ii) for any
loss, claim, damage, liability or action that is finally judicially determined
to have resulted from the gross negligence or willful misconduct of the Lehman
Brothers Entities. The Company shall reimburse the Lehman Brothers Entities
promptly upon demand for any legal or other expenses reasonably incurred by them
in connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or
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any such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or(ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. Notwithstanding anything contained herein
to the contrary, if indemnity may be sought pursuant to Section 8(a) hereof in
respect of such claim or action, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the fees and
expenses of not more than one separate firm (in addition to any local counsel)
for the Lehman Brothers Entities for the defense of any loss, claim, damage,
liability or action arising out of the Directed Share Program. No indemnifying
party shall (i)
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<PAGE> 22
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and the Underwriters on the other from the offering of the Stock
or (ii) if the allocation provided by clause (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 (i) above but also the relative fault of
the Company on the one hand and the Underwriters on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Stock purchased under this Agreement (before deducting expenses) received by the
Company, on the one hand, and the total underwriting discounts and commissions
received by the Underwriters with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the shares of the Stock under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the 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 Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be 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 into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), 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(d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was
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<PAGE> 23
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any 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 Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
Section 10. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1 or
Schedule 2 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting Underwriters in Schedule
1 or Schedule 2 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 3.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Sections 6
and 11. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 or 2 hereto who, pursuant to this Section 9, purchases
which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have to the Company for damages caused by its default.
If other underwriters are obligated
23
<PAGE> 24
or agree to purchase the Stock of a defaulting or withdrawing Underwriter,
either the Representatives or the Company may postpone the Delivery Date for up
to seven (7) full business days in order to effect any changes that in the
opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other document
or arrangement.
Section 11. Termination. The obligations of the Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(h), 7(i) or 7(j), shall have
occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
Section 12. Reimbursement of Underwriters' Expense. If the Company shall
fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company
(including, without limitation, with respect to the transactions) is not
fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by reason
of the default of one or more Underwriters, the Company shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
Section 13. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Lehman Brothers Inc., Three World Financial Center,
New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-6588),
with a copy, in the case of any notice pursuant to Section 8(c), to the Director
of Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World
Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: John J. Hentrich, President and Chief
Executive Officer (Fax: (858) 546-0480);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representatives.
Section 14. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
and their respective
24
<PAGE> 25
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the person or persons, if any, who control
any Underwriter within the meaning of Section 15 of the Securities Act and (B)
the indemnity agreement of the Underwriters contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
Section 15. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
Section 16. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
Section 18. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
Section 19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
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<PAGE> 26
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
WEBSIDESTORY, INC.
By
------------------------------------------
Name: John J. Hentrich
Title: President and Chief Executive Officer
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<PAGE> 27
Accepted:
LEHMAN BROTHERS INC.
U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By
------------------------------------------
Authorized Representative
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.
For themselves and as Representatives
of the several Underwriters named
in Schedule 2 hereto
By LEHMAN BROTHERS INTERNATIONAL (EUROPE)
By
------------------------------------------
Authorized Representative
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<PAGE> 28
SCHEDULE 1
<TABLE>
<CAPTION>
Number of Shares of Firm
U.S. Underwriters Stock to be Purchased
<S> <C>
Lehman Brothers Inc.
U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.
Fidelity Capital Markets,
a division of National Financial Services Corporation
[Names of other U.S. Underwriters]
Total
</TABLE>
28
<PAGE> 29
SCHEDULE 2
<TABLE>
<CAPTION>
Number of Shares of
International Underwriters Firm Stock to be Purchased
<S> <C>
Lehman Brothers International (Europe)
U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.
[Names of other International Underwriters]
Total
</TABLE>
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<PAGE> 30
EXHIBIT A
LOCK-UP LETTER AGREEMENT
LEHMAN BROTHERS INC.
U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.
As Representatives of the several
Underwriters named in Schedule 2,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
The undersigned understands that you and certain other firms
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
providing for the purchase by you and such other firms (the "Underwriters") of
shares (the "Shares") of Common Stock, par value $0.001 per share (the "Common
Stock"), of WebSideStory, Inc., a Delaware corporation (the "Company"), and that
the Underwriters propose to reoffer the Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement
by the Underwriters, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior written consent of
Lehman Brothers Inc., on behalf of the Underwriters, the undersigned will not,
directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose
of (or enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock (including, without limitation, shares of Common
Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock (other than the Shares) owned by the undersigned on the date of execution
of this Lock-Up Letter Agreement or on the date of the completion of the
Offering, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other
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<PAGE> 31
securities, in cash or otherwise, for a period of one hundred eighty (180) days
after the date of the final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer
Agent are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
It is understood that, if the Company notifies you that it does
not intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters
will proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number
of factors, including market conditions. Any Offering will only be made pursuant
to an Underwriting Agreement, the terms of which are subject to negotiation
between the Company and the Underwriters.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Very truly yours,
By:
-------------------------------
Name:
Title:
Dated:
---------------
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EXHIBIT B
Matters to be Covered in the Opinion of
Intellectual Property Counsel for the Company
Such counsel are familiar with the technology used by the Company
in its business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to patents, trade secrets,
trademarks, service marks or other proprietary information or materials and:
(i) As to the statements under the captions "Risk Factors -- The
success of our business depends in large part on our ability to protect
and enforce our intellectual property rights" and "Business --
Intellectual Property," nothing has come to the attention of such
counsel which caused them to believe that the above-mentioned sections
of the Registration Statement and any amendment or supplement thereto
made available and reviewed by such counsel, at the time the
Registration Statement became effective and at all times subsequent
thereto up to and on the Closing Date and on any later date on which
Option Stock are to be purchased, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(ii) Such counsel knows of no material action, suit, claim or
proceeding relating to patent applications, patent rights or licenses,
trademarks or trademark rights, service marks or service mark rights,
copyrights, collaborative research, licenses or royalty arrangements or
agreements or trade secrets, know-how or proprietary techniques,
including processes and substances, owned by or affecting the business
or operations of the Company which are pending or threatened against the
Company or any of its officers or directors;
(iii) The Company is listed in the records of the United States
Patent and Trademark Office as the holder of record of each of the
applications listed on a schedule to such opinion (the "Applications").
To the knowledge of such counsel, there are no claims of third parties
to any ownership interest or lien with respect to any of the
Applications. Such counsel is not aware of any material defect in form
in the preparation or filing of the Applications on behalf of the
Company. To the knowledge of such counsel, the Applications are being
pursued by the Company. To the knowledge of such counsel, the Company
owns as its sole property the pending Applications;
(iv) The Company is listed in the records of the appropriate
foreign offices as the sole holder of record of each of the applications
listed on a schedule to such opinion (the "Foreign Applications"). Such
counsel knows of no claims of third parties to any ownership interest or
lien with respect to the Foreign Applications. Such counsel is not aware
of any material defect of form in the preparation or filing of the
Foreign Applications on behalf of the Company. To the knowledge of such
counsel, the Foreign
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<PAGE> 33
Applications are being pursued by the Company. To the knowledge of such
counsel, the Company owns as its sole property the pending Foreign
Applications; and
(v) Such counsel has no knowledge of any reason why any patent
to be issued as a result of any Application or Foreign Application would
not be valid or would not afford the Company useful patent protection
with respect thereto.
33
