<PAGE>
As filed with the Securities and Exchange Commission on March 8, 2000
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act Of 1933
---------------
OMNIVISION TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
---------------
<TABLE>
<S> <C> <C>
Delaware 3673 77-0401990
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
OmniVision Technologies, Inc.
930 Thompson Place
Sunnyvale, California 94086
(408) 733-3030
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Shaw Hong
Chief Executive Officer
OmniVision Technologies, Inc.
930 Thompson Place
Sunnyvale, California 94086
(408) 733-3030
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
<TABLE>
<S> <C>
Robert P. Latta, Esq. Nora L. Gibson, Esq.
Wilson Sonsini Goodrich & Rosati Brobeck Phleger & Harrison LLP
Professional Corporation Spear Street Tower
650 Page Mill Road One Market
Palo Alto, CA 94304 San Francisco, California 94105
(650) 493-9300 (415) 442-0900
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Proposed
Maximum
Aggregate Amount of
Title of Each Class of Offering Registration
Securities to be Registered Price(1) Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock, $.001 par value.......................................... $63,250,000 $16,698
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell securities, and we are not soliciting offers to buy these +
+securities, in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 8, 2000
[LOGO OF OMNIVISION APPEARS HERE]
Shares
Common Stock
OmniVision Technologies, Inc. is offering shares of its common stock.
This is our initial public offering and no public market currently exists for
our shares. We have applied to have the shares we are offering approved for
quotation on the Nasdaq National Market under the symbol "OVTI." We anticipate
that the initial public offering price will be between $ and $ per
share.
--------------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 8.
--------------
<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Public Offering Price.............................................. $ $
Underwriting Discounts and Commissions............................. $ $
Proceeds to OmniVision Technologies, Inc........................... $ $
</TABLE>
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
We have granted the underwriters a 30 day option to purchase up to an
additional shares of common stock to cover over allotments.
--------------
Robertson Stephens
Prudential Volpe Technology
a unit of Prudential Securities
Needham & Company, Inc.
The date of this prospectus is , 2000
<PAGE>
[Company logo. Title in Bold and Underlined, "Freedom to Envision New Video
Applications". Subtitled "Single Chip CMOS Image Sensors". In the center of the
page a picture of our Single Chip CMOS Image Sensor is next to a quarter, a die
and a camera with a module. Underneath the picture is the following text,
"Single Chip CMOS Image Sensors". The picture and accompanying text are
surrounded by images of products which incorporate our Single Chip CMOS Image
Sensors, along with text describing such products. These products are: PC Video
Cameras, Digital Still Cameras, Toys, Video Conference/Set-Top Boxes,
Automotive, BAR Code Readers, CCTVs, PDAs, Biometrics, Video Phones, Cellular
Phones, Medical Instruments and Security and Surveillance.]
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of the common stock. In this prospectus, references
to "OmniVision," "Registrant," "we," "us" and "our" refer to OmniVision
Technologies, Inc.
Until , 2000, all dealers that buy, sell or trade our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary ...................................................... 4
Risk Factors ............................................................ 8
Forward Looking Statements .............................................. 18
Use Of Proceeds.......................................................... 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Dilution ................................................................ 21
Selected Financial Data ................................................. 22
Management's Discussion And Analysis Of Financial Condition And Results
Of Operations ......................................................... 24
Business ................................................................ 34
Management .............................................................. 51
Certain Transactions .................................................... 59
Principal Stockholders................................................... 61
Description Of Capital Stock ............................................ 63
Shares Eligible For Future Sale ......................................... 67
Underwriting ............................................................ 69
Legal Matters ........................................................... 71
Experts ................................................................. 71
Where You Can Find Additional Information ............................... 71
Index to Financial Statements............................................ F-1
</TABLE>
---------------------
"OmniVision" is our trademark and service mark. Other service marks,
trademarks and trade names referred to in this prospectus are the property of
their respective owners.
3
<PAGE>
PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all the information
that may be important to you. You should read the entire prospectus, especially
"Risk Factors" and the Financial Statements and notes to those statements
appearing elsewhere in this prospectus, before deciding to invest in our common
stock.
Our Business
OmniVision Technologies, Inc. is a leading provider of highly integrated,
single chip semiconductor imaging devices. We design, develop and market our
high performance, high quality and cost efficient semiconductor imaging devices
for computing, communications and consumer electronics applications. Our main
product, an image sensor, is used in cameras and camera related products such
as personal computer, or PC, cameras, digital still cameras and security system
cameras. We believe that we supply the most highly integrated single chip,
complementary metal oxide semiconductor, or CMOS, image sensor. Our single chip
design offers competitive advantages that can allow our customers to design
cameras that are lower in cost, smaller, lighter in weight, consume less power,
are more reliable and more easily integrated with other circuits than cameras
using CCD technology or multiple chip CMOS image sensors.
Our CMOS image sensors are currently used for videoconferencing, digital
still cameras, personal computer video cameras, personal digital assistant
cameras, security and surveillance systems, toys and games and videophones. We
are also working with our customers to help them use our current CMOS image
sensors and develop new CMOS image sensors for emerging applications such as
biometric devices, medical imaging devices, machine vision systems and
automotive applications.
We have shipped over 2.6 million image sensors in the first nine months of
fiscal year 2000. Our customers include industry leading original equipment
manufacturers, or OEMs, such as Alaris, Creative Technology and Viewquest (a
customer who manufactures a PC video camera for Microsoft and the IntelPlay
Me2Cam, which is a PC video camera for an Intel and Mattel joint venture, and
plans to manufacture a personal digital assistant camera for Kodak). In
addition, we have recently achieved a significant design win with Logitech for
a PC video camera.
Our objective is to be the leading supplier of CMOS image sensors for the
OEM marketplace by:
. focusing on capturing mass market applications;
. targeting OEM customers by assisting them in the design and development
of their products;
. maintaining our technology leadership by continuing to develop our core
technology;
. continuing to develop new products aimed at new and existing markets;
and
. continuing to establish both formal and informal strategic relationships
with key suppliers and customers.
Corporate Information
We were incorporated in California in May 1995. In March 2000, we
reincorporated into Delaware. Our principal executive offices are located at
930 Thompson Place, Sunnyvale, California 94086. Our telephone number at this
location is (408) 733-3030. Our corporate Internet address is www.ovt.com. The
information contained on our website is not a part of this prospectus.
4
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered................ shares
Common stock to be outstanding after
this offering..................... shares
Use of proceeds..................... For general corporate purposes, including
working capital. See "Use of Proceeds."
Proposed Nasdaq National Market
symbol............................ OVTI
</TABLE>
- --------------------
The common stock outstanding after the offering is based on the number of
shares outstanding as of January 31, 2000, and excludes:
. 844,450 shares issuable upon exercise of outstanding options under our
1995 stock option plan at a weighted average exercise price of $0.97 per
share;
. a total of 4,750,000 shares available for future issuance under our
various stock plans excluding the annual increase in the number of
shares authorized under each of our plans beginning May 1, 2002. See
"Management--Stock Plans" for a description of how these annual
increases are determined.
Except as described in the financial statements or as otherwise specified
in this prospectus, all information in this prospectus:
. assumes no exercise of the underwriters' over allotment option;
. reflects our reincorporation into Delaware; and
. reflects the conversion of all of our outstanding preferred stock into
common stock upon the closing of this offering.
5
<PAGE>
Summary Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
April 30, January 31,
------------------------- ----------------
1997 1998 1999 1999 2000
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Statement of Operations:
Revenues.......................... $ 59 $ 1,476 $ 5,243 $ 2,147 $25,111
Cost of revenues.................. 557 2,652 4,086 1,595 17,698
Reserve for purchase commitments.. -- -- 3,473 -- (3,235)
------- ------- ------- ------- -------
Gross profit (loss)............... (498) (1,176) (2,316) 552 10,648
------- ------- ------- ------- -------
Operating expenses:
Research and development......... 1,698 3,440 3,290 2,260 2,453
Selling, general and
administrative................. 706 1,323 1,853 1,378 2,126
Stock compensation charge........ 44 206 459 331 1,159
------- ------- ------- ------- -------
Total operating expenses........ 2,448 4,969 5,602 3,969 5,738
------- ------- ------- ------- -------
Income (loss) from operations..... (2,946) (6,145) (7,918) (3,417) 4,910
Interest income (expense) net..... 108 106 396 267 138
------- ------- ------- ------- -------
Net income (loss)................. $(2,838) $(6,039) $(7,522) $(3,150) $ 5,048
======= ======= ======= ======= =======
Net income (loss) per share:
Basic............................ $(16.89) $(12.71) $(10.39) $ (4.51) $ 1.75
======= ======= ======= ======= =======
Diluted.......................... $(16.89) $(12.71) $(10.39) $ (4.51) $ 0.31
======= ======= ======= ======= =======
Shares used in computing net
income (loss) per share:
Basic............................ 168 475 724 699 2,879
======= ======= ======= ======= =======
Diluted.......................... 168 475 724 699 16,418
======= ======= ======= ======= =======
Pro forma net income (loss) per
share:
Basic............................ $ (0.58) $ 0.33
======= =======
Diluted.......................... $ (0.58) $ 0.31
======= =======
Shares used in computing pro forma
net income (loss) per share
(unaudited):
Basic............................ 12,951 15,184
======= =======
Diluted.......................... 12,951 16,418
======= =======
</TABLE>
The reserve for purchase commitments is described in Note 4 of our Notes to
Financial Statements included in this prospectus. Research and development
expenses and selling, general and administrative expenses exclude stock
compensation charges; see Note 8 of our Notes to Financial Statements. The pro
forma net income (loss) per share is calculated assuming that all outstanding
shares of convertible preferred stock are converted into common stock at the
beginning of the periods presented or on the date of issuance of the preferred
stock, whichever is later.
6
<PAGE>
<TABLE>
<CAPTION>
January 31, 2000
------------------
Pro Forma
Actual as adjusted
------ -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................................... $6,370
Working capital.............................................. 9,289
Total assets................................................. 19,716
Total current liabilities.................................... 8,270
Total stockholders' equity................................... 11,446
</TABLE>
The balance sheet data appearing above at January 31, 2000, pro forma as
adjusted, gives effect (1) to the conversion of all outstanding shares of
preferred stock into 12,305,001 shares of common stock and (2) the sale in this
offering of shares of common stock at an estimated initial public
offering price of $ per share after deducting the estimated underwriting
discounts and commissions and the estimated offering expenses.
7
<PAGE>
RISK FACTORS
You should carefully consider these risk factors, together with all of the
other information included in this prospectus, before you decide to purchase
shares of our common stock. The risks and uncertainties described below are not
the only ones we face. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial may also harm our business.
Risks Related to our Operations and the CMOS Image Sensor Industry
Our limited operating history makes it difficult to evaluate our future
prospects and your investment.
We were incorporated in May 1995 and have only recently begun selling our
products. We introduced our first black and white image sensor for the security
and surveillance and toy and game markets in 1996 and our first color image
sensor for the PC video camera and toy and game markets in October 1997. We are
still in the process of developing and producing new products for the digital
still camera and PC video camera markets which we intend to introduce this
year. Thus, we have a limited operating history, which makes an evaluation of
our future prospects and your investment difficult. Accordingly, we face risks
and difficulties frequently encountered by early stage companies in new and
rapidly evolving markets. If we do not successfully address these risks and
difficulties, our business will be seriously harmed.
We have a history of losses, we only recently became profitable and we may not
subsequently sustain profitability.
We incurred net losses of approximately $6.0 million in fiscal year 1998
and approximately $7.5 million in fiscal year 1999. We only recently became
profitable. For the nine months ended January 31, 2000, our net income was
approximately $5.0 million. In the future, as we develop new products, we
expect research and development expenses to increase. Also, as we hire
additional personnel and possibly engage in larger business transactions, we
expect selling, general and administrative expenses to increase. We will also
incur substantial noncash charges relating to the amortization of unearned
compensation. If these expenses increase and our revenues do not increase, we
may not subsequently sustain profitability. See "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Our quarterly operating results may fluctuate significantly in the future due
to factors related to our industry and the markets for our products.
Our quarterly operating results have varied significantly from quarter to
quarter in the past and are likely to vary significantly in the future based on
a number of factors related to our industry and the markets for our products
over which we have little or no control. Any of these factors could cause our
stock price to fluctuate. These factors include:
. the growth of the market for products and applications using CMOS image
sensors;
. the timing and amount of orders from our OEM and distributor customers;
. the deferral of customer orders in anticipation of new products,
designs or enhancements by us or our competitors; and
. the announcement and introduction of products and technologies by our
competitors.
These factors are difficult to forecast and could seriously harm our business.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
8
<PAGE>
Our quarterly operating results may fluctuate significantly in the future due
to factors related to how we manage our business.
Our quarterly operating results are likely to vary significantly in the
future based on a number of factors related to how we manage our business. Any
of these factors could cause our stock price to fluctuate. These factors
include:
. our ability to manage our product transitions;
. the mix of the products we sell and the distribution channels through
which they are sold; and
. the availability of production capacities at the semiconductor
foundries that manufacture our products or components of our products.
In the past, our introduction of new products and our product mix have
affected our quarterly operating results. We also anticipate that the rate of
orders from our customers may vary significantly from quarter to quarter. Our
expenses and inventory levels are based on our expectations of future revenues
and our expenses are relatively fixed in the short term. Consequently, if
revenues in any quarter do not occur when expected, expenses and inventory
levels could be disproportionately high, and our operating results for that
quarter and, potentially, future quarters may be harmed. As a result, the price
of our stock may be adversely affected. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation."
We depend on the acceptance of CMOS technology for mass market image sensor
applications.
Our business strategy depends on the rapid and widespread adoption of the
CMOS semiconductor fabrication process and the acceptance of our single chip
technology. The image sensor market has been dominated by CCD technology for
over 25 years. Although CMOS technology has been available for over 20 years,
CMOS technology has only recently been used in image sensors. Along with the
other risk factors described in this section, the following factors may delay
the widespread adoption of the CMOS fabrication process and our single chip
technology, any of which would seriously harm our business:
. the failure of the emergence of a universal platform for imaging
solutions for computers and the Internet;
. the limited availability of bandwidth to run CMOS image sensor
applications;
. the uncertainty of emerging markets for products incorporating CMOS
technology;
. the failure of development of user friendly and affordable products;
and
. improvements or cost reductions to CCD image sensors, which could slow
the adoption of CMOS image sensors in markets already dominated by CCD
image sensors, such as the security and surveillance market.
We depend on a limited number of third party wafer foundries to manufacture all
of our products, which reduces our ability to control the manufacturing
process.
We do not own or operate a semiconductor fabrication facility. We rely on
Taiwan Semiconductor Manufacturing Company, or TSMC, Powerchip Semiconductor
Company, or PSC, Shanghai HuaHong NEC Electronics Co. Ltd., or HuaHong-NEC, and
Samsung Electronics Co. Ltd., or Samsung, to produce all of our wafers and
final products. Our reliance on these third party foundries involves a number
of significant risks, including:
. reduced control over delivery schedules, quality assurance,
manufacturing yields and production costs;
. lack of guaranteed production capacity or product supply; and
. unavailability of, or delayed access to, next generation or key process
technologies.
9
<PAGE>
We do not have long term supply agreements with any of our foundries and
instead secure manufacturing availability on a purchase order basis. These
foundries have no obligation to supply products to us for any specific period,
in any specific quantity or at any specific price, except as set forth in a
particular purchase order. Our requirements represent a small portion of the
total production capacities of these foundries and TSMC, PSC, HuaHong-NEC or
Samsung may reallocate capacity to other customers, even during periods of high
demand for our products. If any of our foundries were to become unable or
unwilling to continue manufacturing our wafers in the required volumes, at
acceptable quality, yields and costs and in a timely manner, our business would
be seriously harmed. As a result, we would have to identify and qualify
substitute foundries, which would be time consuming and difficult and could
result in unforeseen manufacturing and operations problems. In addition, if
competition for foundry capacity increases, our product costs may increase, and
we may be required to pay or invest significant amounts to secure access to
manufacturing services. We are also exposed to additional risks if we decide to
transfer our production of semiconductors from one foundry to another. We may
qualify additional foundries in the future. If we do not qualify additional
foundries, we may be exposed to increased risk of capacity shortages due to our
complete dependence on our foundries.
We may not adequately forecast the number of wafers we need, and therefore we
may not be able to react to fluctuations in demand for our products, which
could result in higher operating expenses and lower revenues.
We must forecast the number of wafers we need from each of our foundries.
We hold weekly sales meetings, constantly monitor backlog and frequently review
the status of customer orders. However, if customer demand falls below our
forecast and we are unable to reschedule or cancel our wafer orders, we may
retain excess wafer inventories, which could result in higher operating
expenses and reduced gross margins. Conversely, if customer demand exceeds our
forecasts, we may be unable to obtain an adequate supply of wafers to fill
customer orders, which could result in lower revenues.
If we do not achieve acceptable wafer manufacturing yields, our costs could
increase, and our products may not be deliverable which could harm our
business.
The fabrication of our products requires wafers to be produced in a highly
controlled and clean environment. Semiconductor companies that supply our
wafers sometimes have experienced problems achieving acceptable wafer
manufacturing yields. Semiconductor manufacturing yields are a function of both
our design technology and the particular foundry's manufacturing process
technology. Low yields may result from design errors or manufacturing failures.
Yield problems may not be determined or improved until an actual image sensor
is made and can be tested. As a result, yield problems may not be identified
until the wafers are well into the production process. We only test our
products after they are assembled, as their optical nature makes earlier
testing difficult and expensive. The risks associated with yields are even
greater because we rely on third party offshore foundries for our wafers which
increases the effort and time required to identify, communicate and resolve
manufacturing yield problems. If the foundries cannot achieve the planned
yields, this will result in higher costs and reduced product availability and
could harm our business, financial condition and results of operations.
We depend on third party vendors for color filter processing and assembly,
which reduces our control over delivery schedules, product quality and cost.
After our wafers are produced, they are color filter processed and
assembled by five independent vendors: TSMC, PSC and Toppan Printing Co., Ltd.,
or Toppan for the color filtering process and Kyocera Corporation, or Kyocera,
and Taiwan Electronic Packaging Company, or TEPC, for additional processing and
assembly. We do not have long term agreements with any of these vendors and
typically obtain services from them on a purchase order basis. Our reliance on
these vendors involves risks such as reduced control over delivery schedules,
quality assurance and costs. These risks could result in product shortages or
could increase our costs of manufacturing, assembling or testing our products.
If these vendors are unable or unwilling to continue to provide color filter
processing and assembly services and deliver products of acceptable quality, at
acceptable costs and in a timely manner, our business would be seriously
harmed. We would also have to identify and qualify substitute vendors, which
could be time consuming and difficult and result in unforeseen operations
problems.
10
<PAGE>
Our lengthy manufacturing, packaging and assembly cycle, in addition to our
customers' design cycle, may result in uncertainty and delays in generating
revenues.
A lengthy manufacturing, packaging and assembly process, typically lasting
four months or more, is required to manufacture our CMOS image sensors. It can
take additional time before a customer commences volume shipments of products
that incorporate our image sensors. Even when a manufacturer decides to design
our image sensors into its products, the manufacturer may never ship final
products incorporating ours. Given this lengthy cycle, we experience a delay
between the time we increase expenditures for research and development, sales
and marketing efforts and inventory and the time we generate revenues, if any,
from these expenditures. As a result, our business could be seriously harmed if
a significant customer reduces or delays orders or chooses not to release
products incorporating our products.
The success of our business depends on the demand for our products in current
markets and emerging markets.
Our success depends in large part on the continued growth of various
markets that use our products. These markets include video conferencing,
digital still cameras, PC video cameras, personal digital assistant cameras,
security and surveillance systems, toys and games and videophones. If these
markets do not develop or sales of our products into these markets do not grow,
our revenues and profit margins could level off or decline.
Our success is also dependent on our ability to sell our products into new
markets, such as biometric devices, medical imaging devices, machine vision
systems and automotive applications. Any delay in the development of these
markets or similar markets or our failure to provide products of appropriate
quality, features and price in a timely manner would seriously harm our
business.
Failure to obtain design wins could cause our revenues to level off or decline.
Our future success will depend on OEMs designing our image sensors into
their systems. To achieve design wins, which are decisions by those
manufacturers to design our products into their systems, we must define and
deliver cost effective, innovative and integrated semiconductor solutions. Once
a manufacturer has designed a supplier's products into its systems, the
manufacturer may be reluctant to change its source of components due to the
significant costs associated with qualifying a new supplier. Accordingly, the
failure to achieve design wins with key camera manufacturers will seriously
harm our business.
Continuing declines in our average sales prices may result in declines in our
gross margins which would harm our results of operations.
Because the image sensor market is characterized by intense competition,
and price reductions for our products are necessary to meet consumer
pricepoints, we expect to experience market driven pricing pressures. This will
likely result in a decline in average sales prices for our products. We believe
that we can offset declining average sales prices by achieving manufacturing
cost efficiencies, developing new products that incorporate more advanced
technology and including more advanced features that can be sold at stable
average gross margins. However, if we are unable to achieve such cost
reductions and technological advances, or are unable to timely introduce new
products, we will lose revenues and gross margins will decline.
Seasonality in our business will cause our results of operations to fluctuate
from period to period and could cause our stock price to fluctuate or decline.
Sales of our CMOS image sensors are subject to seasonality. Some of the
products using our image sensors such as PC video cameras and digital still
cameras are consumer electronics goods. Typically, these goods are subject to
seasonality with generally increased sales in November and December due to the
holidays. In addition, we have experienced a decrease in orders in the quarter
ended April 30 from our Chinese and Taiwanese customers primarily due to the
Chinese New Year. As a result, product sales are impacted by seasonal
purchasing patterns with higher sales generally occurring in the second half of
each year. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
11
<PAGE>
We depend on a few key customers, and the loss of any of them could
significantly reduce our revenues.
Historically, a relatively small number of customers and distributors has
accounted for a significant portion of our product revenues. For the nine
months ended January 31, 2000, approximately 33% of our revenues were generated
by two of our OEM customers, Creative Technology Ltd. and Alaris, Inc. These
two customers accounted for 17% and 16% of our total revenues, respectively. In
addition, one of our distributors, World Peace Industrial Company, Ltd.,
accounted for 24% of our total revenues.
As a result of customer concentration, a significant reduction, delay or
cancellation of orders from one or more of our key OEMs or distributors, or a
decision by our significant customers to select products manufactured by a
competitor for inclusion in future product generations could seriously harm our
business. For example, in 1999, we had to replace one of our largest
distributors with Wintek Electronics because that distributor decided to
distribute a competitor's products. We expect our operating results to continue
to depend on sales to or design decisions of a relatively small number of
distributors and OEMs. See "Business--Customers."
We do not have long term commitments from our customers, and we allocate
resources based on our estimates of customer demand, which could lead to excess
inventory and lost revenue opportunities.
Our sales are generally made on the basis of purchase orders rather than
long term purchase commitments. In addition, our customers may cancel or defer
purchase orders. We manufacture our products according to our estimates of
customer demand. This process requires us to make multiple demand forecast
assumptions, each of which may introduce error into our estimates. If we
overestimate customer demand, we may allocate resources to manufacturing
products which we may not be able to sell. As a result, we would have excess
inventory, which would have an adverse impact on our results of operations.
Conversely, if we underestimate customer demand or if sufficient manufacturing
capacity is unavailable, we would forego revenue opportunities, lose market
share and damage our customer relationships. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
We face foreign business, political and economic risks because a majority of
our products, and our customers' products are manufactured and sold outside of
the United States.
A substantial portion of our business, in particular, the manufacturing,
processing and assembly of our products, is conducted outside of the United
States, and as a result, we are subject to foreign business, political and
economic risks. All of our products are manufactured outside of the United
States. Many of our customers are OEMs or are the manufacturers or suppliers
for OEMs and are located in China, Japan, Korea, Singapore and Taiwan. In
addition, sales outside of the United States accounted for approximately 71% of
our revenues for the nine months ended January 31, 2000. We anticipate that
sales outside of the United States will continue to account for a substantial
portion of our revenue in future periods. Accordingly, we are subject to
international risks, including:
. difficulties in managing distributors;
. difficulties in staffing and managing foreign operations;
. difficulties in managing foundries and third party manufacturers;
. political and economic instability;
. inadequacy of local infrastructure; and
. difficulties in accounts receivable collections.
In addition, OEMs who design our solutions into their products sell them
outside of the United States. This exposes us indirectly to foreign risks.
Because sales of our products have been denominated to date exclusively in
United States dollars, increases in the value of the United States dollar will
increase the price of our products so that they become relatively more
expensive to customers in the local currency of a particular
12
<PAGE>
country, leading to a reduction in revenues and profitability in that country.
A portion of our international revenues may be denominated in foreign
currencies in the future, which will subject us to risks associated with
fluctuations in those foreign currencies. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Our dependence on selling through distributors increases the risks and
complexity of our business.
Our revenues depend on design wins with new OEMs which, in turn, rely on
third party manufacturers or distributors to provide inventory management and
purchasing functions. Selling through distributors reduces our ability to
forecast sales and increases the complexity of our business, requiring us to:
. manage a more complex supply chain;
. manage the level of inventory at each distributor;
. provide for credits, return rights and price protection;
. estimate the impact of credits, return rights, price protection and
unsold inventory at distributors; and
. monitor the financial condition and credit worthiness of our
distributors.
Any failure to manage these challenges could seriously harm our business.
Competition in our markets may lead to reduced sales of our products, reduced
profits and reduced market share.
The image sensor market is intensely competitive. These markets are
characterized by rapid technological change, evolving standards, short product
life cycles and decreasing prices. Our current products face competition from a
number of sources including companies which sell CCD based image sensors as
well as other companies which sell multiple chip CMOS image sensors. We expect
competition in our markets to increase.
Many of our competitors have longer operating histories and greater
presence in key markets, greater name recognition, access to large customer
bases and significantly greater financial, sales and marketing, manufacturing,
distribution, technical and other resources than we do. As a result, they may
be able to adapt more quickly to new or emerging technologies and customer
requirements or devote greater resources to the promotion and sale of their
product than we may. Our competition includes CCD image sensor manufacturers,
including Matsushita Electric Industrial, Sanyo Electric Co. Ltd., Sharp
Corporation, Sony Corporation, Toshiba Corporation and Victor Company of Japan,
as well as CMOS image sensor manufacturers such as Conexant Systems, Inc.,
Hewlett-Packard Company, Hyundai Electronics Industries Co. Ltd., Mitsubishi
Electronic, Motorola, Inc. and Toshiba Corporation. In addition, there are a
large number of smaller startup companies including Chrontel, Inc., ElecVision,
Inc., Photobit Corporation and VLSI Vision Ltd. (now a division of ST
Microelectronics), which may compete with us. In particular, Hyundai and
Hewlett Packard have introduced multiple chip CMOS image sensors. We cannot
assure you that we can compete successfully against current or potential
competitors, or that competition will not seriously harm our business by
reducing sales of our products, reducing our profits and reducing our market
share. See "Business--Competition" for additional information about our
competitors and competition in our market.
Our success depends on the development and introduction of new products, which
we may not be able to do in a timely manner because the process of developing
products using CMOS image sensors is complex and costly.
The development of new products is highly complex, and we have experienced
delays in completing the development and introduction of new products on
several occasions in the past, some of which exceeded six months. Although we
plan to introduce additional three volt color CMOS image sensors this year,
13
<PAGE>
unforeseeable circumstances may delay their introduction. As our products
integrate new and more advanced functions, they become more complex and
increasingly difficult to design and debug. Successful product development and
introduction depend on a number of factors, including:
. accurate prediction of market requirements and evolving standards,
including pixel resolution, output interface standards, power
requirements, optical lens size, input standards and operating systems
for PCs and other platforms;
. development of advanced technologies and capabilities;
. definition of new products which satisfy customer requirements;
. timely completion and introduction of new product designs;
. use of leading edge foundry processes and achievement of high
manufacturing yields; and
. market acceptance of the new products.
Accomplishing all of this is extremely challenging, time consuming and
expensive. We cannot assure you that any new products or product enhancements
will be developed in time to capture market opportunities or achieve a
significant or sustainable level of acceptance in new and existing markets.
Defects in our products could increase our costs and delay our product
shipments.
Because we integrate many functions on a single chip, our products are
complex. The greater integration of functions and complexity of operations of
our products, the greater the risk that latent defects or subtle faults could
be discovered by customers or end users after volumes of product have been
shipped. Although we test our products, they may contain defects and errors. In
the past we have encountered defects and errors in our products. Delivery of
products with defects or reliability, quality or compatibility problems may
damage our reputation and our ability to retain existing customers and attract
new customers. In addition, product defects and errors could result in
additional development costs, diversion of technical resources, delayed product
shipments, increased product returns, product warranty costs for recall and
replacement and product liability claims against us which may not be fully
covered by insurance, any of which could seriously harm our business.
We maintain a backlog, which may not necessarily lead to revenues in any future
period.
We manufacture and market primarily standard products. Our sales are
generally made pursuant to standard purchase orders. We include in our backlog
only those customer orders for which we have accepted purchase orders and
assigned shipment dates within the upcoming twelve months. As of January 31,
2000, we had a backlog of approximately $15.9 million. Although our backlog is
typically filled within two to four quarters, orders constituting our current
backlog are subject to cancellation or changes in delivery schedules, and
backlog may not necessarily be an indication of future revenue. In addition,
the current backlog will not necessarily lead to revenues in any future period.
Our bookings visibility continues to be limited with a substantial majority of
our quarterly product revenues coming from orders that are received and
fulfilled in the same quarter.
We must attract and retain qualified personnel to be successful, and
competition for qualified personnel is intense in our market.
Our success depends to a significant extent upon the continued
contributions of our key management, technical and sales personnel, many of
whom would be difficult to replace. The loss of one or more of these employees
could seriously harm our business. We do not have key person life insurance on
any of our key personnel. We have no agreements which obligate our employees to
continue working for us. Our success also depends on our ability to identify,
attract and retain qualified technical (particularly analog or mixed signal
design engineers), sales, marketing, finance and management personnel.
Competition for qualified personnel is particularly intense in our industry and
in Silicon Valley, California. This is due to a number of factors, including
the high concentration of established and emerging growth technology companies.
This competition
14
<PAGE>
makes it difficult to retain our key personnel and to recruit new qualified
personnel. We have experienced, and may continue to experience, difficulty in
hiring and retaining candidates with appropriate qualifications. If we do not
succeed in hiring and retaining candidates with appropriate qualifications, our
business could be seriously harmed.
We may be unable to adequately protect our intellectual property and therefore
lose some of our competitive advantage.
We rely on a combination of patent, copyright, trademark and trade secret
laws, as well as nondisclosure agreements and other methods to protect our
proprietary technologies. We have been issued patents and have a number of
pending United States and foreign patent applications. However, we cannot
assure you that any patent will issue as a result of any applications or, if
issued, that any claims allowed will be sufficiently broad to protect our
technology. In addition, it is possible that existing or future patents may be
challenged, invalidated or circumvented. It may be possible for a third party
to copy or otherwise obtain and use our products, or technology without
authorization, develop similar technology independently or design around our
patents. Effective copyright, trademark and trade secret protection may be
unavailable or limited in foreign countries. These disputes may result in
costly and time consuming litigation or the license of additional elements of
our intellectual property for free.
Others may bring infringement claims against us which could be time consuming
and expensive to defend.
In recent years, there has been significant litigation in the United States
involving patents and other intellectual property rights. This litigation is
widespread in the technology industry and is particularly prevalent in the
semiconductor industry, where a number of companies aggressively use their
patent portfolios by bringing numerous infringement claims. In addition, in
recent years, there has been an increase in the filing of nuisance suits
alleging infringement of intellectual property rights, which pressure
defendants into entering settlement arrangements to quickly dispose of such
suits, regardless of their merits.
In this regard, in March of 1999, we received a written notice from
Photobit Corporation in which Photobit claimed to have patent rights in certain
technology. Photobit requested that we review our products in light of one of
their issued patents. We have reviewed Photobit's patent and based on an
opinion from our patent counsel, we do not believe there is a valid claim
against us under this patent. We shall vigorously defend ourselves against any
claim arising from this notice.
Photobit or other companies may pursue litigation with respect to these or
other claims. The results of any litigation are inherently uncertain. In the
event of an adverse result in any litigation with respect to intellectual
property rights relevant to our products that could arise in the future, we
could be required to obtain licenses to the infringing technology, pay
substantial damages under applicable law, including treble damages if we are
held to have willfully infringed, cease the manufacture, use and sale of
infringing products or to expend significant resources to develop noninfringing
technology. Licenses may not be available from third parties, including
Photobit, either on commercially reasonable terms or at all. In addition,
litigation frequently involves substantial expenditures and can require
significant management attention, even if we ultimately prevail. Accordingly,
any infringement claim or litigation against us could significantly harm our
business, operating results and financial condition.
If we do not effectively manage our growth, our business may be harmed.
We are experiencing a period of significant growth that will continue to
place a great strain on our management and other resources. We have grown from
44 employees on January 31, 1999 to 71 employees on January 31, 2000. To manage
our growth effectively, we must, among other things:
. implement and improve operational and financial systems;
. train and manage our employee base;
15
<PAGE>
. attract and retain qualified personnel with relevant experience; and
. lease additional facilities within the next 12 months.
We must also manage multiple relationships with customers, business
partners and other third parties, such as our foundries and process and
assembly vendors. Moreover, our growth may significantly overburden our
management and financial systems and other resources. We also cannot assure you
that we have made adequate allowances for the costs and risks associated with
this expansion. In addition, our systems, procedures or controls may not be
adequate to support our operations, and we may not be able to expand quickly
enough to capitalize on potential market opportunities. Our future operating
results will also depend on expanding sales and marketing, research and
development and administrative support. If we cannot attract qualified people
or manage growth effectively, our business would be seriously harmed.
Risks Related to this Offering
Management may apply the proceeds of this offering to uses that do not increase
our profits or market value.
Our management has broad discretion as to how to spend the net proceeds
from this offering and may spend those proceeds in ways which may not increase
our profitability or our market value. We cannot assure you that our
investments and use of the net proceeds of this offering will yield favorable
returns or results. You will not have the opportunity, as part of your
investment decision, to assess whether the proceeds are being used
appropriately. See "Use of Proceeds."
Provisions in our charter documents and Delaware law could prevent or delay a
change in control of OmniVision and may reduce the market price of our common
stock.
Provisions of our certificate of incorporation and bylaws may discourage,
delay or prevent a merger or acquisition that a stockholder may consider
favorable. These provisions include:
. adjusting the price, rights, preferences, privileges and restrictions
of preferred stock without stockholder approval;
. providing for a classified board of directors with staggered, three
year terms;
. requiring supermajority voting to amend some provisions in our
certificate of incorporation and bylaws;
. limiting the persons who may call special meetings of stockholders; and
. prohibiting stockholder actions by written consent.
Provisions of Delaware law also may discourage, delay or prevent another
company from acquiring or merging with us. See "Description of Capital Stock--
Preferred Stock" and "--Anti-Takeover Provisions."
Existing stockholders own a large percentage of our voting stock, which may
allow them to influence the election of directors and approval or disapproval
of significant corporate actions that may not be in the best interests of our
stockholders.
Immediately after the offering, our executive officers, directors and other
principal stockholders will beneficially own or control, directly or
indirectly, approximately % of the outstanding shares of common stock. As a
result, if these persons act together, they will significantly influence the
election of our directors and approval or disapproval of our significant
corporate actions. This influence over our affairs might be adverse to the
interests of other stockholders. In addition, the voting power of these
stockholders could have the effect of delaying or preventing a change in
control of OmniVision. This concentration of ownership could also adversely
affect our stock's market price or lessen any premium over market price that an
acquiror might otherwise pay. See "Principal Stockholders."
16
<PAGE>
Our common stock has not been publicly traded, and we expect that the price of
our stock may fluctuate substantially which may make it difficult to resell
your shares at or above the initial public offering price.
Recently, the stock prices of technology companies similar to OmniVision
have been volatile. Moreover, prior to this offering, there has been no public
market for our common stock. The initial public offering price will be
determined through negotiations between the underwriters and us. You may not be
able to resell your shares at or above the initial public offering price. The
market price of our common stock may fluctuate significantly in response to a
number of factors, including:
. actual or anticipated fluctuations in our operating results;
. changes in expectations as to our future financial performance;
. changes in financial estimates of securities analysts;
. changes in market valuations of other technology companies; and
. announcements by us or our competitors of significant technical
innovations, design wins, contracts, standards or acquisitions.
Due to these factors, the price of our stock may decline and the value of your
investment would be reduced. In addition, the stock market experiences extreme
volatility that often is unrelated to the performance of particular companies.
These market fluctuations may cause our stock price to decline regardless of
our performance.
Our business may be harmed by class action litigation due to stock price
volatility.
In the past, securities class action litigation often has been brought
against a company following periods of volatility in the market price of its
securities. Companies in the semiconductor industry and other technology
industries are particularly vulnerable to this kind of litigation due to the
high volatility of their stock prices. Accordingly, we may in the future be the
target of securities litigation. Securities litigation could result in
substantial costs and could divert our management's attention and resources.
Future sales of our common stock in the public market may depress our stock
price.
After this offering, we will have outstanding shares of common stock.
Sales of a substantial number of shares of our common stock in the public
market following this offering could cause our stock price to decline. All the
shares sold in this offering will be freely tradeable, except for those shares
reserved by the underwriters for sale to employees, directors and other persons
associated with us, which will be subject to the restrictions on sale described
in "Underwriting." Of the remaining shares of common stock outstanding
after this offering, approximately of the shares will be eligible for
sale in the public market beginning 180 days after the effective date of this
offering and of the shares will become freely tradeable at various dates
thereafter. In addition, the sale of these shares could impair our ability to
raise capital through the sale of additional stock. See "Shares Eligible for
Future Sale."
17
<PAGE>
FORWARD LOOKING STATEMENTS
This prospectus, including the sections entitled "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business," contains forward looking statements.
These statements relate to future events or our future financial performance
and involve known and unknown risks, uncertainties and other factors that may
cause our or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by the forward
looking statements. These risks and other factors include those listed under
"Risk Factors" and elsewhere in this prospectus. In some cases, you can
identify forward looking statements by terminology such as "may", "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors, including the risks outlined under "Risk
Factors." These factors may cause our actual results to differ materially from
any forward looking statement. Although we believe that the expectations
reflected in the forward looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. Moreover,
neither we nor any other person assumes responsibility for the accuracy and
completeness of these forward looking statements.
18
<PAGE>
USE OF PROCEEDS
Our proceeds from the sale of the shares of common stock we are
offering are estimated to be $ million ($ million if the underwriters'
over allotment option is exercised in full) assuming a public offering price of
$ per share and after deducting the underwriting discounts and commissions
and our estimated offering expenses.
We plan to use the proceeds for general corporate purposes, including
working capital. We may also use some of the proceeds to meet capacity
commitments or to acquire other companies, technology or products that
complement our business, although we are not currently planning any of these
transactions. Pending these uses, the net proceeds of this offering will be
invested in interest bearing, investment grade securities.
DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock. We
currently expect to retain our future earnings, if any, for use in the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future.
19
<PAGE>
CAPITALIZATION
The following table sets forth:
. the actual capitalization of OmniVision at January 31, 2000, assuming
reincorporation into Delaware;
. the pro forma capitalization of OmniVision after giving effect to the
conversion of all outstanding shares of preferred stock into 12,305,001
shares of common stock immediately prior to the completion of this
offering; and
. the pro forma as adjusted capitalization, which gives effect to the
sale in this offering of shares of common stock at an estimated
initial public offering price of $ per share and after deducting
the estimated underwriting discounts and commissions and estimated
offering expenses.
<TABLE>
<CAPTION>
January 31, 2000
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands, except share
data)
Stockholders' Equity:
<S> <C> <C> <C>
Preferred stock, $0.001 par value;
12,783,336 shares authorized, actual;
12,305,001 shares issued and outstanding,
actual; 10,000,000 shares authorized, pro
forma; no shares issued and outstanding,
pro forma and pro forma as adjusted........ $ 12 -- --
Common stock, $0.001 par value; 100,000,000
shares authorized, actual;
3,936,550 shares issued and outstanding,
actual; 100,000,000 shares authorized, pro
forma; 16,241,551 shares issued and
outstanding, pro forma; shares
issued and outstanding, pro forma as
adjusted................................... 4 16
Additional paid-in capital................... 26,886 26,886
Deferred compensation........................ (2,929) (2,929)
Accumulated deficit.......................... (12,527) (12,527)
-------- -------- ----
Total stockholders' equity................ 11,446 11,446
-------- -------- ----
Total capitalization...................... $ 11,446 $ 11,446
======== ======== ====
</TABLE>
In addition to the shares of common stock to be outstanding after this
offering, we may issue additional shares of common stock under the following
plans and arrangements:
. 844,450 shares issuable upon exercise of outstanding options under our
1995 stock option plan at a weighted average exercise price of $0.97
per share as of January 31, 2000; and
. a total of 4,750,000 shares available for future issuance under our
various stock plans as of January 31, 2000 excluding the annual
increases in the number of shares authorized under each of our plans
beginning May 1, 2002. See "Management--Stock Plans" for a description
of how these annual increases are determined.
Please read the capitalization table together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and with the
financial statements and related notes beginning on page F-1.
20
<PAGE>
DILUTION
Our pro forma net tangible book value at January 31, 2000 was approximately
$11,446,000, or $0.70 per share after giving effect to the conversion of all
outstanding shares of our preferred stock into shares of common stock upon
completion of this offering. Pro forma net tangible book value per share is
equal to our total tangible assets less our total liabilities, divided by the
total number of shares of our common stock outstanding. After giving effect to
the sale of the shares of our common stock offered in this offering
at an assumed initial public offering price of $ per share (after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us) our pro forma as adjusted net tangible book
value at January 31, 2000 would have been approximately $ or $ per
share. This represents an immediate increase in net tangible book value of
$ per share to existing stockholders and an immediate dilution of $ per
share to new investors purchasing shares of our common stock in this offering.
The following table illustrates the per share dilution to the new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
Pro forma net tangible book value per share at January 31, 2000.. $0.70
Increase in pro forma net tangible book value per share
attributable to this offering..................................
-----
Pro forma net tangible book value per share as adjusted after the
offering.........................................................
-----
Dilution per share to new investors in this offering............... $
=====
</TABLE>
The following table summarizes, on a pro forma basis as of January 31,
2000, the total number of stockholders and new investors with respect to the
number of shares of common stock purchased from OmniVision, the total
consideration paid and the average price per share paid by the existing
stockholders and by the new investors in this offering before deducting the
underwriting discounts and commissions and estimated offering expenses payable
by us:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price Per
Share Percent Amount Percent Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 16,241,551 % $21,724,000 % $1.34
New investors................. % %
---------- --- ----------- ---
Total....................... 100% $ 100%
========== === =========== ===
</TABLE>
The information in the table above excludes:
. 844,450 shares issuable upon exercise of outstanding options under our
1995 stock option plan at a weighted average exercise price of $0.97
per share as of January 31, 2000; and
. a total of 4,750,000 shares available for future issuance under our
various stock plans as of January 31, 2000 excluding the annual
increases in the number of shares authorized under each of our plans
beginning May 1, 2002. See "Management--Stock Plans" for a description
of how these annual increases are determined.
Please read the capitalization table together with the sections of this
prospectus entitled "Capitalization," "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and with the financial statements and related notes beginning on
page F-1.
21
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
our financial statements, the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this prospectus. The statement of operations data for the fiscal year ended
April 30, 1996 and the balance sheet data at April 30, 1996 are derived from
our unaudited financial statements not included in this prospectus. The
statement of operations data for the fiscal years ended April 30, 1997, 1998
and 1999 and the balance sheet data at April 30, 1998 and 1999 are derived from
our audited financial statements included in this prospectus. The statement of
operations data for the nine months ended January 31, 1999 is derived from our
unaudited financial statements included in this prospectus. The statement of
operations data for the nine months ended January 31, 2000 and the balance
sheet data at January 31, 2000 are derived from our audited financial
statements included in this prospectus. Our unaudited financial statements have
been prepared by us on a basis consistent with our audited financial statements
and, in management's opinion, include all adjustments necessary for a fair
presentation of such information. The results of operations for the nine months
ended January 31, 2000 are not necessarily indicative of the results to be
expected for the entire fiscal year, for any other interim period or for any
future fiscal year.
<TABLE>
<CAPTION>
Nine Months
Ended January
Year Ended April 30, 31,
---------------------------------- ----------------
1996 1997 1998 1999 1999 2000
------- ------- ------- ------- ------- -------
(in thousands, except per share)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................. $ 166 $ 59 $ 1,476 $ 5,243 $ 2,147 $25,111
Cost of revenues......... 438 557 2,652 4,086 1,595 17,698
Reserve for purchase
commitments............ -- -- -- 3,473 -- (3,235)
------- ------- ------- ------- ------- -------
Gross profit (loss)..... (272) (498) (1,176) (2,316) 552 10,648
------- ------- ------- ------- ------- -------
Operating expenses:
Research and
development........... 451 1,698 3,440 3,290 2,260 2,453
Selling, general and
administrative........ 464 706 1,323 1,853 1,378 2,126
Stock compensation
charge................ 28 44 206 459 331 1,159
------- ------- ------- ------- ------- -------
Total operating
expenses............. 943 2,448 4,969 5,602 3,969 5,738
------- ------- ------- ------- ------- -------
Income (loss) from
operations............. (1,215) (2,946) (6,145) (7,918) (3,417) 4,910
Interest income
(expense), net......... 39 108 106 396 267 138
------- ------- ------- ------- ------- -------
Net income (loss)........ $(1,176) $(2,838) $(6,039) $(7,522) $(3,150) $ 5,048
======= ======= ======= ======= ======= =======
Net income (loss) per
share:
Basic................... $(11.31) $(16.89) $(12.71) $(10.39) $ (4.51) $ 1.75
======= ======= ======= ======= ======= =======
Diluted................. $(11.31) $(16.89) $(12.71) $(10.39) $ (4.51) $ 0.31
======= ======= ======= ======= ======= =======
Shares used in computing
net income (loss) per
share:
Basic................... 104 168 475 724 699 2,879
======= ======= ======= ======= ======= =======
Diluted................. 104 168 475 724 699 16,418
======= ======= ======= ======= ======= =======
Pro forma net income
(loss) per share
(unaudited):
Basic................... $ (0.58) $ 0.33
======= =======
Diluted................. $ (0.58) $ 0.31
======= =======
Shares used in computing
pro forma net income
(loss) per share
(unaudited):
Basic................... 12,951 15,184
======= =======
Diluted................. 12,951 16,418
======= =======
</TABLE>
22
<PAGE>
The reserve for purchase commitments is described in Note 4 of our Notes to
Financial Statements included in this prospectus. Research and development
expenses and selling, general and administrative expenses exclude stock
compensation charges; see Note 8 of our Notes to Financial Statements. The pro
forma net income (loss) per share is calculated assuming that all outstanding
shares of convertible preferred stock are converted into common stock at the
beginning of the periods presented or on the date of issuance of the preferred
stock, whichever is later.
<TABLE>
<CAPTION>
April 30, January 31,
------------------------------------ -----------
1996 1997 1998 1999 2000
------- ------- -------- -------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.... $ 1,329 $ 3,747 $ 2,686 $ 5,374 $ 6,370
Working capital.............. 1,344 3,669 2,343 3,345 9,289
Total assets................. 1,682 4,516 3,721 10,536 19,716
Total current liabilities.... 378 268 633 6,106 8,270
Accumulated deficit.......... (1,176) (4,014) (10,053) (17,575) (12,527)
Total stockholders' equity... 1,376 4,248 3,088 4,330 11,446
</TABLE>
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our
consolidated financial statements and the notes thereto included in this
prospectus. The results described below are not necessarily indicative of the
results to be expected in any future period. Certain statements in this
discussion and analysis contain forward looking statements based upon current
expectations that involve risks and uncertainties. When used in this
prospectus, the words "may," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "continue,"and similar
expressions as they relate to us are included to identify forward looking
statements. Our actual results and the timing of certain events could differ
materially from those anticipated in these forward looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this prospectus.
Overview
We were incorporated in May 1995. We design, develop and market high
performance, high quality, highly integrated and cost efficient semiconductor
image sensor devices. Our single chip image sensors are used in a variety of
electronic cameras and camera related products for both still picture and live
video applications. Our image sensors are used in cameras and camera related
products such as personal computer, or PC, cameras, digital still cameras,
security and surveillance cameras and toy cameras. Our image sensors are
designed using the complementary metal oxide semiconductor, or CMOS,
fabrication process. Our single chip CMOS image sensors can allow our customers
to build cameras that are smaller, require fewer chips, consume less power and
cost less to build than cameras using traditional charged couple device, or
CCD, technology or multiple chip CMOS image sensors. While some competitors
have developed multiple chip CMOS image sensors, we believe that we supply the
most highly integrated single chip CMOS image sensor solution.
Image sensors are characterized by several important attributes such as
pixel resolution, color, lens size, voltage requirements and type of video
output. We intend to continue developing new products aimed at new and existing
markets. We plan to expand the range of pixel resolutions we offer, provide
additional products that require only three volts for portable applications and
further improve image quality and integrate additional functions into our CMOS
image sensor. In addition, we developed and market an interface chip that can
easily connect a camera to the universal serial bus on personal computers, and
we plan to make improvements to that product as well.
Our first CMOS image sensor was a low resolution, analog, black and white
sensor introduced in 1996. We introduced an improved version of this sensor in
early 1997. In addition, we introduced color and digital CMOS image sensors in
1997 and higher resolution and higher quality CMOS image sensors in 1998 and
1999. For the nine months ended January 31, 2000, the first period in which we
generated substantial revenues, the majority of our revenues were generated
from the sale of our five volt color image sensors. Given the growth of the
Internet and multimedia applications which allow for digital images to be
captured, stored and transported, we expect that the majority of our revenues
in fiscal year 2001 will be generated from our five volt color image sensors,
which are used primarily in affordable and easy to use PC cameras.
We sell our products through a direct sales force and indirectly through
distributors and manufacturers' representatives. Our image sensors are sold to
OEMs who market camera products under their own brand. We also sell to large
manufacturing companies that produce camera products for others to market under
different brand names.
We have adopted a fabless semiconductor manufacturing model and outsource
all of our semiconductor manufacturing and assembly. This approach allows us to
focus our resources on the design, development and marketing of our products
and significantly reduces our capital requirements. We outsource the majority
of our wafer manufacturing to Taiwan Semiconductor Manufacturing Company, or
TSMC, and have recently started receiving wafers from Powerchip Semiconductor
Company, or PSC. We have a signed agreement with Shanghai HuaHong NEC, or
HuaHong-NEC, for additional wafer production capacity to provide for our
24
<PAGE>
future growth and for unexpected demand for our products. In addition, we have
a signed agreement with Samsung Electronics Co., Ltd., or Samsung, who is our
sole source supplier for our universal serial bus interface chip that we
sometimes sell along with our CMOS image sensor. Approximately 80% of our sales
of CMOS image sensors are color image sensors. These require a color filter to
be applied to the wafer before packaging. We outsource the application of this
color filter to Toppan Printing Co., or Toppan, and TSMC, and we recently
qualified PSC as an additional source. We outsource the packaging of our CMOS
image sensors to Kyocera Corporation, or Kyocera, and Taiwan Electronic
Packaging Company, or TEPC. Outside testing services do not offer suitable
tests for the key parameter of product performance, image quality. Therefore,
we design and produce our own automatic testing equipment specifically for
image sensor testing, and we do substantially all of our testing in house. Our
control over the testing process helps us maintain consistent product quality
and identify areas to improve product quality and reduce costs.
We recognize revenues when our products are shipped to our customers or, in
the case of sales to distributors made under agreements permitting the return
of unsold products, when our distributors ship the products to their customers.
Our sales are generally made on a purchase order basis rather than by long term
purchase commitments. Our customers may cancel or defer purchase orders without
penalty. Our backlog includes only those customer orders for which we have
accepted purchase orders and assigned shipment dates within the upcoming twelve
months. While our backlog may be substantial at times, it is subject to
cancellation or changes in delivery schedules and may not necessarily be an
indication of future revenues.
Sales of our CMOS image sensors are subject to seasonality. Some of the
products using our image sensors such as PC video cameras and digital still
cameras are consumer electronics goods. Typically, these goods are subject to
seasonality with generally increased sales in November and December due to the
holidays. In addition, we have experienced a decrease in orders in the quarter
ended April 30 from our Chinese and Taiwanese customers primarily due to the
Chinese New Year. As a result, product sales are impacted by seasonal
purchasing patterns with higher sales generally occurring in the second half of
each year.
We intend to maintain our technology leadership by continuing to develop
our core technology through our in house research and development efforts. As a
result, we expect our research and development expenses to increase in fiscal
year 2001.
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<PAGE>
Results of Operations
The following tables set forth, for the periods indicated, certain
statement of operations data and certain statement of operations data reflected
as a percentage of revenues. Our results of operations are reported as a single
business segment.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended April 30, January 31,
------------------------- -------------------
1997 1998 1999 1999 2000
------- ------- ------- ---------- -------
(in thousands)
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues....................... $ 59 $ 1,476 $ 5,243 $ 2,147 $25,111
Cost of revenues............... 557 2,652 4,086 1,595 17,698
------- ------- ------- ------- -------
Gross profit before reserve for
purchase commitment.......... (498) (1,176) 1,157 552 7,413
Reserve for purchase
commitments.................. -- -- 3,473 -- (3,235)
------- ------- ------- ------- -------
Gross profit (loss)........... (498) (1,176) (2,316) 552 10,648
------- ------- ------- ------- -------
Operating expenses:
Research and development...... 1,698 3,440 3,290 2,260 2,453
Selling, general and
administrative.............. 706 1,323 1,853 1,378 2,126
Stock compensation charge..... 44 206 459 331 1,159
------- ------- ------- ------- -------
Total operating expenses..... 2,448 4,969 5,602 3,969 5,738
------- ------- ------- ------- -------
Income (loss) from operations.. (2,946) (6,145) (7,918) (3,417) 4,910
Interest income (expense),
net.......................... 108 106 396 267 138
------- ------- ------- ------- -------
Net income (loss).............. $(2,838) $(6,039) $(7,522) $(3,150) $ 5,048
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended April 30, January 31,
-------------------------- ----------------------
1997 1998 1999 1999 2000
-------- ------ ------ ----------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
As a Percentage of
Revenues:
Revenues.................. 100.0 % 100.0 % 100.0 % 100.0 % 100.0%
Cost of revenues.......... 944.1 179.7 77.9 74.3 70.5
-------- ------ ------ --------- --------
Gross profit before
reserve for purchase
commitments............. (844.1) (79.7) 22.1 25.7 29.5
Reserve for purchase
commitments............. -- -- 66.2 -- (12.9)
-------- ------ ------ --------- --------
Gross profit (loss)...... (844.1) (79.7) (44.2) 25.7 42.4
-------- ------ ------ --------- --------
Operating expenses:
Research and
development............ 2,878.0 233.1 62.8 105.3 9.8
Selling, general and
administrative......... 1,196.6 89.6 35.3 64.2 8.5
Stock compensation
charge................. 74.6 14.0 8.8 15.4 4.6
-------- ------ ------ --------- --------
Total operating
expenses.............. 4,149.2 336.7 106.9 184.9 22.9
-------- ------ ------ --------- --------
Income (loss) from
operations.............. (4,993.3) (416.4) (151.1) (159.2) 19.5
Interest income (expense)
net..................... 183.1 7.2 7.6 12.4 0.6
-------- ------ ------ --------- --------
Net income (loss)......... (4,810.2)% (409.2)% (143.5)% (146.8)% 20.1%
======== ====== ====== ========= ========
</TABLE>
Results of Operations for the Nine Months Ended January 31, 2000 and 1999
Revenues. Revenues were $25.1 million and $2.1 million for the nine months
ended January 31, 2000 and 1999, respectively. Revenues increased due to the
commencement of commercial sales of our color CMOS image sensor products to OEM
customers and increased demand for our image sensor products through our
26
<PAGE>
distribution channels. Revenues from two OEM customers, Creative Technology
Ltd. and Alaris, Inc. accounted for approximately 17% and 16%, of total
revenues for the nine months ended January 31, 2000, respectively. In addition,
revenues from one of our distributors, World Peace Industrial Company, Ltd., or
World Peace, accounted for approximately 24% of total revenues for the nine
months ended January 31, 2000. The remaining 43% of total revenues for the nine
months ended January 31, 2000 was derived from a number of other OEM customers
and distributors, none of which accounted for 10% or more of total revenues.
For the nine months ended January 31, 1999, two distributors, World Peace and
Holy Stone Enterprise Co. Ltd., or Holy Stone, accounted for approximately 43%
and 24% of total revenues, respectively. No other distributor or OEM customer
accounted for 10% or more of total revenues for the nine months ended January
31, 1999. In the first quarter of the year ended April 30, 1999, we decreased
the prices of our image sensor products in order to increase the demand.
Subsequently, the average sale price has continued to decline, but at a slower
rate. Nevertheless, revenues have increased because of higher volumes shipped.
Gross profit before reserve for purchase commitments. Gross margin before
reserve for purchase commitments was 29.5% and 22.1% for the nine months ended
January 31, 2000 and 1999, respectively. The increase in gross margin before
reserve for purchase commitments from the nine months ended January 31, 1999 to
the nine months ended January 31, 2000 was due to changes in product mix and
the benefit of fixed period costs being spread over a larger sales volume.
Reserve for purchase commitments. When the April 30, 1999 financial
statements were prepared, we believed that the demand for certain products was
less than originally estimated when we placed non-cancelable production orders.
Sales orders that we had expected to receive were not received by the time that
the audit of the April 30, 1999 financial statements was completed. There was
significant uncertainty that we would be able to sell the products ordered. As
a result, we accrued approximately $3.5 million as a reserve for a portion of
the purchase commitments.
Several months after the audit of the April 30, 1999 financial statements
was completed, we received sales orders for the products. During the nine
months ended January 31, 2000, most of the products were sold. Of the reserve,
approximately $2.3 million was released during the second quarter ended October
31, 1999 and $930,000 during the third quarter ended January 31, 2000. The
remaining reserve of $238,000 at January 31, 2000 is reflected as a reduction
in the basis of the related inventory.
Research and development. Research and development expenses were $2.5
million and $2.3 million for the nine months ended January 31, 2000 and 1999,
respectively. Research and development expenses represented 9.8% and 105.3% of
revenues for the nine months ended January 31, 2000 and 1999, respectively.
Research and development expenses decreased because revenues significantly
increased. Research and development expenses consist primarily of compensation
and personnel related expenses and costs for purchased materials, designs and
tooling, depreciation of computers and workstations, and amortization of
computer assisted design software, all of which may fluctuate significantly
from period to period as a result of our product development cycles. We expect
that our future quarterly research and development expenses will increase in
absolute dollars as we design and develop our next generation of CMOS image
sensor products.
Selling, general and administrative. Selling, general and administrative
expenses were $2.1 million and $1.4 million for the nine months ended January
31, 2000 and 1999, respectively. Our selling, general and administrative
expenses consist primarily of compensation and personnel related expenses and
commissions paid to distributors and manufacturers' representatives. As a
percentage of revenues, our selling, general and administrative expenses
decreased to 8.5% of revenues for the nine months ended January 31, 2000, from
64.2% of revenues for the nine months ended January 31, 1999. The decrease in
selling, general and administrative expenses as a percentage of revenues was
largely the result of a significant increase in sales volume, partially offset
by increased compensation and personnel related expenses.
Stock compensation charge. Stock compensation charges amounted to $1.2
million and $331,000 for the nine months ended January 31, 2000 and 1999,
respectively. Deferred compensation, representing the
27
<PAGE>
difference between the deemed fair market value of our common stock on the date
of grant and the exercise price of stock options on the date of grant, is
amortized on an accelerated basis as the options vest. We expect deferred
compensation charges of $2.9 million as of January 31, 2000 to be amortized on
an accelerated basis over the vesting period of generally five years.
Interest income (expense), net. For the fiscal years ended April 30, 1999,
1998 and 1997, interest income and interest expense were minor because we
financed our business operations primarily through a series of relatively small
private equity transactions.
Provision for income taxes. While we generated operating profits of
approximately $4.9 million for the nine months ended January 31, 2000, there
was no provision for income taxes because of deductions resulting from the
reversal of deferred tax assets for which there was a full valuation allowance
as of the beginning of the period. We incurred operating losses for the nine
months ended January 31, 1999, and for the fiscal years ended April 30, 1997,
1998 and 1999 and therefore had no provision for income taxes in those periods.
As of January 31, 2000, we had net operating losses of approximately $9.0
million available to offset future taxable income. If not used, the net
operating losses expire between 2011 and 2019. Because of certain changes in
ownership of OmniVision, there is an annual limitation on the use of the net
operating loss carryforwards pursuant to Section 382 of the Internal Revenue
Code.
Results of Operations for the Fiscal Years Ended April 30, 1999, 1998 and 1997.
Revenues. Revenues for the fiscal years ended April 30, 1999, 1998 and 1997
were $5.2 million, $1.5 million and $59,000, respectively. Revenues increased
$3.7 million from fiscal year 1998 to fiscal year 1999 primarily as a result of
an increase in sales of our CMOS color image sensor products. For the fiscal
year 1999, two of our distributors, Holy Stone and World Peace, represented
approximately 24% and 12% of total revenues, respectively. For the fiscal year
1998, one of our distributors, World Peace, represented approximately 43% of
total revenues. Revenues increased from fiscal year 1997 to fiscal year 1998
due to the commencement of commercial sales of our color image sensor products
to OEM customers and to increased demand for our image sensor products through
our distribution channels. In the first quarter of the year ended April 30,
1999, we decreased the price of our image sensor products in order to increase
the demand. Subsequently, the average sale price has continued to decline, but
at a slower rate. Nevertheless, revenues have increased because of higher
volumes shipped.
Gross profit before reserve for purchase commitments. Gross margin before
reserve for purchase commitments for the fiscal years 1999, 1998 and 1997 was
22.1%, (79.7)% and (844.1)%, respectively. The increase in gross margin before
reserve for purchase commitments from fiscal year 1998 to fiscal year 1999 was
primarily due to the increase in sales of higher margin color CMOS image
sensors and improved final test yields. Negative gross margins before reserve
for purchase commitments for the fiscal years 1998 and 1997 were impacted by
relatively low final test yields for a variety of new black and white and color
CMOS image sensors.
Reserve for purchase commitments. When the April 30, 1999 financial
statements were prepared, we believed that the demand for certain products was
less than originally estimated when we placed non-cancelable production orders.
Sales orders that we had expected to receive were not received by the time that
the audit of the April 30, 1999 financial statements was completed. There was
significant uncertainty that we would be able to sell the products ordered. As
a result, we accrued approximately $3.5 million as reserve for a portion of the
purchase commitments.
Several months after the audit of the April 30, 1999 financial statements
was completed, we received sales orders for the products. During the nine
months ended January 31, 2000, most of the products have been sold. Of the
reserve, approximately $2.3 million was released during the second quarter
ended October 31, 1999 and $930,000 during the third quarter ended January 31,
2000. The remaining reserve of $238,000 at January 31, 2000 is reflected as a
reduction in the basis of the related inventory.
Research and development. Research and development expenses for the fiscal
years 1999, 1998 and 1997 were approximately $3.3 million, $3.4 million and
$1.7 million, respectively. As a percentage of
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<PAGE>
revenues, research and development expenses represented 62.8%, 233.1% and
2,878.0% of revenues respectively. As revenues increased from fiscal year 1998
to fiscal year 1999, research and development expenses declined as a percentage
of revenues. Our research and development expenses increased by approximately
$1.7 million from fiscal year 1997 to fiscal year 1998 due to the increase in
the number of engineers and technicians. Although we expect absolute research
and development expenses to increase in the future, we expect these expenses as
a percentage of revenues to decrease.
Selling, general and administrative. Selling, general and administrative
expenses were $1.9 million, $1.3 million and $706,000 for the fiscal years
1999, 1998 and 1997, respectively. As a percentage of revenues, selling,
general and administrative expenses represented 35.3%, 89.6% and 1,196.6%,
respectively. Our selling, general and administrative expenses increased each
fiscal year due to increases in salaries and commissions to distributors and
manufacturers' representatives. The overall decrease in our selling, general
and administrative expenses as a percentage of revenues was principally due to
the increased revenues. Although we expect absolute expenses to increase, we
expect selling, general and administrative expenses as a percentage of revenues
to decrease.
Stock compensation charge. We incurred stock compensation charges of
$459,000, $206,000 and $44,000 for the fiscal years 1999, 1998 and 1997.
Interest income (expense), net. Interest income and interest expense for
the fiscal years 1999, 1998 and 1997 were minor because we have financed our
business operations primarily through a series of relatively small private
equity transactions.
Provision for income taxes. We incurred operating losses for each of the
fiscal years 1999, 1998 and 1997, and therefore made no provision for income
tax in these fiscal years. As of January 31, 2000, we had net operating losses
of approximately $9.0 million available to offset future taxable income. If not
used, the net operating losses expire between 2011 and 2019. Because of certain
changes in ownership of OmniVision, there is an annual limitation on the use of
the net operating loss carryforwards pursuant to Section 382 of the Internal
Revenue Code.
29
<PAGE>
Quarterly Results of Operations
The following table sets forth certain unaudited selected quarterly results
of operations data for the seven quarters ended January 31, 2000, as well as
such data expressed as a percentage of revenues. This data has been derived
from our unaudited financial statements that, in the opinion of management,
include all adjustments necessary for the fair presentation of such information
for the periods presented. This statement of operations data should be read in
conjunction with our annual financial statements, and the related notes thereto
appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------------
July 31, Oct. 31, Jan. 31, April 30, July 31, Oct. 31, Jan. 31,
1998 1998 1999 1999 1999 1999 2000
-------- -------- -------- --------- -------- -------- --------
(unaudited)
(in thousands and as a percentage of revenues)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $ 313 $ 750 $ 1,084 $ 3,096 $4,803 $8,063 $12,245
Cost of revenues........ 171 534 890 2,491 3,178 5,912 8,608
Reserve for purchase
commitments........... -- -- -- 3,473 -- (2,305) (930)
------- ------- ------- ------- ------ ------ -------
Gross profit (loss)... 142 216 194 (2,868) 1,625 4,456 4,567
------- ------- ------- ------- ------ ------ -------
Operating expenses:
Research and
development......... 758 753 749 1,030 787 762 904
Selling, general and
administrative...... 408 433 537 475 632 648 846
Stock compensation
charge.............. 75 128 128 128 79 666 414
------- ------- ------- ------- ------ ------ -------
Total operating
expenses......... 1,241 1,314 1,414 1,633 1,498 2,076 2,164
======= ======= ======= ======= ====== ====== =======
Income (loss) from
operations............ (1,099) (1,098) (1,220) (4,501) 127 2,380 2,403
Interest income
(expense), net........ 49 140 78 129 50 36 52
------- ------- ------- ------- ------ ------ -------
Net income (loss)....... $(1,050) $ (958) $(1,142) $(4,372) $ 177 $2,416 $ 2,455
------- ------- ------- ------- ------ ------ -------
As a Percentage of
Revenues:
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues........ 54.6 71.2 82.1 80.5 66.2 73.3 70.3
Reserve for purchase
commitments........... 112.2 (28.6) (7.6)
------- ------- ------- ------- ------ ------ -------
Gross profit (loss)... 45.4 28.8 17.9 (92.7) 33.8 55.3 37.3
------- ------- ------- ------- ------ ------ -------
Operating expenses:
Research and
development......... 242.2 100.4 69.1 33.3 16.4 9.5 7.4
Selling, general and
administrative...... 130.4 57.7 49.5 15.3 13.2 8.0 6.9
Stock compensation
charge.............. 24.0 17.1 11.8 4.1 1.6 8.3 3.4
------- ------- ------- ------- ------ ------ -------
Total operating
expenses......... 396.6 175.2 130.4 52.7 31.2 25.8 17.7
------- ------- ------- ------- ------ ------ -------
Income (loss) from
operations............ (351.2) (146.4) (112.5) (145.4) 2.6 29.5 19.6
Interest income
(expense), net........ 15.7 18.7 7.2 4.2 1.0 0.4 0.4
------- ------- ------- ------- ------ ------ -------
Net income (loss)....... (335.5)% (127.7)% (105.3)% (141.2)% 3.6% 29.9% 20.0%
======= ======= ======= ======= ====== ====== =======
</TABLE>
30
<PAGE>
When we prepared the financial statements for that quarter, we believed
that our gross margin for the three months ended April 30, 1999 was adversely
impacted by a reserve for purchase commitments. Demand for certain products was
lower than we originally expected when we placed non-cancelable production
orders, and therefore the net realizable value of the products ordered would be
less than the cost. As a result, we accrued approximately $3.5 million for a
portion of the purchase commitments. During the nine months ended January 31,
2000, most of the products were sold. Of the reserve, approximately $2.3
million was released during the second quarter ended October 31, 1999 and
$930,000 during the third quarter ended January 31, 2000. The remaining reserve
of $238,000 at January 31, 2000 is reflected as a reduction in the basis of the
related inventory. In addition to the impact of the foregoing reserve, gross
margins have fluctuated as the result of the introduction of new products,
volatility of yields, economies of scale and other factors.
Sales of our color image sensor products increased in the three months
ended October 31, 1999 and January 31, 2000. In the three months ended January
31, 2000, research and development expenses and selling, general and
administrative expenses increased due to increases in headcount and the
associated payroll and personnel related expenses. In addition, these increases
resulted from higher design and materials costs, depreciation and amortization
in the three months ended January 31, 2000.
We believe that period to period comparisons of our operating results
should not be relied upon as an indication of our future performance. In the
past, our results of operations have fluctuated significantly, and we expect
similar quarterly fluctuations in the future as a result of a number of factors
beyond our control. Among other things, these factors include the rate of
growth in the market for our products, changes in the demand for our products
and seasonality. In addition, because a significant percentage of our revenues
has been and is expected to continue to be derived from a limited number of
OEMs and distributors, any variation in the timing of orders from those large
customers, or design wins or losses from potential large customers, can result
in significant fluctuations in our quarterly operating results. Our anticipated
research and development, selling and marketing, and general and administrative
expenses are based, in part, on future projections of revenues. As a result of
these and other factors, it is likely that in some future period our operating
results or business outlook will be below the expectations of securities
analysts or investors, which would likely result in a significant reduction in
the market price of our common stock. See "Risk Factors."
Liquidity and Capital Resources
Since inception, we have satisfied our liquidity requirements principally
through the issuance and sale of securities, totaling approximately $21.8
million. For the nine months ended January 31, 2000, we generated $1.9 million
in cash from operating activities. During the fiscal years ended April 30, 1999
and 1998, we used $5.0 and $5.3 million, respectively, for operating
activities, primarily due to operating losses and increased working capital as
sales increased. Net cash used from investing activities was $1.4 million,
$650,000, and $413,000 for the nine months ended January 31, 2000 and the
fiscal years ended April 30, 1999 and 1998, respectively. As of January 31,
2000, we did not have any significant capital expenditure commitments. Net cash
provided from financing activities was $560,000 from the issuance and sale of
common stock upon the exercise of employee stock options during the nine months
ended January 31, 2000, $8.3 million from the issuance and sale of Series C
preferred stock in the fiscal year ended April 30, 1999, and $4.6 million from
the issuance and sale of Series C preferred stock in the fiscal year ended
April 30, 1998.
As of January 31, 2000, we had $6.4 million in cash and cash equivalents.
We believe that the net proceeds of the sale of common stock from this
offering, together with our existing cash resources, will be sufficient to meet
our capital requirements for the next twelve months. We anticipate using
approximately $700,000 of cash during the three months ended April 30, 2000 to
fund increases in our inventory and receivables as our sales increase. However,
we could be required or could choose to raise additional capital during the
next twelve months. Our future capital requirements will depend on many
factors, including the rate of revenue growth, profitability, timing and extent
of spending to support research and development programs, expansion of selling
and marketing and administrative activities, timing of introductions of new
products and
31
<PAGE>
product enhancements and market acceptance of our products. We expect that we
may need to raise additional equity or debt financing in the future, although
we are not currently negotiating for additional financing nor do we have any
plans to obtain additional financing following our initial public offering. We
cannot assure you that additional equity or debt financing, if required, will
be available on acceptable terms, or at all. If we are unable to obtain
additional capital, we may be required to reduce the scope of our planned
product development, selling and marketing activities, which could harm our
business, financial condition and results of operations. In the event that we
do raise additional cash through financings, investors in this offering could
be further diluted.
From time to time, we may evaluate acquisitions of businesses, products or
technologies that complement our business. Although we have no current plans in
this regard, any transactions, if consummated, may consume a portion of our
working capital or require the issuance of securities that may result in
further dilution to existing stockholders.
Quantitative and Qualitative Discussion of Market Interest Rate Risk
Our cash equivalents and short term investments are exposed to financial
market risk due to fluctuation in interest rates, which may affect our interest
income and, in the future, the fair market value of our investments. We manage
our exposure to financial market risk by performing ongoing evaluations of our
investment portfolio. We presently invest in short term bank market rate
accounts which are exposed to changes in market interest rates, and in
certificates of deposit issued by banks, the value of which does not change
based on changes in interest rates. As our cash balances increase, we
anticipate investing in short term investment grade government and corporate
securities. These securities will be highly liquid and generally mature within
12 months from our purchase date. Due to the short maturities of our
investments, the carrying value should approximate the fair value. In addition,
we do not use our investments for trading or other speculative purposes. We
have performed an analysis to assess the potential effects of reasonably
possible near term changes in interest and foreign currency exchange rates. The
effects of any change in foreign currency exchange rates is not expected to be
material to our results of operations, cash flows or financial condition. Due
to the short duration of our investment portfolio, an immediate 10% change in
interest rates would not have a material effect on the fair market value of our
portfolio. Therefore, we would not expect our operating results or cash flows
to be affected to any significant degree by the effect of a sudden change in
market interest rates on our securities portfolio.
Foreign Currency Exchange Risk
We are an international company, selling our products globally and, in
particular in China, Japan, Korea, Singapore and Taiwan. Although we transact
our business in U.S. dollars, future fluctuations in the value of the U.S.
dollar may affect the competitiveness of our products, gross profits realized,
and results of operations. Further, we incur expenses in Japan, Korea, Taiwan
and other countries that are denominated in currencies other than the U.S.
dollar. We cannot estimate the effect that an immediate 10% change in foreign
currency exchange rates would have on our future operating results or cash
flows as a direct result of changes in exchange rates. However, we do not
believe that we currently have any significant direct foreign currency exchange
rate risk, and we have not hedged exposures denominated in foreign currencies
or any other derivative financial instruments.
Inflation
The impact of inflation on our business has not been material for the nine
months ended January 31, 2000 or for the fiscal years ended April 30, 1999,
1998 and 1997.
Year 2000 Issues
Prior to January 1, 2000, there was a great deal of concern regarding the
ability of computers to adequately recognize 21st century dates from 20th
century dates due to the two digit date fields used by many
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systems. Most reports to date, however, are that computer systems are
functioning normally and the compliance and remediation work accomplished
leading up to 2000 was effective to prevent any problems. Computer experts have
warned that there may still be residual consequences of the change in
centuries. This problem could result in miscalculations, data corruption,
system failures or disruptions of operations. Any Year 2000 difficulties could
result in a decrease in sales of our products, an increase in allocation of
resources to address Year 2000 problems of our customers without additional
revenue commensurate with such dedication of resources, or an increase in
litigation costs relating to losses suffered by our customers due to such Year
2000 problems.
In addition, because our internal systems utilize third party hardware and
software, residual Year 2000 problems affecting third parties' hardware and
software could cause our internal systems to fail. If residual Year 2000
problems cause the failure of any of the technology, software or systems
necessary to use our products or operate our business, we could lose customers,
suffer significant disruptions in our business, lose revenues and incur
substantial liabilities and expenses. We could also become involved in costly
litigation resulting from Year 2000 problems. This could harm our business,
financial condition and results of operations.
Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities and supercedes and amends a
number of existing accounting standards. SFAS No. 133 requires that all
derivatives be recognized in the balance sheet at their fair market value and
the corresponding derivative gains or losses be either reported in the
statement of operations or as a deferred item depending on the type of hedge
relationship that exists with respect to such derivatives. In July 1999, the
Financial Accounting Standards Board issued SFAS No. 137 "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB statement No. 133". SFAS No. 137 deferred the effective date until the
first quarter of fiscal years beginning after June 15, 2000. We do not expect
the adoption of SFAS No. 133 to have a material impact on our financial
position on results of operations.
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BUSINESS
Overview
OmniVision Technologies, Inc. is a leading provider of highly integrated,
single chip semiconductor imaging devices. We design, develop and market our
high performance, high quality and cost efficient semiconductor imaging devices
for computing, communications and consumer electronics applications. Our main
product, an image sensor, is used in cameras and camera related products. We
believe that we supply the most highly integrated single chip, complementary
metal oxide semiconductor, or CMOS, image sensor. Our single chip design can
allow our customers to provide cameras that are smaller, require fewer chips,
consume less power and cost less to manufacture than cameras using traditional
charged couple device, or CCD, technology or multiple chip CMOS image sensors.
Our CMOS image sensors are currently used for the following applications:
. videoconferencing;
. digital still cameras, personal computer, or PC, video cameras and
personal digital assistant cameras which are used for capturing images
that can be stored, downloaded, viewed, edited and manipulated, and
for Internet applications such as creating still and live video for
websites and email;
. security and surveillance systems including onsite and remote security
cameras for both home and business and surveillance systems such as
baby monitors and door phones;
. toys and games such as highly interactive participatory video games
where the users' motions and images can be incorporated into the game
and his or her motions, rather than a joystick or mouse, control
actions in the game; and
. videophones integrated in both tabletop and mobile phones.
We are also working with our customers to help them use our current image
sensors and to develop new CMOS image sensors for emerging applications.
Examples of such applications include:
. biometric devices such as fingerprint scanners and face recognition
systems;
. medical imaging devices used for routine doctors' office examinations;
. machine vision systems such as bar code readers and quality inspection
systems; and
. automotive applications that range from cameras that may replace rear
and side view mirrors to security systems, air bag inflation sensors,
rain detectors, accident recorders, driver monitors and maintenance
inspection systems.
We shipped over 2.6 million image sensors in the first nine months of
fiscal year 2000. Our customers include industry leading original equipment
manufacturers, or OEMs, such as Alaris, Creative Technology and Viewquest (a
customer who manufactures a PC video camera for Microsoft, the IntelPlay
Me2Cam, which is a PC video camera for an Intel and Mattel joint venture, and
plans to manufacture a personal digital assistant camera for Kodak). In
addition, we have recently achieved a significant design win with Logitech for
a PC video camera.
We have ten United States patents, five Taiwanese patents and 21 patent
applications pending protecting the single chip CMOS image sensor design, noise
reduction and cancellation circuits, and image enhancement and color processing
technologies of our semiconductor imaging devices.
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Industry Background
Growth of Digital Video Imaging
The past decade has seen explosive growth in multimedia technology and its
uses. A significant driver of this growth in multimedia has been the growth of
video technologies. Many large industries including the movie, television,
publishing and computer industries depend directly on video technologies to
create and deliver their products. Traditionally all video, still image and
sound products were based on analog technologies. More recently, computer based
video technology has been replacing traditional analog image and sound capture
technologies, such as conventional cameras, film and tape recorders. This has
begun to occur because digital technology offers enhanced quality, manipulation
and storage capabilities that analog technologies lack. For example, a movie
recorded and stored digitally can be easily searched and will not suffer
degradation over time.
The Internet and Miniaturization of Electronics Fuel Demand for Video Imaging
Video and image capture on PCs was first used in videoconferencing
applications. However, early videoconferencing applications were expensive, and
suffered from poor image quality and inadequate network infrastructure. Video
conferencing grew rapidly as image quality improved and cameras became more
affordable. Frost & Sullivan predicts that the market for video conferencing
cameras will grow from 2.6 million units in 1999 to 13.8 million units by 2003.
As cameras became readily available on PCs, applications other than
videoconferencing quickly followed. The introduction of the World Wide Web
browser, with its hypertext and Uniform Resource Locator, or URL, address
system, changed the Internet from a text based system to a multimedia driven
network that features sound, pictures and live video clips. Fueled by the
growth of the Internet as a method to publish, transport and store images, the
number of pictures generated is expected to grow significantly as different
uses of imaging and video continue to emerge. Today PC video cameras are used
for capturing still pictures and live video clips used for web sites, video
email, video greeting cards, web based photo exchanges, desktop publishing and
interactive games. As network bandwidth continues to improve, transferring
images across PC systems and communication networks will become even easier,
further driving the demand for video and multimedia applications.
Miniaturization has moved computing from the desktop to a wide assortment
of portable and hand held devices including laptops, personal digital
assistants, electronic games and mobile phones. These battery operated devices
are creating an opportunity for small, low power, low cost digital still
cameras to be integrated directly into the portable device so that images can
be captured for transfer to computer systems using wired or wireless methods.
Examples of commercial uses for these captured images include property damage
pictures for insurance claims, images of competitive products for analysis, or
enhancement of computer contact databases.
The more recent digital still cameras use a live video image sensor to
display a real time image on a miniature, built in display which serves as a
viewfinder. Still images captured by the same sensor and stored in the camera
are transferred to a computer system for viewing, editing, transmitting and
printing. When connected to the computer, digital still cameras can also
function like PC video cameras. These devices have made a significant impact on
the camera market by taking market share from film based cameras and are one of
the fastest growing consumer electronic products. Frost & Sullivan predicts
that the market for digital still cameras will grow from 4.0 million units in
1999 to 15 million units in 2003.
Advances in Image Sensor Technology
Image sensors are at the center of all electronic cameras. Image sensors
capture an image through a lens and convert that image into electronic signals.
CCD technology has dominated the image sensor market for over 25 years. As of
1998, there were approximately 32 CCD image sensor manufacturers. However,
production is concentrated with relatively few, large, primarily vertically
integrated camcorder manufacturers. According to Frost & Sullivan, the top six
CCD image sensor manufacturers, Sony Corporation, Matsushita
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Electric Industrial, Sharp Corporation, Toshiba Corporation, Victor Company of
Japan and Sanyo Electric Co. Ltd., account for approximately 55% to 65% of
total CCD image sensor production.
CMOS technology was developed in 1967. According to Frost & Sullivan,
approximately 90% of modern integrated circuits, including microprocessors,
logic circuits, application specific intergrated circuts, or ASICs, and memory
circuits, use CMOS technology. Although CMOS technology has been available for
image sensor designs for over 20 years, it has not been used in commercial
products because of poor image quality. Recent improvements in CMOS, including
smaller submicron geometries and lower current leakage, known as dark current,
and a more stable fabrication process, have made it possible to design CMOS
image sensors that provide high image quality and that have many advantages
over CCD sensors.
Advantages of CMOS Over CCD Technology
CMOS technology has many advantages over CCD technology including:
. Cameras using CMOS image sensors consume as little as one tenth as
much power as those using CCD technology, making them more suitable
for battery operated applications.
. CMOS image sensors require only one voltage, the three or five volts
typically used for standard CMOS based circuits, while CCD image
sensors require three separate and different voltages, which means
that CMOS image sensors are easier and less costly to integrate into
companion circuit boards.
. CMOS technology permits integration of more functions into fewer
chips, providing space, cost, product design and reliability
advantages. Cameras using CMOS technology do not require as many
semiconductors as cameras using CCD technology.
. The CMOS fabrication process requires fewer masking steps than the CCD
fabrication process. The CCD fabrication process requires 20 to 40
masking steps, which is two to three times more complex than the CMOS
fabrication process.
. CMOS image sensors do not cause an image to lose definition when
directed towards bright light while CCD image sensors create a blurry
or smeared image.
In addition, since CCD technology is used only for image sensors, future
improvements in the core technology and the fabrication process are
concentrated among a few large, vertically integrated camera OEMs. Such
concentration tends to limit innovation and investments, and according to Frost
& Sullivan, economies of scale for the manufacture of CCD image sensors have
already been reached. By contrast, CMOS technology is used for approximately
90% of modern integrated circuits and there is a massive ongoing investment of
money, people and facilities to continue the improvement of CMOS technology and
the fabrication process.
Because of the advantages of CMOS technology, the market for CMOS image
sensors is expected to surpass the market for CCD image sensors in 2001. Frost
& Sullivan forecasts that CMOS's share of the image sensor market will grow
from 25.1% in 1999 to 78.6% in 2003. In particular, Frost & Sullivan predicts
that in 2003, 70% of the 13.8 million video conferencing cameras will use CMOS
image sensors. CMOS image sensors are also quickly replacing CCD image sensors
in the low and medium level of the digital still camera market.
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Applications for CMOS Image Sensors
CMOS image sensors are anticipated to help move video applications into
many new mass markets, particularly where low cost, low power consumption and
small size are important. Some of these applications include:
. a wide array of biometric devices for finger print scanners, retina
scanners and facial recognition systems that can be used for credit
card and debit card authorization, opening a hotel door, entering a
car or home, accessing a computer or online network, and any number of
applications where a system needs to identify a person as a valid
user;
. toys, including interactive games, that are connected to either a
television or a computer system;
. home security and surveillance systems to improve the quality and
reliability of detecting and verifying intrusions in order to reduce
the problem of false alarms;
. close circuit television, or CCTV, systems for security and for
monitoring operations that can use low cost image sensors to provide
better coverage;
. a wide array of medical instruments used for everything from routine
doctors' office examinations to disposable cameras for minimal
invasive surgery;
. videophones integrated into both tabletop and mobile phones;
. automotive applications that range from cameras that may replace rear
and side view mirrors to security systems, air bag inflation sensors,
rain detectors, accident recorders, driver monitors and maintenance
inspection systems; and
. machine vision applications, including bar code readers, production
control systems and quality control monitors.
Multiple chip CMOS image sensors, however, do not fully take advantage of
the benefits enabled by CMOS technology. Image sensors that require more than
one chip are more expensive, larger, heavier, consume more power, are less
reliable and are more difficult to integrate with other electronic circuits. As
a result, multiple chip image sensors may not be ideal for many new mass market
applications.
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Our Solution
We are a leading provider of highly integrated, single chip semiconductor
imaging devices. We design, develop and market our high performance, high
quality and cost efficient CMOS image sensors for computing, communications
and consumer electronics applications. We believe that we supply the most
highly integrated single chip CMOS image sensor. Customers can use our single
chip CMOS image sensor to design camera products that are lower in cost,
smaller in size, lighter in weight, consume less power and are more reliable
and easier to integrate with other electronic circuits than cameras using CCD
technology or multiple chip CMOS image sensors.
Our proprietary circuit design integrates the image sensing array, the
image processing function, the color space conversion process and either a
television encoder circuit or an analog to digital converter that outputs an
industry standard computer format. Our CMOS image sensors are used in
conjunction with our Universal Serial Chip, or USB, chip or other
manufacturers' adaptor chips to connect directly with a PC. The following
diagram compares our highly integrated CMOS image sensors with a typical CCD
image sensor and a typical multiple chip CMOS image sensor:
[A chart comparing the typical CCD Image Sensor, the typical Competitive CMOS
Image Sensor and the OmniVision Single Chip CMOS Image Sensor. The left column
describes the typical CCD Image Sensor, which consists of an image sensor chip
with the image sensing array and a multiple chip set with image processing,
color space conversion, CCD control functions and encoder or analog/digital
converter and interface. The center column describes the typical competitive
CMOS image sensor, which consists of an image sensor chip with the image
sensing array and analog/digital converter and a multiple chip set with image
processing, color space conversion and an encoder or interface. The right
column describes the OmniVision single chip CMOS image sensor, which consists
of a single image sensor chip with the image sensing array, image processing,
color space conversion, and an encoder or analog/digital converter and
interface. All three types of image sensor lead to a live video output to TV
standards and computer standards.]
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Our CMOS image sensors provide a number of benefits to our customers,
including the following:
. Lower Cost. The highly integrated design of our CMOS image sensors
allows our customers to build a camera that can be generally less
expensive than one using CCD technology. Our single chip image sensor
also allows our customers to build cameras that are less expensive
than cameras using multiple chip CMOS image sensors.
. Lower Power Consumption. A camera using our CMOS image sensor can
require as little as one tenth of the power required for a CCD camera
and half the power required for a multiple chip CMOS camera, making
our solution more suitable for battery powered operation. In addition,
CMOS image sensors use a single voltage while CCD image sensors
require three voltages. As a result of this simplicity our customers
can more easily and quickly design camera products.
. Smaller Size. Our highly integrated, single chip design allows our
customers to develop cameras that are smaller in size and lighter in
weight than cameras that use CCD or multiple chip CMOS image sensors.
For portable applications, size and weight are critical factors in a
consumer's buying decision. Additionally, devices using our image
sensors are more reliable because there are fewer parts to fail.
. Streamlined Manufacturing and Production. Our CMOS image sensors
provide consistent quality that makes them easier to use for large
scale production than CCD image sensors because CCD image sensors must
each be hand calibrated to match companion components. Our CMOS image
sensors can be mounted with automatic insertion equipment and run
through standard automatic reflow soldering lines, whereas CCDs must
each be individually placed and soldered by hand.
. Ease of Use for End Users. As opposed to other CCD and CMOS image
sensor manufacturers, we offer a complete solution for our customers'
end users. Use of our digital CMOS image sensors along with our
universal serial bus, or USB, interface chips and our Windows software
drivers enables a plug and play connection of the camera to a PC.
. Accelerated Time to Market. The highly integrated nature of our CMOS
image sensors and their programming ease simplify the design of
cameras and allows our customers to shorten their product design time.
We also help our customers accelerate their time to market by
providing camera reference designs, engineering design review services
and customer product evaluation testing and debugging services.
Our Strategy
Our objective is to be the leading supplier of CMOS image sensors for the
OEM marketplace. Key elements of our strategy include:
. Target Mass Market Applications. We intend to focus our efforts on
mass market opportunities for image sensors. We intend to replace CCD
technology as well as capitalize on existing markets already dominated
by CMOS technology by providing high quality, cost efficient products
that meet a variety of OEM requirements. These markets include
videoconferencing, digital still cameras, PC video cameras, personal
digital assistant cameras, security and surveillance systems, toys and
games, videophones, biometric devices, medical imaging devices,
machine vision systems and automotive applications.
. Focus on OEM Customers. We intend to use our expertise in the design
of consumer cameras to assist our OEM customers to design and develop
their products using our CMOS image sensors. We believe a focus on OEM
customers is important because we can take advantage of an OEM's brand
name and distribution and manufacturing capabilities to gain access to
large markets.
. Maintain Technology Leadership. We plan to maintain our technology
leadership by continuing to develop our core technology. We have an
ongoing, in house research effort further exploring the basic physics
relating to image sensing that will give us a solid base for future
improvements. We
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also plan to continue to increase yields through improvements in
product design, wafer fabrication, color filter application, chip
packaging and production testing.
. Continue to Develop New Products. We will continue to develop new
products aimed at new and existing markets. We intend to expand the
range of image resolutions offered, provide more products that use
three volts, improve the image quality and integrate more features,
such as communications, compression and additional interface standards
into our CMOS image sensors. The modular design of our integrated
circuits allows us to quickly add improvements to existing products
and to develop new products using established, fully tested circuits.
. Continue to Develop Strategic Relationships. We will continue to
establish both formal and informal strategic relationships with key
manufacturers and customers. Relationships with manufacturers enable
us to gain access to wafer capacity and develop joint engineering
projects aimed at improving the production yield and the sensor image
quality for our CMOS image sensors. Relationships with customers allow
us to collaborate in the design and development of cameras using our
CMOS image sensors. We believe strategic relationships are essential
to our success and will continue to focus on developing new
relationships.
Products
We are a leading provider of highly integrated, single chip CMOS image
sensors. We design, develop and market our high performance, high quality and
cost efficient CMOS image sensors for computing, communications and consumer
electronics applications.
We have developed proprietary designs for a single chip image sensor that
includes the image sensing array, image processing circuitry, color space
conversion process and either a television encoder circuit or an analog to
digital converter that outputs an industry standard computer format. Our
products are programmable and allow our customers to provide custom,
proprietary features in their application software or hardware design so that
they can offer unique products to end users. Our technology provides a
platform for different products that allow our OEM customers to choose the
most appropriate features for their applications. These features include:
- -------------------------------------------------------------------------------
Product Features
<TABLE>
<S> <C>
CMOS Image Sensors Black and white or color
- ---------------------------------------------------------------------------------------
Resolutions Low resolution 80K--110K pixels
Full resolution 250K--500K pixels
High resolution 800K--over 1 million pixels
- ---------------------------------------------------------------------------------------
Output Signal Analog NTSC, PAL or S-Video
Digital 8-bit, 16-bit or zoom video port
- ---------------------------------------------------------------------------------------
Operating Voltage 5 volt direct current or 3 volt direct current
- ---------------------------------------------------------------------------------------
Optical Lens Size 1/4 or 1/3 or 1/2 inch format
- ---------------------------------------------------------------------------------------
Interface Chips Universal serial bus, or USB, interface with I/2/C bus control
- ---------------------------------------------------------------------------------------
Software Drivers Windows software drivers for USB
</TABLE>
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The following table summarizes our current CMOS image sensor product
offerings:
- --------------------------------------------------------------------------------
CMOS Image Sensors
<TABLE>
<CAPTION>
Product / Voltage
- --------------------------
Black and Color Resolution Introduction
White Sensors Sensors (Pixels) Output Target Markets Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OV5016 352 x 288 Analog Security and surveillance 1/97
5 volt Toys and games
- --------------------------------------------------------------------------------
OV5017 384 x 288 Digital Machine vision 5/97
5 volt
- --------------------------------------------------------------------------------
OV7110 OV7610 640 x 480 Digital PC video cameras 10/98
5 volt 5 volt Digital still cameras
Machine vision
- --------------------------------------------------------------------------------
OV7410 OV7910 508 x 492 Analog Security and surveillance 2/99
5 volt 5 volt 628 x 582 Close circuit television
Toys and games
- --------------------------------------------------------------------------------
OV6120 OV6620 352 x 288 Digital PC video cameras 4/99
5 volt 5 volt Toys and games
Machine vision
- --------------------------------------------------------------------------------
OV7120 OV7620 640 x 480 Digital PC video cameras 10/99
5 volt 5 volt Digital still cameras
Machine vision
Security and surveillance
- --------------------------------------------------------------------------------
OV6130 OV6630 352 x 288 Digital PC video cameras 2/00
3 volt 3 volt Toys and games
Machine vision
</TABLE>
We have new products currently scheduled for introduction in fiscal year
2001 that feature higher resolutions. These products have pixel resolutions of
800 x 600 pixels and 1280 x 1024 pixels. Both will operate on three volts and
are targeted at the digital still camera, PC video camera, security and
surveillance, and machine vision markets.
We also provide a companion USB chip used to interface our CMOS image
sensors to the USB on PCs. These low cost, proprietary designed ASICs accept
the live video output from our CMOS image sensors, have real time compression
and handle the USB protocol for transferring the image data to the PC. They
also act as an I/2/C master, which is an industry standard protocol, for
passing programming information to and from our CMOS image sensor.
We also design, develop and license plug and play software drivers for
Microsoft Windows and are currently developing a software driver for Apple
Computer's iMac system. These software drivers accept the image data being
received from the USB, provide the decompression if required and manage
interface protocols with the camera. These drivers have been designed for speed
and flexibility and allow easy customization of the user interface to give the
appearance of the OEMs branded product or application software.
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Customers
Our customers include industry leading OEMs, contract manufacturers and
distributors. In the first nine months of fiscal year 2000 we shipped over 2.6
million CMOS image sensors. The following table describes representative OEM
customers who purchase our products for their own branded products and contract
manufacturers who build products for an OEM. Also shown are our representative
distributors who purchase our products for resale.
<TABLE>
<CAPTION>
Customer Product Family Markets
OEM and Contract Manufacturer Customers
<S> <C> <C>
Advanced Integration of Pure Color digital sensors PC video cameras
Intelligence USB interface
- --------------------------------------------------------------------------------
Alaris Color digital sensors PC video cameras
Color analog sensors Toys and games
- --------------------------------------------------------------------------------
COMedia Black and white analog Security and surveillance
sensors
Color analog sensors
- --------------------------------------------------------------------------------
Creative Technology Color digital sensors PC video cameras
USB interface Digital still cameras
- --------------------------------------------------------------------------------
CRS Electronic Color analog sensors Toys and games
- --------------------------------------------------------------------------------
Marshall Electronics Color analog sensors Security and surveillance
- --------------------------------------------------------------------------------
Olympus Optical Co. Color digital sensors Security and surveillance
Color analog sensors PC video cameras
- --------------------------------------------------------------------------------
Prochips Technology Color digital sensors PC video cameras
USB interface
- --------------------------------------------------------------------------------
RDI/Core Technology Black and white analog Security and surveillance
sensors
Color analog sensors
- --------------------------------------------------------------------------------
Viewquest Technologies Color digital sensors Toys and games
USB interface PC video cameras
Personal digital assistant
cameras
- --------------------------------------------------------------------------------
Welch Allyn Black and white analog Security and surveillance
sensors
Color analog sensors
- --------------------------------------------------------------------------------
X-10 (USA) Color analog sensors Security and surveillance
<CAPTION>
Distributors
<S> <C> <C>
Wintek Electronics Color digital sensors PC video cameras
Black and white digital Digital still cameras
sensors
Color analog sensors General purpose cameras
USB interface Security and surveillance
- --------------------------------------------------------------------------------
World Peace Industrial Color digital sensors PC video cameras
Black and white digital Digital still cameras
sensors
Color analog sensors Security and surveillance
USB interface General purpose cameras
</TABLE>
In addition to the OEM customers described above, we have recently achieved
a significant design win with Logitech for a PC video camera.
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In many cases, OEMs outsource manufacturing functions to third parties. In
cases where we have achieved the design win, we typically help these third
party manufacturers bring the design to production. Once the production is
ready, we sell our products to these third party manufacturers either directly
or through distributors. For example, Viewquest, a major manufacturer in
Taiwan, manufactures cameras for an Intel and Mattel joint venture and
Microsoft, and plans to manufacture a personal digital assistant camera for
Kodak. In many cases these third party manufacturers will also introduce us to
additional OEMs with whom they have previous relationships.
In the nine months ended January 31, 2000, approximately 66% of our
revenues were directly to OEMs and their contract manufacturers. Our two
largest customers, Creative Technology Ltd. and Alaris, Inc., accounted for 17%
and 16% of our total revenues, respectively. No other single OEM customer
represented more than 10% of total revenues.
In the nine months ending January 31, 2000, approximately 34% of our
revenues were to distributors. The largest distributor was World Peace
Industrial Co. Ltd., who represented approximately 24% of total revenues. No
other single distributor represented more than 10% of total revenues.
Strategic Relationships
We have established an informal strategic relationship with Taiwan
Semiconductor Manufacturing Company, or TSMC, both in Taiwan and in the United
States. TSMC is our primary source of wafer fabrication. This relationship
includes joint engineering projects aimed at improving production yields,
improving image quality and correlating final packaged chip testing and wafer
level testing. We provide extensive, in depth technical expertise on image
sensor design issues which has allowed TSMC to develop an image sensor
production business. TSMC provides us with extensive, in depth technical
expertise on variations of the CMOS semiconductor fabrication process which
assists us in improving the design and production of our image sensors. We are
TSMC's largest customer for CMOS image sensors and in the past we have received
preferential capacity scheduling.
We have signed an agreement with Powerchip Semiconductor Company, or PSC,
as a second source for wafer fabrication. PSC is an equity investor in
OmniVision. By working closely with PSC's engineers, we have been able to
design new image sensor products that take advantage of PSC's dynamic random
access memory fabrication processes. PSC's fabrication process gives us a
number of important improvements, including lower dark current for better image
quality, three volt power for portable applications and more die per wafer. In
return, we have assisted PSC in the image sensor fabrication and the color
filter application process business.
We have signed an agreement with Shanghai HuaHong NEC Electronics Co. Ltd.,
or HuaHong-NEC, as an additional source of wafer manufacturing. HuaHong-NEC is
an equity investor in OmniVision. This agreement not only assures us future
production capacity, but also gives us a production source in China that will
be strategically important as we develop a market in China. We will use our
technical expertise to help HuaHong-NEC develop its image sensor fabrication
business.
We have several informal strategic relationships with key customers in the
development of new camera products incorporating our CMOS image sensors. By
working directly with key customers, we can help them take advantage of our
CMOS image sensors and can inform them of new developments so they can market
their products more quickly. By learning more about our customers' desires and
requirements we are able to plan and prioritize our product development
projects. These key customers include Creative Technology, for PC video cameras
and digital still cameras, Alaris for PC video cameras, Viewquest for toys, PC
video cameras and personal digital assistant cameras, and Welch Allyn for
medical instruments, security and surveillance systems and machine vision
applications.
Sales and Marketing
We sell our products through a direct sales force and indirectly through
distributors and manufacturer's representatives. As of January 31, 1999 our
sales and marketing organizations had a total of 14 employees,
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including 7 of whom are in Taiwan. We also have 18 independent distributors and
manufacturers' representatives, nine of whom are in Asia and six of whom are in
Europe.
Our sales and marketing strategy is to achieve design wins with key
industry leaders who target mass market applications. Our marketing efforts
focus primarily on promoting the advantages of a single chip CMOS image sensor
and in supporting our customers at industry trade shows around the world. We
sell our CMOS image sensors to OEMs who market camera products under their own
brand. We also sell to large manufacturing companies that produce camera
products for others to market under different brand names. Through our
relationships, we have developed considerable expertise in the design of
consumer cameras. We use that expertise in assisting our customers to develop
their products using our CMOS image sensors. We also provide reference designs
and engineering design review and engineering product evaluation testing and
debugging services for our customers. We believe that good customer support at
a technical level is extremely important in developing long term relationships
with key customers.
Technology
We have key technical competencies in analog signal processing design,
mixed signal circuit design, advanced CMOS image sensor design, automatic
testing and single chip semiconductor design.
Analog Signal Processing Design
We have the in house expertise to design sophisticated analog semiconductor
circuits. This expertise is unique because most semiconductor design engineers
today work in the area of digital circuit design. Our in house expertise allows
us to process the video data captured on the image sensing array in the analog
domain, which has many significant advantages over digital processing. Analog
processing works directly on the original image signals without the loss of
data typical with conversion to digital processing. Analog circuits require
considerably less space which means we can design smaller chips with far less
noise caused by heat or cross talk than digital circuits. The image processing
circuits take approximately 20% of the space in our typical CMOS image sensor
design, leaving 80% for the image sensing array. Most CCD image sensors and
other competitive CMOS image sensor products convert the image signal to
digital as the very first step. In our product designs, conversion to a digital
signal is the last step taken before the output step rather than the first.
Analog processing is the key for integrating all the functions on a single chip
thereby taking full advantage of the benefits of CMOS technology.
Mixed Signal Circuit Design
We have developed extensive in house expertise in the technology of mixing
analog and digital signals in the same semiconductor design without suffering
the common problems of interference from noise caused by heat or crosstalk. We
use digital circuits in our CMOS image sensors to interface to the outside
digital world. We have developed a method of using programmable digital
registers to control the analog processing circuits, which gives our customers
extensive and flexible programming capability from digitally based
microprocessors and micro controllers.
Advanced CMOS Image Sensor Design
Our in house semiconductor design engineers are skilled in the design of
high speed, low power and mixed signal CMOS image sensors. We use advanced
design techniques and submicron geometries to develop high speed, highly
integrated semiconductors which can be fabricated using standard CMOS processes
and which can be manufactured using conventional low cost packages.
Automatic Testing
Automatic testing methods and equipment designed for conventional CMOS
devices are not sufficient for testing an image sensor. In addition to testing
all the normal logic and electrical functions, an optical test must
44
<PAGE>
be performed on the image sensor. The sensor is turned on and captures a live
image which is subsequently analyzed for quality and color. Our in house
expertise allows us to design automatic testing equipment, or ATE, specifically
for CMOS image sensors. Using commercially available off the shelf modules and
components, we have designed and developed a complete microcomputer based ATE
system that has automatic handling capability, an image source, a lighting and
lens system and automatic output sorting. This low cost system is programmable
so that testing criteria and testing methodology can be easily changed and can
be replicated to meet increased production requirements. The system produces
detailed reports on test results that are used for feedback to our quality
control and operations department. We currently use these systems to deliver a
high quality product at high production volumes.
Single Chip Semiconductor Design
Our expertise has allowed us to create a single chip CMOS image sensor. Our
single chip integrates the image sensing array, the image processing, the color
space conversion and either a television encoder circuit or an analog to
digital converter that outputs an industry standard computer format. The
following chart is a summary of the functions that we have integrated into our
single chip design:
45
<PAGE>
Our Single Chip Design
Image Sensing Array Options
<TABLE>
<C> <S>
. Digital:
QVGA 320X240 (77K pixels)
CIF 352X288 (110K pixels)
VGA 640X480 (307K pixels)
SVGA 800X600 (480K pixels)
Mega pixel 1280X1024 (1.3M pixels)
. Analog:
NTSC 508X492 (250K pixels)
PAL 628X582 (365K pixels)
</TABLE>
Image Processing Functions
<TABLE>
<S> <C> <C>
.Automatic controls: . Internal or external . Image enhancement controls:
Exposure (AEC) synchronization Correlated double sampling (CDS)
Gain (AGC) . I/2/C bus control Hue
White balance (AWB) . Image quality features: Contrast
Brightness Anti-blooming Gamma correction
. Progressive or
interlaced scan Zero smearing Saturation
. Frame or line exposure Wide dynamic range Sharpness
. Programmable frame
rate Windowing
(0.5-60 fps) Backlight compensation
Color correction
Smart color
Antialias
</TABLE>
Color Space Conversion
.Color space formats:
YCrCb
RGB
RGB Original
-------------------------------
or
Encoder A/D & Interface
Output Output
.TV standards: .Computer standards:
NTSC (60Hz) CCIR 601 (16-bit)
PAL (50Hz) CCIR 656 (8-bit)
S-Video Zoom video (ZV)
Composite Video port
75-Ohm Terminated RGR raw data--CCD
Compatible
46
<PAGE>
Research and Development
The internal design of our CMOS image sensors has been done in a modular
fashion. The major functions, such as the image sensor area, image sensor
control logic, color processing, analog encoding, digital output and I/2/C bus
control, are stand alone circuits that can rapidly be modified or used as is in
new product developments. As a result, circuit improvements automatically
migrate to each new product, and the total development time and cost for new
products is greatly reduced.
We use a team approach to design new products which includes a senior
design engineer and additional engineers with specific design expertise. As of
January 31, 2000, we had a total of 11 employees in our core logic group
responsible for CMOS image sensor design and development. In addition, we had a
total of 17 employees in our engineering systems group responsible for the
design and development of interface ASIC, software drivers, reference camera
designs, ATE and customer engineering support services.
We have invested, and expect that we will continue to invest, significant
funds on research and development. Our research and development expenses were
approximately $1.7 million in fiscal year 1997, $3.4 million in fiscal year
1998 and $3.3 million in fiscal year 1999.
Intellectual Property
Our success and future revenue growth will depend, in part, on our ability
to protect our intellectual property. We rely on a combination of patent,
copyright, trademark and trade secrets, as well as nondisclosure agreements and
other methods to protect various aspects of our CMOS image sensors such as the
image sensor array and the image processing circuit. As of January 31, 2000, we
have been issued ten United States patents. We have also received five
Taiwanese patents. We have filed 14 additional United States patent
applications, of which two have been allowed. We have also filed seven
additional foreign patent applications. These patents and patent applications
protect the single chip image sensor design, noise reduction and cancellation
circuits and image enhancement and color processing technologies of our
semiconductor image sensors.
From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights to technologies that
are important to us. We expect that we will increasingly be subject to license
offers and infringement claims as the number of products and competitors in our
market grows and the functionality of products overlaps. In this regard, in
March of 1999, we received a written notice from Photobit Corporation in which
Photobit claimed to have patent rights in certain technology. Photobit
requested that we review our products in light of one of their issued patents.
We have reviewed Photobit's patent and based on an opinion from our patent
counsel, we do not believe there is a valid claim against us under this patent.
We shall vigorously defend ourselves against any claim arising from this
notice.
Photobit or other companies may pursue litigation with respect to these or
other claims. The results of any litigation are inherently uncertain. In the
event of an adverse result in any litigation with respect to intellectual
property rights relevant to our products that could arise in the future, we
could be required to obtain licenses to the infringing technology, pay
substantial damages under applicable law, including treble damages if we are
held to have willfully infringed, to cease the manufacture, use and sale of
infringing products or to expend significant resources to develop noninfringing
technology. Licenses may not be available from third parties, including
Photobit, either on commercially reasonable terms or at all. In addition,
litigation frequently involves substantial expenditures and can require
significant management attention, even if we ultimately prevail. Accordingly,
any infringement claim or litigation against us could significantly harm our
business, operating results and financial condition.
Manufacturing
Wafer Fabrication
Our semiconductor products are fabricated using standard CMOS processes,
which permit us to engage independent wafer foundries to fabricate our
semiconductors. By outsourcing our manufacturing to
47
<PAGE>
semiconductor foundries, we are able to avoid the high cost of owning and
operating a semiconductor wafer fabrication facility. This allows us to focus
our resources on the design, development and marketing of our CMOS image
sensors.
We outsource the majority of our wafer manufacturing to TSMC. During 1999
we began developing new CMOS image sensors to take advantage of PSC's DRAM
fabrication technology, and we have begun receiving production quantities of
wafers from PSC. We expect that the volume of production from PSC will increase
over time. We also have an agreement with HuaHong-NEC to provide us with
additional wafer manufacturing support.
Our CMOS image sensors are currently fabricated using a single poly silicon
double metal process at 0.5 and 0.6 microns. Some new products that will use
the 0.35 micron process are in development. We continue to evaluate the
benefits and feasibility of migrating to a smaller geometry process technology
in order to reduce costs or to increase quality and performance.
Our USB interface ASIC is currently being fabricated by Samsung on its
standard ASIC fabrication line. Samsung not only fabricates the wafers, but
also packages the dies and performs a final test, delivering a final product
that can be shipped directly to our customers when required.
Color Filter Application
Approximately 80% of our sales of CMOS image sensors are color image
sensors. These require a color filter to be applied to the wafer before
packaging. This color filter application uses a series of masks to place red,
green and blue dyes on the individual pixels in the image sensing array in an
industry standard Bayer pattern. As a final step, a micro lens is applied to
each pixel. We outsource the application of our color filters to Toppan
Printing Co., Ltd. in Japan and to TSMC in Taiwan. We have also recently
qualified PSC in Taiwan. We continue to evaluate the benefits of using other
vendors with different process technology in order to further reduce costs or
increase quality and performance.
Assembly
After wafer fabrication, and color filter application if required, wafers
are diced and dies are assembled into packages. Our products are designed to
use low cost standard packages that are widely in use for optical sensor chips.
These packages have a glass lid to allow light to pass through to the image
sensor array. We outsource all our packaging requirements to Kyocera
Corporation in Japan and to Taiwan Electronic Packaging Company in Taiwan. We
continue to evaluate the benefits of using other vendors and other packaging
technologies in order to further reduce costs or increase quality or
performance.
Testing
High volume product testing is an important part of the production of image
sensors and is a substantial barrier to entry for many companies. Production
testing equipment designed for conventional CMOS semiconductors is not
sufficient for testing image sensors because an optical image must be captured
and checked in addition to checking the normal logic and electrical functions.
The few commercially available image sensor testers are expensive and do not
meet our high standards.
We have designed our own automatic test equipment, or ATE, using readily
available modules and components. These ATEs are computer based and have
automatic handling capability, a lighting and lens system, a changeable image
source and automatic output sorting by grade. The system is programmable so
that testing criteria and methodology can be changed easily to accommodate new
products or special testing requests. Our cost to build a system is
substantially less than that of commercially available ATEs. We can expand our
production capability by building additional systems at a low cost. Current
testing capacity is in excess of one million units per month, and we need to
double that capacity during the coming fiscal year.
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<PAGE>
Our policy is to do a complete optical test of all our CMOS image sensors.
Currently substantially all of our testing is done on our ATE machines
installed at our headquarters facility in Sunnyvale, California, although a
very small amount of testing for a few older products is done by hand by a
third party. We continue to evaluate the benefits of making our ATEs available
to outside vendors who could perform our testing in order to reduce costs.
We use the reports from our ATEs to monitor the cause of any failure in
order to place responsibility with the appropriate vendor, i.e. wafer
fabrication, color filter application and packaging. Since image sensors are
optical products, the introduction of impurities is a major concern during the
color filter application and packaging process. We use test data to establish
yield goals at each step of the manufacturing process and take remedial action
as appropriate.
Quality Assurance
We focus on product quality through all stages of the design and
manufacturing process. Our designs are subjected to in depth circuit simulation
before being committed to silicon. Test wafers are fabricated and test die are
packaged and live tested before a new product is committed to production.
Initial production runs are kept at a minimum until sufficient products have
completed the entire manufacturing and testing process and are delivered to and
approved by customers. Full production runs are committed only at that time.
We qualify each of our vendors through a series of industry standard
environmental product stress tests, as well as an audit and an analysis of the
subcontractor's quality system and manufacturing capability. We also
participate in quality and reliability monitoring through each stage of the
production cycle by reviewing electrical parametric data from our foundries and
other subcontractors. We closely monitor wafer foundry production to obtain
consistent overall quality, reliability and yield levels.
Competition
We compete in an industry characterized by intense competition, rapid
technological changes, evolving industry standards, declining average selling
prices and rapid product obsolescence. We believe that the principal factors
affecting competition in our markets are time to market, quality, total system
design cost, availability of foundry capacity, customer support and reputation.
Our primary competition comes from CCD image sensor manufacturers and CMOS
image sensor manufacturers.
. CCD Image Sensor Manufacturers. CCD image sensor manufacturers include
a number of well established companies, particularly vertically
integrated camcorder manufacturers. Our main competition comes from the
top six companies that collectively account for approximately 55% to
65% of the total CCD image sensor market. These six include Matsushita
Electric Industrial, Sanyo Electric Co. Ltd., Sharp Corporation, Sony
Corporation, Toshiba Corporation and Victor Company of Japan; and
. CMOS Image Sensor Manufacturers. CMOS image sensor manufacturers
include a number of well established companies such as Conexant
Systems, Inc., Hewlett-Packard Company, Hyundai Electronics Industries
Co. Ltd., Intel, Lucent Technologies, Inc., Mitsubishi Electronic,
Motorola, Inc., and Toshiba Corporation. In addition, we compete with a
large number of smaller startup companies including Chrontel, Inc.,
ElecVision, Inc., Photobit Corporation and VLSI Vision Ltd. (now a
division of ST Microelectronics).
Our competitors include many large domestic and international companies
that have greater access to advanced wafer foundry capacity, substantially
greater financial, technical, marketing, distribution and other resources,
broader product lines, access to large customer bases and longer standing
relationships with suppliers and customers than we do. However, we believe that
our single chip design offers competitive advantages that can allow our
customers to design cameras that are lower in cost, smaller, lighter weight,
consume less power, more reliable and more easily integrated with other
circuits than cameras using CCD technology or multiple chip CMOS image sensors.
49
<PAGE>
Backlog
Sales are generally made pursuant to standard purchase orders. Our backlog
includes only those customer orders for which we have accepted purchase orders
and assigned shipment dates within the upcoming twelve months. As of January
31, 2000, our backlog was $15.9 million. Although our backlog is typically
filled within two to four quarters, our current backlog is subject to changes
in delivery schedules and backlog may not necessarily be an indication of
future revenue.
Employees
As of January 31, 2000 we had a total of 71 full time employees, 64 located
at our headquarters in Sunnyvale, California and seven at our Taiwan office. Of
the 71 employees, 11 are in design engineering, 17 are in systems development,
22 are in production, 14 are in sales and marketing and seven are in general
and administrative. None of our employees are represented by a collective
bargaining agreement, and we have never experienced any work stoppage. We
believe that our employee relations are good.
Facilities
Our headquarters, including our principal engineering, administrative,
marketing and testing facilities, are located in approximately 21,280 square
feet of space we have leased in Sunnyvale, California under a lease expiring
April 30, 2003. We intend to lease additional space in the next 12 months. We
also lease a sales and support office in Taiwan.
50
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following table sets forth, as of March 6, 2000 certain information
concerning our executive officers and directors:
<TABLE>
<CAPTION>
Name Age Position
----------------------- --- -----------------------------------------------------
<S> <C> <C>
Shaw Hong............... 62 Chief Executive Officer and Director
H. Gene McCown.......... 64 Vice President of Finance and Chief Financial Officer
Robert J. Stroh......... 60 Vice President of Sales and Marketing
Raymond Wu.............. 46 Executive Vice President and Director
Frank Huang(1)(2)....... 50 Director
Edward C.V. Winn(1)(2).. 61 Director
Leon Malmed(1)(2)....... 62 Director
</TABLE>
- --------
(1)Member of the Compensation Committee
(2)Member of the Audit Committee
Mr. Hong, one of our cofounders, has served as one of our directors and as
our Chief Executive Officer and President since May 1995. From January 1990 to
April 1995, Mr. Hong was the President of HK Technology, Inc., an integrated
circuit design company. Mr. Hong received a B.S. degree in Electrical
Engineering from Jiao Tong University in China and a M.S. in Electrical
Engineering from Oregon State University.
Mr. McCown has served as our Vice President of Finance and Chief Financial
Officer since July 1999. From July 1998 to January 1999, Mr. McCown served as
Vice President of Finance and Chief Financial Officer of Innovative Robotic
Solutions, Inc, a manufacturer of semiconductor equipment. From July 1991 to
July 1998, Mr. McCown served as Vice President of Finance and Chief Financial
Officer of Chrontel, Inc., a semiconductor manufacturer. Mr. McCown received a
B.S. in Accounting from San Jose State University.
Mr. Stroh has served as our Vice President of Sales and Marketing since
June 1998. From January 1997 to June 1998, Mr. Stroh served as our Director of
Marketing and Sales. From June 1993 to December 1996, Mr. Stroh founded and was
president of Stroh Golf Ventures, a company that conducted golf camps, Stroh
Holdings LLC, an Internet sales company, and Direct Product Network, Inc., an
Internet sales company. Mr. Stroh received an M.B.A. from Indiana University
and a B.S. in Business from Pennsylvania State University.
Mr. Wu, one of our cofounders, has served as one of our directors since May
1995 and as our Executive Vice President since October of 1999. From July 1998
to October 1999, Mr. Wu served as our Vice President of Business Development.
From May 1995 to July 1998, Mr. Wu was the head of our Sales department and our
Engineering department. From January 1990 to April 1995, Mr. Wu held various
positions within the design and mechanical engineering departments of HK
Technology, Inc. Mr. Wu received a B.S. degree in Electrical Engineering from
Chung-Yuan University in Taiwan and a M.S. in Electrical Engineering from Wayne
State University.
Mr. Huang has served as one of our directors since December 1999. From
August 1993 to the present, Mr. Huang has served as the Chairman of UMAX Group,
formerly UMAX Data Systems, a scanner designer and manufacturer. From December
1994 to the present, Mr. Huang has served as the Chairman of Powerchip
Semiconductor Corp., a joint venture between UMAX Group and Mitsubishi
Electrical Corporation for DRAM manufacturing. Dr. Huang received a Ph.D. in
Medicine from Mount Sinai Medical School and was a Deputy Professor of Medicine
at Taipei Medical College.
Mr. Winn has served as one of our directors since March 2000. From March
1992 to January 2000, Mr. Winn served in various capacities with TriQuint
Semiconductor, Inc., most recently as Executive Vice President, Finance and
Administration and Chief Financial Officer. From 1985 until December 1991, he
served in various capacities with Avantek, Inc., a microwave semiconductor
corporation, most recently as Product Group Vice President. Mr. Winn received a
B.S. in Physics from Rensselaer Polytechnic Institute and an M.B.A. from
Harvard University.
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<PAGE>
Mr. Malmed has served as one of our directors since March 2000. From
December 1992 to the present, Mr. Malmed has served in various capacities with
SanDisk Corporation, most recently as Senior Vice President of Worldwide
Marketing and Sales. From 1991 to 1992, Mr. Malmed was Executive Vice President
of Sales and Marketing at SyQuest Technology, Inc., a manufacturer of removable
cartridge disk drives. From 1990 to 1991, Mr. Malmed was Senior Vice President
of Sales and Marketing at Prairetek, Inc., a manufacturer of disk drives. From
1982 to 1990, Mr. Malmed was Senior Vice President of Maxtor Corporation. Mr.
Malmed holds a B.S. in Mechanical Engineering from the University of Paris.
Committees of the Board of Directors
Our compensation committee consists of Messrs. Huang, Winn and Malmed. The
compensation committee makes recommendations regarding our various incentive
compensation and benefit plans and determines salaries for our executive
officers and incentive compensation for our employees and consultants.
Our audit committee consists of Messrs. Huang, Winn and Malmed. The audit
committee makes recommendations to the board of directors regarding the
selection of our independent auditors, reviews the results and scope of the
audit and other services provided by our independent auditors and reviews and
evaluates our control functions.
Board Composition
Our board currently consists of five directors. Our certificate of
incorporation and bylaws that become effective upon the completion of this
offering provide that our Board will be divided into three classes, Class I,
Class II and Class III, with each class serving staggered three year terms. The
Class I directors, Messrs. Hong and Winn, will stand for reelection at the 2001
annual meeting of stockholders. The Class II directors, Messrs. Wu and Malmed,
will stand for reelection at the 2002 annual meeting of stockholders. The Class
III director, Mr. Huang will stand for reelection at the 2003 annual meeting of
stockholders. Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as
nearly as possible, each class will consist of one third of the directors. This
staggered classification of the board of directors may have the effect of
delaying or preventing changes in control or management. There are no family
relationships among any of our directors, officers or key employees.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee was, at any time since
our formation, an officer or employee of OmniVision. None of our executive
officers serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of
our board of directors or compensation committee.
Director Compensation
We do not currently pay any cash compensation to our directors for their
services as members of the board of directors, although we reimburse them for
certain expenses in connection with attending our board and committee meetings.
We do not provide additional compensation for committee participation or
special assignments of the board of directors. Under our 2000 Stock Plan,
nonemployee directors are eligible to receive stock option grants at the
discretion of the board of directors, and, after this offering is completed,
all nonemployee directors will receive stock options pursuant to the automatic
option grant program in effect under the 2000 Director Option Plan. See "--
Stock Plans" for more information about the automatic grant program.
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<PAGE>
Executive Compensation
The following table sets forth the compensation earned for services
rendered to us in all capacities by our Chief Executive Officer and our four
most highly compensated executive officers whose total cash compensation
exceeded $100,000--collectively, the "Named Executive Officers"--for the year
ended April 30, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual
Compensation Securities
-------------- Underlying All Other
Name and Principal Position Salary Bonus Options Compensation
--------------------------- -------- ----- ------------ ------------
<S> <C> <C> <C> <C>
Shaw Hong
President and Chief Executive
Officer............................ $112,000 $ -- -- $3,864(1)
Tai Ching Shyu (2)
Former Vice President of System
Product Development................ 109,600 -- -- 3,406(3)
Steven Busby (4)
Former Chief Financial Officer....... 108,766 -- -- 900(5)
Robert J. Stroh
Vice President of Sales and
Marketing.......................... 108,333 -- -- 4,844(6)
Raymond Wu
Vice President....................... $107,583 -- -- $3,346(7)
</TABLE>
- --------
(1) Consists of $504 in premiums paid on Mr. Hong's life insurance policy and
$3,360 in contributions to Mr. Hong's account under our Salary Reduction
Simplified Employee Pension Plan.
(2) Mr. Shyu left the company in February 2000.
(3) Represents $118 in premiums paid on Mr. Shyu's life insurance policy and
$3,288 in contributions to Mr. Shyu's account under our Salary Reduction
Simplified Employee Pension Plan.
(4) Mr. Busby left the company in July 1999.
(5) Represents $900 in contributions to Mr. Busby's account under our Salary
Reduction Simplified Employee Pension Plan.
(6) Represents $594 in premiums on Mr. Stroh's life insurance policy and $4,250
in contributions to Mr. Stroh's account under our Salary Reduction
Simplified Employee Pension Plan.
(7) Consists of $118 in premiums on Mr. Wu's life insurance policy and $3,228
in contributions to Mr. Wu's account under our Salary Reduction Simplified
Employee Pension Plan.
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<PAGE>
Option Grants in Last Fiscal Year
The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the year ended April 30, 1999.
For grants in fiscal year 2000 to the Named Executive Officers, see "Certain
Transactions--Option Grants to Directors and Executive Officers." All of the
options were awarded under our 1995 Stock Option Plan. Options under the 1995
Stock Option Plan generally vest over five years with 20% of the shares subject
to the option vesting on the first anniversary of the grant date and 1/20th of
the remaining shares vesting ratably each calendar quarter thereafter.
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Number of Stock Price
Securities Percent of Appreciation
Underlying Total Options for Options Term
Options Granted in Exercise Expiration ----------------------
Name Granted (#) Fiscal 1999 Price ($) Date 5% 10%
---- ----------- ------------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shaw Hong............... 90,000 11.3% $0.30 07/17/08 $ $
Tai Ching Shyu(1)....... 25,000 3.2 0.30 07/17/08
Robert J. Stroh......... 25,000 3.2 0.30 07/17/08
Steven Busby(2)......... 100,000 12.6 0.30 07/17/08
Raymond Wu.............. 70,000 8.8 0.30 07/17/08 $ $
</TABLE>
- --------
(1)Mr. Shyu left the company in February 2000.
(2)Mr. Busby left the company in July 1999.
The exercise price per share of each option was equal to the fair market
value of the common stock as determined by the board of directors on the date
of grant. The potential realizable value assumes an initial public offering
price of $ per share over the 10 year term of the options based on assumed
rates of stock appreciation of 5% and 10%, compounding annually less the total
option exercise price. There is no assurance provided to any holder of our
securities that the actual stock price appreciation over the ten year option
term will be at the assumed 5% and 10% levels or at any other defined level.
The percentages above are based on an aggregate of 794,000 shares subject
to options we granted to employees in the year ended April 30, 1999.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth for each of the Named Executive Officers the
number of shares of common stock acquired and the dollar value realized upon
exercise of options during the year ended April 30, 1999 and the number and
value of securities underlying unexercised options held at April 30, 1999.
The value of in the money options is based on a value of $0.75 per share,
the fair market value of our common stock as of April 30, 1999, as determined
by the board of directors, less the per share exercise price, multiplied by the
number of shares issued upon exercise of the option. All options were granted
under our 1995 Stock Option Plan.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options of April 30, 1999 In-the-Money Options
Shares at April 30, 1999
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shaw Hong............... -- -- 226,500 163,500 $169,875 $122,625
Tai Ching Shyu(1)....... -- -- 123,500 111,500 92,625 83,625
Steven Busby(2)......... -- -- -- 100,000 -- 75,000
Robert J. Stroh......... 52,000 31,200 6,500 44,500 4,875 33,375
Raymond Wu.............. -- -- 156,500 143,500 117,375 107,625
</TABLE>
- --------
(1)Mr. Shyu left the company in February 2000.
(2)Mr. Busby left the company in July 1999.
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<PAGE>
Stock Plans
1995 Stock Option Plan
Our 1995 Stock Option Plan was adopted by our board of directors and
stockholders in May 1995. A total of 3,600,000 shares of common stock were
reserved for issuance under the 1995 Stock Option Plan. In February 2000, the
Board of Directors terminated the 1995 Stock Option Plan as to future grants.
However, options outstanding under the 1995 Stock Option Plan continue to be
governed by the terms of the 1995 Stock Option Plan.
As of January 31, 2000, we had issued 2,736,550 shares of common stock
upon the exercise of options granted under the 1995 Stock Option Plan, we had
outstanding options to purchase 844,450 shares of common stock at a weighted
average exercise price of $0.97 per share and no shares remain available for
future option grants under the 1995 Stock Option Plan.
2000 Stock Plan
Our 2000 Stock Plan was adopted by our board of directors in February 2000
and our stockholders on March 6, 2000. A total of 3,000,000 shares of common
stock have been reserved for issuance under our stock option plan, together
with an annual increase in the number of shares reserved thereunder beginning
on the first day of our fiscal year, commencing May 1, 2002, in an amount
equal to the lesser of:
. 1,500,000 shares;
. 6% of our outstanding shares of common stock on the last day of the
prior fiscal year; or
. an amount determined by our board of directors.
The 2000 Stock Plan provides for grants of incentive stock options to our
employees including officers and employee directors and nonstatutory stock
options to our consultants including nonemployee directors. The purposes of
our stock option plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentive
to our employees and consultants and to promote the success of our business.
At the request of the board of directors, the compensation committee
administers our stock option plan and determines the optionees and the terms
of options granted, including the exercise price, number of shares subject to
the option and the exercisability thereof.
The term of the options granted under the 2000 Stock Plan is stated in the
option agreement. However, the term of an incentive stock option may not
exceed ten years and, in the case of an option granted to an optionee who owns
more than 10% of our outstanding stock at the time of grant, the term of an
option may not exceed five years. Options granted under the 2000 Stock Plan
vest and become exercisable as set forth in each option agreement.
With respect to any optionee who owns more than 10% of our outstanding
stock, the exercise price of any stock option granted must be at least 110% of
the fair market value on the grant date.
No incentive stock options may be granted to an optionee, which, when
combined with all other incentive stock options becoming exercisable in any
calendar year that are held by that person, would have an aggregate fair
market value in excess of $100,000. In any fiscal year, we may not grant any
employee options to purchase more than 500,000 shares or 1,000,000 shares in
the case of an employee's initial employment.
The 2000 Stock Plan will terminate in February 2010, unless our board of
directors terminates it sooner.
As of January 31, 2000, no shares had been granted under the 2000 Stock
Plan.
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<PAGE>
2000 Employee Stock Purchase Plan
Our 2000 Employee Stock Purchase Plan was adopted by our board of directors
in February 2000 and will become effective upon the closing of this offering.
We have reserved a total of 1,500,000 shares of common stock for issuance under
the 2000 employee stock purchase plan, together with an annual increase in the
number of shares reserved thereunder beginning on the first day of our fiscal
year commencing May 1, 2002 in an amount equal to the lesser of:
. 1,000,000 shares;
. 4% of our outstanding common stock on the last day of the prior fiscal
year; or
. an amount determined by our board of directors.
Our employee stock purchase plan is administered by the board of directors
and is intended to qualify under Section 423 of the Internal Revenue Code. Our
employees, including our officers and employee directors but excluding our five
percent or greater stockholders, are eligible to participate if they are
customarily employed for at least 20 hours per week and for more than five
months in any calendar year. Our employee stock purchase plan permits eligible
employees to purchase common stock through payroll deductions, which may not
exceed the lesser of 15% of an employee's compensation, as defined on Form W-2,
or $25,000 per annum.
Our employee stock purchase plan will be implemented in a series of
overlapping 24-month offering periods, and each offering period consists of
four six-month purchase periods. The initial offering period under our employee
stock purchase plan will begin on the effective date of this offering, and the
subsequent offering periods will begin on the first trading day on or after
June 1 and December 1 of each year. Each participant will be granted an option
on the first day of the offering period and the option will be automatically
exercised on the date six months later, the end of a purchase period,
throughout the offering period. If the fair market value of our common stock on
any purchase date is lower than such fair market value on the start date of
that offering period, then all participants in that offering period will be
automatically withdrawn from such offering period and re-enrolled in the
immediately following offering period. The purchase price of our common stock
under our employee stock purchase plan will be 85 percent of the lesser of the
fair market value per share on the start date of the offering period or at the
end of the purchase period. Employees may end their participation in an
offering period at any time, and their participation ends automatically on
termination of employment with our company.
Our employee stock purchase plan will terminate in February 2010, unless
our board of directors terminates it sooner.
2000 Director Option Plan
Our 2000 Director Option Plan will become effective upon the closing of
this offering. We have reserved a total of 250,000 shares of common stock for
issuance under the 2000 director option plan, together with an annual increase
in the number of shares reserved thereunder beginning on the first day of our
fiscal year commencing May 1, 2002 equal to the lesser of:
. 75,000 shares;
. 0.25% of the outstanding shares of our common stock on the last day of
the prior fiscal year; or
. an amount determined by the board of directors.
The option grants under the 2000 Director Option Plan are automatic and non
discretionary, and the exercise price of the options is 100% of the fair market
value of our common stock on the grant date.
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The 2000 Director Option Plan provides for an initial grant to a
nonemployee director of an option to purchase 20,000 shares of common stock.
Subsequent to the initial grants, each nonemployee director will be granted an
option to purchase 10,000 shares of common stock at the next meeting of the
board of directors following the annual meeting of stockholders, if on the date
of the annual meeting, the director has served on the board of directors for
six months.
The term of the options granted under the 2000 Director Option Plan is ten
years, but the options expire three months following the termination of the
optionee's status as a director or twelve months if the termination is due to
death or disability. The initial 20,000 share grants will become exercisable at
a rate of one-fourth of the shares on the first anniversary of the grant date
and at a rate of 1/16th of the shares per quarter thereafter. The subsequent
10,000 share grants will become exercisable at the rate of 1/16th of the shares
per quarter.
As of January 31, 2000, no shares had been granted under the 2000 Director
Option Plan.
401(k) Plan
In January 2000, we adopted a 401(k) plan covering our full-time employees
located in the United States. The 401(k) plan is intended to qualify under
Section 401(k) of the Internal Revenue Code, so that contributions to the
401(k) plan by employees or by us, and the investment earnings thereon, are not
taxable to employees until withdrawn from the 401(k) plan, and so that we can
deduct our contributions, if any, when made. Pursuant to the 401(k) plan,
employees may elect to reduce their current compensation by up to the
statutorily prescribed annual limit ($10,000 in 2000) and to have the amount of
such reduction contributed to the 401(k) plan. The 401(k) plan permits, but
does not require, that we provide additional matching contributions to the
40l(k) plan on behalf of all participants in the 401(k) plan. We make
contributions to the 401(k) plan each pay period to all participants in an
amount equal to 3% of their base salary.
Employment Agreements and Change of Control Arrangements
We do not have any employment, noncompete and change in control
arrangements with our current officers.
Limitations of Liability and Indemnification Matters
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for any of the
following:
. any breach of their duty of loyalty to the corporation or its
stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporate Law; or
. any transaction from which the director derived an improper personal
benefit.
This limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
Our bylaws provide that we shall indemnify our directors and officers and
may indemnify our employees and other agents to the fullest extent permitted by
law. We believe that indemnification under our bylaws covers at least
negligence and gross negligence on the part of indemnified parties. Our bylaws
also permit us to secure insurance on behalf of any officer, director, employee
or other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the bylaws would otherwise permit
indemnification.
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We have entered into agreements to indemnify our directors, executive
officers and other employees as determined by the board of directors. These
agreements, among other things, will indemnify our directors and executive
officers for certain expenses, including attorneys' fees, judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by us arising out of such person's services as our
director or executive officer, any of our subsidiaries or any other company or
enterprise to which the person provides services at our request. We believe
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.
At present we are not aware of any pending litigation or proceeding
involving any director, officer, employee or agent of our company where
indemnification will be required or permitted. Nor are we aware of any
threatened litigation or proceeding that might result in a claim for
indemnification.
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<PAGE>
CERTAIN TRANSACTIONS
Our Formation
In connection with our incorporation in May 1995, we issued an aggregate of
1,200,000 shares of common stock to our founders, Shaw Hong, Raymond Wu, Tai-
Ching Shyu and Datong Chen for aggregate proceeds of $72,000. These founders'
shares are subject to a right of repurchase by us at the original purchase
price of $0.06 per share. This repurchase right lapsed as to one fifth of the
shares upon the one year anniversary of the vesting start date and lapses as to
the remaining shares on a cumulative quarterly basis over a period of 48 months
from the one year anniversary of the vesting start date. In February 2000, we
gave Mr. Shyu notice that we would repurchase 45,000 shares from him due to the
termination of his employment for an aggregate of $2,700.
Preferred Stock Financings
As of June 1996, we have issued an aggregate of 4,300,003 shares of Series
A preferred stock for aggregate proceeds of $2,580,000. As of April 1998, we
have issued an aggregate of 3,671,668 shares of Series B preferred stock for
aggregate proceeds of $5,507,502. As of June 1998, we have issued an aggregate
of 4,333,333 shares of Series C preferred stock for aggregate proceeds of
$12,999,999. Upon the closing of this offering, all shares of outstanding
preferred stock will be automatically converted into shares of common stock.
The holders of our preferred stock include, among others, our executive
officers and directors and the following holders of more than 5% of our
outstanding stock:
<TABLE>
<CAPTION>
Preferred Stock Aggregate
--------------------------- Consideration
Stockholder Series A Series B Series C Paid
- ----------- --------- -------- -------- -------------
<S> <C> <C> <C> <C>
Shaw Hong............................. 50,000 -- -- $ 30,000
Datong Chen........................... 50,000 -- -- 30,000
Raymond Wu............................ 45,334 -- -- 27,200
Aucera Technology Group............... 1,333,334 -- -- 800,000
Kempten Limited ...................... 933,333 -- -- $560,000
</TABLE>
Option Grants to our Directors and Executive Officers
Stock option grants to our directors and executive officers are described
under the captions "Management--Director Compensation" and "--Executive
Compensation". Since our inception, we have granted options to our directors
and current and former executive officers, including the Named Executive
Officers as follows:
<TABLE>
<CAPTION>
Number
of Exercise
Stockholder Shares Grant Date Price
----------- ------- ---------- --------
<S> <C> <C> <C>
Shaw Hong................................ 150,000 June 25, 1996 $0.06
150,000 July 8, 1996 0.06
90,000 July 17, 1998 0.30
65,000 September 22, 1999 0.75
H. Gene McCown........................... 100,000 September 22, 1999 0.75
Robert J. Stroh.......................... 130,000 March 8, 1997 0.15
25,000 July 17, 1998 0.30
Raymond Wu............................... 150,000 June 25, 1996 0.06
80,000 July 8, 1996 0.06
70,000 July 17, 1998 0.30
5,000 September 22, 1999 0.75
Tai-Ching Shyu........................... 100,000 June 25, 1996 0.06
50,000 July 8, 1996 0.06
60,000 October 30, 1997 0.25
25,000 July 17, 1998 0.30
Steven Busby............................. 100,000 July 17, 1998 0.30
Frank Huang.............................. 20,000 March 6, 2000 9.00
Edward C. V. Winn........................ 20,000 March 6, 2000 9.00
Leon Malmed.............................. 20,000 March 6, 2000 9.00
</TABLE>
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<PAGE>
Messrs. Hong, Stroh, and Wu exercised these options in full subject to
repurchase by us at the original exercise price. The repurchase right lapses as
to one-fifth of the shares upon the one year anniversary of the vesting start
date and lapses as to the remaining shares on a cumulative quarterly basis over
a period of 48 months from the one year anniversary of the vesting start date.
Mr. Shyu exercised the options granted to him in June and July 1996 in full
subject to repurchase by us at the original exercise price. The repurchase
right lapses as to one-fifth of the shares upon the one year anniversary of the
vesting start date and lapses as to the remaining shares on a cumulative
quarterly basis over a period of 48 months from the one year anniversary of the
vesting start date. In February 2000, we gave Mr. Shyu notice that we would
repurchase an aggregate of 25,000 unvested shares from him due to his
termination for an aggregate of $1,500. In June 1999 Mr. Busby exercised 20,000
options granted to him and the remaining 80,000 options were returned to the
1995 Stock Plan.
Transactions with Officers and Directors
Frank Huang, one of our directors, is the Chairman of Powerchip
Semiconductor Corp., a joint venture between UMAX Group and Mitsubishi
Electrical Corporation. Mr. Huang is also the Chairman of UMAX Group. We have
entered into a Confidential Foundry Agreement with Powerchip Semiconductor
Corp., dated March 13, 1998, under which Powerchip Semiconductor Corp. has
agreed to supply us with semiconductor wafers. Our total purchases from
Powerchip Semiconductor Corp. were $5,000 and $1,396,000 for the year ended
April 30, 1999 and the nine months ended January 31, 2000. In addition,
Powerchip Semiconductor Corp. owns 333,333 shares of our Series B preferred
stock.
Mr. Huang is also the Chairman of PowerWorld Capital Management, a wholly
owned subsidiary of UMAX Group. PowerWorld Capital Management owns 166,667
shares of our Series B preferred stock.
The options granted to Messrs. Huang, Winn and Malmed were automatically
granted under the terms of the 2000 Director Stock Option Plan upon their
election to the Board of Directors on March 6, 2000.
Policy Regarding Transactions with Affiliates
All future transactions with affiliates, including any loans we make to our
officers, directors, principal stockholders or other affiliates, will be
approved by a majority of our Board of Directors, including a majority of the
independent and disinterested members or, if required by law, a majority of
disinterested stockholders, and will be on terms no less favorable to us than
we could have obtained from unaffiliated third parties.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of January 31, 2000, by the following
individuals or groups:
. each person, or group of affiliated persons, whom we know beneficially
owns more than 5% of our outstanding stock;
. each of our executive officers listed in our Summary Compensation Table
on page 53;
. each of our directors; and
. all of our current directors and executive officers as a group.
Unless otherwise indicated, the address for each stockholder on this table
is c/o OmniVision Technologies, Inc., 930 Thompson Place, Sunnyvale, California
94086. Except as otherwise noted, and subject to applicable community property
laws, to the best of our knowledge, the persons named in this table have sole
voting and investing power with respect to all of the shares of common stock
held by them.
This table lists applicable percentage ownership based on 16,241,551 shares
of common stock outstanding as of January 31, 2000, as adjusted to reflect the
conversion of all outstanding shares of preferred stock upon the closing of
this offering, and also lists applicable percentage ownership based on
shares of common stock outstanding after completion of this offering,
assuming that the underwriters' over-allotment option is not exercised. If the
over-allotment option is exercised in full, we will sell an aggregate of
shares of new common stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned
--------------------------------------
Percent Before Percent After
Beneficial Owner Number Offering Offering
---------------- --------- -------------- -------------
<S> <C> <C> <C>
Aucera Technology Group................ 1,333,334 8.2%
7th Flr., 216 Nanking East Road 104
Taipei, Taiwan
Kempten Limited........................ 933,333 5.8
P.O. Box 3186
Town Road, Tortola, BVI
Shaw Hong.............................. 995,000 6.1
Tai-Ching Shyu......................... 520,833 3.2
Steven Busby........................... 20,000 *
Robert Stroh .......................... 155,000 *
Raymond Wu............................. 650,334 4.0
H. Gene McCown ........................ -- --
Edward C.V. Winn....................... -- --
Leon Malmed............................ -- --
Frank Huang............................ 500,000 3.1
All current directors and executive
officers as a group (7 people)....... 2,300,334 14.4
</TABLE>
- --------
*Less than 1% of the outstanding shares of common stock.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person, we
have included the shares of common stock subject to options held by that person
that are currently exercisable or will become exercisable within 60 days after
January 31, 2000, but we have not included those shares for purposes of
computing percentage ownership of any other person. We have assumed unless
otherwise indicated below that the person and entities named in the table have
sole voting and investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
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<PAGE>
The beneficial ownership for Shaw Hong includes 995,000 shares held by a
family trust of which Mr. Hong is a trustee. The beneficial ownership for Mr.
Hong includes 31,500 shares held by the family trust subject to a right of
repurchase by us within 60 days of January 31, 2000 in the event of the
termination of employment of Wen Hong, Mr. Hong's wife and one of our
employees. The beneficial ownership for Mr. Hong includes 195,000 shares
subject to a right of repurchase by us within 60 days of January 31, 2000 in
the event of the termination of Mr. Hong's employment.
The beneficial ownership for Tai-Ching Shyu includes 37,500 shares subject
to options exercisable within 60 days of January 31, 2000 held by Mr. Shyu and
includes 70,000 shares which were subject to repurchase by us within 60 days of
January 31, 2000 in the event of the termination of Mr. Shyu's employment.
The beneficial ownership for Robert Stroh includes 69,500 shares subject to
a right of repurchase by us within 60 days of January 31, 2000 in the event of
the termination of Mr. Stroh's employment.
The beneficial ownership for Raymond Wu includes 111,500 shares subject to
a right of repurchase by us within 60 days of January 31, 2000 in the event of
the termination of Mr. Wu's employment.
The beneficial ownership for Frank Huang includes 333,333 shares held by
Powerchip Semiconductor Corp. and 166,667 shares held by PowerWorld Capital
Management. Mr. Huang is Chairman of the Board of Directors of both entities
and disclaims beneficial ownership of these shares.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
Our certificate of incorporation that becomes effective upon the closing of
this offering authorizes the issuance of up to 100,000,000 shares of common
stock, $0.001 par value, and authorizes the issuance of 10,000,000 shares of
undesignated preferred stock, $.001 par value. From time to time, our board of
directors may establish the rights and preferences of the preferred stock. As
of January 31, 2000, 3,936,550 shares of common stock were issued and
outstanding and held by 37 stockholders, and 12,305,001 shares of preferred
stock were issued and outstanding and held by 76 stockholders. Upon the closing
of this offering, all outstanding shares of preferred stock will convert into
an aggregate of 12,305,001 shares of common stock. The following description of
our capital stock is, by necessity, not complete. We encourage you to refer to
our certificate of incorporation and bylaws, which are included as exhibits to
the registration statement of which this prospectus forms a part, and
applicable provisions of Delaware law for a more complete description.
Common Stock
Each holder of common stock is entitled to one vote for each share held on
all matters to be voted upon by the stockholders. Subject to preferences that
may be applicable to any outstanding preferred stock, holders of common stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the board of directors out of funds legally available for that
purpose. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of OmniVision, the holders of common stock are entitled to share in
our assets remaining after the payment of liabilities and the satisfaction of
any liquidation preference granted to the holders of any outstanding shares of
preferred stock. Holders of common stock have no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are fully paid and nonassessable. The rights, preferences and privileges
of the holders of common stock are subject to, and may be adversely affected by
the rights of the holders of shares of any series of preferred stock which we
may designate in the future.
Preferred Stock
The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may
be greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of such preferred stock. However, the effects
might include, among other things:
. restricting dividends on the common stock;
. diluting the voting power of the common stock;
. impairing the liquidation rights of the common stock; or
. delaying or preventing a change in control of OmniVision without
further action by the stockholders.
Upon the closing of this offering, no shares of preferred stock will be
outstanding, and OmniVision has no present plans to issue any shares of
preferred stock.
Registration Rights of Certain Holders
After this offering, holders of 12,305,001 shares of common stock (the
"Registrable Securities") or their transferees are entitled to certain rights
with respect to the registration of such shares under the Securities Act. These
rights are provided under the terms of an agreement between OmniVision and the
holders of the Registrable Securities. Beginning six months following the date
of this prospectus, holders of at least 40% of
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<PAGE>
the Registrable Securities may require on two occasions, that we use our best
efforts to register the Registrable Securities for public resale. OmniVision is
obligated to register these shares only if the outstanding Registrable
Securities have an anticipated public offering price of at least $10,000,000.
Also, holders of 40% of the Registrable Securities may require, no more than
once during any twelve-month period, that OmniVision register their shares for
public resale on Form S-3 or similar short-form registration if OmniVision is
eligible to use Form S-3 or similar short-form registration and if the value of
the securities to be registered is at least $500,000. Furthermore, in the event
OmniVision elects to register any of its shares of common stock for purposes of
effecting any public offering (with the exception of our initial public
offering), the holders of Registrable Securities are entitled to include their
shares of common stock in the registration, but OmniVision may reduce or
exclude entirely in the case of OmniVision's initial public offering the number
of shares proposed to be registered in view of market conditions. OmniVision
will bear all expenses in connection with any registration including the
reasonable cost of one attorney for the holders of Registrable Securities,
other than underwriting discounts and commissions. All registration rights will
terminate five years following the consummation of this offering or when all
Registrable Securities have been sold on or after the consummation of this
offering under Rule 144, pursuant to certain exceptions.
Certain Charter and Bylaw Provisions and Delaware Law
Certain provisions of Delaware law and OmniVision's certificate of
incorporation and bylaws could make the following more difficult:
. the acquisition of OmniVision by means of a tender offer;
. the acquisition of OmniVision by means of a proxy contest or otherwise;
or
. the removal of OmniVision's incumbent officers and directors.
These provisions, summarized below, are expected to discourage certain
types of coercive takeover practices and inadequate takeover bids. These
provisions are also designed to encourage persons seeking to acquire control of
OmniVision to first negotiate with OmniVision's board. OmniVision believes that
the benefits of increased protection of its potential ability to negotiate with
the proponent of an unfriendly or unsolicited proposal to acquire or
restructure OmniVision outweigh the disadvantages of discouraging such
proposals because negotiation of such proposals could result in an improvement
of their terms.
Election And Removal Of Directors.
Our board of directors is divided into three classes. The directors in each
class will serve for a three-year term, with OmniVision's stockholders electing
one class each year. See "Management--Board Composition." This system of
electing and removing directors may tend to discourage a third party from
making a tender offer or otherwise attempting to obtain control of OmniVision,
because it generally makes it more difficult for stockholders to replace a
majority of the directors.
Stockholder Meetings.
Under our bylaws, upon the closing of this offering, the board of
directors, the chairman of the board, the chief executive officer and the
holders of at least 50% of the shares of the corporation's capital stock may
call special meetings of stockholders.
Requirements For Advance Notification Of Stockholder Nominations And
Proposals.
Our bylaws establish advance notice procedures for stockholder proposals
and the nomination of candidates for election as directors, other than
nominations made by or at the direction of the board of directors or a
committee of the board.
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Anti-Takeover Effects of Some Provisions of Delaware Law and Our Charter
Documents
A number of the provisions of Delaware law and our certificate of
incorporation and bylaws could make the acquisition of our company through a
tender offer, a proxy contest or other means more difficult and could make the
removal of incumbent officers and directors more difficult. These provisions
include our failure to "opt out" of the protections of Section 203 of the
Delaware Code, as described below, as well as our reservation of 10,000,000
shares of blank check preferred and our staggered board of directors. We expect
these provisions to discourage coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of our
company to first negotiate with our board of directors. We believe that the
benefits provided by our ability to negotiate with the proponent of an
unfriendly or unsolicited proposal outweigh the disadvantages of discouraging
such proposals. We believe the negotiation of an unfriendly or unsolicited
proposal could result in an improvement of its terms.
Delaware Law
We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became
an interested stockholder, unless:
. prior to the date of the transaction, the board of directors of the
corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder;
. the stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding
(a) shares owned by persons who are directors and also officers, and
(b) shares owned by employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer; or
. on or subsequent to the date of the transaction, the business
combination is approved by the board and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock
which is not owned by the interested stockholder.
Generally, a "business combination" includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns or, within three years prior to the
determination of interested stockholder status, did own 15% or more of a
corporation's outstanding voting securities. We expect the existence of this
provision to have an anti-takeover effect with respect to transactions our
board of directors does not approve in advance. We also anticipate that Section
203 may discourage attempts that might result in a premium over the market
price for the shares of common stock held by stockholders.
Charter Documents
Upon completion of this offering, our certificate of incorporation provides
for our board of directors to be divided into three classes serving staggered
terms. Approximately 1/3 of the board of directors will be elected each year.
The provision for a classified board could prevent a party who acquires control
of a majority of the outstanding voting stock from obtaining control of the
board of directors until the second annual stockholders meeting following the
date the acquirer obtains the controlling stock interest. The classified board
provision could discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of our company and could increase the
likelihood that incumbent directors will retain their positions. Our
certificate of incorporation provides that directors may be removed:
. with cause by the affirmative vote of the holders of at least a
majority of the outstanding shares of voting stock or
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. without cause by the affirmative vote of the holders of at least 66
2/3% of the then-outstanding shares of the voting stock.
Our bylaws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of our stockholders, including proposed
nominations of persons for election to the board of directors. At an annual
meeting, stockholders may only consider proposals or nominations specified in
the notice of meeting or brought before the meeting by or at the direction of
the board of directors. Stockholders may also consider a proposal or nomination
by a person who was a stockholder of record on the record date for the meeting,
who is entitled to vote at the meeting and who has given to our Secretary
timely written notice, in proper form, of his or her intention to bring that
business before the meeting. The bylaws do not give the board of directors the
power to approve or disapprove stockholder nominations of candidates or
proposals regarding other business to be conducted at a special or annual
meeting of the stockholders. However, our bylaws may have the effect of
precluding the conduct of that item of business at a meeting if the proper
procedures are not followed. These provisions may also discourage or deter a
potential acquiror from conducting a solicitation of proxies to elect the
acquirer's own slate of directors or otherwise attempting to obtain control of
our company.
Under Delaware law, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the
certificate of incorporation or the bylaws. The following persons are
authorized to call a special meeting of stockholders:
. a majority of our board of directors;
. the chairman of the board;
. the chief executive officer; or
. 50% of our stockholders entitled to vote at the special meeting.
The limitation on the right of our stockholders to call a special meeting
will make it more difficult for a stockholder to force stockholder
consideration of a proposal over the opposition of the board of directors by
calling a special meeting of stockholders. The restriction on the ability of
stockholders to call a special meeting also will make it more difficult to
replace the board until the next annual meeting.
Although Delaware law provides that stockholders may execute an action by
written consent in lieu of a stockholder meeting, it also allows us to
eliminate stockholder actions by written consent. Elimination of written
consents of stockholders may lengthen the amount of time required to take
stockholder actions since actions by written consent are not subject to the
minimum notice requirement of a stockholders' meeting. However, we believe that
the elimination of stockholders' written consents may deter hostile takeover
attempts. Without the availability of stockholders' actions by written consent,
a holder controlling a majority of our capital stock would not be able to amend
our bylaws or remove directors without holding a stockholders meeting. The
holder would have to obtain the consent of a majority of the board of
directors, the chairman of the board or the chief executive officer to call a
stockholders' meeting and satisfy the notice periods determined by the board of
directors. Our certificate of incorporation provides for the elimination of
actions by written consent of stockholders upon the closing of this offering.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is BankBoston, N.A.
BankBoston is located at 150 Royall Street, Canton, Massachusetts, 02021 and
its telephone number is (781) 575-3120.
Nasdaq Stock Market Listing
We have applied to have our common stock listed on the Nasdaq National
Market for quotation under the symbol "OVTI."
66
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our stock.
Future sales of substantial amounts of our common stock in the public market
following this offering or the possibility of such sales occurring could
adversely affect prevailing market prices for our common stock or could impair
our ability to raise capital through an offering of equity securities.
After this offering, we will have outstanding shares of common
stock, based upon shares outstanding as of January 31, 2000, assuming no
exercise of the underwriters' over allotment option and no exercise of
outstanding options after January 31, 2000. All of the shares sold in this
offering will be freely tradeable without restriction under the Securities Act
except for any shares purchased by our "affiliates" as that term is defined in
Rule 144 under the Securities Act. The remaining 16,241,551 shares of common
stock held by existing stockholders are "restricted" shares as that term is
defined in Rule 144 under the Securities Act. We issued and sold the restricted
shares in private transactions in reliance upon exemptions from registration
under the Securities Act. Restricted shares may be sold in the public market
only if they are registered under the Securities Act or if they qualify for an
exemption from registration, such as Rule 144 or 701 under the Securities Act,
which are summarized below.
Our officers, directors, employees and other stockholders, who collectively
hold an aggregate of 16,241,551 restricted shares, and the underwriters entered
into lock up agreements in connection with this offering. These lock up
agreements provide that, with limited exceptions, our officers, directors,
employees and stockholders have agreed not to offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of any of our shares for a
period of 180 days after the effective date of this offering. FleetBoston
Robertson Stephens may, in its sole discretion and at any time without prior
notice, release all or any portion of the shares subject to these lock up
agreements. We have also entered into an agreement with FleetBoston Robertson
Stephens that we will not offer, sell or otherwise dispose of our common stock
until 180 days after the effective date of this offering.
Taking into account the lock up agreements, the number of shares that will
be available for sale in the public market under the provisions of Rule 144,
144(k) and 701 will be as follows:
<TABLE>
<CAPTION>
Number of
Date of Availability for Sale Shares
----------------------------- ----------
<S> <C>
At various times between January 31, 2000 and July 31, 2000..... 0
At various times thereafter upon the expiration of applicable
holding periods............................................... 16,241,551
</TABLE>
Following the expiration of the lock up period, shares issued upon exercise
of options granted by us prior to the completion of this offering will also be
available for sale in the public market pursuant to Rule 701 under the
Securities Act unless those shares are held by one of our affiliates, directors
or officers.
Rule 701 permits resales of shares in reliance upon Rule 144 but without
compliance with certain restrictions, including the holding period requirement,
of Rule 144. In general, under Rule 144 as currently in effect, a person, or
persons whose shares are aggregated, who has beneficially owned restricted
shares for at least one year, including the holding period of any prior owner
except an affiliate, would be entitled to sell within any three month period a
number of shares that does not exceed the greater of:
. one percent of the number of shares of common stock then outstanding;
or
. the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to such
sale
Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of our company at any time during the three months preceding a sale,
and who has beneficially owned the shares proposed to be sold for at least two
years including the holding period of any prior owner except an affiliate, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
67
<PAGE>
We intend to file a registration statement on Form S-8 under the Securities
Act covering the shares of common stock reserved for issuance under the stock
plans and subject to outstanding options under our 1995 stock option plan. See
"Management--Stock Plans." We expect this registration statement to be filed
and to become effective as soon as practicable after the effective date of this
offering. Shares of common stock issued upon exercise of options under the Form
S-8 will be available for sale in the public market, subject to Rule 144 volume
limitations applicable to affiliates and subject to the contractual
restrictions described above. At January 31, 2000, options to purchase 844,450
shares of common stock were outstanding, of which options to purchase
approximately 179,216 shares were then vested and exercisable. Beginning 180
days after the effective date of this offering, approximately 211,850 shares
issuable upon the exercise of vested stock options will become eligible for
sale in the public market, if such options are exercised.
Following this offering, the holders of an aggregate of 12,305,001 shares
of outstanding common stock will have the right to require us to register their
shares for sale upon meeting certain requirements. See "Description of Capital
Stock--Registration Rights" for additional information regarding registration
rights.
68
<PAGE>
UNDERWRITING
The underwriters named below, acting through their representatives,
FleetBoston Robertson Stephens Inc., Prudential Securities Incorporated and
Needham & Company, Inc., have severally agreed with us, subject to the terms
and conditions of the underwriting agreement, to purchase the number of shares
of common stock set forth opposite their respective names below. The
underwriters are committed to purchase and pay for all such shares, if any are
purchased.
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ ---------
<S> <C>
FleetBoston Robertson Stephens Inc................................
Prudential Securities Incorporated................................
Needham & Company, Inc............................................
Total...........................................................
===
</TABLE>
The representatives have advised us that the underwriters propose to offer
the shares of common stock to the public at the public offering price set forth
on the cover page of this prospectus and to certain dealers at such price less
a concession of not more than $ per share, of which $ may be
reallowed to other dealers. After the completion of this offering, the public
offering price, concession and reallowance to dealers may be reduced by the
representatives. No such reduction shall change the amount of proceeds to be
received by us as set forth on the cover page of this prospectus.
Over Allotment Option. We have granted to the underwriters an option,
exercisable during the 30 day period after the date of this prospectus, to
purchase up to additional shares of common stock at the same price per
share as we will receive for the shares that the underwriters have
agreed to purchase from us. To the extent that the underwriters exercise this
option, each of the underwriters will have a firm commitment to purchase
approximately the same percentage of such additional shares that the number of
shares of common stock to be purchased by it shown in the above table
represents as a percentage of the total number of shares offered by the
prospectus. If purchased, the additional shares will be sold by the
underwriters on the same terms as those on which the shares are being
sold.
The following table shows the per share and total underwriting discounts
and commissions to be paid by us to the underwriters. this information is
presented assuming either no exercise of full exercise by the underwriters of
their over-allotment option.
<TABLE>
<CAPTION>
Per Without With
Share Option Option
----- ------- ------
<S> <C> <C> <C>
Public offering price................................... $ $ $
Underwriting discounts and commissions.................. $ $ $
Proceeds, before expenses, to us........................ $ $ $
</TABLE>
Indemnity. The underwriting agreement contains covenants of indemnity among
the underwriters and us against certain civil liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
representations and warranties contained in the underwriting agreement.
Lock Up Agreements. Each of our executive officers, directors, stockholders
and option holders has agreed, for a period of 180 days after the date of this
prospectus, not to offer, to sell contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to any shares of common
stock, any options or warrants to purchase any shares of common stock, or any
securities convertible into or exchangeable for common stock owned as of the
date of this prospectus or acquired directly from us by these holders or with
respect to which they have or may acquire the power of disposition, without the
prior written consent of FleetBoston Robertson Stephens Inc. However,
FleetBoston Robertson Stephens Inc. may, in their sole
69
<PAGE>
discretion and at any time without notice, release all or any portion of the
securities subject to lock-up agreements. There are no agreements between the
underwriters and any of our stockholders providing consent by the
representatives to the sale of shares prior to the expiration of the 180 day
lock-up period.
Future Sales By Us. In addition, we have agreed that until 180 days after
the date of this prospectus, we will not, without prior written consent of
FleetBoston Robertson Stephens Inc., (a) consent to the disposition of any
shares held by stockholders prior to the expiration of the 180 day lock-up
period or (b) issue, sell, contract to sell or otherwise dispose of any shares
of common stock, any options to purchase any share of common stock or any
securities convertible into, exercisable for or exchangeable for shares of
common stock, other than our sale of shares in this offering, the issuance of
shares of common stock upon the exercise of outstanding options and warrants
and the grant of options to purchase shares of common stock under existing
employee stock option or stock purchase plans. See "Shares Eligible For Future
Sale."
Directed Shares. At our request, the underwriters will reserve up to
shares of common stock to be issued by us and offered hereby for sale,
at the initial public offering price, to directors, officers, employees,
business associates and related persons of OmniVision. The number of shares of
common stock available for sale to the general public will be reduced to the
extent that such individuals purchase all or a portion of these reserved
shares. Any reserved shares which are not purchased will be offered by the
underwriters to the general public on the same basis as the shares of common
stock offered hereby.
No Prior Public Market. Prior to this offering, there has been no public
market for our common stock. Consequently, the initial public offering price
for our common stock offered by this prospectus has been determined through
negotiations between us and the representatives. Among the factors considered
in these negotiations were prevailing market conditions, our financial
information, market valuations of other companies that we and the
representatives believe to be comparable to us, estimates of our business
potential and the present state of our development.
Stabilization. The representatives have advised us that, pursuant to
Regulation M under the Exchange Act, some participants in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids which may have the effect of
stabilizing or maintaining the market price of the common stock at a level
above that which might otherwise prevail in the open market. A "stabilizing
bid" is a bid for or the purchase of the common stock on behalf of the
underwriters for the purpose of fixing or maintaining the price of the common
stock. A "syndicate covering transaction" is the bid for or the purchase of the
common stock on behalf of the underwriters to reduce a short position incurred
by the underwriters in connection with the offering. A "penalty bid" is an
arrangement permitting the representatives to reclaim the selling concession
otherwise accruing to an underwriter or syndicate member in connection with the
offering if the common stock originally sold by such underwriter or syndicate
member is purchased by the representatives in a syndicate covering transaction
and has therefore not been effectively placed by such underwriter or syndicate
member. The representatives have advised us that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
Expenses of the Offering. The expenses of the offering are estimated at
approximately $1.3 million and are payable entirely by us.
70
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Certain legal matters with this offering will be passed upon for
the underwriters by Brobeck Phelger & Harrison LLP, San Francisco, California.
Certain legal matters related to intellectual property will be passed on for us
by Blakely Sokoloff Taylor & Zofman, Kirkland, Washington. As of January 31,
2000, a certain investment partnership and members of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, beneficially owned an aggregate of 19,801
shares of our common stock.
EXPERTS
Our financial statements at April 30, 1998 and 1999 and for each of the
three years in the period ended April 30, 1999 and at January 31, 2000 and for
the nine months ended January 31, 2000 included in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
OmniVision has filed with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act with respect to the
common stock offered hereby. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to OmniVision and our
common stock, reference is made to the registration statement and the exhibits
and schedules filed as a part thereof. Statements contained in this prospectus
as to the contents of any contract or any other document referred to are not
necessarily complete. In each instance, reference is made to the copy of such
contract or document filed as an exhibit to the registration statement, and
each such statement is qualified in all respects by such reference. Copies of
the registration statement, including exhibits and schedules thereto, may be
inspected without charge at the Securities and Exchange Commission's principal
office in Washington, D.C., or obtained at prescribed rates from the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Securities and Exchange Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Securities and Exchange Commission. The address of the site is
http://www.sec.gov.
71
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Balance Sheets............................................................. F-3
Statements of Operations................................................... F-4
Statements of Stockholders' Equity ........................................ F-5
Statements of Cash Flows................................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
OmniVision Technologies, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of OmniVision Technologies, Inc. at
April 30, 1998 and 1999 and January 31, 2000, and the results of its operations
and its cash flows for each of the three years in the period ended April 30,
1999 and the nine months ended January 31, 2000, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
San Jose, California
March 6, 2000
F-2
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
Equity
April 30, January 31,
------------------ January 31, 2000
1998 1999 2000 (Note 1)
-------- -------- ----------- -------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...... $ 2,686 $ 5,374 $ 6,370
Accounts receivable, net....... 41 1,733 4,275
Inventories.................... 158 2,241 6,166
Prepaid expenses and other
assets....................... 91 103 748
-------- -------- --------
Total current assets........ 2,976 9,451 17,559
Property and equipment, net...... 745 1,085 2,157
-------- -------- --------
Total assets................ $ 3,721 $ 10,536 $ 19,716
======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable............... $ 293 $ 1,735 $ 7,417
Accrued expenses and other
liabilities.................. 340 615 516
Reserve for purchase
commitment................... -- 3,474 --
Deferred revenue............... -- 282 337
-------- -------- --------
Total current liabilities... 633 6,106 8,270
-------- -------- --------
Commitments (Note 11)
Stockholders' equity (deficit):
Convertible preferred stock,
$0.001 par value;
12,783 shares authorized;
9,524, 12,305 and
12,305 shares issued and
outstanding.................. 10 12 12 $ --
Common stock, $0.001 par
value; 100,000 shares
authorized; 1,200, 1,256 and
3,937 shares issued and
outstanding, 16,242 shares
issued and outstanding
pro forma.................... 1 1 4 16
Additional paid-in capital..... 13,559 22,726 26,886 26,886
Deferred compensation related
to stock options............. (429) (734) (2,929) (2,929)
Accumulated deficit............ (10,053) (17,575) (12,527) (12,527)
-------- -------- -------- --------
Total stockholders' equity.. 3,088 4,430 11,446 $ 11,446
-------- -------- -------- ========
Total liabilities and
stockholders' equity...... $ 3,721 $ 10,536 $ 19,716
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended April 30, January 31,
---------------------------- -------------------
1997 1998 1999 1999 2000
-------- -------- -------- ----------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues................... $ 59 $ 1,476 $ 5,243 $ 2,147 $25,111
Cost of revenues........... 557 2,652 4,086 1,595 17,698
Reserve for purchase
commitments.............. -- -- 3,473 -- (3,235)
-------- -------- -------- -------- -------
Gross profit (loss)........ (498) (1,176) (2,316) 552 10,648
-------- -------- -------- -------- -------
Operating expenses:
Research and development
excluding stock
compensation, Note 8.... 1,698 3,440 3,290 2,260 2,453
Selling, general and
administrative excluding
stock compensation, Note
8 ...................... 706 1,323 1,853 1,378 2,126
Stock compensation
charge.................. 44 206 459 331 1,159
-------- -------- -------- -------- -------
Total operating
expenses.............. 2,448 4,969 5,602 3,969 5,738
-------- -------- -------- -------- -------
Income (loss) from
operations............... (2,946) (6,145) (7,918) (3,417) 4,910
Interest income (expense),
net...................... 108 106 396 267 138
-------- -------- -------- -------- -------
Net income (loss).......... $ (2,838) $ (6,039) $ (7,522) $ (3,150) $ 5,048
======== ======== ======== ======== =======
Net income (loss) per
share:
Basic..................... $ (16.89) $ (12.71) $ (10.39) $ (4.51) $ 1.75
======== ======== ======== ======== =======
Diluted................... $ (16.89) $ (12.71) $ (10.39) $ (4.51) $ 0.31
======== ======== ======== ======== =======
Shares used in computing
net income (loss) per
share:
Basic..................... 168 475 724 699 2,879
======== ======== ======== ======== =======
Diluted................... 168 475 724 699 16,418
======== ======== ======== ======== =======
Pro forma net income (loss)
per share (unaudited):
Basic..................... $ (0.58) $ 0.33
======== =======
Diluted................... $ (0.58) $ 0.31
======== =======
Shares used in computing
pro forma net income
(loss) per share
(unaudited):
Basic.................... 12,951 15,184
======== =======
Diluted.................. 12,951 16,418
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Series A Series B Series C
Preferred Preferred Preferred
Stock Stock Stock Common Stock Additional
------------- -------------- ------------- -------------- Paid-in Deferred Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Capital Compensation Deficit Total
------ ------ ------ ------ ------ ------ ------ ------ ---------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April
30, 1996........ 4,130 $ 4 -- $ -- -- $ -- 1,230 $ 1 $ 2,626 $ (51) $ (1,176) $ 1,404
Purchase of
common stock... -- -- -- -- -- -- (30) -- (2) -- -- (2)
Issuance of
Series A
preferred stock
at $0.60 per
share for
cash........... 170 -- -- -- -- -- -- -- 102 -- -- 102
Issuance of
Series B
preferred stock
at $1.50 per
share for
cash........... -- -- 3,692 4 -- -- -- -- 5,534 -- -- 5,538
Deferred
compensation
related to
stock options
granted........ -- -- -- -- -- -- -- -- 77 (77) -- --
Amortization of
deferred
compensation... -- -- -- -- -- -- -- -- -- 44 -- 44
Net loss........ -- -- -- -- -- -- -- -- -- -- (2,838) (2,838)
----- --- ----- ---- ----- ---- ----- --- ------- ------- -------- -------
Balance at April
30, 1997........ 4,300 4 3,692 4 -- -- 1,200 1 8,337 (84) (4,014) 4,248
Issuance of
Series C
preferred stock
at $3.00 per
share for
cash........... -- -- -- -- 1,553 1 -- -- 4,656 -- -- 4,657
Repurchase of
Series B
preferred
stock.......... -- -- (20) -- -- -- -- -- (30) -- -- (30)
Deferred
compensation
related to
stock options
granted........ -- -- -- -- -- -- -- -- 596 (596) -- --
Amortization of
deferred
compensation... -- -- -- -- -- -- -- -- -- 251 -- 251
Net loss........ -- -- -- -- -- -- -- -- -- -- (6,039) (6,039)
----- --- ----- ---- ----- ---- ----- --- ------- ------- -------- -------
Balance at April
30, 1998........ 4,300 4 3,672 4 1,553 1 1,200 1 13,559 (429) (10,053) 3,087
Issuance of
Series C
preferred stock
at $3.00 per
share for
cash........... -- -- -- -- 2,781 3 -- -- 8,334 -- -- 8,337
Exercise of
stock options.. -- -- -- -- -- 56 -- 9 -- -- 9
Deferred
compensation
related to
stock options
granted........ -- -- -- -- -- -- -- 824 (824) -- --
Amortization of
deferred
compensation... -- -- -- -- -- -- -- -- 519 -- 519
Net loss........ -- -- -- -- -- -- -- -- -- (7,522) (7,522)
----- --- ----- ---- ----- ---- ----- --- ------- ------- -------- -------
Balance at April
30, 1999........ 4,300 4 3,672 4 4,334 4 1,256 1 22,726 (734) (17,575) 4,430
Exercise of
stock options.. -- -- -- -- -- 2,681 3 557 -- -- 560
Deferred
compensation
related to
stock options
granted........ -- -- -- -- -- -- -- 3,603 (3,603) -- --
Amortization of
deferred
compensation... -- -- -- -- -- -- -- -- 1,408 -- 1,408
Net loss........ -- -- -- -- -- -- -- -- -- 5,048 5,048
----- --- ----- ---- ----- ---- ----- --- ------- ------- -------- -------
Balance at
January 31,
2000............ 4,300 $ 4 3,672 $ 4 4,334 $ 4 3,937 $ 4 $26,886 $(2,929) $(12,527) $11,446
===== === ===== ==== ===== ==== ===== === ======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended April 30, January 31,
------------------------- -------------------
1997 1998 1999 1999 2000
------- ------- ------- ----------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss...................... $(2,838) $(6,039) $(7,522) $(3,150) $ 5,048
Adjustments to reconcile net
loss to net cash used in
operating activities:
Reserve for purchase
commitment................ -- -- 3,474 -- (3,236)
Depreciation................ 57 247 309 233 372
Allowance for doubtful
accounts and sales
returns................... -- 408 137 (26) 356
Amortization of deferred
compensation.............. 44 251 519 378 1,408
Changes in assets and
liabilities:
Accounts receivable....... 83 (432) (1,829) (506) (2,898)
Inventories............... (2) (63) (2,083) (590) (4,163)
Prepaid expenses and other
assets.................. (78) (13) (12) -- (645)
Accounts payable.......... (11) 204 1,442 589 5,682
Accrued expenses and other
liabilities............. 1 161 275 71 (99)
Deferred revenue.......... -- -- 282 62 55
------- ------- ------- ------ -------
Net cash used in
operating activities... (2,744) (5,276) (5,008) (2,939) 1,880
------- ------- ------- ------ -------
Cash flows from investing
activities:
Acquisition of property and
equipment................... (476) (413) (650) (304) (1,444)
------- ------- ------- ------ -------
Net cash used in
investing activities... (476) (413) (650) (304) (1,444)
------- ------- ------- ------ -------
Cash flows from financing
activities:
Proceeds from issuance of
preferred stock............. 5,640 4,658 8,337 8,337 --
Payment for repurchase of
preferred stock............. -- (30) -- -- --
Issuance (repurchase) of
common stock................ (2) -- 9 -- 560
------- ------- ------- ------ -------
Net cash provided by
financing activities.... 5,638 4,628 8,346 8,337 560
------- ------- ------- ------ -------
Net increase/(decrease) in cash
and cash equivalents......... 2,418 (1,061) 2,688 5,094 996
Cash and cash equivalents at
beginning of year............ 1,329 3,747 2,686 2,686 5,374
------- ------- ------- ------ -------
Cash and cash equivalents at
end of year (period)......... $ 3,747 $ 2,686 $ 5,374 $7,780 $ 6,370
======= ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--OMNIVISION AND SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
The Company
OmniVision Technologies, Inc. (the "Company") designs, develops and markets
CMOS image sensors. The Company was incorporated in California in May 1995. The
Company's principal location of business is Sunnyvale, California. The Company
operates in one business segment.
Reincorporation
On March 6, 2000, the Company's stockholders approved the reincorporation
of the Company in the State of Delaware. As a result of the reincorporation,
the Company is authorized to issue 100,000,000 shares of $0.001 par value
common stock and 10,000,000 shares of $0.001 par value preferred stock. Share
and per share information for all periods presented have been retroactively
adjusted to reflect the reincorporation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments purchased with a
maturity at the date of purchase of three months or less to be cash
equivalents. Cash equivalents consist principally of money market deposit
accounts that are stated at cost, which approximates fair value.
Fair value of financial statements
The reported amounts of certain of the Company's financial instruments
including cash and cash equivalents, receivables, accounts payable and accrued
liabilities approximate fair value due to their short maturities.
Property and equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives ranging from three to
seven years. Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the estimated life of the assets or
the extended lease term.
Long lived assets
The Company accounts for long-lived assets under Statement of Financial
Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to be Disposed of, which requires the
Company to review for impairment of long-lived assets, whenever events or
changes in circumstances indicate that the carrying amount of an asset might
not be recoverable. When such an event occurs, the Company estimates the future
cash flows expected to result from the use of the asset and its eventual
disposition. If the undiscounted expected future cash flows is less than the
carrying amount of the asset, an impairment loss is recognized. To date, no
impairment loss has been recognized.
F-7
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Revenue recognition
Revenue from product sales is recognized at the time of shipment, except
for certain shipments to distributors under agreements allowing for return or
credits, in which case revenue is deferred until the distributor resells the
product. For sales recognized at the time of shipment, provision is made for
expected sales returns and allowances when revenue is recognized.
Inventories
Inventories are stated at the lower of cost, determined on first-in,
first-out ("FIFO") basis, or market.
Research and development
Research and development costs are expensed as incurred.
Income taxes
OmniVision accounts for income taxes under the asset and liability
approach whereby the expected future tax consequences of temporary differences
between the book and tax basis of assets and liabilities are recognized as
deferred tax assets and liabilities. A valuation allowance is established for
any deferred tax assets for which there is significant uncertainty regarding
realization.
Comprehensive income
Comprehensive income is defined as the change in equity of a company
during a period from transactions and other events and circumstances excluding
transactions resulting from investment by owners and distribution to owners.
For the periods presented, the comprehensive income (loss) did not differ from
the net income (loss).
Certain risks and uncertainties
The Company's products are concentrated in a single segment in the
semiconductor imaging devices industry which is characterized by rapid
technological advances, changes in customer requirements and evolving industry
standards. These products depend in part on a limited number of suppliers of
wafers . Also, the Company has depended on a limited number of products and
customers for substantially all revenue to date. Failure by the Company to
anticipate or to respond adequately to technological developments in its
industry, changes in customer or supplier requirements or changes in industry
standards, or any significant delays in the development or introduction of
products or services, could have a material adverse effect on the Company's
business and operating results.
Segment information
The Company identifies its operating segments based on business
activities, management responsibility and geographical location. For all
periods presented, the Company operated in a single business segment. Revenue
by geographic location is presented in Note 10.
Stock based compensation
The Company accounts for stock based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion ("APB") No.
25, Accounting for Stock Issued to Employees and complies with the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based
F-8
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Compensation. Under APB No. 25, compensation expense is based on the excess, if
any, on the date grant, of the fair value of the Company's common stock over
the amount an employee must pay to acquire the stock. Deferred compensation is
amortized over the vesting period on an accelerated basis using the model
presented in paragraph 24 of FASB Interpretation No. 28. Accordingly, the
percentages of the deferred compensation amortized in the first, second, third,
fourth and fifth years following the option grant date are 45.6%, 25.6%, 15.8%,
9.0% and 4.0%, respectively. SFAS 123 requires a "fair value" based method of
accounting for an employee stock option or similar equity investment. The pro
forma disclosures of the difference between the compensation expense included
in net loss and the related cost measured by the fair value method are
presented in Note 7.
Basic and diluted net income (loss) per share
The Company computes net income (loss) per share in accordance with SFAS
No. 128, Earnings per Share, under the provisions of which basic income (loss)
per share is computed by dividing the income (loss) available to holders of
common stock for the period by the weighted average number of shares of common
stock outstanding during the period. The calculation of diluted income (loss)
per share excludes potential common stock if the effect of such stock is
antidilutive. Potential common stock consists of unvested restricted common
stock, incremental common or preferred shares issuable upon the exercise of
stock options and shares issuable upon conversion of the Series A, Series B,
and Series C convertible preferred stock.
Pro forma net loss per share (unaudited)
The pro forma net loss per share is calculated assuming that all
outstanding shares of convertible preferred stock are converted into common
stock at the beginning of the periods presented, or on the date of issuance of
the Preferred Stock, whichever is later.
Pro forma stockholders' equity (unaudited)
If the offering is consummated, all shares of convertible preferred stock
outstanding will automatically convert into common stock. The pro forma effect
of this conversion has been reflected in the accompanying financial statements
as of January 31, 2000.
Interim results (unaudited)
The accompanying statements of operations and of cash flows for the nine
months ended January 31, 1999 are unaudited. In the opinion of management,
these statements have been prepared on the same basis as the audited
consolidated financial statements and include all adjustments, consisting of
only normal recurring adjustments, necessary for the fair presentation of the
results for the interim periods. The data disclosed in the notes to the
consolidated financial statements as of such dates and for such periods are
unaudited.
Recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133. "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities and supercedes and amends a
number of existing accounting standards. SFAS No. 133 requires that all
derivatives be recognized in respect to such derivatives. In July 1999, the
Financial Accounting Standards Board issued SFAS No. 137 "Accounting for
Derivative Instruments and Hedging Activities, Deferral of the Effective Date
of FASB
F-9
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
statement No. 133" ("SFAS No. 137"). SFAS No. 137 deferred the effective date
until the first quarter of fiscal years beginning after June 15, 2000. The
Company does not expect the adoption of this pronouncement to have a material
impact on its financial condition or results of operations.
NOTE 2--BALANCE SHEET ACCOUNTS (IN THOUSANDS):
<TABLE>
<CAPTION>
April, 30,
-------------- January 31,
1998 1999 2000
------ ------ -----------
<S> <C> <C> <C>
Accounts receivable:
Accounts receivable............................ $ 449 $2,278 $5,179
Less: Allowance for doubtful accounts.......... (10) (56) (159)
Sales return reserve......................... (398) (489) (745)
------ ------ ------
$ 41 $1,733 $4,275
====== ====== ======
Inventories:
Work in progress............................... $ 32 $2,043 $5,151
Finished goods................................. 126 198 1,015
------ ------ ------
$ 158 $2,241 $6,166
====== ====== ======
Property and equipment:
Machinery and equipment........................ $ 418 $ 632 $1,882
Furniture and fixtures......................... 163 189 298
Software....................................... 483 523 650
Construction in progress....................... -- 369 327
------ ------ ------
1,064 1,713 3,157
Less: Accumulated depreciation................. (319) (628) (1,000)
------ ------ ------
$ 745 $1,085 $2,157
====== ====== ======
Accrued expenses and other liabilities:
Employee compensation.......................... $ 259 $ 337 $ 240
Other.......................................... 81 278 276
------ ------ ------
$ 340 $ 615 $ 516
====== ====== ======
</TABLE>
NOTE 3--INCOME TAXES:
There was no income tax provision for the years ended April 30, 1997, 1998
and 1999 because operations resulted in pre-tax losses. As of April 30, 1999,
the Company had net operating loss carryforwards of approximately $9,000,000
for federal income tax purposes. These losses are available to reduce taxable
income and expire from 2011 through 2019. Because of certain changes in the
ownership of the Company, there is an annual limitation on the use of the net
operating loss carryforwards pursuant to Section 382 of the Internal Revenue
Code.
There was no income tax provision for the nine months ended January 31,
2000 because of deductions resulting from the reversal of deferred tax assets
for which there was a full valuation allowance as of the beginning of the
period.
Deferred tax assets at April 30, 1998 and 1999 and January 31, 2000 relate
primarily to net operating losses, fixed assets, reserves, accruals and
credits. A valuation allowance has been provided in an amount equal to these
assets because there is significant uncertainty regarding their realization.
F-10
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following is an analysis of the Company's deferred tax assets (in
thousands):
<TABLE>
<CAPTION>
April 30,
---------------- January 31,
1998 1999 2000
------- ------- -----------
<S> <C> <C> <C>
Net operating loss carryforward............... $ 2,702 $ 3,754 $ 2,290
Fixed assets.................................. 18 48 (4)
Reserves...................................... 380 1,724 417
Credits....................................... 400 607 835
Others........................................ 32 224 284
------- ------- -------
Total....................................... 3,532 6,357 3,822
------- ------- -------
Valuation allowance........................... (3,532) (6,357) (3,822)
------- ------- -------
Net deferred tax assets....................... $ -- $ -- $ --
======= ======= =======
</TABLE>
NOTE 4--RESERVE FOR PURCHASE COMMITMENTS:
When the April 30, 1999 financial statements were prepared, the Company
believed that the demand for certain products was less than originally
estimated when the Company placed noncancelable production orders. Sales orders
that the Company had expected to receive were not received by the time that the
audit of the April 30, 1999 financial statements was completed. There was
significant uncertainty that the Company would be able to sell the products
ordered. As a result, the Company accrued $3,473,000 as a reserve for a portion
of the purchase commitments.
Several months after the audit of the April 30, 1999 financial statements
was completed, the Company received sales orders for the products. During the
nine months ended January 31, 2000, most of the products were sold. Of the
reserve, $2,305,000 was released during the second quarter ended October 31,
1999 and $930,000 during the third quarter ended January 31, 2000. The
remaining reserve of $238,000 at January 31, 2000 is reflected as a reduction
in the basis of the related inventory.
NOTE 5--RELATED PARTIES TRANSACTIONS:
The chairman of Powerchip Semiconductor Corp. ("PSC") is a board member of
the Company. PSC has been a vendor for the Company beginning in the year ended
April 30, 1999. Total purchases were $5,000 and $1,396,000 for the year ended
April 30, 1999 and the nine months ended January 31, 2000.
F-11
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 6--NET INCOME (LOSS) PER SHARE:
The following table sets forth the computation of basic and diluted income
(loss) per share attributable to common stockholders of the period indicated
(in thousands, except per share data):
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended April 30, January 31,
------------------------- ------------------
1997 1998 1999 1999 2000
------- ------- ------- ----------- ------
(unaudited)
<S> <C> <C> <C> <C> <C>
Numerator:
Net income (loss)............... $(2,838) $(6,039) $(7,522) $(3,150) $5,048
======= ======= ======= ======= ======
Net income (loss) attributable
to common stockholders........ $(2,838) $(6,039) $(7,522) $(3,150) $5,048
======= ======= ======= ======= ======
Denominator:
Denominator for basic earnings
per share--weighted average
common shares................. 168 475 724 699 2,879
Effect of dilutive securities
Common stock options........... -- -- -- -- 614
Unvested common stock subject
to repurchase................ -- -- -- -- 620
Convertible preferred stock.... -- -- -- -- 12,305
------- ------- ------- ------- ------
Denominator for dilutive earnings
per share...................... 168 475 724 699 16,418
======= ======= ======= ======= ======
Basic earnings per share......... $(16.89) $(12.71) $(10.39) $ (4.51) $ 1.75
Diluted earnings per share....... $(16.89) $(12.71) $(10.39) $ (4.51) $ 0.31
The following table sets forth weighted average potential shares of common
stock that are not included in the diluted net income (loss) per share
calculation above because to do so would be antidilutive for the periods
indicated:
<CAPTION>
Nine Months Ended
Year Ended April 30, January 31,
------------------------- ------------------
1997 1998 1999 1999 2000
------- ------- ------- ----------- ------
(unaudited)
<S> <C> <C> <C> <C> <C>
Weighted average effect of common
stock equivalents:
Unvested common stock subject to
repurchase.................... 1,041 725 492 509 --
Options outstanding............. 1,238 1,723 2,350 2,339 --
Shares resulting from the
conversion of the:
Series A convertible preferred
stock........................ 4,300 4,300 4,300 4,300 --
Series B convertible preferred
stock........................ 710 3,692 3,672 3,672 --
Series C convertible preferred
stock........................ -- 418 4,256 4,233 --
------- ------- ------- ------- ------
Total common stock equivalents
excluded from the
computation of earnings per
share as their effect was
antidilutive................ 7,289 10,858 15,070 15,053 --
======= ======= ======= ======= ======
</TABLE>
NOTE 7--SHAREHOLDERS' EQUITY:
Convertible Preferred Stock
The Company is authorized to issue 12,783,336 shares of Convertible
preferred stock ("preferred stock"). As of April 30, 1999, 4,450,003, 4,000,000
and 4,333,333 shares of preferred stock were designated
F-12
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Series A, Series B and Series C, respectively. Series A, Series B and Series C
preferred stock were issued at $0.60, $1.50 and $3.00 per share, respectively.
The rights, preferences and restrictions of the preferred stock are as follows:
Conversion. Each share of Series A, Series B and Series C preferred stock
is convertible into such number of shares of common stock as is determined by
dividing the original issuance price by $0.60, $1.50 the balance sheet at their
fair market value and the corresponding derivative gains or losses be either
reported in the statement of operations or as a deferred item depending on the
type of hedge relationship exists with and $3.00, respectively ("Initial
Conversion Price"). The Initial Conversion Price is subject to subsequent
adjustment to give effect to certain dilutive events that may occur. Such
conversion is automatic upon the effective date of a public offering of common
stock with aggregate proceeds of at least $10,000,000.
Dividends. Holders of Series A, Series B and Series C preferred stock are
entitled to receive, when and as declared by the Board of Directors,
noncumulative dividends at the annual rate of $0.06, $0.15 and $0.30 per share,
respectively. Such dividends are payable in preference to any dividend for
common stock declared by the Board of Directors. No dividends were declared
since inception.
Voting. The holders of the preferred stock have the right to vote with the
common stock, on an as-if-converted basis, on all other matters as provided
under California law. The holder of each share of preferred stock is entitled
to the number of votes equal to the number of shares of common stock into which
such share of preferred stock could be converted on the record date for the
vote or the consent of shareholders and shall have voting rights and powers
equal to the voting rights and powers of the common stock.
Liquidation. In the event of any liquidation, dissolution or winding up of
the corporation, the holders of each share of preferred stock then outstanding
are entitled to be paid, before any payment made to the holders of the common
stock, an amount equal to the original issue price per share ("Preference
Amount") of preferred stock. If the assets of the corporation are insufficient
to pay the full liquidation preference to the preferred stock, the assets shall
be distributed ratably among the holders of the preferred stock in proportion
to the full preference amount each such holder is otherwise entitled to
receive. After payment has been made to the holders of the preferred stock of
their full preference amount, any remaining assets or surplus funds of the
corporation are to be shared by and distributed ratably among the holders of
common stock in proportion to the number of shares then held by each of them.
Common Stock
As of March 2000, the Company is authorized to issue up to 100,000,000
shares of common stock. Of the shares authorized, 3,600,000 shares of common
stock have been reserved for issuance under the Company's employee stock option
plans.
Certain common stock option holders have the right to exercise unvested
options, subject to a repurchase right held by the Company, in the event of
voluntary or involuntary termination of employment of the stockholder. As of
January 31, 2000, 1,025,000 shares of common stock were subject to repurchase
by the Company at the original exercise price. Of the shares issued to date,
1,200,000 shares of the Company's common stock have been issued under
restricted stock purchase agreements, under which the Company has the option to
repurchase issued shares of common stock. Under these agreements, 20% of the
Company's repurchase rights lapse after one year. The remaining rights lapse
quarterly over the following four years. At January 31, 2000, 180,000
outstanding common shares were subject to repurchase.
F-13
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 8--STOCK-BASED COMPENSATION:
Stock Option Plan
In May 1995, the Company adopted the 1995 Stock Plan under which 3,600,000
shares of common stock were reserved for issuance to eligible employees,
directors and consultants upon exercise of the stock options and stock purchase
rights. Incentive stock options are granted at a price not less than 100% of
the fair market value of the Company's common stock and at a price of not less
than 110% of the fair market value for grants to any person who owned more than
10% of the voting power of all classes of stock on the date of grant.
Nonstatutory stock options are granted at a price not less than 85% of the fair
market value of the common stock and at a price not less than 110% of the fair
market value for grants to a person who owned more than 10% of the voting power
of all classes of stock on the date of the grant. Options granted under the
1995 Stock Plan generally vest over five years and are exercisable immediately
or for up to ten years (five years for grants to any person who owned more than
10% of the voting power of all classes of stock on the date of the grant).
Those options exercised but unvested are subject to repurchase by the Company
at the exercise price.
The following table summarizes option activities:
<TABLE>
<CAPTION>
Options Outstanding
--------------------------------
Weighted
Average
Options Price
Available Number of Price per per
for Grant Shares Share Share
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Balance at April 30, 1996......... 2,720,000 880,000 $0.06
Granted........................... (1,300,000) 1,300,000 $0.06-$0.25 0.09
Canceled.......................... 405,000 (405,000) 0.06 0.06
---------- ----------
Balance at April 30, 1997......... 1,825,000 1,775,000 0.08
Granted........................... (717,000) 717,000 0.25-$0.30 0.25
Canceled.......................... 368,000 (368,000) 0.15-$0.25 0.19
---------- ----------
Balance at April 30, 1998......... 1,476,000 2,124,000 0.12
Granted........................... (741,000) 741,000 0.30 0.30
Exercised......................... -- (56,000) 0.15-$0.25 0.16
Canceled.......................... 48,000 (48,000) 0.25-$0.30 0.28
---------- ----------
Balance at April 30, 1999......... 783,000 2,761,000 0.17
Granted........................... (877,000) 877,000 0.75-$4.50 1.09
Exercised......................... -- (2,680,550) 0.06-$0.75 0.21
Canceled.......................... 113,000 (113,000) $0.30-$0.75 0.73
---------- ----------
Balance at January 31, 2000....... 19,000 844,450 $0.97
========== ==========
</TABLE>
F-14
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table summarizes information about stock options outstanding
at January 31, 2000:
<TABLE>
<CAPTION>
Options Outstanding at January Options Exercisable at
31, 2000 January 31, 2000
--------------------------------------------------------------------
Weighted Average
Exercise Number Remaining Number Weighted Average
Prices Outstanding Contractual Life Outstanding Exercise Price
-------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
$0.06 20,000 1.44 14,256 $0.06
0.25 88,250 2.42 45,596 0.25
0.30 134,000 3.37 43,807 0.30
0.75 522,200 4.31 71,557 0.75
$4.50 80,000 4.75 4,000 4.50
------- ---- -------
844,450 3.94 179,216 $0.21
======= ==== ======= =====
</TABLE>
Stock based compensation under APB No. 25
In connection with certain stock option grants the Company recorded
deferred stock compensation costs totaling $5,178,000 being the difference
between the exercise price and the deemed fair value at the date of grant which
is being recognized over the vesting period of the related options of generally
five years. Future amortization of deferred compensation expense is estimated
to be approximately $475,000, $1,190,000, $701,000, $380,000 and $181,000 in
the years ended April 30, 2000, 2001, 2002 and 2003, and 2004 and after
respectively.
Stock based compensation expense is comprised of the following (in
thousands):
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
April 30, January 31,
-------------- -----------
1997 1998 1999 2000
---- ---- ---- -----------
<S> <C> <C> <C> <C>
Cost of revenues................................. $-- $ 45 $ 60 $ 249
--- ---- ---- ------
Research and development......................... 31 186 302 755
Selling, general and administrative.............. 13 20 157 404
--- ---- ---- ------
Total operating expenses....................... 44 206 459 1,159
--- ---- ---- ------
Total compensation charge...................... $44 $251 $519 $1,408
=== ==== ==== ======
</TABLE>
Fair value disclosures
Pro forma information regarding net loss and net loss per share is required
by SFAS No. 123, which also requires that the information be determined as if
the Company had accounted for its employee stock options granted under the fair
value method. The fair value for these options was estimated using the Black-
Scholes option pricing model.
The Company calculated the fair value of each option grant on the date of
grant using the Black-Scholes option pricing model as prescribed by SFAS No.
123 using the following assumptions:
<TABLE>
<S> <C>
Risk free interest rate........................................ 4.43%-6.47%
Expected life (in years)....................................... 4.1
Dividend yield................................................. 0%
Expected volatility............................................ 0%
</TABLE>
F-15
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
As the determination of fair value of all options granted after such time
as the Company becomes a public entity will include an expected volatility
factor in addition to the factors described in the preceding paragraph, the
above results may not be representative of future periods.
The weighted average grant date fair value of options granted during the
years ended April 30, 1997, 1998 and 1999 and the nine months ended January 31,
2000 was $0.75, $1.27, $1.63 and $5.29, respectively.
Had compensation cost been determined based upon the fair value at the
grant date, consistent with the methodology prescribed under SFAS No. 123, the
Company's pro forma net loss and pro forma basic and diluted net loss per share
under SFAS No. 123 would have been (in thousands, except per share data):
<TABLE>
<CAPTION>
Nine Months
Ended January
Year Ended December 31, 31,
------------------------- ---------------
1997 1998 1999 1999 2000
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net loss-as reported........... $(2,838) $(6,039) $(7,522) $(3,150) $5,048
Net loss-as adjusted........... (2,874) (6,181) (8,247) (3,666) 4,369
Net loss per share:
basic as reported............. (16.89) (12.71) (10.39) (4.51) 1.75
diluted as reported..........: (16.89) (12.71) (10.39) (4.51) 0.31
Net loss per share:
basic as adjusted............. (17.11) (13.01) (11.39) (5.24) 1.52
diluted as adjusted........... $(17.11) $(13.01) $(11.39) $ (5.24) $ 0.27
</TABLE>
NOTE 9--CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables and
investments in a money market account. The Company's products are primarily
sold to OEM customers and to distributors. The Company performs ongoing credit
evaluations of its customers and maintains reserves for credit losses. In
fiscal 1998, the Company's sales to four customers represented 17%, 16%, 12%
and 12% of total revenues. At April 30, 1998, three customers accounted for
22%, 22% and 12% of accounts receivable. In fiscal 1999, the Company's sales to
two customers represented 43% and 24% of total revenues. At April 30, 1999,
three customers accounted for 34%, 20% and 20% of accounts receivable. In nine
months ended January 31, 2000, the Company's sales to three customers
represented 24%, 17% and 16% of total sales. At January 31, 2000, four
customers accounted for 30%, 17%, 12% and 11% of accounts receivable.
F-16
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 10--SEGMENT AND GEOGRAPHIC INFORMATION:
The Company identifies its operating segments based on business activities,
management responsibility and geographic location. For all periods presented,
the Company operated in a single business segment.
The Company sells its products in the United States and to the Asia Pacific
region. Revenues by geographic locations based on the country of the customer
were as follows:
<TABLE>
<CAPTION>
Years Ended April Nine Months
30, Ended
------------------ January 31,
1997 1998 1999 2000
---- ------ ------ -----------
(in thousands)
<S> <C> <C> <C> <C>
United States................................. $34 $ 355 $ 735 $ 7,394
Taiwan........................................ 7 777 3,084 9,142
Singapore..................................... 536 4,478
Hong Kong..................................... 297 435 1,740
Other Asia Pacific Countries.................. 18 47 389 2,208
Europe........................................ -- -- 64 149
--- ------ ------ -------
$59 $1,476 $5,243 $25,111
=== ====== ====== =======
</TABLE>
NOTE 11--COMMITMENTS:
The Company leases its facilities in the U.S. under non cancelable lease
agreements. The facility leases expire April 30, 2003. Future minimum lease
payments under all non cancelable operating leases as of January 31, 2000 are
$67,000, $268,000, $268,000 and $268,000 in the years ending April 30, 2000,
2001, 2002 and 2003, respectively. Rental expenses under all operating leases
amounted to $88,000, $250,000, $203,000 and $201,000 for the years ended April
30, 1997, 1998, 1999 and the nine months ended January 31, 2000, respectively.
F-17
<PAGE>
[Company Logo centered at the top of the page. Title in bold and
underlined, "CMOS Imaging Solutions for Mass Market Applications". In the
center of the page is an image of a representative Phone System or Internet
System with the following language at the top of the image "Phone System" and
the following language at the bottom of the page "Internet System". This image
is surrounded by four large drawings. Each of these drawings depict an
individual interacting with a product which incorporates our Single Chip CMOS
Imaging Sensors with the name of the product listed above or below the
respective drawing. The products depicted are the following: Video Phones,
Video Conference/Set-Top Boxes, Laptop/PDA Video Cameras and PC Video Cameras.]
<PAGE>
[OMNIVISION LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth all fees and expenses payable by OmniVision
in connection with the registration of the common stock hereunder. All of the
amounts shown are estimates except for the SEC registration fee, NASD filing
fee and the Nasdaq National Market listing fees.
<TABLE>
<CAPTION>
Amount
To Be Paid
----------
<S> <C>
SEC Registration Fee............................................. $ 16,698
NASD Filing Fee.................................................. 6,825
Nasdaq National Market Listing Fee............................... 1,000
Printing and Engraving Expenses.................................. 235,000
Legal Fees and Expenses.......................................... 600,000
Accounting Fees and Expenses..................................... 270,000
Blue Sky Fees and Expenses....................................... 5,000
Transfer Agent and Registrar Fees and Expenses................... 15,000
Miscellaneous Expenses........................................... 150,477
Total.......................................................... $1,300,000
</TABLE>
Item 14. Indemnification of Directors and Officers
The Registrant is subject to Section 145 of the Delaware General
Corporation Law ("Section 145"). Section 145 permits indemnification of
officers and directors of the Company under certain conditions and subject to
certain limitations. Section 145 also provides that a corporation has the power
to maintain insurance on behalf of its officers and directors against any
liability asserted against such person and incurred by him or her in such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of Section 145. Under Article VIII, Sections 8.1 and 8.2
of the Registrant's Bylaws will provide for mandatory indemnification of its
directors and officers and permissible indemnification of employees and other
agents to the maximum extent not prohibited by the Delaware General Corporation
Law. The rights to indemnity thereunder continue as to a person who has ceased
to be a director, officer, employee or agent and inure to the benefit of the
heirs, executors and administrators of the person. In addition, expenses
incurred by a director or executive officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding by reason of the
fact that he or she is or was a director or officer of the Registrant (or was
serving at the Registrant's request as a director or officer of another
corporation) shall be paid by the Registrant in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by
the Registrant as authorized by the relevant section of the Delaware General
Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
the Registrant's Certificate of Incorporation provides that, pursuant to
Delaware law, its directors shall not be personally liable for monetary damages
for breach of the directors' fiduciary duty as directors to the Registrant and
its stockholders. This provision in the Certificate of Incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief
will remain available under Delaware law. In addition, each director will
continue to be subject to liability for breach of the director's duty of
loyalty to the Registrant for acts or omission not in good faith or involving
international misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of Stock repurchases or redemptions that are unlawful under Section
174 of the Delaware General Corporation Law. The provision also does not affect
a director's
II-1
<PAGE>
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. The Registrant has entered into
indemnification agreements with each of its directors and executive officers.
Generally, the indemnification agreements attempt to provide the maximum
protection permitted by Delaware law as it may be amended from time to time.
Moreover, the indemnification agreements provide for certain additional
indemnification. Under such additional indemnification provisions, however, an
individual will not receive indemnification for judgments, settlements or
expenses if he or she is found liable to the Registrant (except to the extent
the court determines he or she is fairly and reasonably entitled to indemnity
for expenses). The indemnification agreements provide for the Registrant to
advance to the individual any and all reasonable expenses (including legal fees
and expenses) incurred in investigating or defending any such action, suit or
proceeding. In order to receive an advance of expenses, the individual must
submit to the Registrant copies of invoices presented to him or her for such
expenses. Also, the individual must repay such advances upon a final judicial
decision that he or she is not entitled to indemnification.
The Registrant intends to enter into additional indemnification agreements
with each of its directors and executive officers to effectuate these indemnity
provisions and to purchase directors' and officers' liability insurance.
In addition to the foregoing, the Underwriting Agreement contains certain
provisions by which the Underwriters have agreed to indemnify the Registrant,
each person, if any, who controls the Registrant within the meaning of Section
15 of the Securities Act, each director of the Registrant, each officer of the
Registrant who signs the Registration Statement, with respect to information
furnished in writing by or on behalf of the Underwriters for use in the
Registration Statement.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought, nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
Item 15. Recent Sales of Unregistered Securities
Since our incorporation in May 1995, we have sold and issued the following
securities:
(1) In May 1995, the Registrant issued and sold 1,200,000 shares of
common stock to its four founders for $72,000 pursuant to Section 4(2) of
the Securities Act.
(2) As of June 1996, the Registrant has issued and sold 4,300,001 shares
of Series A preferred stock to 27 investors for $2,500,000.60 pursuant to
Section 4(2) of the Securities Act.
(3) As of April 1998, the Registrant has issued and sold 3,671,668
shares of Series B preferred stock to 33 investors for $5,507,502 pursuant
to Section 4(2) of the Securities Act.
(4) As of June 1998, the Registrant has issued and sold 4,333,332 shares
of Series C preferred stock to 23 investors for $12,999,999 pursuant to
Section 4(2) of the Securities Act.
(5) Pursuant to Rule 701 promulgated under the Securities Act, from May
1995 to January 31, 2000, the Registrant issued and sold 2,736,550 shares
of Common Stock to employees and consultants for aggregate consideration
of $568,437.50 upon the exercise of stock options pursuant to the
Registrant's 1995 Stock Option Plan.
The recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and warrants issued in such
transactions. All recipients had adequate access, through their relationships
with us, to information about us.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
-------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Merger Agreement between OmniVision Technologies, Inc., a Delaware
corporation and OmniVision Technologies, Inc., a California
corporation
3.1(a) Certificate of Incorporation of Registrant
3.1(b) Form of Restated Certificate of Incorporation to be filed after the
closing of the offering made under this Registration Statement
3.2 Bylaws of the Registrant
+4.1 Specimen Common Stock Certificate
4.2 Amended and Restated Registration Rights Agreement, dated as of May
20, 1998, by and among the Registrant and certain stockholders of the
Registrant
5.1 Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Form of Indemnification Agreement between the Registrant and each of
its directors and officers
10.2 2000 Stock Plan
10.3 2000 Employee Stock Purchase Plan and form of subscription agreement
10.4 2000 Director Option Plan and form of option agreement
10.5 Lease Agreement dated April 4, 1997 between the Registrant and Lewis
Duckor for the premises at 930 Thompson Avenue, Sunnyvale California
94086
10.6 First Amendment to Lease Agreement dated July 15, 1999 between the
Registrant and Lewis Duckor for the premises at 930 Thompson Avenue,
Sunnyvale California 94086
*10.7 Non-exclusive Distributor Agreement between the Registrant and World
Peace Industrial Co., Ltd. dated January 1, 1998
*10.8 Confidential Foundry Agreement between Registrant and Powerchip
Semiconductor Corp. dated March 13, 1998
10.9 Non-exclusive Distributor Agreement between the Registrant and Holy
Stone Enterprise Co., Ltd. dated July 1, 1998
*10.10 Software License Agreement between the Registrant and Creative
Technology Ltd. dated February 1, 1999
*10.11 Non-exclusive Distributor Agreement between the Registrant and Wintek
Electronics Co., Ltd. dated October 22, 1999
*10.12 Confidential Foundry Agreement between Registrant and Shanghai
HuaHong-NEC Electronics Co., Ltd. dated December 13, 1999
*10.13 Sales Agreement between the Registrant and CoAsia MicroElectronics
Cop. dated May 7, 1999
*10.14 Agreement between the Registrant, CoAsia MicroElectronics and Samsung
Electronics Taiwan Co., Ltd. dated July 17, 1998
Letter Agreement between the Registrant and Creative Technology Ltd.
*10.15 dated February 1, 1999
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see page II-5)
27.1 Financial Data Schedule
</TABLE>
- --------
+ To be filed by amendment
* A request for confidential treatment for portions of this agreement has
been submitted to the Commission. Omitted portions have been filed
separately with the Commission.
II-3
<PAGE>
(b) Financial Statement Schedules:
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public offering as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
OmniVision Technologies, Inc. has duly caused this Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on the 8th day of
March, 2000.
OMNIVISION TECHNOLOGIES, INC.
/s/ Shaw Hong
By: _________________________________
Shaw Hong
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Shaw Hong and H. Gene McCown and each of
them, his attorneys-in-fact, each with the power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same Offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-
effective amendments thereto, and to file the same, with all exhibits thereto
in all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every Act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Shaw Hong Chief Executive Officer, March 8, 2000
____________________________________ President and Director
Shaw Hong (Principal Executive
Officer)
/s/ H. Gene McCown Vice President of Finance March 8, 2000
____________________________________ and Chief Financial Officer
H. Gene McCown (Principal Financial and
Accounting Officer)
/s/ Raymond Wu Executive Vice President and March 8, 2000
____________________________________ Director
Raymond Wu
/s/ Frank Huang Director March 8, 2000
____________________________________
Frank Huang
/s/ Edward C.V. Winn Director March 8, 2000
____________________________________
Edward C.V. Winn
/s/ Leon Malmed Director March 8, 2000
____________________________________
Leon Malmed
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
-------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Merger Agreement between OmniVision Technologies, Inc., a Delaware
corporation and OmniVision Technologies, Inc., a California
corporation
3.1(a) Certificate of Incorporation of Registrant
3.1(b) Form of Restated Certificate of Incorporation to be filed after the
closing of the offering made under this Registration Statement
3.2 Bylaws of the Registrant
+4.1 Specimen Common Stock Certificate
4.2 Amended and Restated Registration Rights Agreement, dated as of May
20, 1998, by and among the Registrant and certain stockholders of the
Registrant
5.1 Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Form of Indemnification Agreement between the Registrant and each of
its directors and officers
10.2 2000 Stock Plan
10.3 2000 Employee Stock Purchase Plan and form of subscription agreement
10.4 2000 Director Stock Option Plan and form of option agreement
10.5 Lease Agreement dated April 4, 1997 between the Registrant and Lewis
Duckor for the premises at 930 Thompson Avenue, Sunnyvale California
94086
10.6 First Amendment to Lease Agreement dated July 15, 1999 between the
Registrant and Lewis Duckor for the premises at 930 Thompson Avenue,
Sunnyvale California 94086
*10.7 Non-exclusive Distributor Agreement between the Registrant and World
Peace Industrial Co., Ltd. dated January 1, 1998
*10.8 Confidential Foundry Agreement between Registrant and Powerchip
Semiconductor Corp. dated March 13, 1998
10.9 Non-exclusive Distributor Agreement between the Registrant and Holy
Stone Enterprise Co., Ltd. dated July 1, 1998
*10.10 Software License Agreement between the Registrant and Creative
Technology Ltd. dated February 1, 1999
*10.11 Non-exclusive Distributor Agreement between the Registrant and Wintek
Electronics Co., Ltd. dated October 22, 1999
*10.12 Confidential Foundry Agreement between Registrant and Shanghai
HuaHong-NEC Electronics Co., Ltd. dated December 13, 1999
*10.13 Sales Agreement between the Registrant and CoAsia MicroElectronics
Cop. dated May 7, 1999
*10.14 Agreement between the Registrant, CoAsia MicroElectronics and Samsung
Electronics Taiwan Co., Ltd. dated July 17, 1998
*10.15 Letter Agreement between the Registrant and Creative Technology Ltd.
dated February 1, 1999
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see page II-5)
27.1 Financial Data Schedule
</TABLE>
- --------
+ To be filed by amendment
* A request for confidential treatment for portions of this agreement has
been submitted to the Commission. Omitted portions have been filed
separately with the Commission.
<PAGE>
EXHIBIT 1.1
FleetBoston Robertson Stephens Inc.
UNDERWRITING AGREEMENT
Underwriting Agreement
Date
FleetBoston Robertson Stephens Inc.
Prudential Volpe Technology
Needham & Company, Inc.
As Representatives of the several Underwriters
c/o FleetBoston Robertson Stephens Inc.
555 California Street, Suite 2600
San Francisco, CA 94104
Ladies and Gentlemen:
Introductory. Omnivision Technologies, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of [___] shares (the "Firm Shares")
- ----------
of its Common Stock, par value $0.001 per share (the "Common Shares"). In
addition, the Company has granted to the Underwriters an option to purchase up
to an additional [___] Common Shares (the "Option Shares") as provided in
Section 2. The Firm Shares and, if and to the extent such option is exercised,
the Option Shares are collectively called the "Shares". FleetBoston Robertson
Stephens Inc. ("Robertson Stephens"), Prudential Volpe Technology and Needham &
Company, Inc., have agreed to act as representatives of the several Underwriters
(in such capacity, the "Representatives") in connection with the offering and
sale of the Shares. As a part of this offering contemplated by this Agreement,
Robertson Stephens has agreed to reserve out of the Shares set forth opposite
its name on the Schedule II to this Agreement, up to _________________ shares,
for sale to the Company's employees, officers, and directors and other parties
associated with the Company (collectively, "Participants"), as set forth in the
Prospectus under the heading "Underwriting" (the "Directed Share Program"). The
Shares to be sold by Robertson Stephens pursuant to the Directed Share Program
(the "Directed Shares") will be sold by Robertson Stephens pursuant to this
Agreement at the public offering price. Any Directed Shares not orally confirmed
for purchase by any Participants as of 7:00 am New York time on the first day
trading of the shares commences will be offered to the public by Robertson
Stephens as set forth in the Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-[___]), which contains a form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus". Such registration statement, as amended,
including the financial statements, exhibits and schedules thereto, in the form
in which it was declared effective by the Commission under the Securities Act of
1933 and the rules and regulations promulgated thereunder (collectively, the
"Securities Act"), including any information deemed to be a part thereof at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is called
the "Registration Statement". Any
<PAGE>
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement", and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Shares, is called the "Prospectus". All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
a preliminary prospectus, the Prospectus or any amendments or supplements to any
of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").
The Company hereby confirms its agreements with the Underwriters as
follows:
Section 1. Representations and Warranties of the Company.
A. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Shares. Each
of the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Each preliminary
prospectus, as of its date, and the Prospectus, as amended or supplemented, as
of its date and at all subsequent times through the 30/th/ day after the date
hereof, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the Representatives expressly
for use therein. There are no contracts or other documents required to be
described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives three complete conformed copies of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution of
the Shares, any offering material in connection with the offering and sale of
the Shares other than a preliminary prospectus, the Prospectus or the
Registration Statement.
2.
<PAGE>
(d) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(e) Authorization of the Shares. The Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(g) No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change" or a "Material
Adverse Effect"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(h) Independent Accountants. PricewaterhouseCoopers LLP who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.
(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved, except
as may be expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The financial data set forth in the Prospectus under the
captions "Summary--Summary Selected Financial Data", "Selected Financial Data"
and "Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement.
(j) Company's Accounting System. The Company maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
3.
<PAGE>
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(k) Subsidiaries of the Company. The Company has no subsidiaries.
(l) Incorporation and Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation or limited liability
company, as the case may be, in good standing under the laws of the jurisdiction
in which it is organized with full corporate power and authority to own its
properties and conduct its business as described in the prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification. The pro forma
financial statements of the Company and the related notes thereto included under
the caption "Prospectus Summary - Summary Pro Forma Selected Financial Data",
"Pro Forma Selected Financial Data" and elsewhere in the Prospectus and in the
Registration Statement present fairly the information contained therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly presented on
the bases described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. No other pro forma
financial information is required to be included in the Registration Statement
Pursuant to Regulation S-X.
(m) No Prohibition on Subsidiaries from Paying Dividends or Making Other
Distributions. No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus.
(n) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Prospectus or upon exercise
of outstanding options or warrants described in the Prospectus). The Common
Shares (including the Shares) conform in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding Common Shares have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding Common Shares were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any
of its subsidiaries other than those accurately described in the Prospectus. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(o) Stock Exchange Listing. The Shares have been approved for listing on
the Nasdaq National Market, subject only to official notice of issuance.
(p) No Consents, Approvals or Authorizations Required. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein, except such as have been obtained or made under the
Securities Act and such as may be required (i) under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares by
the Underwriters in the manner contemplated here and in the Prospectus, (ii) by
the National Association of Securities Dealers, LLC and (iii) by the federal and
provincial laws of Canada.
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(q) Non-Contravention of Existing Instruments Agreements. Neither the
issue and sale of the Shares nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company pursuant to, (i) the
charter or by-laws of the Company, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the Company is
a party or bound or to which its or their property is subject or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of its
or their properties.
(r) No Defaults or Violations. The Company is not in violation or default
of (i) any provision of its charter or by-laws, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which it is a
party or bound or to which its property is subject or (iii) any statute, law,
rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its properties, as applicable, except
any such violation or default which would not, singly or in the aggregate,
result in a Material Adverse Change except as otherwise disclosed in the
Prospectus.
(s) No Actions, Suits or Proceedings. No action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries or its or their property is
pending or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a Material Adverse Effect on the performance of
this Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to result in a Material Adverse
Effect.
(t) All Necessary Permits, Etc. The Company possesses such valid and
current certificates, authorizations or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct its
respective business, and the Company has not received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
Material Adverse Change.
(u) Title to Properties. The Company has good and marketable title to all
the properties and assets reflected as owned in the financial statements
referred to in Section 1(A)(i) above (or elsewhere in the Prospectus), in each
case free and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially interfere with
the use made or proposed to be made of such property by the Company or such
subsidiary. The real property, improvements, equipment and personal property
held under lease by the Company or any subsidiary are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company or such
subsidiary.
(v) Tax Law Compliance. The Company has filed all necessary federal, state
and foreign income and franchise tax returns and have paid all taxes required to
be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them. The Company has made
adequate charges, accruals and reserves in the applicable financial statements
referred to in Section 1(A)(i) above in respect of all federal, state and
foreign income and franchise taxes for all periods as to which the tax liability
of the Company has not been finally determined. The Company is not aware of any
tax deficiency that has been or might be asserted or threatened against the
Company that could result in a Material Adverse Change.
(w) Intellectual Property Rights. The Company owns or possesses adequate
rights to use all patents, patent rights or licenses, inventions, collaborative
research agreements, trade secrets, know-
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how, trademarks, service marks, trade names and copyrights which are necessary
to conduct its businesses as described in the Registration Statement and
Prospectus; the expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not result in a
Material Adverse Change that is not otherwise disclosed in the Prospectus; the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a Material Adverse Change. There is no
claim being made against the Company regarding patents, patent rights or
licenses, inventions, collaborative research, trade secrets, know-how,
trademarks, service marks, trade names or copyrights. The Company does not in
the conduct of their business as now or proposed to be conducted as described in
the Prospectus infringe or conflict with any right or patent of any third party,
or any discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company, which such
infringement or conflict is reasonably likely to result in a Material Adverse
Change.
(x) Y2K. There are no Y2K issues related to the Company that (i) are of a
character required to be described or referred to in the Registration Statement
or Prospectus by the Securities Act which have not been accurately described in
the Registration Statement or Prospectus or (ii) might reasonably be expected to
result in any Material Adverse Change or that might materially affect their
properties, assets or rights.
(y) No Transfer Taxes or Other Fees. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the shares.
(z) Company Not an "Investment Company". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and after receipt of payment
for the Shares will not be, an "investment company" or an entity "controlled" by
an "investment company" within the meaning of the Investment Company Act and
will conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(aa) Insurance. The Company is insured by recognized, financially sound and
reputable institutions with policies in such amounts and with such deductibles
and covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal
property owned or leased by the Company against theft, damage, destruction, acts
of vandalism and earthquakes, general liability and Directors and Officers
liability. The Company has no reason to believe that it will not be able (i) to
renew its existing insurance coverage as and when such policies expire or (ii)
to obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. The Company has not been denied any
insurance coverage which it has sought or for which it has applied.
(bb) Labor Matters. To the best of Company's knowledge, no labor
disturbance by the employees of the Company exists or is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, subassemblers, value added
resellers, subcontractors, original equipment manufacturers, authorized dealers
or international distributors that might be expected to result in a Material
Adverse Change.
(cc) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in
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stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(dd) Lock-Up Agreements. Each officer and director of the company and each
beneficial owner of one or more percent of the outstanding issued share capital
of the Company has agreed to sign an agreement substantially in the form
attached hereto as Exhibit A (the "Lock-up Agreements"). The Company has
provided to counsel for the Underwriters a complete and accurate list of all
securityholders of the Company and the number and type of securities held by
each securityholder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the Lock-up Agreements presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other stockholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of Robertson Stephens.
(ee) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been described
as required.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
(ff) No Unlawful Contributions or Other Payments. Neither the Company nor,
to the best of the Company's knowledge, any employee or agent of the Company,
has made any contribution or other payment to any official of, or candidate for,
any federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(gg) ERISA Compliance. The Company and any "employee benefit plan" (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
"ERISA")) established or maintained by the Company, or its "ERISA Affiliates"
(as defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company, any member of any group of
organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company is a member. No
"reportable event" (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any "employee benefit plan" established or
maintained by the Company or any of its ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfounded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(hh) Financial Projections. The statements, (including the assumptions
described therein) included in the Registration Statement and the Prospectus
under the headings "Summary of Significant Projections and Assumptions" and
"Financial Projections" (i) are within the coverage of Rule 175(b) under the Act
to the extent such data constitute forward looking statements as defined in Rule
175(c) and (ii) were made by the Company with a reasonable basis and reflect the
Company's good faith estimate of the matters described therein.
(ii) Consents Required in Connection with the Directed Share Program. No
consent, approval, authorization or order of, or qualification with, any
governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered.
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(jj) No Improper Influence in Connection with the Directed Share Program.
The Company has not offered, or caused FleetBoston Robertson Stephens Inc. to
offer, Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
Section 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. The Company agrees to issue and sell to the several
Underwriters the Firm Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company the respective number of
Firm Shares set forth opposite their names on Schedule A. The purchase price per
Firm Share to be paid by the several Underwriters to the Company shall be $[___]
per share.
(b) The First Closing Date. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representatives at 8:00 a.m. San Francisco time, at the offices of Wilson,
Sonsini, Goodrich & Rosati (or at such other place as may be agreed upon among
the Representatives and the Company), (i) on the third (3/rd/) full business day
following the first day that Shares are traded, (ii) if this Agreement is
executed and delivered after 1:30 P.M., San Francisco time, the fourth (4/th/)
full business day following the day that this Agreement is executed and
delivered or (iii) at such other time and date not later that seven (7) full
business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "Closing
Date;" provided, however, that if the Company has not made available to the
Representatives copies of the Prospectus within the time provided in Section
2(g) and 3(e) hereof, the Representatives may, in their sole discretion,
postpone the Closing Date until no later that two (2) full business days
following delivery of copies of the Prospectus to the Representatives.
(c) The Option Shares; the Second Closing Date. In addition, on the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of [___] Option Shares from the Company at the purchase price
per share to be paid by the Underwriters for the Firm Shares. The option granted
hereunder is for use by the Underwriters solely in covering any over-allotments
in connection with the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. The time and date of delivery of the
Option Shares, if subsequent to the First Closing Date, is called the "Second
Closing Date" and shall be determined by the Representatives and shall not be
earlier than three nor later than five full business days after delivery of such
notice of exercise. If any Option Shares are to be purchased each Underwriter
agrees, severally and not jointly, to purchase the number of Option Shares
(subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be purchased as the number of Firm Shares set forth
on Schedule A opposite the name of such Underwriter bears to the total number of
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Firm Shares bears to the total number of Option Shares. The Representatives may
cancel the option at any time prior to its expiration by giving written notice
of such cancellation to the Company.
(d) Public Offering of the Shares. The Representatives hereby advises the
Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Shares as soon
after this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, have
determined is advisable and practicable.
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(c) Payment for the Shares. Payment for the Shares shall be made at the
First Closing Date (and, if applicable, at the Second Closing Date) by wire
transfer in immediately available-funds to the order of the Company.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
FleetBoston Robertson Stephens Inc., individually and not as the Representatives
of the Underwriters, may (but shall not be obligated to) make payment for any
Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
(d) Delivery of the Shares. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Shares to an account or accounts at
The Depository Trust Company, as designated by the Representatives for the
accounts of the Representatives and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The Company shall
also deliver, or cause to be delivered, a credit representing the Option Shares
the Underwriters have agreed to purchase at the First Closing Date (or the
Second Closing Date, as the case may be), to an account or accounts at The
Depository Trust Company as designated by the Representatives for the accounts
of the Representatives and the several Underwriters, against the irrevocable
release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters.
Section 3. Covenants of the Company.
A. Covenants of the Company. The Company further covenants and agrees
with each Underwriter as follows:
(a) Registration Statement Matters. The Company will (i) use its best
efforts to cause a registration statement on Form 8-A (the "Form 8-A
Registration Statement") as required by the Securities Exchange Act of 1934 (the
"Exchange Act") to become effective simultaneously with the Registration
Statement, (ii) use its best efforts to cause the Registration Statement to
become effective or, if the procedure in Rule 430A of the Securities Act is
followed, to prepare and timely file with the Commission under Rule 424(b) under
the Securities Act a Prospectus in a form approved by the Representatives
containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Securities Act and (iii)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which the Representatives shall not previously have been advised
and furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Securities Act. If
the Company elects to rely on Rule 462(b) under the Securities Act, the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) under the Securities Act prior to the time
confirmations are sent or given, as specified by Rule 462(b)(2) under the
Securities Act, and shall pay the applicable fees in accordance with Rule 111
under the Securities Act.
(b) Securities Act Compliance. The Company will advise the Representatives
promptly (i) when the Registration Statement or any post-effective amendment
thereto shall have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
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(c) Blue Sky Compliance. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both national
and foreign) as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided 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 where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(d) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. The Company will comply with the Securities Act and the Exchange Act,
and the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and the Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
the Representatives or counsel for the Underwriters, it becomes necessary to
amend or supplement the Prospectus in order to make the statements therein, in
the light of the circumstances existing at the time the Prospectus is delivered
to a purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission, and furnish at its own expense to the
Underwriters and to dealers, an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(e) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the period
beginning on the date hereof and ending on the later of the First Closing Date
or such date, as in the opinion of counsel for the Underwriters, the Prospectus
is no longer required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), as many copies of the
Prospectus and any amendments and supplements thereto as the Representatives may
request.
(f) Insurance. The Company shall (i) obtain Directors and Officers
liability insurance in the minimum amount of $10 million which shall apply to
the offering contemplated hereby and (ii) cause Robertson Stephens to be added
to such policy such that up to $500,000 of its expenses pursuant to Section 7(a)
shall be paid directly by such insurer and (iii) shall cause FleetBoston
Robertson Stephens Inc. to be added as an additional insured to such policy in
respect of the offering contemplated hereby.
(g) Notice of Subsequent Events. If at any time during the ninety (90) day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which, in your opinion, the market price of the Company Shares has
been or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(h) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(i) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Company Shares.
(j) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending [___] that satisfies the provisions of Section 11(a) of the Securities
Act.
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(k) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Exchange Act.
(l) Agreement Not to Offer or Sell Additional Securities. The Company will
not offer, sell or contract to sell, or otherwise dispose of or enter into any
transaction which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise by the Company or any affiliate of the Company
or any person in privity with the Company or any affiliate of the Company)
directly or indirectly, or announce the offering of, any other Common Shares or
any securities convertible into, or exchangeable for, Common Shares; provided,
however, that the Company may (i) issue and sell Common Shares pursuant to any
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and
described in the Prospectus so long as none of those shares may be transferred
and the Company shall enter stop transfer instructions with its transfer agent
and registrar against the transfer of any such Common Shares and (ii) the
Company may issue Common Shares issuable upon the conversion of securities or
the exercise of warrants outstanding at the date of the Prospectus and described
in the Prospectus. These restrictions terminate after the close of trading of
the Shares on the 180th day of (and including) the day the Shares commenced
trading on the Nasdaq National Market (the "Lock-Up Period").
(m) Future Reports to the Representatives. During the period of five years
hereafter the Company will furnish to the Representatives (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, the National Association of Securities Dealers, LLC
or any securities exchange; and (iii) as soon as available, copies of any report
or communication of the Company mailed generally to holders of its capital
stock.
(n) Directed Share Program. The Company (i) will indemnify Robertson
Stephens for any losses incurred in connection with the Directed Share Program,
(ii) will comply with all applicable securities and other applicable laws, rules
and regulations in each jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program and (iii) will pay all reasonable
fees and disbursements of counsel incurred by the Underwriters in connection
with the Directed Share Program and any stamp duties, similar taxes or duties or
other taxes, if any, incurred by the underwriters in connection with the
Directed Share Program.
Section 4. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein on the First Closing Date and, with respect to the Option
Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the First Closing Date as though then
made and, with respect to the Option Shares, as of the Second Closing Date as
though then made, to the timely performance by the Company of its covenants and
other obligations hereunder, and to each of the following additional conditions:
(a) Compliance with Registration Requirements; No Stop Order; No Objection
from the National Association of Securities Dealers, LLC. The Registration
Statement shall have become effective prior to the execution of this Agreement,
or at such later date as shall be consented to in writing by you; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel; and the National Association of
Securities Dealers, LLC shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
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(b) Corporate Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to Underwriters'
Counsel, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section.
(c) No Material Adverse Change. Subsequent to the execution and delivery
of this Agreement and prior to the First Closing Date, or the Second Closing
Date, as the case may be, there shall not have been any Material Adverse Change
in the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
which, in your sole judgment, is material and adverse and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public offering
of the Shares as contemplated by the Prospectus.
(d) Opinion of Counsel for the Company. You shall have received on the
First Closing Date, or the Second Closing Date, as the case may be, an opinion
of Wilson, Sonsini, Goodrich & Rosati counsel for the Company substantially in
the form of Exhibit B attached hereto, dated the First Closing Date, or the
Second Closing Date, addressed to the Underwriters and with reproduced copies or
signed counterparts thereof for each of the Underwriters.
Counsel rendering the opinion contained in Exhibit B may rely as to
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questions of law not involving the laws of the United States or the State of
California and Delaware upon opinions of local counsel, and as to questions of
fact upon representations or certificates of officers of the Company, and of
government officials, in which case their opinion is to state that they are so
relying and that they have no knowledge of any material misstatement or
inaccuracy in any such opinion, representation or certificate. Copies of any
opinion, representation or certificate so relied upon shall be delivered to you,
as Representatives of the Underwriters, and to Underwriters' Counsel.
(e) Opinion of Intellectual property Counsel for the Company. You shall
have received on the First Closing Date, or the Second Closing Date, as the case
may be, an opinion of [NAME OF PATENT COUNSEL], intellectual property counsel
for the Company substantially in the form of Exhibit C attached hereto.
---------
(f) Opinion of Counsel for the Underwriters. You shall have received on
the First Closing Date or the Second Closing Date, as the case may be, an
opinion Brobeck, Phleger & Harrison LLP, substantially in the form of Exhibit D
---------
hereto. The Company shall have furnished to such counsel such documents as they
may have requested for the purpose of enabling them to pass upon such matters.
(g) Accountants' Comfort Letter. You shall have received on the First
Closing Date and on the Second Closing Date, as the case may be, a letter from
PricewaterhouseCoopers LLP addressed to the Underwriters, dated the First
Closing Date or the Second Closing Date, as the case may be, confirming that
they are independent certified public accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and Regulations
and based upon the procedures described in such letter delivered to you
concurrently with the execution of this Agreement (herein called the "Original
Letter"), but carried out to a date not more than four (4) business days prior
to the First Closing Date or the Second Closing Date, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the First Closing Date or the Second
Closing Date, as the case may be, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of such letter, or to reflect the availability of
more recent financial statements, data or information. The letter shall not
disclose any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise from that set forth in the Registration Statement
or Prospectus, which, in your sole judgment, is material and adverse and that
makes it, in your sole judgment, impracticable or inadvisable to proceed with
the public offering of the Shares as contemplated by the Prospectus. The
Original Letter from PricewaterhouseCoopers LLP shall be addressed to or for the
use
12.
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of the Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that they are independent certified
public accountants with respect to the Company within the meaning of the Act and
the applicable published Rules and Regulations, (ii) set forth their opinion
with respect to their examination of the consolidated balance sheet of the
Company as of [December 31], ____ and related consolidated statements of
operations, shareholders' equity, and cash flows for the twelve (12) months
ended [December 31], ____, [(iii) state that PricewaterhouseCoopers LLP has
performed the procedures set out in Statement on Auditing Standards No. 71 ("SAS
71") for a review of interim financial information and providing the report of
PricewaterhouseCoopers LLP as described in SAS 71 on the financial statements
for each of the quarters in the ____-quarter period ended ________________, ___
(the "Quarterly Financial Statements"), (iv) state that in the course of such
review, nothing came to their attention that leads them to believe that any
material modifications need to be made to any of the Quarterly Financial
Statements in order for them to be in compliance with generally accepted
accounting principles consistently applied across the periods presented,] and
address other matters agreed upon by PricewaterhouseCoopers LLP and you. In
addition, you shall have received from PricewaterhouseCoopers LLP a letter
addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements as
of [December 31], ____, did not disclose any weaknesses in internal controls
that they considered to be material weaknesses.
(h) Officers' Certificate. You shall have received on the First Closing
Date and the Second Closing Date, as the case may be, a certificate of the
Company, dated the First Closing Date or the Second Closing Date, as the case
may be, signed by the Chief Executive Officer and Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this Agreement
are true and correct, as if made on and as of the First Closing Date or the
Second Closing Date, as the case may be, and the Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the First Closing Date or the Second
Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained all material information required to be included therein by the
Securities Act and in all material respects conformed to the requirements
of the Securities Act, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, did not and does not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, there has not been (a) any
material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise, (b) any transaction that is
material to the Company and its subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of business, (c)
any obligation, direct or contingent, that is material to the Company and
its subsidiaries considered as one enterprise, incurred by the Company or
its subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding indebtedness
of the Company or any of its subsidiaries that is material to the Company
and its subsidiaries considered as one enterprise, (e) any dividend or
13.
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distribution of any kind declared, paid or made on the capital stock of the
Company or any of its subsidiaries, or (f) any loss or damage (whether or
not insured) to the property of the Company or any of its subsidiaries
which has been sustained or will have been sustained which has a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise.
(i) Lock-up Agreement from Certain Stockholders of the Company. The
Company shall have obtained and delivered to you an agreement substantially in
the form of Exhibit A attached hereto from each officer and director of the
---------
Company and each beneficial owner of one or more percent of the outstanding
issued share capital of the Company.
(j) Stock Exchange Listing. The Shares shall have been approved for
listing on the Nasdaq National Market, subject only to official notice of
issuance.
(k) Compliance with Prospectus Delivery Requirements. The Company shall
have complied with the provisions of Sections 2(g) and 3(e) hereof with respect
to the furnishing of Prospectuses.
(l) Additional Documents. On or before each of the First Closing Date and
the Second Closing Date, as the case may be, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Shares, at any time prior to the
Second Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 5 (Payment of Expenses),
Section 6 (Reimbursement of Underwriters' Expenses), Section 7 (Indemnification
and Contribution) and Section 10 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
Section 5. Payment of Expenses. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Shares to the Underwriters, (iv) all fees and expenses of the
Company's counsel, independent public or certified public accountants and other
advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all costs and
expenses incurred by Underwriters counsel in connection with the Directed Share
Program, (vii) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada or any other country, and, if requested
by the Representatives, preparing and printing a "Blue Sky Survey", an
"International Blue Sky Survey" or other memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (viii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the National
Association of Securities Dealers, LLC review and approval of the Underwriters'
participation in the offering and distribution of the Common Shares, (ix) the
fees and expenses associated with listing the Common Shares on the Nasdaq
National Market, (x) all costs and expenses incident to the travel and
accommodation of the Company's employees on the "roadshow", and (xi) all other
fees, costs and expenses referred to in Item 13 of Part II of the Registration
Statement. Except as provided in this
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Section 5, Section 6, and Section 7 hereof, the Underwriters shall pay their own
expenses, including the fees and disbursements of their counsel.
Section 6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 4, Section 8, Section 9,
or if the sale to the Underwriters of the Shares on the First Closing Date is
not consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse the Representatives and the other Underwriters
(or such Underwriters as have terminated this Agreement with respect to
themselves), severally, upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by the Representatives and the Underwriters in
connection with the proposed purchase and the offering and sale of the Shares,
including but not limited to fees and disbursements of counsel, printing
expenses, travel and accommodation expenses, postage, facsimile and telephone
charges.
Section 7. Indemnification and Contribution.
(a) Indemnification of the Underwriters.
(1) The Company agrees to 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 and the Exchange Act
against any loss, claim, damage, liability or expense, as incurred, to which
such Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its respective obligations hereunder or under law; or (v) any untrue
statement or alleged untrue statement of any material fact contained in any
audio or visual materials provided by the Company or based upon written
information furnished by or on behalf of the Company including, without
limitation, slides, videos, films or tape recordings, used in connection with
the marketing of the Shares, including without limitation, statements
communicated to securities analysts employed by the Underwriters; or (vi) 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 Shares 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 any matter
covered by clause (i), (ii), (iii), (iv) or (v) above, provided that the Company
shall not be liable under this clause (vi) to the extent that a court of
competent jurisdiction shall have determined by a final judgment 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 bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by Robertson Stephens) as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and
15.
<PAGE>
provided, further, that with respect to any preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or expense.
The indemnity agreement set forth in this Section 7(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The indemnity
agreement set forth in this Section 7(b) shall be in addition to any liabilities
that each Underwriter may otherwise have.
(c) Information Provided by the Underwriters. The Company and each person,
if any, who controls the Company within the meaning of the Securities Act or the
Exchange Act, hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth in the table in the first
paragraph, the second paragraph and the [____] paragraph under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct.
(d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 7 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party
16.
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and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of such
indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party (Robertson Stephens in the case of Section
7(b) and Section 8), representing the indemnified parties who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 7(d) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 60 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes (i) an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(f) Contribution. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by such party on the one hand and the Underwriters on
the other from the offering of the Shares. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the such party on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company the "control" Stockholders on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
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The Company and Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(f) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7(f). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 7(f) shall be deemed to include 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
subsection (f), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 7(f)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) Timing of Any Payments of Indemnification. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days of invoice to the indemnifying party.
(h) Survival. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 7.
(i) Acknowledgements of Parties. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Securities Act and the Exchange Act.
(j) Indemnification for Directed Share Program. The Company agrees to
indemnify and hold harmless Robertson Stephens and its affiliates and each
person, if any, who controls Robertson Stephens or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act ("Robertson Stephens Entities"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
consent of the Company for distribution to participants in connection with the
Directed Share Program, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) the failure of any participant to pay
for and accept delivery of Directed Shares that the participant has agreed to
purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of Robertson Stephens Entities.
Section 8. Default of One or More of the Several Underwriters. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Shares that
it or they have agreed to purchase hereunder on such date, and the
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aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
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bears to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Shares and the
aggregate number of Shares with respect to which such default occurs exceeds 10%
of the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the
provisions of Section 5, and Section 7 shall at all times be effective and shall
survive such termination. In any such case either the Representatives or the
Company shall have the right to postpone the First Closing Date or the Second
Closing Date, as the case may be, but in no event for longer than seven days in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this
Section 8. Any action taken under this Section 8 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
Section 9. Termination of this Agreement. This Agreement may be terminated
by the Representatives by notice given to the Company if (a) at any time after
the execution and delivery of this Agreement and prior to the First Closing Date
(i) trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the Nasdaq Stock Market, or trading
in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the National Association of Securities Dealers, LLC; (ii) a
general banking moratorium shall have been declared by any of federal, New York
or California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective change in United
States' or international political, financial or economic conditions, as in the
judgment of the Representatives is material and adverse and makes it
impracticable or inadvisable to market the Common Shares in the manner and on
the terms contemplated in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured or (b) in the case of any of
the events specified 9(a)(i)-(v), such event singly or together with any other
event, makes it, in your judgement, impracticable or inadvisable to market the
Common Shares in the manner and on the terms contemplated in the Prospectus. Any
termination pursuant to this Section 9 shall be without liability on the part of
(x) the Company to any Underwriter, except that the Company shall be obligated
to reimburse the expenses of the Representatives and the Underwriters pursuant
to Sections 5 and 6 hereof, (y) any Underwriter to the Company or any person
controlling the Company, or (z) of any party hereto to any other party except
that the provisions of Section 7 shall at all times be effective and shall
survive such termination.
Section 10. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the company, of its
officers, and of the several Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of its or their
partners, officers or directors or any
19.
<PAGE>
controlling person, as the case may be, and will survive delivery of and payment
for the Shares sold hereunder and any termination of this Agreement.
Section 11. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
FLEETBOSTON ROBERTSON STEPHENS INC.
555 California Street
San Francisco, California 94104
Facsimile: (415) 676-2675
Attention: General Counsel
If to the Company:
[Company]
[address]
Facsimile: [___]
Attention: [___]
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 8 hereof, and to the benefit of the employees, officers and directors
and controlling persons referred to in Section 7, and to their respective
successors, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
Section 13. Partial Unenforceability. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
Section 14. Governing Law Provisions.
(a) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any
20.
<PAGE>
such court has been brought in an inconvenient forum. Each party not located in
the United States irrevocably appoints CT Corporation System, which currently
maintains a San Francisco office at 49 Stevenson Street, San Francisco,
California 94105, United States of America, as its agent to receive service of
process or other legal summons for purposes of any such suit, action or
proceeding that may be instituted in any state or federal court in the City and
County of San Francisco.
(c) Waiver of Immunity. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
Section 15. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
Section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
[The remainder of this page has been intentionally left blank.]
21.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
OMNIVISION TECHNOLOGIES, INC.
By: ______________________________
[Title]
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives as of the date first above written.
FLEETBOSTON ROBERTSON STEPHENS INC.
FLEETBOSTON ROBERTSON STEPHENS INTERNATIONAL LIMITED
PRUDENTIAL VOLPE TECHNOLOGY
NEEDHAM & COMPANY, INC.
On their behalf and on behalf of each of the several underwriters named in
Schedule A hereto.
- ----------
By FLEETBOSTON ROBERTSON STEPHENS INC.
By: __________________________________
Mitch Whiteford
22.
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Firm Common
Underwriters Shares To be Purchased
- --------------------------------------------------------------------------------------------------------------
<S> <C>
FLEETBOSTON ROBERTSON STEPHENS INC. AND FLEETBOSTON ROBERTSON STEPHENS
INTERNATIONAL LIMITED............................................................. [___]
PRUDENTIAL VOLPE TECHNOLOGY........................................................ [___]
NEEDHAM & COMPANY, INC............................................................. [___]
[___].............................................................................. [___]
[___].............................................................................. [___]
Total......................................................................... [___]
</TABLE>
S-A
<PAGE>
Exhibit A
Lock-Up Agreement
FleetBoston Robertson Stephens Inc.
Prudential Volpe Technology
Needham & Company, Inc.
As Representatives of the Several Underwriters
c/o FleetBoston Robertson Stephens Inc.
555 California Street, Suite 2600
San Francisco, California 94104
RE: OMNIVISION TECHNOLOGIES, INC. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain
shares of Common Stock of the Company ("Common Stock") or securities convertible
into or exchangeable or exercisable for Common Stock. The Company proposes to
carry out a public offering of Common Stock (the "Offering") for which you will
act as the Representatives (the "Representatives") of the underwriters. The
undersigned recognizes that the Offering will be of benefit to the undersigned
and will benefit the Company by, among other things, raising additional capital
for its operations. The undersigned acknowledges that you and the other
underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) as a distribution to partners or shareholders of such
person, provided that the distributees thereof agree in writing to be bound by
the terms of this restriction, (iii) with respect to sales or purchases of
Common Stock acquired on the open market or (iv) with the prior written consent
of FleetBoston Robertson Stephens Inc. The foregoing restrictions will terminate
after the close of trading of the Common Stock on the 180th day of (and
including) the day the Common Stock commenced trading on the Nasdaq National
Market (the "Lock-Up" Period). The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that included, relates to or derives any significant
part of its value from Securities. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of shares of Common Stock or Securities held by
the undersigned except in compliance with the foregoing restrictions.
A-1
<PAGE>
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned. In the event the Offering has not occurred on or before
____________, this Lock-Up Agreement shall be of no further force or effect.
Dated _______________________________
_____________________________________
Printed Name of Holder
By:__________________________________
Signature
_____________________________________
Printed Name of Person Signing
(and indicate capacity of person
signing if signing as custodian,
trustee, or on behalf of an
entity)
A-2
<PAGE>
Exhibit B
Matters to be Covered in the Opinion of Company Counsel
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation;
(ii) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus;
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction, if any, in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified or
be in good standing would not have a Material Adverse Effect. To such
counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity;
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of
the dates stated therein, the issued and outstanding shares of capital
stock of the Company outstanding prior to the issuance of the Shares have
been duly and validly issued and are fully paid and nonassessable, and, to
such counsel's knowledge, will not have been issued in violation of or
subject to any preemptive right arising under the certificate of
incorporation or General Corporation Law, co-sale right, right of first
refusal or other similar right, other than any registration rights
described in Opinion (xix) hereof;
(v) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been
duly authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully
paid and nonassessable, and will not have been issued in violation of or
subject to any preemptive right, co-sale right, right of first refusal or
other similar right, other than any registration rights described in
Opinion (xix) hereof.
(vi) The Company has the corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Shares to
be issued and sold by it hereunder;
(vii) This Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered
by the Company and, assuming due authorization, execution and delivery by
you, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder
may be limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (whether relief is sought in a proceeding at law or in
equity;
(viii) The Registration Statement has become effective under the Act and,
to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Securities Act;
(ix) The 8-A Registration Statement complied as to form in all material
respects with the requirements of the Exchange Act; the 8-A Registration
Statement has become effective under the Exchange Act; and the Firm Shares
or the Option Shares have been validly registered under the Securities Act
and the Rules and Regulations of the Exchange Act and the applicable rules
and regulations of the Commission thereunder;
A-1
<PAGE>
(x) The Registration Statement and the Prospectus, and each amendment
or supplement thereto (other than the financial statements (including
supporting schedules) and financial data derived therefrom as to which such
counsel need express no opinion), as of the effective date of the
Registration Statement, complied as to form in all material respects with
the requirements of the Act and the applicable Rules and Regulations;
(xi) The information in the Prospectus under the caption "Description of
Capital Stock," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is a fair summary of
such matters and conclusions; and the forms of certificates evidencing the
Common Stock and filed as exhibits to the Registration Statement comply
with Delaware law;
(xii) The description in the Registration Statement and the Prospectus of
the charter and bylaws of the Company and of statutes are accurate and
fairly present the information required to be presented by the Securities
Act;
(xiii) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required
to be described or referred to in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement which are not
described or referred to therein or filed as required;
(xiv) The performance of this Agreement and the consummation of the
transactions herein contemplated (other than performance of the Company's
indemnification obligations hereunder, concerning which no opinion need be
expressed) will not (a) result in any violation of the Company's charter or
bylaws or (b) to such counsel's knowledge, result in a material breach or
violation of any of the terms and provisions of, or constitute a default
under, any bond, debenture, note or other evidence of indebtedness, or any
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument known to such counsel to which the
Company is a party or by which its properties are bound, or any applicable
statute, rule or regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries, or over any of their properties or operations;
(xv) No consent, approval, authorization or order of or qualification
with any court, government or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries, or over any of
their properties or operations is necessary in connection with the
consummation by the Company of the transactions herein contemplated, except
(i) such as have been obtained under the Securities Act, (ii) such as may
be required under state or other securities or Blue Sky laws in connection
with the purchase and the distribution of the Shares by the Underwriters,
(iii) such as may be required by the National Association of Securities
Dealers, LLC and (iv) such as may be required under the federal or
provincial laws of Canada;
(xvi) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or any of its
subsidiaries of a character required to be disclosed in the Registration
Statement or the Prospectus by the Securities Act, other than those
described therein;
(xvii) To such counsel's knowledge, neither the Company nor any of its
subsidiaries is presently (a) in material violation of its respective
charter or bylaws, or (b) in material breach of any applicable statute,
rule or regulation known to such counsel or, to such counsel's knowledge,
any order, writ or decree of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations; and
(xviii) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Company Shares or
other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights known to such
A-2
<PAGE>
counsel to registration of such shares of Company Shares or other
securities, because of the filing of the Registration Statement by the
Company have, with respect to the offering contemplated thereby, waived
such rights or such rights have expired by reason of lapse of time
following notification of the Company's intent to file the Registration
Statement or have included securities in the Registration Statement
pursuant to the exercise of and in full satisfaction of such rights.
(xix) The Company is not and, after giving effect to the offering and the
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(xx) To such counsel's knowledge, the Company owns or possesses sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals,
trade secrets and other similar rights (collectively, "Intellectual
Property Rights") reasonably necessary to conduct their business as now
conducted; and the expected expiration of any such Intellectual Property
Rights would not result in a Material Adverse Effect. The Company has not
received any notice of infringement or conflict with asserted Intellectual
Property Rights of others, which infringement or conflict, if the subject
of an unfavorable decision, would result in a Material Adverse Effect. To
such counsel's knowledge, the Company's discoveries, inventions, products,
or processes referred to in the Registration Statement or Prospectus do not
infringe or conflict with any right or patent which is the subject of a
patent application known to the Company.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the First Closing Date or Second Closing Date,
as the case may be, the Registration Statement and any amendment or supplement
thereto (other than the financial statements including supporting schedules and
other financial and statistical information derived therefrom, as to which such
counsel need express no comment) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or at the First Closing
Date or the Second Closing Date, as the case may be, the Registration Statement,
the Prospectus and any amendment or supplement thereto (except as aforesaid)
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
A-3
<PAGE>
Exhibit C
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 -- Dependence
on Patents and Proprietary Rights" and "Business -- Patents and Proprietary
Rights," 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 patents, patent rights or licenses, trademarks or trademark
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 the patents listed on a
schedule to such opinion (the "Patents") and 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 Patents or 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
Patents and pending Applications;
(iv) The Company is listed in the records of the appropriate foreign
offices as the sole holder of record of the foreign patents listed on a
schedule to such opinion (the "Foreign Patents") and 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 Patents or 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 Applications are
being pursued by the Company. To the knowledge of such counsel, the Company
owns as its sole property the Foreign Patents and pending Foreign
Applications; and
(v) Such counsel knows of no reason why the Patents or Foreign Patents
are not valid as issued. 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;
A-1
<PAGE>
Exhibit D
Matters to be Covered in the Opinion of Underwriters' Counsel
(i) The Firm Shares and Option Shares have been duly authorized and, upon
issuance and delivery and payment therefor in accordance with the terms of
the Underwriting Agreement, will be validly issued, fully paid and non-
assessable.
(ii) The Registration Statement complied as to form in all material
respects with the requirements of the Act; the Registration Statement has
become effective under the Act and, to such counsel's knowledge, no stop
order proceedings with respect thereto have been instituted or threatened
or are pending under the Securities Act.
(iii) The 8-A Registration Statement complied as to form in all material
respects with the requirements of the Exchange Act; the 8-A Registration
Statement has become effective under the Exchange Act; and the Shares have been
validly registered under the Securities Act and the Rules and Regulations of the
Exchange Act and the applicable rules and regulations of the Commission
thereunder;
(iv) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
Such counsel shall state that such counsel has reviewed the opinions
addressed to the Representatives from [list each set of counsel that has
provided an opinion], each dated the date hereof, and furnished to you in
accordance with the provisions of the Underwriting Agreement. Such opinions
appear on their face to be appropriately responsive to the requirements of the
Underwriting Agreement.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the First Closing Date or Second Closing Date,
as the case may be, the Registration Statement and any amendment or supplement
thereto (other than the financial statements including supporting schedules and
other financial and statistical information derived therefrom, as to which such
counsel need express no comment) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or at the First Closing
Date or the Second Closing Date, as the case may be, the Registration Statement,
the Prospectus and any amendment or supplement thereto (except as aforesaid)
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
A-1
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
OF OMNIVISION TECHNOLOGIES, INC.
A DELAWARE CORPORATION
AND
OMNIVISION TECHNOLOGIES, INC.
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of March __, 2000, (the "Agreement")
is between OmniVision Technologies, Inc., a Delaware corporation ("OmniVision-
Delaware") and OmniVision Technologies, Inc., a California corporation
("OmniVision-California"). OmniVision-Delaware and OmniVision-California are
sometimes referred to herein as the "Constituent Corporations."
R E C I T A L S
---------------
A. OmniVision-Delaware is a corporation duly organized and existing under
the laws of the State of Delaware and has an authorized capital of 112,783,336
shares, 100,000,000 of which are designated "Common Stock", $0.001 par value,
and 12,783,336 of which are designated "Preferred Stock", $0.001 par value. Of
such authorized shares of Preferred Stock, 4,450,003 shares are designated
"Series A Preferred Stock," 4,000,000 shares are designated "Series B Preferred
Stock" and 4,333,333 shares are designated "Series C Preferred Stock." As of the
date of this Agreement of Merger, 1,000 shares of Common Stock are issued and
outstanding, all of which were held by OmniVision-California. No shares of
Preferred Stock are outstanding.
B. OmniVision-California is a corporation duly organized and existing
under the laws of the State of California and has an authorized capital of
32,783,336 shares, 20,000,000 of which are designated "Common Stock", no par
value and 12,783,336 of which are designated "Preferred Stock", no par value. Of
such authorized shares of Preferred Stock, 4,450,003shares are designated
"Series A Preferred Stock," and 4,000,000 shares are designated "Series B
Preferred Stock" and 4,333,333 shares are designated "Series C Preferred Stock."
As of the record date of the solicitation of the consent of shareholders at
which this Agreement of Merger was approved, 3,936,550 shares of Common Stock,
4,300,001 shares of Series A Preferred Stock, 3,671,668 shares of Series B
Preferred Stock and 4,333,332 shares of Series C Preferred Stock were issued and
outstanding.
C. The Board of Directors of OmniVision-California has determined that,
for the purpose of effecting the reincorporation of OmniVision-California in the
State of Delaware, it is advisable and in the best interests of OmniVision-
California that OmniVision-California merge with and into OmniVision-Delaware
upon the terms and conditions herein provided.
D. The respective Boards of Directors of OmniVision-Delaware and
OmniVision-California have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective stockholders and executed
by the undersigned officers.
1
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, OmniVision-Delaware and OmniVision-California hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
1. MERGER
(a) Merger. In accordance with the provisions of this Agreement, the
------
Delaware General Corporation Law and the California General Corporation Law,
OmniVision-California shall be merged with and into OmniVision-Delaware (the
"Merger"), the separate existence of OmniVision-California shall cease and
OmniVision-Delaware shall be, and is herein sometimes referred as, the
"Surviving Corporation", and the name of the Surviving Corporation shall be
OmniVision Networks Corporation.
(b) Filing and Effectiveness. The Merger shall be completed when
------------------------
the following actions shall have been completed:
(i) This Agreement and Merger was adopted and approved by the
stockholders of each Constituent Corporation in accordance with the requirements
of the Delaware General Corporation Law and the California General Corporation
Law on March__, 2000 and March__, 2000, respectively;
(ii) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied or duly waived by
the party entitled to satisfaction thereof;
(iii) An executed Agreement and Plan of Merger meeting the
requirements of the Delaware General Corporation Law shall have been filed with
the Secretary of State of the State of Delaware; and
(iv) An executed Certificate of Merger or an executed, acknowledged
and certified counterpart of this Agreement meeting the requirements of the
California Corporations Code shall have been filed with the Secretary of State
of the State of California.
Pursuant to Section 251 of the Delaware General Corporation Law and
Section 1168 of the California Corporations Code, the date and time when the
Merger shall become effective, shall be the date upon which subsections (a), (b)
and (c) of this Section 1.2 are satisfied and as to OmniVision-California on the
day subsection (d) is satisfied, is herein called the "Effective Date of the
Merger."
(c) Effect of the Merger. Upon the Effective Date of the Merger, the
--------------------
separate existence of OmniVision-California shall cease and OmniVision-Delaware,
as the Surviving Corporation, (i) shall continue to possess all of its assets,
rights, powers and property as constituted immediately prior to the Effective
Date of the Merger, (ii) shall be subject to all actions previously taken by its
and OmniVision-California's Board of Directors, (iii) shall succeed, without
other transfer, to all of the assets, rights, powers and property of OmniVision-
California in the manner more fully set forth in Section 259 of the Delaware
General Corporation Law, (iv) shall continue to be subject to all of the debts,
liabilities and obligations of OmniVision-Delaware as constituted
2
<PAGE>
immediately prior to the Effective Date of the Merger, and (v) shall succeed,
without other transfer, to all of the debts, liabilities and obligations of
OmniVision-California in the same manner as if OmniVision-Delaware had itself
incurred them, all as more fully provided under the applicable provisions of the
Delaware General Corporation Law and the California Corporations Code.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
(a) Certificate of Incorporation. The Certificate of Incorporation of
----------------------------
OmniVision-Delaware as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
(b) Bylaws. The Bylaws of OmniVision-Delaware as in effect immediately
------
prior to the Effective Date of the Merger shall continue in full force and
effect as the Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
(c) Directors and Officers. The directors and officers of OmniVision-
----------------------
California immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their successors shall
have been duly elected and qualified or until as otherwise provided by law, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
3. MANNER OF CONVERSION OF STOCK
(a) OmniVision-California Common Shares. Upon the Effective Date of
-----------------------------------
the Merger, each share of OmniVision-California Common Stock, no par value,
issued and outstanding immediately prior thereto shall by virtue of the Merger
and without any action by the Constituent Corporations, the holder of such
shares or any other person, be converted into and exchanged for one (1) fully
paid and nonassessable share of Common Stock, $.001 par value, of the Surviving
Corporation. No fractional share interests of Surviving Corporation Common Stock
shall be issued. In lieu thereof, any fractional share interests to which a
holder would otherwise be entitled shall be aggregated.
(b) OmniVision-California Preferred Shares.
--------------------------------------
(i) Upon the Effective Date of the Merger, each share of
Series A Preferred, Series B Preferred, and Series C Preferred Stock of
OmniVision-California, no par value, issued and outstanding immediately prior to
the Merger, which shares are convertible into such number of shares of
OmniVision-California Common Stock as set forth in the OmniVision-California
Restated Articles of Incorporation, as amended, shall by virtue of the Merger
and without any action by the Constituent Corporations, the holder of such
shares or any other person, be converted into or exchanged for one (1) fully
paid and nonassessable share of Series A Preferred, Series B Preferred and
Series C Preferred Stock of the Surviving Corporation, $0.001 par value,
respectively, having such rights, preferences and privileges as set forth in the
Certificate of Incorporation of the Surviving Corporation, which share of
Preferred Stock shall be convertible into the same number of shares of the
Surviving Corporation's Common Stock, $0.001 par value, as such share of
OmniVision-
3
<PAGE>
California Preferred Stock was so convertible into immediately prior to the
Effective Date of the Merger, subject to adjustment pursuant to the terms of the
Certificate of Incorporation of the Surviving Corporation.
(c) OmniVision-California Options, Warrants, Stock Purchase Rights and
------------------------------------------------------------------
Convertible Securities.
----------------------
(i) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume the obligations of OmniVision-California under, and
continue, the 1995 Stock Option Plan ("Stock Option Plan"),and all other
employee benefit plans of OmniVision-California. Each outstanding and
unexercised option, warrant, other right to purchase, or security convertible
into, OmniVision-California Common Stock or OmniVision-California Preferred
Stock (a "Right") shall become, subject to the provisions in paragraph (c)
hereof, an option, warrant, right to purchase or a security convertible into the
Surviving Corporation's Common Stock or Preferred Stock, respectively, on the
basis of one (1) share of the Surviving Corporation's Common Stock or Preferred
Stock, as the case may be, for each one share of OmniVision-California Common
Stock or Preferred Stock, as the case may be, issuable pursuant to any such
Right, on the same terms and conditions and at an exercise price equal to the
exercise price applicable to any such OmniVision-California Right at the
Effective Date of the Merger. This paragraph 3.3(a) shall not apply to
OmniVision-California Common Stock or Preferred Stock. Such Common Stock and
Preferred Stock are subject to paragraph 3.1 and 3.2, respectively, hereof.
(ii) A number of shares of the Surviving Corporation's Common
Stock and Preferred Stock shall be reserved for issuance upon the exercise of
options, warrants, stock purchase rights and convertible securities equal to the
number of shares of OmniVision-California Common Stock and OmniVision-California
Preferred Stock so reserved immediately prior to the Effective Date of the
Merger.
(iii) The assumed Rights shall not entitle any holder thereof to
a fractional share upon exercise or conversion (unless the holder was entitled
to a fractional interest immediately prior to the Merger). In lieu thereof, any
fractional share interests to which a holder of an assumed Right (other than an
option issued pursuant to OmniVision-California's 1995 Stock Option Plan) would
otherwise be entitled upon exercise or conversion shall be aggregated (but only
with other similar Rights which have the same per share terms). To the extent
that after such aggregation, the holder would still be entitled to a fractional
share with respect thereto upon exercise or conversion, the holder shall be
entitled upon the exercise or conversion of all such assumed Rights pursuant to
their terms (as modified herein), to one full share of Common Stock or Preferred
Stock in lieu of such fractional share. With respect to each class of such
similar Rights, no holder will be entitled to more than one full share in lieu
of a fractional share upon exercise or conversion.
Notwithstanding the foregoing, with respect to options issued under
the OmniVision-California 1995 Stock Option Plan that are assumed in the Merger,
the number of shares of Common Stock to which the holder would be otherwise
entitled upon exercise of each such assumed option following the Merger shall be
rounded down to the nearest whole number and the exercise price shall be rounded
up to the nearest whole cent. In addition, no "additional benefits" (within the
meaning of
4
<PAGE>
Section 424(a)(2) of the Internal Revenue Code of 1986, as amended) shall be
accorded to the optionees pursuant to the assumption of their options.
(d) OmniVision-Delaware Common Stock. Upon the Effective Date of the
--------------------------------
Merger, each share of Common Stock, $.001 par value, of OmniVision-Delaware
issued and outstanding immediately prior thereto shall, by virtue of the Merger
and without any action by OmniVision-Delaware, the holder of such shares or any
other person, be canceled and returned to the status of authorized but unissued
shares.
(e) Exchange of Certificates. After the Effective Date of the Merger,
------------------------
each holder of an outstanding certificate representing shares of OmniVision-
California Common Stock or Preferred Stock may be asked to surrender the same
for cancellation to an exchange agent, whose name will be delivered to holders
prior to any requested exchange (the "Exchange Agent"), and each such holder
shall be entitled to receive in exchange therefor a certificate or certificates
representing the number of shares of the Surviving Corporation's Common Stock or
Preferred Stock, as the case may be, into which the surrendered shares were
converted as herein provided. Until so surrendered, each outstanding certificate
theretofore representing shares of OmniVision-California Common Stock or
Preferred Stock shall be deemed for all purposes to represent the number of
shares of the Surviving Corporation's Common Stock or Preferred Stock,
respectively, into which such shares of OmniVision-California Common Stock or
Preferred Stock, as the case may be, were converted in the Merger.
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the Surviving Corporation or the Exchange Agent, have
and be entitled to exercise any voting and other rights with respect to and to
receive dividends and other distributions upon the shares of Common Stock or
Preferred Stock of the Surviving Corporation represented by such outstanding
certificate as provided above.
Each certificate representing Common Stock or Preferred Stock of the
Surviving Corporation so issued in the Merger shall bear the same legends, if
any, with respect to the restrictions on transferability as the certificates of
OmniVision-California so converted and given in exchange therefore, unless
otherwise determined by the Board of Directors of the Surviving Corporation in
compliance with applicable laws.
If any certificate for shares of the Surviving Corporation's stock is
to be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of issuance of
such new certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not payable.
4. GENERAL
5
<PAGE>
(a) Covenants of OmniVision-Delaware. OmniVision-Delaware covenants
--------------------------------
and agrees that it will, on or before the Effective Date of the Merger:
(i) Qualify to do business as a foreign corporation in the State
of California and in connection therewith irrevocably appoint an agent for
service of process as required under the provisions of Section 2105 of the
California General Corporation Law.
(ii) File any and all documents with the California Franchise
Tax Board necessary for the assumption by OmniVision-Delaware of all of the
franchise tax liabilities of OmniVision-California.
(iii) Take such other actions as may be required by the
California General Corporation Law.
(b) Further Assurances. From time to time, as and when required by
------------------
OmniVision-Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of OmniVision-California such deeds and other instruments,
and there shall be taken or caused to be taken by it such further and other
actions as shall be appropriate or necessary in order to vest or perfect in or
conform of record or otherwise by OmniVision-Delaware the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of OmniVision-California and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of OmniVision-Delaware are fully authorized in the name and on behalf
of OmniVision-California or otherwise to take any and all such action and to
execute and deliver any and all such deeds and other instruments.
(c) Abandonment. At any time before the Effective Date of the Merger, this
-----------
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either OmniVision-California or of
OmniVision-Delaware, or of both, notwithstanding the approval of this Agreement
by the shareholders of OmniVision-California or by the sole stockholder of
OmniVision-Delaware, or by both.
(d) Amendment. The Boards of Directors of the Constituent Corporations may
---------
amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretary of State of the State of
Delaware, provided that an amendment made subsequent to the adoption of this
Agreement by the stockholders of either Constituent Corporation shall not: (1)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (2) alter
or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (3) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of any
Constituent Corporation.
(e) Registered Office. The registered office of the Surviving Corporation
-----------------
in the State of Delaware is 1209 Orange Street, Wilmington, County of New
Castle, DE 19801 and The Corporation Trust Company is the registered agent of
the Surviving Corporation at such address.
6
<PAGE>
(f) Agreement. Executed copies of this Agreement will be on file at the
---------
principal place of business of the Surviving Corporation at 930 Thompson Place,
Sunnyvale, California 94086, and copies thereof will be furnished to any
stockholder of either Constituent Corporation, upon request and without cost.
(g) Governing Law. This Agreement shall in all respects be construed,
-------------
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
(h) FIRPTA Notification.
-------------------
(i) On the Effective Date of the Merger, OmniVision-California
shall deliver to OmniVision-Delaware, as agent for the shareholders of
OmniVision-California, a properly executed statement (the "Statement")
substantially in the form attached hereto as Exhibit A. OmniVision-Delaware
shall retain the Statement for a period of not less than seven years and shall,
upon request, provide a copy thereof to any person that was a shareholder of
OmniVision-California immediately prior to the Merger. In consequence of the
approval of the Merger by the shareholders of OmniVision-California, (i) such
shareholders shall be considered to have requested that the Statement be
delivered to OmniVision-Delaware as their agent and (ii) OmniVision-Delaware
shall be considered to have received a copy of the Statement at the request of
the OmniVision-California shareholders for purposes of satisfying OmniVision-
Delaware's obligations under Treasury Regulation Section 1.1445-2(c)(3).
(ii) OmniVision-California shall deliver to the Internal Revenue
Service a notice regarding the Statement in accordance with the requirements of
Treasury Regulation Section 1.897-2(h)(2).
7
<PAGE>
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of OmniVision-Delaware and OmniVision-
California is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
OMNIVISION TECHNOLOGIES, INC.
a California corporation
By: /s/ Shaw Hong
--------------------------
Shaw Hong, President
and Chief Executive Officer
ATTEST:
/s/ Raymond Wu
- --------------------------------
Raymond Wu
Secretary
OMNIVISION TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Shaw Hong
--------------------------
Shaw Hong, President
and Chief Executive Officer
ATTEST:
/s/ Raymond Wu
- ----------------------
Raymond Wu
Secretary
8
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
(a California corporation)
OFFICERS' CERTIFICATE
Shaw Hong and H. Gene McCown certify that:
1. They are the President and the Chief Financial Officer, respectively,
of OmniVision Technologies, Inc., a corporation organized under the laws of the
State of California.
2. The corporation has two authorized classes of stock, designated
"Common Stock" and "Preferred Stock." There are authorized 20,000,000 shares of
Common Stock and 12,783,336 shares of Preferred Stock. Of the authorized shares
of Preferred Stock, 4,450,003 shares are designated as "Series A Preferred
Stock", 4,000,000 shares are designated as "Series B Preferred Stock", and
4,333,333 shares are designated as "Series C Preferred Stock.."
3. There were 3,936,550 shares of Common Stock issued and outstanding,
4,300,001 shares of Series A Preferred Stock issued and outstanding and
3,671,668 shares of Series B Preferred Stock issued and outstanding and
4,333,332 shares of Series C Preferred Stock issued and outstanding as of the
record date of the shareholders' approval of the Agreement and Plan of Merger
attached hereto (the "Merger Agreement").
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class of stock which
equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the votes entitled
to be cast by holders of outstanding shares of the Common Stock and more than
50% of the votes entitled to be cast by holders of outstanding shares of the
Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock
voting as a single class.
6. The undersigned further declare under penalty of perjury under the
laws of the State of California that each has read the foregoing certificate and
knows the contents thereof and that the same is true of their own knowledge.
Executed in Sunnyvale, California on March 6, 2000.
/s/ Shaw Hong
-----------------------------
Shaw Hong, President and
Chief Executive Officer
/s/ H. Gene McCown
-----------------------------
H. Gene McCown, Vice President,
Finance and Chief Financial Officer
9
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
(a Delaware Corporation)
(Surviving Corporation)
OFFICERS' CERTIFICATE
Shaw Hong and H. Gene McCown certify that:
1. They are the President and Chief Financial Officer, respectively, of
OmniVision Technologies, Inc., a corporation organized under the laws of the
State of Delaware.
2. The corporation has two authorized classes of stock, designated
"Common Stock" and "Preferred Stock." There are authorized 100,000,000 shares
of Common Stock and 12,783,336 shares of Preferred Stock. Of the authorized
shares of Preferred Stock, 4,450,003 shares are designated as "Series A
Preferred Stock", 4,000,000 shares are designated as "Series B Preferred Stock",
and 4,333,333 shares are designated as Series C Preferred Stock."
3. There are 1,000 shares of Common Stock issued and outstanding and
entitled to vote on the Agreement and Plan of Merger attached hereto (the
"Merger Agreement"). There are no shares of Preferred Stock outstanding.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class of stock which
equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the votes entitled
to be cast by the sole stockholder of all outstanding shares of Common Stock.
6. The undersigned further declare under penalty of perjury under the
laws of the State of California that each has read the foregoing certificate and
knows the contents thereof and that the same is true of their own knowledge.
Executed in Sunnyvale, California on March 6, 2000.
/s/ Shaw Hong
-----------------------------
Shaw Hong, President and
Chief Executive Officer
/s/ H. Gene McCown
----------------------------
H. Gene McCown, Vice President,
Finance and Chief Financial
Officer
10
<PAGE>
EXHIBIT 3.1(A)
CERTIFICATE OF INCORPORATION
OF
OMNIVISION TECHNOLOGIES, INC.
FIRST. The name of the corporation is OmniVision Technologies, Inc.
SECOND. The address of the corporation's registered office in the State of
Delaware, is 1209 Orange Street, City of Wilmington, County of Newcastle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. This Corporation is authorized to issue two classes of shares to be
designated respectively Preferred Shares ("Preferred") and Common Shares
("Common"). The total number of Common this Corporation shall have authority to
issue is 100,000,000, $0.001 par value. The total number of shares of Preferred
this Corporation shall have authority to issue is 12,783,336, $0.001 par value.
The Preferred may be issued in series. 4,450,003 shares of Preferred are
designated as Series A Preferred ("Series A Preferred"), 4,000,000 shares of
Preferred are designated as Series B Preferred ("Series B Preferred") and
4,333,333 shares of Preferred are designated as Series C Preferred ("Series C
Preferred").
The relative rights, preferences, privileges and restrictions granted to or
imposed upon the respective classes of the shares of capital stock or the
holders thereof are as set forth below.
1. Dividends. The holders of the Series A Preferred, Series B Preferred
---------
and Series C Preferred shall be entitled to receive, when and as declared by the
Board of Directors, out of funds legally available therefor, dividends at the
rate of $0.06, $0.15 and $0.30 per share per annum, respectively, payable in
preference and priority to any payment of any dividend on Common Stock of the
Corporation. No dividends or other distributions shall be made with respect to
the Common Stock during any fiscal year unless the Board of Directors during
such fiscal year shall have declared a dividend on the Preferred at such annual
rate for each quarter of such fiscal year of the Corporation including the
quarter in which such dividends on Common Stock are declared. Such dividends
shall not be cumulative and no right to such dividends shall accrue to holders
of Preferred unless declared by the Board of Directors.
2. Liquidation Preference. In the event of any liquidation, dissolution,
----------------------
or winding up of the Corporation, either voluntary or involuntary, distributions
to the shareholders of the Corporation shall be made in the following manner:
(a) The holders of the Series A Preferred, Series B Preferred and
Series C Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock by reason of their ownership of such stock, the
amount of (i) $0.06 per share for each share of Series A Preferred then
<PAGE>
held by them, (ii) $0.15 per share for each share of Series B Preferred then
held by them, and (iii) $0.30 per share for each share of Series C Preferred
then held by them, adjusted for any combinations, consolidations, or stock
distributions or dividends with respect to such shares and, in addition, an
amount equal to all declared but unpaid dividends on the Preferred. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Preferred shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, the entire assets and
funds of this corporation legally available for distribution shall be
distributed ratably among the holders of the Preferred in proportion to the full
preferential amount each such holder is otherwise entitled to receive. After
payment has been made to the holders of the Series A Preferred, Series B
Preferred and Series C Preferred of the full amounts to which they shall be
entitled as aforesaid, the holders of the Common Stock shall be entitled to
share ratably among themselves in all the remaining assets.
(b) For purposes of this Section 2, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger of
any other corporation or corporations into the Corporation, in which
consolidation or merger the shareholders of the Corporation receive
distributions in cash or securities of another corporation or corporations as a
result of such consolidation or merger, or a sale of all or substantially all of
the assets of the Corporation, shall not be treated as a liquidation,
dissolution or winding up of the Corporation, unless the shareholders of this
Corporation hold less than fifty percent (50%) of the voting equity securities
of the successor or surviving corporation in which case such consideration,
merger or sale of assets shall be treated as a liquidation, dissolution or
winding up.
(c) The liquidation preference of holders of Preferred Stock provided
herein shall not be deemed to be impaired by distributions made by the
Corporation in connection with the repurchase of shares of Common Stock at the
lower of fair market value or the original issue price from former employees or
consultants upon termination of their employment or services pursuant to stock
restriction agreements between the Corporation and such persons approved by the
Corporation's Board of Directors, and such holders shall be deemed to have
consented to such repurchases.
3. Voting Rights.
-------------
(a) Vote Other Than for Directors. Except as otherwise required by
-----------------------------
law, each share of Common issued and outstanding shall have one vote and each
share of Series A, Series B and Series C Preferred issued and outstanding shall
have the number of votes equal to the number of Common shares into which the
Series A, Series B or Series C Preferred is convertible as adjusted from time of
time pursuant to Section 4 hereof.
(b) Voting for Directors. The Board of Directors shall consist of
--------------------
eight (8) members. For so long as 50% or more of the issued shares of Series B
Preferred have not been converted into Common, the holders of the shares of
Series B Preferred voting as a series shall be entitled to elect two (2)
directors. The holders of Common, Series A and Series C Preferred voting
together as a single class shall be entitled to elect six (6) directors. In the
event that 50% or more of the outstanding shares of Series B Preferred have been
converted into Common, then directors shall thereafter be elected by the holders
of the Series A Preferred, Series B Preferred and Series C
-2-
<PAGE>
Preferred and Common voting as provided in Section 3(a). A vacancy on the Board
of Directors occurring because of the death, resignation or removal of a
director elected by the holders of Series B Preferred voting as a separate
series shall be filled by the vote or written consent of the holders of a
majority of the Series B Preferred. Any vacancy occurring because of the death,
resignation or removal of a director elected by the holders of Common, Series A
and Series C Preferred voting together as a class shall be filled by the vote or
written consent of the holders of a majority of the Common, Series A and Series
C Preferred. A director may be removed from the Board of Directors with or
without cause by the vote or consent of the holders of the outstanding class or
series with voting power entitled to elect him in accordance with this Section
3(b) and the California Corporations Code.
(c) Cumulative Voting. The holders of Common and Series A, Series B
-----------------
and Series C Preferred shall be entitled to cumulative voting rights as to the
directors to be elected by each series or class, or the combined classes (as
provided in Section 3(b) above), in accordance with the provisions of Section
708 of the California Corporations Code.
4. Conversion. The holders of the Series A Preferred, Series B
----------
Preferred and Series C Preferred have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred, Series B
----------------
Preferred and Series C Preferred shall be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share, at the
office of the Corporation or any transfer agent for the Preferred, into such
number of fully paid and nonassessable shares of Common Stock as is determined
in the case of the Series A Preferred by dividing Sixty Cents ($0.60) by the
Series A Conversion Price, in the case of the Series B Preferred by dividing One
Dollar and Fifty Cents ($1.50) by the Series B Conversion Price, and in the case
of the Series C Preferred by dividing Three Dollars ($3.00) by the Series C
Conversion Price each such Conversion Price to be determined as hereinafter
provided, in effect at the time of the conversion. The price at which shares of
Common Stock shall be deliverable upon conversion of the Series A Preferred (the
"Series A Conversion Price") shall initially be Sixty Cents ($0.60) per share of
Common Stock. The price at which shares of Common Stock shall be deliverable
upon conversion of the Series B Preferred (the "Series B Conversion Price")
shall initially be One Dollar and Fifty Cents ($1.50) per share of Common Stock.
The price at which shares of Common Stock shall be deliverable upon conversion
of the Series C Preferred (the "Series C Conversion Price") shall initially be
Three Dollars ($3.00) per share of Common Stock. Such initial Conversion Prices
shall be subject to adjustment as hereinafter provided.
(b) Automatic Conversion. Each share of Series A Preferred, Series B
--------------------
Preferred and Series C Preferred shall automatically be converted into shares of
Common Stock at the then effective Conversion Price upon either (i) the closing
of a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation and
selling shareholders, if any, to the public at an aggregate offering price to
the public of not less than $10,000,000, or (ii) the written consent of holders
of not less than a majority of the then outstanding shares of Preferred Stock.
In the event of the automatic conversion of the Preferred upon a public offering
as aforesaid, the person(s) entitled to receive the Common Stock issuable upon
such
-3-
<PAGE>
conversion of Preferred shall not be deemed to have converted such
Preferred until immediately prior to the closing of such sale of securities.
(c) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of Preferred. In lieu of any fractional shares
to which the holder would otherwise be entitled, the Corporation shall pay cash
equal to such fraction multiplied by the then effective Conversion Price. Before
any holder of Preferred shall be entitled to convert the same into full shares
of Common Stock and to receive certificates therefor, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Preferred, and shall give written
notice to the Corporation at such office that he elects to convert the same;
provided, however, that in the event of an automatic conversion pursuant to
Section 4(b), the outstanding shares of Preferred shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent, and provided further that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates evidencing
such shares of Preferred are either delivered to the Corporation or its transfer
agent as provided above, or the holder notifies the Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at such
office to such holder of Preferred, a certificate or certificates for the number
of shares of Common Stock to which he shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable as the result of
a conversion into fractional shares of Common Stock. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred to be converted, or in the case of
automatic conversion on the date of closing of the offering or the effective
date of such written consent, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on such
date.
(d) Adjustments to Conversion Price for Certain Issues.
--------------------------------------------------
(i) Special Definitions. For purposes of this Section 4(d), the
-------------------
following definitions shall apply:
(1) 'Options' shall mean rights, options or warrants to
-------
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(2) 'Original Issue Date' shall mean the date that shares of
-------------------
Series C Preferred are first issued by the corporation.
(3) 'Convertible Securities' shall mean any evidences of
----------------------
indebtedness, shares (other than Common) or other securities convertible into or
exchangeable for Common.
-4-
<PAGE>
(4) 'Additional Shares of Common' shall mean all shares of
---------------------------
Common issued (or, pursuant to Section 4(d)(iii), deemed to be issued) by the
corporation upon or after the Original Issue Date, other than shares of Common
issued or issuable at any time:
(A) upon conversion of the shares of Series A
Preferred, Series B Preferred and Series C Preferred authorized herein;
(B) shares of Common issued to officers, directors, and
employees of, and consultants to, the corporation to be designated and approved
by the Board of Directors;
(C) as a dividend or distribution on Series A, Series B
and Series C Preferred;
(D) by way of a subdivision, combination or
consolidation of shares of Common described in Section 4(d)(vi) below; and
(E) pursuant to a distribution described in Section
4(d)(vii) below or pursuant to a reorganization, reclassification, exchange or
substitution described in Section 4(d)(viii) below.
(ii) No Adjustment of Conversion Price. No adjustment in the
---------------------------------
respective Conversion Prices of a particular share of Series A, Series B or
Series C Preferred shall be made in respect of the issuance of Additional Shares
of Common unless the consideration per share for an Additional Share of Common
issued or deemed to be issued by the corporation is less than the respective
Conversion Prices in effect on the date of, and immediately prior to such issue,
for such share of Series A, Series B or Series C Preferred.
(iii) Deemed Issue of Additional Shares of Common; Options and
--------------------------------------------------------
Convertible Securities. In the event the corporation at any time or from time to
- ----------------------
time after the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders of any
class of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common issuable upon the exercise of
such Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common issued as of the time of such issue or, in case such
a record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common shall not be deemed to have been
issued unless the consideration per share (determined pursuant to Section
4(d)(v) hereof) of such Additional Shares of Common would be less than the
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common are deemed to be issued:
-5-
<PAGE>
(A) no further adjustment in the Conversion Price shall
be made upon the subsequent issue of Convertible Securities or shares of Common
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;
(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decrease in the number of shares of
Common issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(I) in the case of Convertible Securities or
Options for Common, the only Additional Shares of Common issued were shares of
Common, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the corporation upon such
conversion or exchange, and
(II) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
deemed to have been then issued was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the corporation upon the issue
of the Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clause (B) or (C) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date,
or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common between the original adjustment date and such
readjustment date; and
(E) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided in
clause (C) above.
-6-
<PAGE>
(iv) Adjustment of Series A Conversion Price,
---------------------------------------
Series B Conversion Price and Series C Conversion Price Upon Issuance of
- ------------------------------------------------------------------------
Additional Shares of Common.
- ---------------------------
(1) In the event this corporation shall issue
Additional Shares of Common (including Additional Shares of Common deemed to be
issued pursuant to Section 4(d)(iii)) without consideration or for a
consideration per share less than the Series A Conversion Price, Series B
Conversion Price or Series C Conversion Price in effect on the date of and
immediately prior to such issue, then and in such event, such Series A
Conversion Price, Series B Conversion Price or Series C Conversion Price shall
be reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Series A Conversion Price, Series B
Conversion Price or Series C Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common outstanding immediately prior to
such issue plus the number of shares of Common which the aggregate consideration
received by the corporation for the total number of Additional Shares of Common
so issued would purchase at such Conversion Price; and the denominator of which
shall be the number of shares of Common outstanding immediately prior to such
issue plus the number of such Additional Shares of Common so issued; and
provided further that, for the purposes of this Section 4(d)(iv), all shares of
Common issuable upon conversion of outstanding Convertible Securities (including
Series A, Series B and Series C Preferred), or Options shall be deemed to be
outstanding, and immediately after any Additional Shares of Common are deemed
issued pursuant to Section 4(d)(iii), such Additional Shares of Common shall be
deemed to be outstanding.
(v) Determination of Consideration. For purposes
------------------------------
of this Section 4(d), the consideration received by the corporation for the
issue of any Additional Shares of Common shall be computed as follows:
(1) Cash and Property: Such consideration
-----------------
shall:
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the corporation excluding
amounts paid or payable for accrued interest, accrued dividends, expenses,
discounts or commissions;
(B) insofar as it consists of property
other than cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board; and
(C) in the event Additional Shares of
Common are issued together with other shares or securities or other assets of
the corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.
(2) Options and Convertible Securities.
----------------------------------
The consideration per share received by the corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 4(d)(iii)(1), relating to
Options and Convertible Securities, shall be determined by dividing
-7-
<PAGE>
(x) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(y) the maximum number of shares of Common (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(vi) Adjustments for Subdivisions, Combinations or
---------------------------------------------
Consolidation of Common. In the event the outstanding shares of Common shall be
- -----------------------
subdivided (by stock split or otherwise), into a greater number of shares of
Common, the Conversion Price then in effect shall, concurrently with the
effectiveness of such subdivision, be proportionately decreased. In the event
the outstanding shares of Common shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common, the
Conversion Price then in effect shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(vii) Adjustments for Other Distributions. In the event the
-----------------------------------
corporation at any time or from time to time makes, or fixes a record date for
the determination of holders of Common entitled to receive any distribution
payable in securities of the corporation, then and in each such event provision
shall be made so that the holders of Series A, Series B and Series C Preferred
shall receive upon conversion thereof, in addition to the number of shares of
Common receivable thereupon, the amount of securities of the corporation which
they would have received had their Series A, Series B and Series C Preferred
been converted into Common on the date of such event and had they thereafter,
during the period from the date of such event to and including the date of
conversion, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section 4 with respect to the rights of the holders of the Series A, Series
B and Series C Preferred.
(viii) Adjustments for Reorganization, Reclassification,
------------------------------------------------
Exchange and Substitution. If the Common issuable upon conversion of the Series
- -------------------------
A, Series B and Series C Preferred shall be changed into the same or a different
number of shares of any other class or classes of stock or other securities or
property, whether by reorganization (unless such reorganization is deemed a
liquidation under Section 2(b) hereof), reclassification or otherwise (other
than a subdivision or combination of shares provided for above), the respective
Conversion Prices then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately adjusted such that
the Series A, Series B and Series C Preferred shall be convertible into, in lieu
of the number of shares of Common which the holders would otherwise have been
entitled to receive, a number of shares of such other class or classes of stock
or other securities or property equivalent to the number of shares of Common
that would have been subject to receipt by
-8-
<PAGE>
the holders upon conversion of the Series A, Series B and Series C Preferred
immediately before such event; and, in any such case, appropriate adjustment (as
determined by the Board) shall be made in the application of the provisions
herein set forth with respect to the rights and interest thereafter of the
holders of the Series A, Series B and Series C Preferred, to the end that the
provisions set forth herein (including provisions with respect to changes in and
other adjustments of the respective Conversion Prices) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the conversion of the Series A,
Series B and Series C Preferred.
(a) No Impairment. Except as provided in Section 7, the Corporation
-------------
will not, by amendment of its Restated Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Preferred Stock against impairment.
(b) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price or the Conversion Rate
pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price and the Conversion Rate at the time
in effect, and (iii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of Preferred Stock.
(c) Reservation of Stock Issuable Upon Conversion. This Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of the Preferred Stock such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of the Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Preferred Stock, this
corporation will take such corporate action as may, in the opinion of counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes.
(d) Notices of Record Date. In the event that this Corporation shall
----------------------
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
-9-
<PAGE>
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this Corporation shall send to
the holders of Preferred Stock:
(1) at least 20 days= prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto and the amount and character of such dividend, distribution or
right) or for determining rights to vote in respect of the matters referred to
in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and
(iv) above, at least 20 days= prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event or the record date for
the determination of such holders if such record date is earlier).
Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of the Preferred Stock at
the address for each such holder as shown on the books of this Corporation.
5. Redemption. Shares of Series A Preferred, Series B Preferred and Series
----------
C Preferred are not redeemable.
6. Covenants. In addition to any other rights provided by law, so long as
---------
at least fifty percent (50%) of the Series A, Series B and Series C Preferred
originally issued by this Corporation shall be outstanding, this Corporation
shall not, without first obtaining the affirmative vote or written consent of
the holders of not less than a majority of such outstanding shares of Series A
Preferred, Series B Preferred and Series C Preferred, voting together as a
single class:
(a) amend or repeal any provision of, or add any provision to, this
Corporation's Articles of Incorporation if such action would materially and
adversely alter or change the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, any Series A Preferred, Series B
Preferred or Series C Preferred;
(b) authorize or issue shares of any class of stock having any
preference or priority as to dividends or assets superior to or on a parity with
any such preference or priority of the Series A Preferred, Series B Preferred or
Series C Preferred;
-10-
<PAGE>
(c) increase the authorized number of shares of Preferred or
reclassify any shares of Common Stock and any other shares of this Corporation
other than the Series A Preferred, Series B Preferred or Series C Preferred into
shares having any preference or priority as to dividends or assets superior to
or on a parity with any such preference or priority of the Series A Preferred,
Series B Preferred or Series C Preferred; or
(d) authorize or take any action with respect to a consolidation or
merger of this Corporation with or into another corporation, or a sale of
substantially all of the assets of the Corporation in exchange in whole or in
part for the equity securities of an acquiring corporation.
Notwithstanding the foregoing, the above actions may not be taken unless
the effect thereof is to treat all outstanding shares of Series A Preferred,
Series B Preferred and Series C Preferred equally.
FIFTH. The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
SIXTH. The Corporation is to have perpetual existence.
SEVENTH. Limitation of Liability. To the fullest extent permitted by the
-----------------------
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
Indemnification. The corporation may indemnify to the fullest
---------------
extent permitted by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the corporation, or any predecessor of
the corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the corporation or any predecessor to the
corporation.
Amendments. Neither any amendment nor repeal of this Article
----------
SEVENTH, nor the adoption of any provision of the corporation's Certificate of
Incorporation inconsistent with this Article SEVENTH, shall eliminate or reduce
the effect of this Article SEVENTH, in respect of any matter occurring, or any
action or proceeding accruing or arising or that, but for this Article SEVENTH,
would accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.
EIGHTH. In the event any shares of Preferred shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be reissuable by the corporation.
NINTH. For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and
regulations of the powers of the corporation, of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided
that notwithstanding the provisions of Article FOURTH, Section 3 above,
effective upon the closing of a
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<PAGE>
Qualified Public Offering (as defined below) and at such time as the corporation
is no longer subject to Section 2115 of the California Corporations Code:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted from time to time by the Board of
Directors.
The Board of Directors shall be divided into three classes
designated as Class I, Class II and Class III, respectively. Directors shall be
assigned to each class in accordance with a resolution or resolutions adopted by
the Board of Directors. At the first annual meeting of stockholders following
the closing of a Qualified Public Offering and at such time as the corporation
is no longer subject to Section 2115 of the California Corporations Code, the
term of office of the Class I directors shall expire and Class I directors shall
be elected for a full term of three years. At the second annual meeting of
stockholders following the closing of Qualified Public Offering and at such time
as the corporation is no longer subject to Section 2115 of the California
Corporations Code, the term of office of the Class II directors shall expire and
Class II directors shall be elected for a full term of three years. At the third
annual meeting of stockholders following the closing of a Qualified Public
Offering and at such time as the corporation is no longer subject to Section
2115 of the California Corporations Code, the term of office of the Class III
directors shall expire and Class III directors shall be elected for a full term
of three years. At each succeeding annual meeting of stockholders, directors
shall be elected for a full term of three years to succeed the directors of the
class whose terms expire at such annual meeting. Each holder of voting stock or
of any class or Series thereof shall be entitled to cumulative voting rights as
to the directors to be elected by each Series or class or the combined classes
in accordance with the provisions of Section 214 of the Delaware General
Corporation Law.
Notwithstanding the foregoing provisions of this Article, each
director shall serve until his or her successor is duly elected and qualified or
until his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes shall be filled by
either (i) the affirmative vote of the holders of a majority of the voting power
of the then outstanding shares of voting stock of the corporation entitled to
vote generally in the election of directors (the "Voting Stock") voting together
as a single class; or (ii) by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Newly created directorships resulting from any increase in the
number of directors shall, unless the Board of Directors determines by
resolution that any such newly created directorship shall be filled by the
stockholders, be filled only by the affirmative vote of the directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified.
-12-
<PAGE>
2. The directors of the corporation need not be elected by written
ballot unless a stockholder demands election by written ballot at the meeting
and before voting begins, or unless the Bylaws so provide.
3. The affirmative vote of sixty-six and two-thirds percent (66-2/3%)
of the voting power of the then outstanding shares of Voting Stock, voting
together as a single class, shall be required for the adoption, amendment or
repeal of the following sections of the corporation's Bylaws by the stockholders
of this corporation: 2.3 (Annual Meeting) and 2.4 (Special Meeting).
4. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of the stockholders called in accordance
with the Bylaws and no action shall be taken by the stockholders by written
consent.
5. Advance notice of stockholder nomination for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
6. Any director, or the entire Board of Directors, may be removed
from office at any time (i) with cause by the affirmative vote of the holders of
at least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.
"Qualified Public Offering" as used in this Certificate of
Incorporation shall mean the corporation's initial firm commitment underwritten
public offering pursuant to an effective registration under the Securities Act
of 1933, as amended, covering the offer and sale of Common Stock for the account
of the corporation to the public.
TENTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the corporation.
ELEVENTH. Following a Qualified Public Offering and at such time as the
corporation is no longer subject to Section 2115 of the California Corporations
Code, notwithstanding any other provision in this Certificate of Incorporation
or in any provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative voting of the holders of any particular
class or Series of the Voting Stock required by law, this Certificate of
Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Article NINTH or
this Article ELEVENTH.
TWELFTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter described by statute, except as provided in Article
ELEVENTH of this Certificate, and all rights conferred upon the stockholders
herein are granted subject to this right.
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<PAGE>
THIRTEENTH. Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside of the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the Bylaws of the Corporation.
FOURTEENTH. The name and mailing address of the incorporator are:
Marianne Stark Bradley
Senior Legal Assistant
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is the act and deed of such incorporator and that
the facts stated therein are true.
Dated: February 28, 2000
--------------------------------
Incorporator
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<PAGE>
EXHIBIT 3.1B
RESTATED CERTIFICATE OF INCORPORATION
OF
OMNIVISION TECHNOLOGIES, INC.
OmniVision Technologies, Inc., a corporation organized and existing under
laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is OmniVision Technologies, Inc. The
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the state of Delaware on March __, 2000.
2 Pursuant to Sections 228, 242 and 245 of the General Corporation Laws of
the State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of this corporation.
3. The text of the Certificate of Incorporation as heretofore amended or
supplemented is hereby amended and restated to read in its entirety as follows:
FIRST: The name of this corporation is OmniVision Technologies, Inc.
SECOND: The address of the corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, State
of Delaware. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is 110,000,000
shares. 100,000,000 shares shall be Common Stock, par value $.001 per share,
and 10,000,000 shares shall be Preferred Stock, par value $.001 per share.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is authorized to fix the number of shares of any series
of Preferred Stock and to determine the designation of any such series. The
Board of Directors is also authorized to determine and alter the powers, rights,
preferences and privileges and the qualifications, limitations and restrictions
granted to or imposed upon any wholly unissued series of Preferred Stock and
within the limitations or restrictions stated in any resolution or resolutions
of the Board of Directors originally fixing the number of shares constituting
any series, to increase or decrease (but not below the number of shares of such
series then outstanding) the number of shares of any series subsequent to the
issue of shares of that series, to
<PAGE>
determine the designation of any series, and to fix the number of shares of any
series. In case the number of shares of any series shall be so decreased, the
share constituting such decrease shall resume the status which they had prior to
the adoption of the resolution originally fixing the number of shares of such
series.
FIFTH: The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
SIXTH. The Corporation is to have perpetual existence.
SEVENTH. Limitation of Liability. To the fullest extent permitted by the
-----------------------
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
Indemnification. The corporation may indemnify to the fullest extent
---------------
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the corporation, or any predecessor of
the corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the corporation or any predecessor to the
corporation.
Amendments. Neither any amendment nor repeal of this Article SEVENTH,
----------
nor the adoption of any provision of the corporation's Certificate of
Incorporation inconsistent with this Article SEVENTH, shall eliminate or reduce
the effect of this Article SEVENTH, in respect of any matter occurring, or any
action or proceeding accruing or arising or that, but for this Article SEVENTH,
would accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.
EIGHTH. For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and
regulations of the powers of the corporation, of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided
that effective upon the closing of a Qualified Public Offering (as defined
below) and at such time as the corporation is no longer subject to Section 2115
of the California Corporations Code:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted from time to time by the Board of
Directors.
The Board of Directors shall be divided into three classes
designated as Class I, Class II and Class III, respectively. Directors shall be
assigned to each class in accordance with a resolution or resolutions adopted by
the Board of Directors. At the first annual meeting of stockholders
<PAGE>
following the date hereof, the term of office of the Class I directors shall
expire and Class I directors shall be elected for a full term of three years. At
the second annual meeting of stockholders following the date hereof, the term of
office of the Class II directors shall expire and Class II directors shall be
elected for a full term of three years. At the third annual meeting of
stockholders following the date hereof, the term of office of the Class III
directors shall expire and Class III directors shall be elected for a full term
of three years. At each succeeding annual meeting of stockholders, directors
shall be elected for a full term of three years to succeed the directors of the
class whose terms expire at such annual meeting. Each holder of voting stock or
of any class or series thereof shall be entitled to cumulative voting rights as
to the directors to be elected by each series or class or the combined classes
in accordance with the provisions of Section 214 of the Delaware General
Corporation Law.
Notwithstanding the foregoing provisions of this Article, each
director shall serve until his or her successor is duly elected and qualified or
until his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes shall be filled by
either (i) the affirmative vote of the holders of a majority of the voting power
of the then outstanding shares of voting stock of the corporation entitled to
vote generally in the election of directors (the "Voting Stock") voting together
as a single class; or (ii) by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Newly created directorships resulting from any increase in the
number of directors shall, unless the Board of Directors determines by
resolution that any such newly created directorship shall be filled by the
stockholders, be filled only by the affirmative vote of the directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified.
2. The directors of the corporation need not be elected by written
ballot unless a stockholder demands election by written ballot at the meeting
and before voting begins, or unless the Bylaws so provide.
3. The affirmative vote of sixty-six and two-thirds percent (66-2/3%)
of the voting power of the then outstanding shares of Voting Stock, voting
together as a single class, shall be required for the adoption, amendment or
repeal of the following sections of the corporation's Bylaws by the stockholders
of this corporation: 2.3 (Annual Meeting) and 2.4 (Special Meeting).
4. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of the stockholders called in accordance
with the Bylaws and no action shall be taken by the stockholders by written
consent.
<PAGE>
5. Advance notice of stockholder nomination for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
6. Any director, or the entire Board of Directors, may be removed
from office at any time (i) with cause by the affirmative vote of the holders of
at least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.
"Qualified Public Offering" as used in this Certificate of
Incorporation shall mean the corporation's initial firm commitment underwritten
public offering pursuant to an effective registration under the Securities Act
of 1933, as amended, covering the offer and sale of Common Stock for the account
of the corporation to the public.
NINTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the corporation.
TENTH. Notwithstanding any other provision in this Certificate of
Incorporation or in any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative voting of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Article EIGHTH or
this Article TENTH.
ELEVENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter described by statute, except as provided in Article
TENTH of this Certificate, and all rights conferred upon the stockholders herein
are granted subject to this right.
TWELFTH. Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside of the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the Corporation.
The foregoing Restated Certificate of Incorporation has been duly approved
by the required vote of stockholders in accordance with Section 228 of the
Delaware General Corporation Law. The total number of outstanding shares of the
Corporation is 1,000 shares of Common Stock. The number of shares voting in
favor of the amendment equaled or exceeded the vote required. The percentage
vote required was more than 50% of the Common Stock.
<PAGE>
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been signed
this day of March , 2000.
----- -------
OmniVision Technologies, Inc.
By:
---------------------------------------
Shaw Hong
President and Chief Executive Officer
ATTEST:
- --------------------------
Raymond Wu, Secretary
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
OMNIVISION TECHNOLOGIES, INC.
Article 1
Offices
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Section 1.1. Registered Office. The registered office of the Corporation
-----------------
which is required by the state of Delaware to be maintained in the state of
Delaware shall be the registered office named in the charter documents of the
Corporation, or such other office as may be designated from time to time by the
Board of Directors in the manner provided by law.
Section 1.2. Other Offices. The Corporation may also have offices at such
-------------
other places both within and without the state of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require .
Article 2
Stockholders
------------
Section 2.1. Place of Meetings. All meetings of the stockholders shall be
-----------------
held at the principal office of the Corporation, or at such other place within
or without the state of Delaware as shall be specified or fixed in the notices
or waivers of notice thereof.
Section 2.2. Quorum; Adjournment of Meetings. Unless otherwise required by
-------------------------------
law or provided in the charter documents of the Corporation or these Bylaws, (i)
the holders of a majority of the stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum at any meeting of stockholders for the transaction of business, (ii) in
all matters other than election of directors, the affirmative vote of the
holders of a majority of such stock so present or represented at any meeting of
stockholders at which a quorum is present shall constitute the act of the
stockholders, and (iii) where a separate vote by a class or classes is required,
a majority of the outstanding shares of such class or classes, present in person
or represented by proxy shall constitute a quorum entitled to take action with
respect to that vote on that matter and the affirmative vote of the majority of
the shares of such class or classes present in person or represented by proxy at
the meeting shall be the act of such class. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum, subject to the provisions of clauses (ii) and (iii) above.
Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors.
<PAGE>
Notwithstanding the other provisions of the charter documents of the
Corporation or these Bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy and entitled to vote thereat, at any meeting of stockholders, whether
or not a quorum is present, shall have the power to adjourn such meeting from
time to time, without any notice other than announcement at the meeting of the
time and place of the holding of the adjourned meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at such meeting. At such
adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting as originally
called.
Section 2.3. Annual Meeting.
--------------
(a) An annual meeting of the stockholders, for the election of
directors to succeed those whose terms expire and for the transaction of such
other business as may properly come before the meeting, shall be held at such
place (within or without the state of Delaware), on such date, and at such time
as the Board of Directors shall fix and set forth in the notice of the meeting,
which date shall be within thirteen (13) months subsequent to the last annual
meeting of stockholders.
(b) At an annual meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days in advance of the date specified in the corporation's proxy
statement released to stockholders in connection with the previous year's annual
meeting of stockholders; provided, however, that in the event that no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than thirty (30) days from the date contemplated at the time of
the previous year's proxy statement, notice by the stockholder to be timely must
be so received a reasonable time before the solicitation is made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these
-2-
<PAGE>
Bylaws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this paragraph (b). The
chairman of the annual meeting shall, if the facts warrant, determine and
declare at the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this paragraph (b), and, if he should
so determine, he shall so declare at the meeting that any such business not
properly brought before the meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as Directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of Directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 2.2. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a Director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for
elections of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the 1934 Act (including without limitation such person's
written consent to being named in the proxy statement, if any, as a nominee and
to serving as a Director if elected); and (ii) as to such stockholder giving
notice, the information required to be provided pursuant to paragraph (b) of
this Section 2.2. At the request of the Board of Directors, any person nominated
by a stockholder for election as a Director shall furnish to the Secretary of
the corporation that information required to be set forth in the stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a Director of the corporation unless nominated in accordance
with the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrants, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.
Section 2.4. Special Meetings. Special meetings of stockholders may be
----------------
called at any time by a majority of the Board of Directors, by the Chairman of
the Board, the Chief Executive Officer or by the holders of at least 10% of the
shares of the corporation's capital stock entitled to vote at such meeting, but
such special meetings may not be called by any other person or persons;
provided, however, that effective upon closing of the Corporation's initial
public offering of shares of its Common Stock pursuant to an effective
registration statement filed with the Securities and Exchange Commission (the
"IPO") and the corporation is no longer subject to Section 2115 of the
California Corporation Code, special meetings of stockholders may be called at
any time by a majority of the
-3-
<PAGE>
Board of Directors, by the Chairman of the Board, by the Chief Executive Officer
or by the holders of at least 50% of the shares of the corporation's capital
stock entitled to vote at such meeting, but such special meetings may not be
called by any other person or persons.
Section 2.5. Record Date. For the purpose of determining stockholders
-----------
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors of the Corporation may fix a date as
the record date for any such of stockholders, which record date shall not
precede the date on which the resolutions fixing the record date are adopted and
which record date shall not be more than sixty (60) days nor less than ten (10)
days before the date of such meeting of stockholders, nor more than sixty (60)
days prior to any other action to which such record date relates.
If the Board of Directors does not fix a record date for any meeting of the
stockholders, the record date for determining stockholders entitled to notice of
or to vote at such meeting shall be at the close of business on the day next
preceding the day on which notice is given, or, in accordance with Article 7,
Section 7.3 of these Bylaws notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. The record date for
determining stockholders for any other purpose (other than the consenting to
corporate action in writing without a meeting) shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
For the purpose of determining the stockholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If the
Board of Directors does not fix the record date, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is necessary, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Corporation at its registered office
in the state of incorporation of the Corporation or at its principal place of
business. If the Board of Directors does not fix the record date, and prior
action by the Board of Directors is necessary, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
Section 2.6. Notice of Meetings. Written notice of the place, date and hour
------------------
of all meetings, and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by or at the direction of the
President, the Secretary or the other person(s) calling the meeting to each
stockholder entitled to vote thereat not less than ten (10) nor more than sixty
(60) days before the date of the meeting. Such notice may be delivered either
personally or by mail.
-4-
<PAGE>
If mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at such stockholder's address as it appears
on the records of the Corporation.
Section 2.7. Stockholder List. A complete list of stockholders entitled to
----------------
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in the name of such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The stockholder list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 2.8. Proxies. Each stockholder entitled to vote at a meeting of
-------
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to time
determine by resolution, before or at the time of the meeting. All proxies
shall be received and taken charge of and all ballots shall be received and
canvassed by the secretary of the meeting, who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless the
proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at any
meeting at which their powers thereunder are to be exercised shall have and may
exercise all the powers of voting or giving consents thereby conferred, or if
only one be present, then such powers may be exercised by that one; or, if an
even number attend and a majority do not agree on any particular issue, each
proxy so attending shall be entitled to exercise such powers in respect of such
portion of the shares as is equal to the reciprocal of the fraction equal to the
number of proxies representing such shares divided by the total number of shares
represented by such proxies.
Section 2.9. Voting; Election; Inspectors. Unless otherwise required by law
----------------------------
or provided for in the charter documents of the Corporation, each stockholder
shall on each matter submitted to a vote at a meeting of stockholders have one
vote for each share of the stock entitled to vote which is registered in his
name on the record date for the meeting. For the purposes hereof, each election
to fill a directorship shall constitute a separate matter. Shares registered in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the bylaws (or comparable body) of such corporation
may determine. Shares registered in the name of a deceased person may be voted
by the executor or administrator of such person's estate, either in person or by
proxy.
-5-
<PAGE>
All voting, except as required by the charter documents of the Corporation
or where otherwise required by law, may be by a voice vote; provided, however,
upon request of the chairman of the meeting or upon demand therefor by
stockholders holding a majority of the issued and outstanding stock present in
person or by proxy at any meeting a stock vote shall be taken. Every stock vote
shall be taken by written ballots, each of which shall state the name of the
stockholder or proxy voting and such other information as may be required under
the procedure established for the meeting. The directors of the corporation need
not be elected by written ballot unless a stockholder demands election by
written ballot at the meeting and before voting begins, or unless the Bylaws so
provide.
At any meeting at which a vote is taken by written ballots, the chairman of
the meeting may appoint one or more inspectors; each of whom shall subscribe an
oath or affirmation to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of such inspector's
ability. Such inspector shall receive the written ballots, count the votes, and
make and sign a certificate of the result thereof. The chairman of the meeting
may appoint any person to serve as inspector, except no candidate for the office
of director shall be appointed as an inspector.
Each holder of voting stock or of any class or series thereof shall be
entitled to cumulative voting rights as to the directors to be elected by each
series or class or the combined classes in accordance with the provisions of
Section 214 of the Delaware General Corporation Law.
Section 2.10. Conduct of Meetings. The meetings of the stockholders shall
-------------------
be presided over by the President, or, if the President is not present, by a
chairman elected at the meeting. The Secretary of the Corporation, if present,
shall act as secretary of such meetings, or, if the Secretary is not present, an
Assistant Secretary shall so act; if neither the Secretary of or Assistant
Secretary is present, then a secretary shall be appointed by the chairman of the
meeting.
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to the chairman in order.
Section 2.11. Treasury Stock. The Corporation shall not vote, directly or
--------------
indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes. Nothing in this Section 2.11 shall be construed as
limiting the right of the Corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
Section 2.12. Action Without Meeting. Unless otherwise provided in the
----------------------
Certificate of Incorporation, any action which may be taken at any annual or
special meeting of stockholders may be taken without a meeting and without prior
notice, if a consent in writing, setting forth the action so taken, is signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take that action at a meeting at
which all shares entitled to vote on that action were present and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under
-6-
<PAGE>
any section of the General Corporation Law of Delaware if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written notice and written consent
have been given as provided in Section 228 of the General Corporation Law of
Delaware.
Effective upon the closing of the Corporation's IPO and the date that the
Corporation is no longer subject to Section 2115 of the California Corporations
Code, no action of stockholders shall be taken by the stockholders except at an
annual or special meeting of stockholders called in accordance with the notice
requirements of Section 2.6 above and no action of the stockholders shall be
taken by written consent.
Article 3
Board of Directors
------------------
Section 3.1. Power; Number; Term of Office. The business and affairs of the
-----------------------------
Corporation shall be managed by or under the direction of the Board of
Directors, and, subject to the restrictions imposed by law or the charter
documents of the Corporation, the Board of Directors may exercise all the powers
of the Corporation.
Notwithstanding anything contained in these Bylaws to the contrary, at any
time that a valid agreement among the stockholders is in force with respect to
the nomination, election and removal of directors or similar matters, such
agreement is hereby recognized and directors shall be nominated, elected and
removed in accordance therewith.
The number of directors which shall constitute the whole Board of Directors
shall be determined from time to time by the Board of Directors (provided that
no decrease in the number of directors which would have the effect of shortening
the term of an incumbent director may be made by the Board of Directors). Each
director shall hold office for the term for which such director is elected, and
until such director's successor shall have been elected and qualified or until
such director's earlier death, resignation or removal.
Unless otherwise provided in the charter documents of the Corporation,
directors need not be stockholders nor resident of the state of Delaware.
Section 3.2. Classes of Directors. Effective upon the closing of the
--------------------
Corporation's IPO and the date that the Corporation is no longer subject to
Section 2115 of the California Corporations Code, the Directors shall be divided
into three classes designated as Class I, Class II and Class III, respectively.
Directors shall be assigned to each class in accordance with a resolution or
resolutions adopted by the Board of Directors. At the first annual meeting of
stockholders following the closing of the IPO, the term of office of the Class I
Directors shall expire and Class I Directors shall be elected for a full term of
three years. At the second annual meeting of stockholders following the closing
of the IPO, the term of office of the Class II Directors shall expire and Class
II Directors shall be elected for a full term of three years. At the third
annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class III Directors shall expire and Class
III Directors shall be elected for a full term of three years. At each
succeeding annual meeting
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<PAGE>
of stockholders, Directors shall be elected for a full term of three years to
succeed the Directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each Director
shall serve until his successor is duly elected and qualified or until his
earlier death, resignation or removal. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
Section 3.3. Quorum; Voting. Unless otherwise provided in the charter
--------------
documents of the Corporation, a majority of the number of directors then in
office shall constitute a quorum for the transaction of business of the Board of
Directors and the vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 3.4. Place of Meetings; Order of Business. The directors may hold
------------------------------------
their meetings and may have an office and keep the books of the Corporation,
except as otherwise provided by law, in such place or places, within or without
the state of incorporation of the Corporation, as the Board of Directors may
from time to time determine. At all meetings of the Board of Directors business
shall be transacted in such order as shall from time to time be determined by
the President or by the Board of Directors.
Section 3.5. First Meeting. Each newly elected Board of Directors may hold
-------------
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which
a quorum shall be present, held after the annual meeting of stockholders, the
Board of Directors shall elect the officers of the Corporation.
Section 3.6. Regular Meetings. Regular meetings of the Board of Directors
----------------
shall be held at such times and places as shall be designated from time to time
by the President, or in the President's absence, by another officer of the
Corporation. Notice of such regular meetings shall not be required.
Section 3.7. Special Meetings. Special meetings of the Board of Directors
----------------
may be called by the President, or on the written request of any director, by
the Secretary, in each case on at least twenty-four (24) hours' personal,
written, telegraphic, cable or wireless notice to each director. Such notice, or
any waiver thereof pursuant to Article 7, Section 7.3 hereof, need not state the
purpose or purposes of such meeting, except as may otherwise be required by law
or provided for in the charter documents of the Corporation or these Bylaws.
Meetings may be held at any time without notice if all the directors are present
or if those not present waive notice of the meeting in writing.
Section 3.8. Removal. Any director or the entire Board of Directors may be
-------
removed as set forth in the Certificate of Incorporation of the corporation, as
amended from time to time.
Section 3.9. Vacancies; Increases in the Number of Directors. Any director
-----------------------------------------------
may resign effective on giving written notice to the chairman of the board, the
president, the secretary or the board of directors, unless the notice specifies
a later time for that resignation to become effective. If
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<PAGE>
the resignation of a director is effective at a future time, the board of
directors may elect a successor to take office when the resignation becomes
effective.
Unless otherwise provided in the Certificate of Incorporation or these
bylaws, vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the stockholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the stockholders and until a
successor has been elected and qualified. Notwithstanding the foregoing,
however, effective upon the closing of the Corporation's IPO and the date that
the Corporation is no longer subject to Section 2115 of the California
Corporations Code, the number of directors which shall constitute the whole
Board of Directors shall be fixed exclusively by one or more resolutions adopted
from time to time by the Board of Directors.
Unless otherwise provided in the Certificate of Incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
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<PAGE>
Section 3.10. Compensation. Directors and members of standing committees
------------
may receive such compensation as the Board of Directors from time to time shall
determine to be appropriate, and shall be reimbursed for all reasonable expenses
incurred in attending and returning from meetings of the board of Directors.
Section 3.11. Action Without a Meeting: Telephone Conference Meeting.
-------------------------------------------------------
Unless otherwise restricted by the charter documents of the Corporation, any
action required or permitted to be taken at any of the Board of Directors or any
committee designated by the Board of Directors may be taken without a meeting if
all members of the Board of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee. Such consent shall have the
same force and effect as a unanimous vote at a meeting, and may be stated as
such in any document or instrument filed with the Secretary of State of the
state of incorporation of the Corporation.
Unless otherwise restricted by the charter documents of the Corporation,
subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors, may
participate in a meeting of such Board of Directors or committee, as the case
may be, by means of a conference telephone connection or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 3.12. Approval or Ratification of Acts or Contracts by
------------------------------------------------
Stockholders. The Board of Directors in its discretion may submit any act or
- ------------
contract for approval or ratification at any annual meeting of the stockholders,
or at any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any act or contract that shall be
approved or be ratified by the vote of the stockholders holding a majority of
the issued and outstanding shares of stock of the Corporation entitled to vote
and present in person or by proxy at such meeting (provided that a quorum is
present) shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it has been approved or ratified by every stockholder of the
Corporation. In addition, any such act or contract may be approved or ratified
by the written consent of stockholders holding a majority of the issued and
outstanding shares of capital stock of the Corporation entitled to vote, and
such consent shall be as valid and binding upon the Corporation and upon all the
stockholders as if it had been approved or ratified by every stockholder of the
Corporation.
Article 4
Committees
----------
Section 4.1. Designation; Powers. The Board of Directors may, by
-------------------
resolution passed by a majority of the board, designate one or more committees,
including, if they shall so determine, an executive committee and a compensation
committee, with each such committee to consist of one or more of the directors
of the Corporation. Any such designated committee shall have and may exercise
such of the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation as may be provided in such
resolution, except that no such committee shall have the power or authority of
the Board of Directors in reference of amending the
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<PAGE>
charter documents of the Corporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution of the Corporation, or amending, altering or repealing these Bylaws
or adopting new bylaws for the Corporation. Any such designated committee may
authorize the seal of the Corporation to be affixed to all papers which may
require it. In addition to the above, such committee or committees shall have
such other powers and limitations of authority as may be determined from time to
time by the Board of Directors.
Section 4.2. Procedure; Meetings; Quorum. Any committee designated pursuant
---------------------------
to this Article 4 shall keep regular minutes of its actions and proceedings in a
book provided for that purpose and report the same to the Board of Directors at
its meeting next succeeding such action, shall fix its own rules or procedures,
and shall meet at such times and at such place or places as may be provided by
such rules, or by such committee or the board of Directors. Should a committee
fail to fix its own rules, the provisions of these Bylaws, pertaining to the
calling of meetings and conduct of business by the Board of Directors, shall
apply as nearly as may be possible. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum,
except as provided in Section 4.3 of this Article 4 and the affirmative vote of
a majority of the members present shall be necessary for the adoption by it of
any resolution.
Section 4.3. Substitution and Removal of Members: Vacancies. The Board of
----------------------------------------------
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of a member of a committee,
the member or members present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of the absent or
disqualified member. The Board of Directors shall have the power at any time to
remove any member(s) of a committee and to appoint other directors in lieu of
the person(s) so removed and shall also have the power to fill vacancies in a
committee.
Article 5
Officers
--------
Section 5.1. Number, Titles, and Term of Office. The officers of the
----------------------------------
Corporation shall be a President, Treasurer, a Secretary, and such other
officers as the Board of Directors may from time to time elect or appoint
(including, but not limited to, a Chairman of the Board, and or more Vice
Presidents, (anyone or more of whom may be designated Executive Vice President
or Senior Vice President) Vice Chairman of the Board, one or more Assistant
Secretaries and one or more Assistant Treasurers). Each officer shall hold
office until such officer's successor shall be duly elected and shall qualify or
until such officer's death or until such officer shall resign or shall have been
removed. Any number of offices may be held by the same person, unless the
Articles of Incorporation of the Corporation provide otherwise. Except for the
Chairman of the Board and the Vice Chairman of the Board, no officer need be a
director.
Section 5.2. Powers and Duties of the President. The President shall be the
----------------------------------
chief executive officer of the Corporation. Subject to the control of the Board
of Directors and the Executive
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<PAGE>
Committee (if any), the President shall have general executive charge,
management and control of the properties, business and operations of the
Corporation with all such powers as may be reasonably incident to such
responsibilities; may agree upon and execute all leases, contracts, evidences of
indebtedness and other obligations in the name of the Corporation and may sign
all certificates for shares of capital stock of the Corporation; and shall have
such other powers and duties as designated in accordance with these Bylaws and
as from time to time may be assigned to the President by the Board of Directors.
The President shall preside at all meetings of the stockholders and of the Board
of Directors.
Section 5.3. Vice Presidents. Each Vice President shall at all times
---------------
possess power to sign all certificates, contracts and other instruments of the
Corporation, except as otherwise limited in writing by the Chairman of the
Board, the President or the Vice Chairman of the Board of the Corporation. Each
Vice President shall have such other powers and duties as from time to time may
be assigned to such Vice President by the Board of Directors, the Chairman of
the Board, the President or the Vice Chairman of the Board.
Section 5.4. Secretary. The Secretary shall keep the minutes of all
---------
meetings of the Board of Directors, committees of the Board of Directors and the
stockholders, in books provided for that purpose; shall attend to the giving and
serving of all notices; may in the name of the Corporation affix the seal of the
Corporation to all contracts and attest the affixation of the seal of the
Corporation thereto; may sign with the other appointed officers all certificates
for shares of capital stock of the Corporation; shall have charge of the
certificate books, transfer books and stock ledgers, and such other books and
papers as the Board of Directors may direct, all of which shall at all
reasonable times be open to inspection of any director upon application at the
office of the Corporation during business hours; shall have such other powers
and duties as designated in these Bylaws and as from time to time may be
assigned to the Secretary by the Board of Directors, the Chairman of the Board,
the President or the Vice Chairman of the Board; and shall in general perform
all acts incident of the office of Secretary, subject to the control of the
Board of Directors, the Chairman of the Board, the President or the Vice
Chairman of the Board.
Section 5.5. Assistant Secretaries. Each Assistant Secretary shall have the
---------------------
usual powers and duties pertaining to such offices, together with such other
powers and duties as designated in these Bylaws and as from time to time may be
assigned to an Assistant Secretary by the board of directors, the President, or
the Secretary. The Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability or refusal to act.
Section 5.6. Treasurer. The Treasurer shall have responsibility for the
---------
custody and control of all the funds and securities of the Corporation, and
shall have such other powers and duties as designated in these Bylaws and as
from time to time may be assigned to the Treasurer by the Board of Directors or
the President. The Treasurer shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors or the President;
and the Treasurer shall, if required by the Board of Directors, give such bond
for the faithful discharge of the Treasurer's duties in such form as the Board
of Directors may require.
Section 5.7. Assistant Treasurers. Each Assistant Treasurer shall have the
--------------------
usual powers and duties pertaining to such office, together with such other
powers and duties as designated in
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<PAGE>
these Bylaws and as from time to time may be assigned to each Assistant
Treasurer by the Board of Directors, the President, or the Treasurer. The
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
Section 5.8. Action with Respect to Securities of Other Corporations.
-------------------------------------------------------
Unless otherwise directed by the Board of Directors, the President, together
with the Secretary or any Assistant Secretary shall have power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of security holders of or with respect to any action of security holders
of any other corporation in which this Corporation may hold securities and
otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other corporation.
Section 5.9. Delegation. For any reason that the Board of Directors may
----------
deem sufficient, the Board of Directors may, except where otherwise provided by
statute, delegate the powers or duties of any officer to any other person, and
may authorize any officer to delegate specified duties of such office to any
other person. Any such delegation or authorization by the Board shall be
effected from time to time by resolution of the Board of Directors.
Article 6
Capital Stock
-------------
Section 6.1. Certificates of Stock. The certificates for shares of the
---------------------
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the charter documents of the Corporation, as shall be
approved by the Board of Directors. Every holder of stock represented by
certificates shall be entitled to have a certificate signed by or in the name of
the Corporation by the President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation representing the number of shares (and, if the stock of the
Corporation shall be divided into classes or series, certifying the class and
series of such shares) owned by such stockholder which are registered in
certified form; provided, however, that any of or all the signatures on the
certificate may be facsimile. The stock record books and the blank stock
certificate books shall be kept by the Secretary or at the office of such
transfer agent or transfer agents as the Board of Directors may from time to
time determine. In case any officer, transfer agent or registrar who shall have
signed or whose facsimile signature or signatures shall have been placed upon
any such certificate or certificates shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued by the
Corporation, such certificate may nevertheless be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or registrar
at the date of issue. The stock certificates shall be consecutively numbered
and shall be entered in the books of the Corporation as they are issued and
shall exhibit the holder's name and number of shares.
Section 6.2. Transfer of Shares. The shares of stock of the Corporation
------------------
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal representatives
upon surrender and cancellation of certificates for a like number of shares.
Upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or
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<PAGE>
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 6.3. Ownership of Shares. The Corporation shall be entitled to
-------------------
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the state of
Delaware.
Section 6.4. Regulations Regarding Certificates. The Board of Directors
----------------------------------
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 6.5. Lost or Destroyed Certificates. The Board of Directors may
------------------------------
determine the conditions upon which the Corporation may issue a new certificate
of stock in place of a certificate theretofore issued by it which is alleged to
have been lost, stolen or destroyed and may require the owner of such
certificate or such owner's legal representative to give bond, with surety
sufficient to indemnify the Corporation and each transfer agent and registrar
against any and all losses or claims which may arise by reason of the alleged
loss, theft or destruction of any such certificate or the issuance of such new
certificate in the place of the one so lost, stolen destroyed.
Article 7
Miscellaneous Provisions
------------------------
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall begin on
-----------
the first day of January of each year.
Section 7.2. Corporate Seal. The corporate seal shall be circular in form
--------------
and shall have inscribed thereon the name of the Corporation and the state of
its incorporation, which seal shall be in the charge of the Secretary and shall
be affixed to certificates of stock, debentures, bonds and other documents, in
accordance with the direction of the Board of Directors or a committee thereof,
and as may be required by law; however, the Secretary may, if the Secretary
deems it expedient, have a facsimile of the corporate seal inscribed on any such
certificates of stock, debentures, bonds, contract or other documents.
Duplicates of the seal may be kept for use by any Assistant Secretary.
Section 7.3. Notice and Waiver of Notice. Whenever any notice is required
---------------------------
to be given by law, the charter documents of the Corporation or under the
provisions of these Bylaws, said notice shall be deemed to be sufficient if
given (i) by telegraphic, cable or wireless transmission (including by telecopy
or facsimile transmission) or (ii) by deposit of the same in a post office box
or by delivery to an overnight courier service company in a sealed prepaid
wrapper addressed to the person entitled thereto at such person's post office
address, as it appears on the records of the Corporation, and such notice shall
be deemed to have been given on the day of such transmission or mailing or
delivery to courier, as the case may be.
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<PAGE>
Whenever notice is required to be given by law, the charter documents of
the Corporation or under any of the provisions of these Bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person, including without limitation a director, at meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the charter documents of the Corporation or these Bylaws.
Section 7.4. Facsimile Signature. In addition to the provisions for the use
-------------------
of facsimile signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
Section 7.5. Reliance upon Books, Reports and Records. A member of the
----------------------------------------
Board of Directors, or a member of any committee designated by the Board of
Directors, shall, in the performance of such person's duties, be protected to
the fullest extent permitted by law in relying upon the records of the
Corporation and upon information, opinion, reports or statements presented to
the Corporation.
Section 7.6. Application of Bylaws. In the event that any provisions of
---------------------
these Bylaws is or may be in conflict with any law of the United States, of the
state of Delaware, or of any other governmental body or power having
jurisdiction over this Corporation, or over the subject matter to which such
provision of these Bylaws applies, or may apply, such provision of these Bylaws
shall be inoperative to the extent only that the operation thereof unavoidably
conflicts with such law, and shall in all other respects be in full force and
effect.
Article 8
Indemnification of Officers and Directors
-----------------------------------------
Section 8.1. Indemnification. The corporation shall, to the maximum extent
---------------
and in the manner permitted by the General Corporation Law of Delaware,
indemnify each of its directors and officers against expenses (including
attorneys' fees), judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding, arising by reason of the
fact that such person is or was an agent of the corporation. For purposes of
this Section 6.1, a "director" or "officer" of the corporation includes any
person (i) who is or was a director or officer of the corporation, (ii) who is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise, or
(iii) who was a director or officer of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
Section 8.2. Indemnification of Others. The corporation shall have the
--------------------------
power, to the maximum extent and in the manner permitted by the General
Corporation Law of Delaware, to indemnify each of its employees and agents
(other than directors and officers) against expenses (including attorneys'
fees), judgments, fines, settlements and other amounts actually and reasonably
-15-
<PAGE>
incurred in connection with any proceeding, arising by reason of the fact that
such person is or was an agent of the corporation. For purposes of this Section
6.2, an "employee" or "agent" of the corporation (other than a director or
officer) includes any person (i) who is or was an employee or agent of the
corporation, (ii) who is or was serving at the request of the corporation as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was an employee or agent of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
Section 8.3. Insurance. The corporation may purchase and maintain insurance
---------
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.
Article 9
Amendments
----------
Section 9.1. Amendments. The Board of Directors shall have the power to
----------
adopt, amend and repeal from time to time Bylaws of the Corporation, subject to
the right of the stockholders entitled to vote with respect thereto to amend or
repeal such Bylaws as adopted or amended by the Board of Directors
-16-
<PAGE>
EXHIBIT 4.2
OMNIVISION TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
May 10, 1998
- --------------------------------------------------------------------------------
<PAGE>
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 10th day of May, 1998 by and among OmniVision
Technologies, Inc., a California corporation (the "Company"), and the investors
listed on Exhibit A hereto, which Exhibit A may be revised from time to time to
include persons who purchase shares of Series C Preferred Stock in closings held
after the date of this Agreement under the terms of the Series C Preferred Stock
Purchase Agreement of even date herewith (the "Investors"). Should any
Investors be added to this Agreement in subsequent closings, the Company shall
distribute a revised Schedule A to this Agreement reflecting the names of such
Investors.
RECITALS
WHEREAS, the Company and the Investors are entering into a Series C
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement"), pursuant to which the Company shall sell, and certain of the
Investors shall acquire, shares of the Company's Series C Preferred Stock (the
"Preferred Shares").
WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Investors to invest funds in the Company, the
parties desire that the Investors be granted registration rights and rights of
participation with respect to the Preferred Shares.
WHEREAS, the Company and certain of the Purchasers are parties to an
Amended and Restated Registration Rights Agreement dated as of October 31,1997
(the "Former Agreement").
WHEREAS, the parties to the Former Agreement desire to amend and restate
the agreement to read as set forth below and to include additional Purchasers as
set forth on Exhibit A hereto.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
Restrictions on Transferability; Registration Rights
----------------------------------------------------
1.1 Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act.
<PAGE>
"Conversion Shares" means the Common Stock issued or issuable upon
-----------------
conversion of the Preferred Shares as defined herein.
"Holder" shall mean any Purchaser holding Registrable Securities and
------
any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.
"Initiating Holders" shall mean Holders in the aggregate of not less
------------------
than forty percent (40%) of the Registrable Securities.
"Preferred Shares" shall mean the Series A Preferred Stock, Series B
----------------
Preferred Stock and Series C Preferred Stock of the Company.
The terms "register," "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
---------------------
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"Registrable Securities" means (i) the Preferred Shares, (ii) the
----------------------
Conversion Shares; and (iii) any Common Stock of the Company issued or issuable
in respect of the Preferred Shares or Conversion Shares or other securities
issued or issuable with respect to the Preferred Shares or Conversion Shares
upon any stock split, stock dividend, recapitalization, or similar event, or any
Common Stock otherwise issued or issuable with respect to the Conversion Shares
or Preferred Shares; provided, however, that shares of Common Stock or other
-------- -------
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(l) thereof so that all transfer restrictions
and restrictive legends with respect thereto are removed upon the consummation
of such sale.
"Restricted Securities" shall mean the securities of the Company
---------------------
required to bear the legend set forth in Section 1.3 of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
-2-
<PAGE>
"Selling Expenses" shall mean all underwriting discounts, selling
----------------
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (except as
provided by Section 1.9).
1.2 Restrictions. The Preferred Shares and the Conversion Shares shall
------------
not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. The Investors will cause any
proposed purchaser, assignee, transferee or pledgee of the Preferred Shares, or
the Conversion Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the Preferred
------------------
Shares, (ii) the Conversion Shares, and (iii) any other securities issued in
respect of the securities referenced in clauses (i) and (ii) upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event,
shall (unless otherwise permitted by the provisions of Section 1.4 below) be
stamped or otherwise imprinted with legends in the following form (in addition
to any legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH
MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY TIES CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
Each Purchaser and Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
1.4 Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holders intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
-3-
<PAGE>
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "no action"
letter (a) in any transaction in compliance with Rule 144, (b) in any
transaction in which a Purchaser which is a corporation distributes Restricted
Securities after six (6) months after the purchase thereof solely to its
majority-owned subsidiaries or affiliates for no consideration, or (c) in any
transaction in which a Purchaser which is a partnership distributes Restricted
Securities after six (6) months after the purchase thereof solely to partners
thereof for no consideration, provided that each transferee agrees in writing to
be subject to the terms of this Section 1.4. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 1.3 above, except that such certificate shall not bear such
restrictive legend if, in the opinion of counsel for such holder and the
Company, such legend is not required in order to establish compliance with any
provisions of the Securities Act.
1.5 Requested Registration.
----------------------
(a) Request for Registration. In case the Company shall receive from
------------------------
Initiating Holders a written request that the Company effect any qualification,
compliance or registration (which, in connection with the Company's initial
public offering, must reasonably anticipate an aggregate price to the public
net of underwriting discounts and commissions, exceeding $10,000,000):
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
--------
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.5:
(1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
-4-
<PAGE>
(2) Prior to the earlier of (i) six (6) months following
the Company's initial public offering or (ii) January 1, 2001.
(3) During the period ending on the date six (6) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan);
(4) After the Company has effected two (2) such
registrations pursuant to this subparagraph 1.5(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold; or
(5) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1. 5 shall be deferred for a single period
not to exceed one hundred-twenty (120) days from the date of receipt of written
request from the Initiating Holders.
Subject to the foregoing clauses (1) through (5), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
------------
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided in this Agreement.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders (which managing underwriter shall
be reasonably acceptable to the Company). Notwithstanding any other provision
of this Section 1.5, if the managing underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.
-5-
<PAGE>
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution, sold (including, without limitation, any
short sale), offered for sale, contracted to sell, pledged or otherwise dispose
of any of the Common Stock, or any options or warrants to purchase any of the
Common Stock, or any securities convertible into or exchangeable for any of the
Common Stock, owned directly by the Investor or with respect to which the
Investor has the power of disposition, in any such case whether now owned or
hereafter acquired, other than (i) as a bona fide gift or gifts, provided that
the Investor provides prior written notice of such gift or gifts to the managing
underwriter and the donee or donees thereof agree to be bound by the
restrictions set forth herein or (ii) with the prior written consent of the
managing underwriter, which consent may be withheld at the sole discretion of
the managing underwriter, prior to one hundred eighty (180) days after the
effective date of such registration (the "Lock-Up Period"); provided, however,
that if such registration is not the Company's initial public offering such
Lock-Up Period shall be one hundred twenty (120) days unless the managing
underwriter requires a longer period in which case the Lock-Up Period shall be
specified by the managing underwriter but shall not exceed one hundred eighty
(180) days.
1.6 Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time, the
----------------------
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved in
such registration, all the Registrable Securities specified in a written request
or requests made within twenty (20) days after receipt of such written notice
from the Company by any Holder, but only to the extent that such inclusion will
not diminish the number of securities included by the Company or by holders of
the Company's securities who have demanded such registration.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration). Notwithstanding any other
provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a
-6-
<PAGE>
limitation of the number of shares to be underwritten, the managing underwriter
may limit the Registrable Securities to be included in such registration to a
minimum of 30% of the total shares to be included in such underwriting or
exclude them entirely in the case of the Company's initial public offering. The
Company shall so advise all Holders and the other holders distributing their
securities through such underwriting pursuant to piggyback registration rights
similar to this Section 1.6, and the number of shares of Registrable Securities
and other securities that may be included in the registration and underwriting
shall be first allocated among all Investors in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Investors at the time of filing the registration statement, and after
satisfaction of the requirements of the Investors, the remaining shares that may
be included in the registration and underwriting shall be allocated among the
officers, directors and other shareholders of the Company in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such officers and directors of the Company at the time of filing of the
registration statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company or the underwriters may round the number
of shares allocated to any Holder or other holder to the nearest 100 shares. If
any Holder or other holder disapproves of the terms of any such underwriting, he
or she may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution, sold (including, without limitation, any
short sale), offered for sale, contracted to sell, pledged or otherwise dispose
of any of the Common Stock, or any options or warrants to purchase any of the
Common Stock, or any securities convertible into or exchangeable for any of the
Common Stock, owned directly by the Investor or with respect to which the
Investor has the power of disposition, in any such case whether now owned or
hereafter acquired, other than (i) as a bona fide gift or gifts, provided that
the Investor provides prior written notice of such gift or gifts to the managing
underwriter and the donee or donees thereof agree to be bound by the
restrictions set forth herein or (ii) with the prior written consent of the
managing underwriter, which consent may be withheld at the sole discretion of
the managing underwriter, prior to one hundred eighty (180) days after the
effective date of the registration statement relating thereto; provided,
however, that if such registration is not the Company's initial public offering
such Lock-Up Period shall be one hundred twenty (120) days unless the managing
underwriter determines that marketing factors require a longer period in which
case the Lock-Up period shall be specified by the managing underwriter but shall
not exceed one hundred eighty (180) days.
(c) Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.7 Registration on Form S-3.
------------------------
(a) If the Initiating Holder requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $500,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form; provided,
--------
however,
- -------
-7-
<PAGE>
that the Company shall not be required to effect more than one registration
pursuant to this Section 1.7 in any twelve (12) month period. The Company will
(i) promptly give written notice of the proposed registration to all other
Holders, and (ii) as soon as practicable, use its best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within twenty (20)
days after receipt of such written notice from the Company. The substantive
provisions of Section 1.5(b) shall be applicable to each registration initiated
under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date six (6) months following the effective date of, a registration
statement (other than with respect to a registration statement relating to a
Rule 145 transaction, an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities), or
(iii) if the Company shall furnish to such Holder a certificate signed by the
President of the Company stating that, in the good faith judgment of the Board
of Directors, it would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a single period not to exceed one hundred twenty
(120) days from the receipt of the request to file such registration by such
Holder or Holders.
1.8 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such holder derives its rights as
an additional Holder hereunder, or such shares or securities are entitled to be
included in registrations only to the extent that the inclusion of such
securities will not diminish the amount of Registrable Securities that are
included.
1.9 Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration pursuant to Sections 1.5, 1.6 or 1.7 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company, provided that
the Company shall not be required to pay the Registration Expenses of any
registration proceeding begun pursuant to Section 1.5, the request of which has
been subsequently withdrawn by the Initiating Holders. In such case, the
Holders of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered unless the Holders of a majority of the Registrable Securities agree
to forfeit their right to one demand registration pursuant to Section 1.5.
Notwithstanding the foregoing, however, if at the time of the withdrawal, the
Holders have learned of a material adverse change in the condition, business or
prospects of the Company
-8-
<PAGE>
from that known to the Holders at the time of their request, of which the
Company had knowledge at the time of the request, then the Holders shall not be
required to pay any of said Registration Expenses or to forfeit the right to one
demand registration.
1.10 Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; and
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
Facilitate the public offering of such securities.
1.11 Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in fight of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or underwriter and
stated to be specifically for use therein.
-9-
<PAGE>
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, 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, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that the liability
of a Holder for indemnification under this Section 1.11(b) shall not exceed the
gross proceeds from the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 1.11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section I unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
1.12 Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.13 Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the
-10-
<PAGE>
public without registration, after such time as a public market exists for the
Common Stock of the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) So long as a Purchaser owns any Restricted Securities, to furnish
to the Purchaser forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Purchaser may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Purchaser to sell
any such securities without registration.
1.14 Transfer of Registration Rights. The rights to cause the Company to
-------------------------------
register securities granted Investors under Sections 1.5, 1.6 and 1.7 may be
assigned to a transferee or assignee reasonably acceptable to the Company in
connection with any transfer or assignment of Registrable Securities by a
Purchaser (together with any affiliate); provided, that (a) such transfer may
--------
otherwise be effected in accordance with applicable securities laws, (b) notice
of such assignment is given to the Company, and (c) such transferee or assignee
(i) is a wholly-owned subsidiary or constituent partner (including limited
partners) of such Purchaser, or (ii) acquires from such Purchaser 20% or more of
the shares of Registrable Securities (as appropriately adjusted for stock splits
and the like) originally purchased by the Purchaser from the Company.
1.15 Standoff Agreement. Each Holder agrees in connection with the initial
------------------
registration of the Company's securities that, upon request of the Company or
the underwriters managing any underwritten initial public offering of the
Company's securities, not to sell (including, without limitation, any short
sale), offer to sell, contract to sell, pledge or otherwise dispose of any of
the Common Stock, or any options or warrants to purchase any of the Common
Stock, or any securities convertible into or exchangeable for any of the Common
Stock, owned directly by the Holder or with respect to which the Holder has the
power of disposition, in any such case whether now owned or hereafter acquired,
other than (i) pursuant to an underwriting agreement, (ii) as a bona fide gift
or gifts, provided that the Holder provides prior written notice of such gift or
gifts to the managing underwriter and the donee or donees thereof agree to be
bound by the restrictions set forth herein or (iii) with the prior written
consent of the managing underwriter, which consent may be withheld at the sole
discretion of the managing underwriter, for such period of time (not to exceed
one hundred eighty (180) days from the effective date of such
-11-
<PAGE>
registration) as may be requested by the Company or such managing underwriters;
provided, however, that the officers and directors of the Company who own stock
of the Company also agree to such restrictions.
1.16 Termination of Rights. No Holder shall be entitled to exercise any
---------------------
right provided for in this Section 1:
(a) after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten offering of its
securities to the general public, or
(b) on or after the closing of a public offering of the Common Stock
of the Company, initiated by the Company, when all shares of the Holder's
Registrable Securities may be sold under Rule 144 during any 90-day period;
provided, however, that the provisions of this subsection (b) shall not apply
where the Holder owns more than two percent (2%) of the Company's outstanding
stock until such time as such Holder owns less than two percent (2%) of the
outstanding stock.
SECTION 2
Right of Participation
----------------------
2.1 Purchasers' Right of Participation.
----------------------------------
(a) Right of Participation. Subject to the terms and conditions
----------------------
contained in this Section 2.1, the Company hereby grants to each Purchaser the
right of participation to purchase its Pro Rata Portion of any New Securities
(as defined in subsection 2.1(b)) which the Company may, from time to time,
propose to sell and issue. A Holder's "Pro Rata Portion" for purposes of this
Section 2.1 is the ratio that (x) the sum of the number of shares of the
Company's Common Stock then held by such Purchaser and the number of shares of
the Company's Common Stock issuable upon conversion of the Preferred Stock then
held by such Holder, bears to (y) the sum of the total number of shares of the
Company's Common Stock then outstanding, the number of shares of the Company's
Common Stock issuable upon the exercise of any outstanding rights, options or
warrants, and the number of shares of the Company's Common Stock issuable upon
conversion of the then outstanding Preferred Stock.
(b) Definition of New Securities. Except as set forth below, "New
----------------------------
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New
Securities" does not include (i) the Preferred Shares or the Conversion Shares,
(ii) securities offered to the public generally pursuant to a registration
statement under the Securities Act, (iii) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets or shares or other reorganization whereby the
Company or its shareholders own not less than a majority of the voting
-12-
<PAGE>
power of the surviving or successor corporation, (iv) up to 3,600,000 shares of
the Company's Common Stock or related options or warrants convertible into or
exercisable for such Common Stock issued to employees, officers and directors
of, and consultants to, the Company, pursuant to any arrangement approved by the
Board of Directors of the Company, (v) shares of the Company's Common Stock or
related options convertible into or exercisable for such Common Stock issued to
banks, commercial lenders, lessors and other financial institutions in
connection with the borrowing of money or the leasing of equipment by the
Company, (vi) stock issued pursuant to any rights or agreements, including,
without limitation, convertible securities, options and warrants, provided that
the Company shall have compiled with the rights of participation established by
this Section 2.1 with respect to the initial sale or grant by the Company of
such rights or agreements, or (vii) stock issued in connection with any stock
split, stock dividend or recapitalization by the Company.
(c) Notice of Right. In the event the Company proposes to undertake
---------------
an issuance of New Securities, it shall give each Purchaser written notice of
its intention, describing the type of New Securities and the price and terms
upon which the Company proposes to issue the same. Each Purchaser shall have
twenty (20) days from the date of receipt of any such notice to agree to
purchase shares of such New Securities (up to the amount referred to in
subsection 2.1(a)), for the price and upon the terms specified in the notice, by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.
(d) Exercise of Right. If any Purchaser exercises its right of
-----------------
participation under this Agreement, the closing of the purchase of the New
Securities with respect to which such right has been exercised shall take place
within ninety (90) calendar days after the Purchaser gives notice of such
exercise, which period of time shall be extended in order to comply with
applicable laws and regulations. Upon exercise of such right of participation,
the Company and the Purchaser shall be legally obligated to consummate the
purchase contemplated thereby and shall use their best efforts to secure any
approvals required in connection therewith.
(e) Lapse and Reinstatement of Right. In the event a Purchaser fails
--------------------------------
to exercise the right of participation provided in this Section 2.1 within said
twenty (20) day period, the Company shall have ninety (90) days thereafter to
sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of said agreement) to sell the New Securities not elected to be purchased by
such Purchaser at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities or entered into an agreement
to sell the New Securities within said ninety (90) day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) days
from the date of said agreement), the Company shall not thereafter issue or sell
any New Securities without first offering such securities to the Purchasers in
the manner provided above.
(f) Assignment. The right of the Purchasers to purchase any part of
----------
the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of a Purchaser, or other persons or
organizations who acquire the lesser of (i) 20% or more shares of
-13-
<PAGE>
Restricted Securities (as adjusted for stock splits and the like) or (ii) all of
the Restricted Securities then owned by such Purchaser.
2.2 Termination of Participation Right. The rights of participation
----------------------------------
granted under Section 2.1 of this Agreement shall terminate on and be of no
further force or effect upon the earlier of (i) the consummation of the
Company's sale of its Common Stock in an underwritten public offering pursuant
to an effective registration statement filed under the Securities Act
immediately subsequent to which the Company shall be obligated to file annual
and quarterly reports with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act or (ii) the registration by the Company of a class of its equity
securities under Section 12(b) or 12(g) of the Exchange Act.
SECTION 3
Miscellaneous
-------------
3.1 Assignment. Except as otherwise provided in this Agreement, the terms
----------
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties to this Agreement.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California in the United States of America
without giving effect to the conflicts of laws principles thereof.
3.4 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.5 Notices. Any notice required or permitted by this Agreement shall be
-------
in writing and shall be sent by prepaid registered or certified mail return
receipt requested, or otherwise delivered by hand or by messenger addressed to
the other party at the address shown below or at such other address for which
such party gives notice under this Agreement. Such notice shall be deemed to
have been given when delivered if delivered personally, or, if sent by mail, at
the earlier of its receipt or three (3) days after deposit in the mail.
3.6 Severability. If one or more provisions of this Agreement are held to
------------
be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
-14-
<PAGE>
3.7 Amendment and Waiver. Any provision of this Agreement may be amended
--------------------
or waived with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities, so long as the
effect is to treat all Holders equally. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities and the Company. In addition, the Company may waive performance of
any obligation owing to it, as to some or all of the Holders of Registrable
Securities, or agree to accept alternatives to such performance, without
obtaining the consent of any Holder of Registrable Securities. In the event that
an underwriting agreement is entered into between the Company and any Holder,
and such underwriting agreement contains terms differing from this Agreement, as
to any such Holder the terms of such underwriting agreement shall govern.
3.8 Effect of Amendment or Waiver. The Investors and their successors and
-----------------------------
assigns acknowledge that by the operation of Section 2.7 of this Agreement the
holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
3.9 Rights of Holders. Each holder of Registrable Securities shall have
-----------------
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
Stations the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
3.10 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
3.11 Restatement of Prior Agreement. The Company and certain of the
------------------------------
Investors are parties to the Former Agreement. The Former Agreement may be
amended by the written consent of the holders of a majority of the Registrable
Securities. Through their execution of this Agreement, the Company and such
Investors, constituting at least 50% of the holders of the Registrable
Securities under the Former Agreement, agree to terminate the Former Agreement
and restate the terms thereof through this Agreement, with the result that this
Agreement shall constitute the sale agreement among the parties hereto with
respect to the registration of Registrable Securities.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
OMNIVISION TECHNOLOGIES, INC.
a California corporation
By: /s/ Shaw Hong
--------------------
Shaw Hong
President
-16-
<PAGE>
Series A Preferred Stock
Investors: AUCERA TECHNOLOGY GROUP
By /s/ Aucera Technology Group
---------------------------------
Title
------------------------------
/s/ Shen-Chih Chang
-----------------------------------
Shen-Chih Chang
/s/ Datong Chen
-----------------------------------
Datong Chen
/s/ Stanley Chui
-----------------------------------
Stanley Chui
/s/ Xinping He
-----------------------------------
Xinping He
HONG FAMILY TRUST
By /s/ Hong Family Trust
---------------------------------
Title
------------------------------
/s/ Xinping He
-----------------------------------
Xinping He
/s/ Jeanette Hong
-----------------------------------
Jeanette Hong
-17-
<PAGE>
/s/ Shaw Hong
-----------------------------------
Shaw Hong
MAGAMAX CORP.
By /s/ Magamax
---------------------------------
Title
------------------------------
MAGANUS DEVELOPMENT CORP.
By /s/ Maganus Development Corp.
---------------------------------
Title
------------------------------
MAGNUS INVESTING CORP.
By /s/ Magnus Investing Corp.
---------------------------------
Title
------------------------------
/s/ Andy Shia
-----------------------------------
Andy Shia
/s/ Tai-Ching Shyu
-----------------------------------
Tai-Ching Shyu
/s/ Raymond Wu
-----------------------------------
Raymond Wu
-18-
<PAGE>
Series B Preferred Stock
Investors:
/s/ Marianne S. Bradley
-----------------------------------
Marianne S. Bradley
BROTHERS INVESTMENT CORP.
By: /s/ Brothers Investment Corp.
--------------------------------
Title:
-----------------------------
/s/ Sam Chang
-----------------------------------
Sam Chang
/s/ Yi-You Chang
-----------------------------------
Yi-You Chang
/s/ Chu Yin Yeh Chen
-----------------------------------
Chu Yin Yeh Chen
/s/ Jaan-Ming Chen
-----------------------------------
Jaan-Ming Chen
/s/ Ling-Ying Chen
-----------------------------------
Ling-Ying Chen
/s/ Melinda N. Chen
-----------------------------------
Melinda N. Chen
/s/ Yih-Wu Chen
-----------------------------------
Yih-Wu Chen
-----------------------------------
-19-
<PAGE>
Eugene Cheng
/s/ Lo-Hou Chen
--------------------------------------
Lo-Hou Chen
/s/ Chen-Chieh Chien
--------------------------------------
Chen-Chieh Chien
COSMOS TECHNOLOGY VENTURE
CAPITAL INVESTMENT CORPORATION
By: /s/ Cosmos Technology Venture
Capital Investment Corporation
-----------------------------------
Title:
--------------------------------
FORTUNE VENTURE CAPITAL CO.
By: /s/ Fortune Venture Capital
-----------------------------------
Title:
--------------------------------
GOLDEN TECHNOLOGY VENTURE
CAPITAL INVESTMENT CORP.
By: /s/ Golden Technology Venture
Capital Investment Corp.
-----------------------------------
Title:
--------------------------------
/s/ Ren-Wu Gong
--------------------------------------
Ren-Wu Gong
-20-
<PAGE>
/s/ Ting Herh
-----------------------------------
Ting Herh
/s/ Johntie Hsu
-----------------------------------
Johntie Hsu
/s/ Hsien-Ten Huang
-----------------------------------
Hsien-Ten Huang
/s/ Teng Jui-Chen
-----------------------------------
Teng Jui-Chen
/s/ Pei Fung Ku
-----------------------------------
Pei Fung Ku
/s/ Robert P. Latta
-----------------------------------
Robert P. Latta
/s/ Jui-Chen Lee
-----------------------------------
Jui-Chen Lee
/s/ Hsueh-Fu Liao
-----------------------------------
Hsueh-Fu Liao
/s/ Chuan Yu Lin
-----------------------------------
Chuan Yu Lin
/s/ Fred R. Lin
-----------------------------------
Fred R. Lin
/s/ Chiu-Tsao Liu
-----------------------------------
Chiu-Tsao Liu
-21-
<PAGE>
/s/ Shaw Teong Liu
-----------------------------------
Shaw Teong Liu
LTC HOLDING PTE LTD.
By: /s/ LTC Holding PTE Ltd.
-------------------------------
Title:_____________________________
/s/ Hsiu-Fen Lu
-----------------------------------
Hsiu-Fen Lu
/s/ Yi-Chen Mo
-----------------------------------
Yi-Chen Mo
/s/ Hsin-An Mu
-----------------------------------
Hsin-An Mu
/s/ Hsiao-Chen Peng
-----------------------------------
Hsiao-Chen Peng
/s/ Li Chung Shin
-----------------------------------
Li Chung Shin
/s/ Kung-Yuan Soong
-----------------------------------
Kung-Yuan Soong
/s/ Ya-Hui Liu Tang
-----------------------------------
Ya-Hui Liu Tang
/s/ Ming-Jen Tseng
-----------------------------------
Ming-Jen Tseng
-22-
<PAGE>
/s/ Sen-Tai Wen
-----------------------------------
Sen-Tai Wen
/s/ I-Cheng Wong
-----------------------------------
I-Cheng Wong
/s/ Somjai Wongaphisamphot
-----------------------------------
Somjai Wongaphisamphot
WS INVESTMENTS 96B
By: /s/ WS Investments 96B
-------------------------------
Title:_____________________________
/s/ Chun Yang
-----------------------------------
Chun Yang
/s/ Chih-Chiang Yeh
-----------------------------------
Chih-Chiang Yeh
/s/ Chih-Kuo Yeh
-----------------------------------
Chih-Kuo Yeh
/s/ Chih-Hung Yeh
-----------------------------------
Chih-Hung Yeh
/s/ Der-Zhong Yeh
-----------------------------------
Der-Zhong Yeh
/s/ Chih-Ming Yu
-----------------------------------
Chih-Ming Yu
-23-
<PAGE>
Series C Preferred Stock
Investors: DAITUNG VENTURE CAPITAL
(First Closing) CORPORATION
By: /s/ Daitung Venture Capital Corporation
-----------------------------------------
Title:
--------------------------------------
LITUNG VENTURE CAPITAL CORPORATION
By: /s/ Litung Venture Capital Corporation
-----------------------------------------
Title:
--------------------------------------
WANTUNG VENTURE CAPITAL
CORPORATION
By: /s/ Wantung Venture Capital Corporation
-----------------------------------------
Title:
--------------------------------------
HUITUNG INVESTMENT (BVI) LIMITED
By: /s/ Huitung Investment (BVI) Limited
-----------------------------------------
Title:
--------------------------------------
ORIX INVESTMENT AND
MANAGEMENT PTE. LTD.
By: /s/ Orix Investment and Management PTE. LTD.
---------------------------------------------
Title:
------------------------------------------
-24-
<PAGE>
UNIVERSITY VENTURES, INC.
By: /s/ University Ventures, Inc.
--------------------------------
Title:
-----------------------------
/s/ Wen-Bing Soong
-----------------------------------
Wen-Bing Soong
MATON FUND I, L.P.
By: /s/ Maton Fund I, L.P.
--------------------------------
Title:
-----------------------------
/s/ Christine Kim
-----------------------------------
Christine Kim
/s/ Ming-Chin Wu
-----------------------------------
Ming-Chin Wu
Series C Preferred Stock
Investors:
(May 1998 Closing)
-----------------------------------
-25-
<PAGE>
Exhibit A
---------
HOLDERS OF SERIES A PREFERRED STOCK
Shares of
Name Series A Preferred
- ------------------------------- -----------------------
Aucera Technology Group 1,333,334
Shen-Chih Chang 666,667
Datong Chen 50,000
Stanley Chui 833,333
Xinping He 16,667
Hong Family Trust 8,333
Jeanette Hong 50,000
Shaw Hong 41,667
Magamax Corp. 83,334
Maganus Development Corp. 666,667
Magnus Investing Corp. 416,667
Andy Shia 16,667
Tai-Ching Shyu 33,333
Raymond Wu 83,334
---------
4,300,003
=========
<PAGE>
Exhibit A Cont'd.
-----------------
HOLDERS OF SERIES B PREFERRED STOCK
Shares of
Name Series B Preferred
- ------------------------------------------------------ ----------------------
Marianne S. Bradley 3,334
Brothers Investment Corp. 60,000
Sam Chang 20,000
Yi-You Chang 10,000
Chu Yin Yeh Chen 200,000
Jaan-Ming Chen 15,000
Ling-Ying Chen 15,000
Melinda N. Chen 3,000
Yih-Wu Chen 20,000
Eugene Cheng 13,333
Lo-Hou Chew 60,000
Chen-Chieh Chien 20,000
Cosmos Technology Venture Capital Investment Corporation 500,000
Fortune Venture Capital Co. 540,000
Golden Technology Venture Capital Investment Corp. 500,000
Ren Wu Gong 20,000
Ting Herh 12,000
Johntie Hsu 180,000
Hsien-Ten Huang 10,000
Teng Jui-Chen 2,000
Pei Fung Ku 20,000
Robert P. Latta 3,334
Jui-Chen Lee 2,000
Hsueh-Fu Liao 50,000
Chuan Yu Lin 20,000
Fred R. Lin 10,000
Chiu-Tsao Liu 10,000
Shaw Teong Liu 6,667
LTC Holding PTE Ltd. 472,000
Hsiu-Fen Lu 200,000
Yi-Chen Mo 15,000
Hsin-An Mu 10,000
Hsiao-Chen Peng 36,000
Li Chung Shih 33,333
Kung-Yuan Soong 173,000
Ya-Hui Liu Tang 60,000
Ming-Jen Tseng 20,000
-2-
<PAGE>
Shares of
Name Series B Preferred
- ------------------------------------------------------ ----------------------
Sen-Tai Wen 50,000
I-Chang Wong 15,000
Somjai Wongaphisamphot 50,000
WS Investments 96B 16,667
Chun Yang 15,000
Chih Chiang Yeh 60,000
Chih-Kuo Yeh 60,000
Chih-Hung Yeh 6,000
Der-Zhong Yeh 34,000
Chih-Ming Yu 20,000
---------
3,671,668
-3-
<PAGE>
Exhibit A Cont'd.
-----------------
HOLDERS OF SERIES C PREFERRED STOCK
(First Closing)
Shares of
Series C Preferred
Name (Post-Split)
- ------------------------------------------- ---------------------------
Daitung Venture Capital Corporation 133,333
Litung Venture Capital Corporation 133,333
Wantung Venture Capital Corporation 333,333
Huitung Investment (BVI) Limited 266,667
ORIX Investment and Management Pte. Ltd. 133,333
University Ventures, Inc. 166,667
Wen-Bing Soong 200,000
Maton Fund I, L.P. 166,667
Christine Kim 3,333
Ming-Chin Wu 16,000
-------
TOTAL 1,552,666
-4-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 - Restrictions on Transferability; Registration Rights................ 1
1.1 Certain Definitions................................................. 1
1.2 Restrictions........................................................ 3
1.3 Restrictive Legend.................................................. 3
1.4 Notice of Proposed Transfers........................................ 3
1.5 Requested Registration.............................................. 4
1.6 Company Registration................................................ 6
1.7 Registration on Form S-3............................................ 8
1.8 Limitations on Subsequent Registration Rights....................... 8
1.9 Expenses of Registration............................................ 9
1.10 Registration Procedures............................................. 9
1.11 Indemnification..................................................... 9
1.12 Information by Holder............................................... 11
1.13 Rule 144 Reporting.................................................. 11
1.14 Transfer of Registration Rights..................................... 11
1.15 Standoff Agreement.................................................. 12
1.16 Termination of Rights............................................... 12
SECTION 2 - Right of Participation.............................................. 12
2.1 Purchasers' Right of Participation.................................. 12
2.2 Termination of Participation Right.................................. 14
SECTION 3 - Miscellaneous....................................................... 14
3.1 Assignment.......................................................... 14
3.2 Third Parties....................................................... 14
3.3 Governing Law....................................................... 14
3.4 Counterparts........................................................ 15
3.5 Notices............................................................. 15
3.6 Severability........................................................ 15
3.7 Amendment and Waiver................................................ 15
3.8 Effect of Amendment or Waiver....................................... 15
3.9 Rights of Holders................................................... 15
3.10 Delays or Omissions................................................. 15
3.11 Restatement of Prior Agreement...................................... 16
</TABLE>
-i-
<PAGE>
EXHIBIT 5.1
Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
TELEPHONE 650-493-9300 FACSIMILE 650-493-6811
WWW.WSGR.COM
MARCH , 2000
OmniVision Technologies, Inc.
930 Thompson Place
Sunnyvale, California 94086
Re: REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (File No. 333 )
to be filed by you with the Securities and Exchange Commission on March , 2000
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 5,750,000 shares (including shares
issuable upon exercise of the underwriters' over-allotment option) of Common
Stock of OmniVision Technologies, Inc. (the "Shares"). As your counsel in
connection with this transaction, we have examined the proceedings proposed to
be taken in connection with said sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
various states, where required, the Shares when issued and sold in the manner
referred to in the Registration Statement will be legally and validly issued,
fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting a part thereof,
and any amendment thereto.
Sincerely,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
EXHIBIT 10.1
OMNIVISION TECHNOLOGIES, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
___________, 2000 by and between OmniVision Technologies, Inc., a Delaware
corporation (the "Company"), and ______________ ("Indemnitee").
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and its related
entities;
WHEREAS, in order to induce Indemnitee to continue to provide services to
the Company, the Company wishes to provide for the indemnification of, and the
advancement of expenses to, Indemnitee to the maximum extent permitted by law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company's directors, officers, employees,
agents and fiduciaries, the significant increases in the cost of such insurance
and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in connection with the Company's reincorporation, the Company and
Indemnitee desire to continue to have in place the additional protection
provided by an indemnification agreement, with such changes as are required to
conform the existing agreement to Delaware law and to provide indemnification
and advancement of expenses to the Indemnitee to the maximum extent permitted by
Delaware law;
WHEREAS, in view of the considerations set forth above, the Company desires
that Indemnitee shall be indemnified and advanced expenses by the Company as set
forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below.
1. Certain Definitions.
-------------------
a. "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company, becomes the
"beneficial owner" (as defined
<PAGE>
in Rule 13d-3 under said Act), directly or indirectly, of securities of the
Company representing more than 50% of the total voting power represented by the
Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation
other than a merger or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
related transactions) all or substantially all of the Company's assets.
b. "Claim" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.
c. References to the "Company" shall include, in addition to
OmniVision Technologies, Inc., any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger to which
OmniVision Technologies, Inc. (or any of its wholly owned subsidiaries) is a
party which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued. Company shall also include
OmniVision Technologies, Inc., a California corporation, the predecessor of
OmniVision Technologies, Inc., a Delaware corporation.
d. "Covered Event" shall mean any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee, agent or fiduciary
of the Company, or any subsidiary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action or inaction on the part of Indemnitee while serving in
such capacity.
-2-
<PAGE>
e. "Expenses" shall mean any and all expenses (including attorneys'
fees and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, to be a witness in or to participate in, any
action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of any Claim and any federal,
state, local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement.
f. "Expense Advance" shall mean a payment to Indemnitee pursuant to
Section 3 of Expenses in advance of the settlement of or final judgement in any
action, suit, proceeding or alternative dispute resolution mechanism, hearing,
inquiry or investigation which constitutes a Claim.
g. "Independent Legal Counsel" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other Indemnitees under similar
indemnity agreements).
h. References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
i. "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
j. "Section" refers to a section of this Agreement unless otherwise
indicated.
k. "Voting Securities" shall mean any securities of the Company that
vote generally in the election of directors.
2. Indemnification.
---------------
a. Indemnification of Expenses. Subject to the provisions of
---------------------------
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if
-3-
<PAGE>
Indemnitee was or is or becomes a party to or witness or other participant in,
or is threatened to be made a party to or witness or other participant in, any
Claim (whether by reason of or arising in part out of a Covered Event),
including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses.
b. Review of Indemnification Obligations. Notwithstanding the
-------------------------------------
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; provided, however, that if Indemnitee has commenced or
-------- -------
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
c. Indemnitee Rights on Unfavorable Determination; Binding Effect.
--------------------------------------------------------------
If any Reviewing Party determines that Indemnitee substantively is not entitled
to be indemnified hereunder in whole or in part under applicable law, Indemnitee
shall have the right to commence litigation seeking an initial determination by
the court or challenging any such determination by such Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and, subject to
the provisions of Section 15, the Company hereby consents to service of process
and to appear in any such proceeding. Absent such litigation, any determination
by any Reviewing Party shall be conclusive and binding on the Company and
Indemnitee.
d. Selection of Reviewing Party; Change in Control. If there has
-----------------------------------------------
not been a Change in Control, any Reviewing Party shall be selected by the Board
of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such
-4-
<PAGE>
counsel against any and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto. Notwithstanding any other provision of this
Agreement, the Company shall not be required to pay Expenses of more than one
Independent Legal Counsel in connection with all matters concerning a single
Indemnitee, and such Independent Legal Counsel shall be the Independent Legal
Counsel for any or all other Indemnitees unless (i) the employment of separate
counsel by one or more Indemnitees has been previously authorized by the Company
in writing, or (ii) an Indemnitee shall have provided to the Company a written
statement that such Indemnitee has reasonably concluded that there may be a
conflict of interest between such Indemnitee and the other Indemnitees with
respect to the matters arising under this Agreement.
e. Mandatory Payment of Expenses. Notwithstanding any other
-----------------------------
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
----------------
a. Obligation to Make Expense Advances. Upon receipt of a written
-----------------------------------
undertaking by or on behalf of the Indemnitee to repay such amounts if it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
therefore by the Company hereunder under applicable law, the Company shall make
Expense Advances to Indemnitee.
b. Form of Undertaking. Any obligation to repay any Expense
-------------------
Advances hereunder pursuant to a written undertaking by the Indemnitee shall be
unsecured and no interest shall be charged thereon.
c. Determination of Reasonable Expense Advances. The parties agree
--------------------------------------------
that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
---------------------------------------------------
a. Timing of Payments. All payments of Expenses (including without
------------------
limitation Expense Advances) by the Company to the Indemnitee pursuant to this
Agreement shall be made to the fullest extent permitted by law as soon as
practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than thirty (30) business days after such written
demand by Indemnitee is presented to the Company, except in the case of Expense
Advances, which shall be made no later than ten (10) business days after such
written demand by Indemnitee is presented to the Company.
-5-
<PAGE>
b. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
--------------------------------
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
c. No Presumptions; Burden of Proof. For purposes of this
--------------------------------
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
----
contendere, or its equivalent, shall not create a presumption that Indemnitee
- ----------
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, shall be a
defense to Indemnitee's claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder under applicable
law, the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
d. Notice to Insurers. If, at the time of the receipt by the
------------------
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
e. Selection of Counsel. In the event the Company shall be
--------------------
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently retained by
or on behalf of Indemnitee with respect to the same Claim; provided that, (i)
Indemnitee shall have the right to employ Indemnitee's separate counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of separate
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably
-6-
<PAGE>
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees and expenses
of Indemnitee's separate counsel shall be Expenses for which Indemnitee may
receive indemnification or Expense Advances hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------
a. Scope. The Company hereby agrees to indemnify the Indemnitee
-----
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
b. Nonexclusivity. The indemnification and the payment of Expense
--------------
Advances provided by this Agreement shall be in addition to any rights to which
Indemnitee may be entitled under the Company's Certificate of Incorporation, its
Bylaws, any other agreement, any vote of stockholders or disinterested
directors, the General Corporation Law of the State of Delaware, or otherwise.
The indemnification and the payment of Expense Advances provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
--------------------------
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
-----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
---------------------
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the
-7-
<PAGE>
question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
-------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
----------
the Company shall not be obligated pursuant to the terms of this Agreement:
a. Excluded Action or Omissions. To indemnify or make Expense
----------------------------
Advances to Indemnitee with respect to Claims arising out of acts, omissions or
transactions for which Indemnitee is prohibited from receiving indemnification
under applicable law.
b. Claims Initiated by Indemnitee. To indemnify or make Expense
------------------------------
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or cross-claim, except (i)
with respect to actions or proceedings brought to establish or enforce a right
to indemnification under this Agreement or any other agreement or insurance
policy or under the Company's Certificate of Incorporation or Bylaws now or
hereafter in effect relating to Claims for Covered Events, (ii) in specific
cases if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, Expense Advances, or insurance recovery, as
the case may be.
c. Lack of Good Faith. To indemnify Indemnitee for any Expenses
------------------
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
d. Claims Under Section 16(b). To indemnify Indemnitee for Expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.
-8-
<PAGE>
12. Binding Effect; Successors and Assigns. This Agreement shall be
--------------------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or Interpretation.
---------------------------------------------------------------------
In the event that any action is instituted by Indemnitee under this Agreement or
under any liability insurance policies maintained by the Company to enforce or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee with respect to such action
(including without limitation attorneys' fees), regardless of whether Indemnitee
is ultimately successful in such action, unless as a part of such action a court
having jurisdiction over such action makes a final judicial determination (as to
which all rights of appeal therefrom have been exhausted or lapsed) that each of
the material assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous; provided, however, that until such final
judicial determination is made, Indemnitee shall be entitled under Section 3 to
receive payment of Expense Advances hereunder with respect to such action. In
the event of an action instituted by or in the name of the Company under this
Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee in
defense of such action (including without limitation costs and expenses incurred
with respect to Indemnitee's counterclaims and cross-claims made in such
action), unless as a part of such action a court having jurisdiction over such
action makes a final judicial determination (as to which all rights of appeal
therefrom have been exhausted or lapsed) that each of the material defenses
asserted by Indemnitee in such action was made in bad faith or was frivolous;
provided, however, that until such final judicial determination is made,
Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action.
14. Period of Limitations. No legal action shall be brought and no cause
---------------------
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
-------- -------
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
15. Notice. All notices, requests, demands and other communications under
------
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for
-9-
<PAGE>
by the party addressed, on the date of such delivery, or (ii) if mailed by
domestic certified or registered mail with postage prepaid, on the third
business day after the date postmarked. Addresses for notice to either party are
as shown on the signature page of this Agreement, or as subsequently modified by
written notice.
16. Consent to Jurisdiction. The Company and Indemnitee each hereby
-----------------------
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
17. Severability. The provisions of this Agreement shall be severable
------------
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
18. Choice of Law. This Agreement, and all rights, remedies, liabilities,
-------------
powers and duties of the parties to this Agreement, shall be governed by and
construed in accordance with the laws of the State of Delaware as applied to
contracts between Delaware residents entered into and to be performed entirely
in the State of Delaware without regard to principles of conflicts of laws.
19. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
20. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. Integration and Entire Agreement. This Agreement sets forth the
--------------------------------
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
22. No Construction as Employment Agreement. Nothing contained in this
---------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.
OMNIVISION TECHNOLOGIES, INC.
By: ___________________________
Name: _________________________
Title: ________________________
Address: 930 Thompson Place
Sunnyvale, CA 94086
AGREED TO AND ACCEPTED
INDEMNITEE:
________________________________
(signature)
________________________________
Name
________________________________
Address
-11-
<PAGE>
EXHIBIT 10.2
OMNIVISION TECHNOLOGIES, INC.
2000 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
--------------------
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of its Committees appointed
-------------
in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
-----------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by the Board
---------
in accordance with Section 4 hereof.
(f) "Common Stock" means the Common Stock of the Company.
------------
(g) "Company" means OmniVision Technologies, Inc., a California
-------
corporation.
(h) "Consultant" means any person who is engaged by the Company or any
----------
Parent or Subsidiary to render consulting or advisory services to such entity
and who is compensated for such services.
(i) "Director" means a member of the Board of Directors of the
--------
Company.
(j) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave
<PAGE>
of absence approved by the Company is not so guaranteed, on the 181st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(l) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(m) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(o) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "Option" means a stock option granted pursuant to the Plan.
------
(q) "Option Agreement" means a written or electronic agreement
----------------
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(r) "Option Exchange Program" means a program whereby outstanding
-----------------------
Options are exchanged for Options with a lower exercise price.
(s) "Optioned Stock" means the Common Stock subject to an Option.
--------------
-2-
<PAGE>
(t) "Optionee" means the holder of an outstanding Option granted
--------
under the Plan.
(u) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(v) "Plan" means this 2000 Stock Plan.
----
(w) "Service Provider" means an Employee, Director or Consultant.
----------------
(x) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 below.
(y) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is 3,000,000 Shares, together with an annual increase in
the number of shares of Common Stock reserved for issuance hereunder on the
first day of the Company's fiscal year, beginning with May 1, 2002, equal to the
lesser of (i) 1,500,000 shares, (ii) six percent (6%) of the outstanding shares
of the Company as of the last day of the prior fiscal year or (iii) such amount
as determined by the Board of Directors. The Shares may be authorized but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, upon exercise of an Option, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan.
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Multiple Administrative Bodies. The Plan may be
------------------------------
administered by different Committees with respect to different groups of
Employees and Consultants.
(ii) Section 162(m). To the extent that the Administrator
--------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
-3-
<PAGE>
(iv) Other Administration. Other than as provided above, the
--------------------
Plan shall be administered by (A) the Board or (B) a Committee, which Committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each
such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, of any Option
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to
-4-
<PAGE>
be determined. All elections by Optionees to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(xii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations
----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees.
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted to Service Providers.
Incentive Stock Options may be granted only to Employees.
(b) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate such relationship at any time, with or
without cause.
(d) Upon the Company, or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act, or upon the Plan being assumed by a corporation having a class of
common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants to options to
Service Providers:
(i) No Employee shall be granted in any fiscal year, Options to
purchase more than 500,000 Shares.
(ii) In connection with his or her initial employment, and
Employee may be granted Options to purchase up to an additional 1,000,000 Shares
which shall not count against the amount set forth in subsection (i) above.
-5-
<PAGE>
(iii) The foregoing limitations shall be adjusted
appropriately in connection with any change in the Company?s capitalization as
described in Section 11.
(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 11), the cancelled Option will be counted against the
limits set forth in subsections (i)and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
6. Term of Plan. The Plan shall become effective upon its adoption by
------------
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of the grant.
(B) granted to any other Service Provider, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
-6-
<PAGE>
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, (6) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan, (7) any
combination of the foregoing methods of payment, or (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration may
be reasonably expected to benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a Stockholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
-7-
<PAGE>
(b) Termination of Relationship as a Service Provider. If an Optionee
-------------------------------------------------
ceases to be a Service Provider, such Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement (of at least
thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If such disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option on the day three months and one day following such termination. If, on
the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
-----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
-8-
<PAGE>
10. Non-Transferability of Options. Options may not be sold, pledged,
------------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
Stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the Option, Board of Directors of the Company, at
its discretion, may choose to accelerate the vesting of some portion of or all
of the outstanding options such that the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate
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<PAGE>
upon the expiration of such period. For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
12. Time of Granting Options and Stock Purchase Rights. The date of grant
--------------------------------------------------
of an Option shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option, or such other date as is
determined by the Administrator. Notice of the determination shall be given to
each Employee or Consultant to whom an Option is so granted within a reasonable
time after the date of such grant.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Board shall obtain stockholder approval
--------------------
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
14. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention
-10-
<PAGE>
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
15. Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
16. Reservation of Shares. The Company, during the term of this Plan,
---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. Stockholder Approval. The Plan shall be subject to approval by the
--------------------
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the degree and manner
required under Applicable Laws.
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<PAGE>
EXHIBIT 10.3
OMNIVISION TECHNOLOGIES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock Purchase Plan
of OmniVision Technologies, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" shall mean the Board of Directors of the Company or any
-----
committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" shall mean the common stock of the Company.
------------
(d) "Company" shall mean OmniVision Technologies, Inc. and any
-------
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all compensation reportable on Form
------------
W-2, including without limitation base straight time gross earnings, sales
commissions, payments for overtime, shift premiums, incentive compensation,
incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary that has been
---------------------
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
--------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first Trading Day of each
---------------
Offering Period.
(i) "Exercise Date" shall mean the last Trading Day of each Purchase
-------------
Period.
<PAGE>
(j) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock prior
to the date of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board; or
(iv) For purposes of the Enrollment Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "Registration
Statement").
(k) "Offering Periods" shall mean the periods of approximately
----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after June 1 and
December 1 of each year and terminating on the last Trading Day in the periods
ending twenty-four months later; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
May 31, 2002. The duration and timing of Offering Periods may be changed
pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.
----
(m) "Purchase Period" shall mean the approximately six month period
---------------
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.
(n) "Purchase Price" shall mean 85% of the Fair Market Value of a
--------------
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that the Purchase Price may be adjusted by the Board
pursuant to Section 20.
(o) "Reserves" shall mean the number of shares of Common Stock
--------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
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<PAGE>
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
-----------
and the Nasdaq System are open for trading.
3. Eligibility.
-----------
(a) Any Employee (as defined in Section 2(g)) who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate in
the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after June 1 and December 1 each year, or on such other date
as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
May 31, 2002. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
-3-
<PAGE>
6. Payroll Deductions.
------------------
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen percent (15%) of
the Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period, including allowing such
changes only at the beginning of each Purchase Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
---------------
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than a
number of shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock (subject to any adjustment pursuant to
Section 19) on the Enrollment Date, and provided further that such purchase
shall be
-4-
<PAGE>
subject to the limitations set forth in Sections 3(b) and 13 hereof. The Board
may, for future Offering Periods, increase or decrease, in its absolute
discretion, the maximum number of shares of the Company's Common Stock an
Employee may purchase during each Purchase Period of such Offering Period.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire
on the last day of the Offering Period.
8. Exercise of Option.
------------------
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
shareholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
--------
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal.
----------
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any
-5-
<PAGE>
time by giving written notice to the Company in the form of Exhibit B to this
Plan. All of the participant's payroll deductions credited to his or her account
shall be paid to such participant promptly after receipt of notice of withdrawal
and such participant's option for the Offering Period shall be automatically
terminated, and no further payroll deductions for the purchase of shares shall
be made for such Offering Period. If a participant withdraws from an Offering
Period, payroll deductions shall not resume at the beginning of the succeeding
Offering Period unless the participant delivers to the Company a new
subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. Termination of Employment.
-------------------------
Upon a participant's ceasing to be an Employee, for any reason, he or
she shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant's account during the Offering Period but
not yet used to exercise the option shall be returned to such participant or, in
the case of his or her death, to the person or persons entitled thereto under
Section 15 hereof, and such participant's option shall be automatically
terminated. The preceding sentence notwithstanding, a participant who receives
payment in lieu of notice of termination of employment shall be treated as
continuing to be an Employee for the participant's customary number of hours per
week of employment during the period in which the participant is subject to such
payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
--------
participant in the Plan.
13. Stock.
-----
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 1,500,000 shares together with an annual increase to the number of
shares reserved for issuance thereunder on the first day of the Company's fiscal
year beginning in May 1, 2001, equal to the lesser of (i) 1,000,000 shares, (ii)
four percent (4%) of the outstanding shares of the Company on the last day of
the prior fiscal year or (iii) such amount as determined by the Board.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
-6-
<PAGE>
14. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each participant
-------
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
-7-
<PAGE>
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
---------------------------------------------------------------------
Merger or Asset Sale.
- --------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
------------------------
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board
-8-
<PAGE>
of Directors on any Exercise Date if the Board determines that the termination
of the Offering Period or the Plan is in the best interests of the Company and
its shareholders. Except as provided in Section 19 and this Section 20 hereof,
no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
(ii) shortening any Offering Period so that Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of the
Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
-9-
<PAGE>
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company; provided, however, the Plan shall not become
effective until the effective date of the Company's initial public offering
pursuant to a registration statement filed with the Securities and Exchange
Commission. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 20 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
-----------------------------------------------
permitted by any applicable laws, regulations, or stock exchange rules, if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
-10-
<PAGE>
EXHIBIT A
---------
OMNIVISION TECHNOLOGIES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in the OmniVision
Technologies, Inc. Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to purchase shares of the Company's Common
Stock in accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday during the Offering Period in
accordance with the Employee Stock Purchase Plan. (Please note that the
percentage withholding must be between 1% and 15% and that no fractional
percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is subject
to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only):
_____________________________.
6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares at the time such
shares were purchased by me over the price which I paid for the shares. I
-
hereby agree to notify the Company in writing within 30 days after the date
---------------------------------------------------------------------------
of any disposition of my shares and I will make adequate provision for
----------------------------------------------------------------------
Federal, state or other tax withholding obligations, if any, which arise
------------------------------------------------------------------------
upon the
--------
<PAGE>
disposition of the Common Stock. The Company may, but will not be
-------------------------------
obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year and
1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to
the extent of an amount equal to the lesser of (1) the excess of the fair
market value of the shares at the time of such disposition over the
purchase price which I paid for the shares, or (2) 15% of the fair market
value of the shares on the first day of the Offering Period. The remainder
of the gain, if any, recognized on such disposition will be taxed as
capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)______________________________________________________
(First) (Middle) (Last)
_________________________ _________________________________________
Relationship
_________________________________________
(Address)
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ _________________________________________
Signature of Employee
_________________________________________
Spouse's Signature (If beneficiary other
than spouse)
-2-
<PAGE>
EXHIBIT B
---------
OMNIVISION TECHNOLOGIES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the OmniVision
Technologies, Inc. Employee Stock Purchase Plan which began on ____________,
______ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
________________________________
________________________________
________________________________
Signature:
________________________________
Date:____________________________
<PAGE>
EXHIBIT 10.4
OMNIVISION TECHNOLOGIES, INC.
2000 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 2000 Director Option Plan are
--------------------
to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Board" shall mean the Board of Directors of the Company.
-----
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" shall mean the common stock of the Company.
------------
(d) "Company" shall mean OmniVision Technologies, Inc.
-------
(e) "Director" shall mean a member of the Board.
--------
(f) "Disability" shall mean total and permanent disability as defined in
----------
section 22(e)(3) of the Code.
(g) "Employee" shall mean any person, including officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(i) "Fair Market Value" shall mean, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for the last market
<PAGE>
trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "Inside Director" shall mean a Director who is an Employee.
---------------
(k) "Option" shall mean a stock option granted pursuant to the Plan.
------
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
--------------
(m) "Optionee" shall mean a Director who holds an Option.
--------
(n) "Outside Director" shall mean a Director who is not an Employee.
----------------
(o) "Parent" shall mean a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
(p) "Plan" shall mean this 2000 Director Option Plan.
----
(q) "Share" shall mean a share of the Common Stock, as adjusted in
-----
accordance with Section 10 of the Plan.
(r) "Subsidiary" shall mean a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 250,000 Shares (the "Pool") (the Shares may be authorized, but
unissued, or reacquired Common Stock), together with an annual increase to the
number of Shares reserved thereunder on the first day of the Company's fiscal
year, beginning with May 1, 2002, equal to the lesser of (i) 75,000 Shares, (ii)
one quarter of one percent (0.25%) of the outstanding Shares of Common Stock on
the last day of each prior fiscal year or (iii) such amount as determined by the
Board.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan.
---------------------------------------------------
(a) Procedure for Grants. All grants of Options to Outside Directors
--------------------
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
-2-
<PAGE>
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options.
(ii) Each Outside Director shall be automatically granted an Option
to purchase Shares (the "First Option") on the date on which the later of the
following events occurs: (A) the effective date of this Plan, as determined in
accordance with Section 6 hereof; or (B) the date on which such person first
becomes an Outside Director, whether through election by the shareholders of the
Company or appointment by the Board to fill a vacancy; provided, however, that
an Inside Director who ceases to be an Inside Director but who remains a
Director shall not receive a First Option. The First Option shall be for 20,000
Shares.
(iii) Each Outside Director shall subsequently be automatically
granted an Option to purchase Shares (a "Subsequent Option") on the date of the
next meeting of the Board following the Annual Meeting of Shareholders in each
year commencing with the 2001 Annual Meeting of Shareholders provided he or she
is then an Outside Director and if as of such date, he or she shall have served
on the Board for at least the preceding six (6) months. The Subsequent Option
shall be for 10,000 Shares.
(iv) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any exercise of an Option granted before the Company has obtained
shareholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such shareholder approval of the Plan in accordance
with Section 16 hereof.
(v) The terms of a First Option granted hereunder shall be as
follows:
(A) the term of the First Option shall be ten (10) years.
(B) the First Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Sections 8
and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option provided,
however, that in the case of a First Option granted on the effective date of the
Company's initial public offering pursuant to a registration statement filed
with the Securities and Exchange Commission, the exercise price per share shall
be the initial public offering price per share.
(D) subject to Section 10 hereof, the First Option shall become
exercisable as to 1/4 of the Shares subject to the First Option on the
anniversary of the date of grant, and as to 1/16 of the First Option at the end
of each quarter thereafter, so that the First Option shall be fully exercisable
four years after its date of grant, provided that the Optionee continues to
serve as a Director on such dates.
(vi) The terms of a Subsequent Option granted hereunder shall be as
follows:
(A) the term of the Subsequent Option shall be ten (10) years.
-3-
<PAGE>
(B) the Subsequent Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.
(D) subject to Section 10 hereof, the Subsequent Option shall
become exercisable cumulatively with respect to 1/16th of the Subsequent Option
at the end of each quarter after the date of grant, so that the Subsequent
Option shall be fully exercisable four years after its date of grant, provided
that the Optionee continues to serve as a Director on such dates.
(vii) In the event that any Option granted under the Plan would cause
the number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the shareholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
-----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the later to occur of
------------
its adoption by the Board or its approval by the shareholders of the Company as
described in Section 16 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to be
---------------------
issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.
8. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
-----------------------------------------------
hereunder shall be exercisable at such times as are set forth in Section 4
hereof; provided, however,
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<PAGE>
that no Options shall be exercisable until shareholder approval of the Plan in
accordance with Section 16 hereof has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
----------------------------------------------
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
----------------------
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
-----------------
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to
-5-
<PAGE>
exercise such Option does not exercise such Option (to the extent otherwise so
entitled) within the time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
------------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
------------------------------------------------------------------------
Sale.
- ----
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
--------------------------
or liquidation of the Company, to the extent that an Option has not been
previously exercised, it shall terminate immediately prior to the consummation
of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company with
--------------------
or into another corporation or the sale of substantially all of the assets of
the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
-6-
<PAGE>
For the purposes of this Section 10(c), an Option shall be considered assumed
if, following the merger or sale of assets, the Option confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend, or discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with any applicable law, regulation
or stock exchange rule, the Company shall obtain shareholder approval of any
Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for all
------------------------
purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
----------------------------------
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange upon which the
Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
-7-
<PAGE>
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
16. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.
-8-
<PAGE>
OMNIVISION TECHNOLOGIES, INC.
DIRECTOR OPTION AGREEMENT
Omnivision Technologies, Inc., (the "Company"), has granted to
___________________ (the "Optionee"), an option to purchase a total of
[__________ (____)] shares of the Company's Common Stock (the "Optioned Stock"),
at the price determined as provided herein, and in all respects subject to the
terms, definitions and provisions of the Company's 2000 Director Option Plan
(the "Plan") adopted by the Company which is incorporated herein by reference.
The terms defined in the Plan shall have the same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is not
--------------------
intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_______ for each share of
--------------
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
-----------------
(a) This Option shall become exercisable in installments
cumulatively with respect to_________ of the Optioned Stock ___________________
the date of grant, and as to an additional 1/48 of the Optioned Stock each month
thereafter, so that one hundred percent (100%) of the Optioned Stock shall be
exercisable four years after the date of grant; provided, however, that in no
event shall any Option be exercisable prior to the date the stockholders of the
Company approve the Plan.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by written
------------------
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
-----------------
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
(ii) check; or
<PAGE>
(iii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred
-----------------------------
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by the Optionee. The
terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
--------------
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability of a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the
-2-
<PAGE>
date of exercise of the Option, to the extent not included in income as
described above, will be treated as capital gain or loss.
DATE OF GRANT: ______________
Omnivision Technologies, Inc.,
a Delaware corporation
By:_________________________________
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: _________________
______________________________
Optionee
-3-
<PAGE>
EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Omnivision Technologies, Inc.
930 Thompson Place
Sunnyvale, CA 94086
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
------------------
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Omnivision Technologies, Inc. (the "Company") under and pursuant to
the Company's 2000 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
--------------------------------
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by reference.
----------------
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the
<PAGE>
subject matter hereof. This Exercise Notice and the Agreement are governed by
California law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: Omnivision Technologies, Inc.
By:_______________________ By:______________________________
Its:_____________________________
Address:
Dated:____________________ Dated:___________________________
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<PAGE>
EXHIBIT 10.5
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
(Do not use this form for Multi-Tenant Property)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
April 4, 1997 is made by and between Lewis Duckor ("Lessor") and Omnivision,
Inc. ("Lessee") (collectively the "Parties" or individually a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 926-930 Thompson Place located in the County of
Santa Clara, State of California, and generally described as (describe briefly
the nature of the property) Approximately 21,280 square feet of single story
light industrial / R&D building in Santa Clara County. Assessors Parcel Number
205-26-009. ("Premises"). (See Paragraph 2 for further provisions.)
1.3 Term: five (5) years and (0) months ("Original Term") commencing
May 1, 1997 (See Addendum.) ("Commencement Date") and ending April 30, 2002
("Expiration Date"). (See Paragraph 3 for further provisions.)
1.4 Early Possession: N/A ("Early Possession Date"), (See Paragraphs 3.2
and 3.3 for further provisions.)
1.5 Base Rent: $20,216.00 per month ("Base Rent"), payable on the first
day of each month commencing May 1, 1997 or upon completion of Landlord provided
improvements, (See Addendum Paragraph 50) whichever is later. (See Paragraph 4
for further provisions.)
[x] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted., Paragraph 49 in the Addendum
1.6 Base Rent Paid Upon Execution: $20,216.00 as Base Rent for the period
May 1, 1997 through May 31, 1997.
1.7 Security Deposit: $75,000.00 ("Security Deposit"). (See Paragraph 5
for further provisions.)
1.8 Permitted Use: Office, testing, research and development, light
assembly and other legal related uses. (See Paragraph 6 for further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction and are
consented to by the Parties (check applicable boxes):
BT Commercial (Mike Connor) represents
[X] Lessor exclusively ("Lessor's Broker"); [X] both Lessor and Lessee, and
BT Commercial (Jana Gluckman and Tenny Tsai-Eng) represents
[X] Lessee exclusively ("Lessor's Broker"); [X] both Lessee and Lessor (See
Paragraph 15 for further provisions.)
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("Guarantor"). (See Paragraph 37 for further provisions.)
1.12 Addenda, Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 53 and Exhibits A all of which constitute a part of this
Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less,
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris, on the Commencement Date and warrants to Lessee that the existing
plumbing, fire sprinkler system, lighting, air conditioning, heating, and
loading doors, if any, in the Premises, other than those constructed by Lessee,
shall be in good operating condition on the Commencement Date, if a non-
compliance with said warranty exists as of the Commencement Date. Lessor shall,
except as otherwise provided in this Lease promptly alter receipt of written
notice from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessor's expense, if Lessee does not give Lessor
written notice of a non-compliance with this warranty within thirty (30) days
after the Commencement Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to
be made by Lessee. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly alter receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has
been advised by the Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any non-
compliance of the Premises with said warranties.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease, however,
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
Initials R.W.
----
PAGE 1
<PAGE>
3.3 Delay In Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided, however, that if
such written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease shall terminate and be of no further
force or effect. Except as may be otherwise provided, and regardless of when the
term actually commences, if possession is not tendered to Lessee when required
by this Lease and Lessee does not terminate this Lease, as aforesaid, the period
free of the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or omissions of
Lessee.
4. Rent.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due under the terms of this Lease. Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual number
of days of the calendar month involved. Payment of Base Rent and other charges
shall be made to Lessor at its address stated herein or to such other persons or
at such other addresses as Lessor may from time to time designate in writing to
Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor sufficient to maintain the same ratio between the
Security Deposit and the Base Rent as those amounts are specified in the Basic
Provisions. Lessor shall not be required to keep all or any part of the Security
Deposit separate from its general accounts. Lessor shall, at the expiration or
earlier termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last assignee, if
any, of Lessee's interest herein), that portion of the Security Deposit not used
or applied by Lessor. Unless otherwise expressly agreed in writing by Lessor, no
part of the Security Deposit shall be considered to be held in trust, to bear
interest or other increment for its use, or to be prepayment for any moneys to
be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the purposes
set forth in Paragraph 1.8, or any other use which is comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to, neighboring premises or properties.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for liability of Lessor to any governmental agency
or third party under any applicable statute or common law theory. Hazardous
Substance shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in, on or about the Premises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law (as defined in
Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with any governmental authority. Reportable Use shall
also include Lessee's being responsible for the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Law
requires that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but in compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by Lessee in the
normal course of Lessee's business permitted on the Premises, so long as such
use is not a Reportable Use and does not expose the Premises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. In addition, Lessor may (but without any obligation to
do so) condition its consent to the use or presence of any Hazardous Substance,
activity or storage tank by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefrom or therefor, including, but
not limited to, the installation (and removal on or before Lease expiration or
earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance, or a condition involving or resulting
from same, has come to be located in, on, under or about the Premises, other
than as previously consented to by Lessor, Lessee shall immediately give written
notice of such fact to Lessor. Lessee shall also immediately give Lessor a copy
of any statement, report, notice, registration, application, permit, business
plan, license, claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.
(c) Indemnification. Lessee shall Indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include, but
not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation (including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor in writing at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "Applicable Law" which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to
employ experts and/or consultants in connection therewith and/or to advise
Lessor with respect to Lessee's activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.
7. Maintenance Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as
to condition), 2.3 (Lessor's warranty as to compliance with covenants, etc), 7.2
(Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair, structural and non-structural (whether or not such portion of the
Premises requiring repair, or the means of repairing the same, are reasonably or
readily accessible to Lessee, and whether or not the need for such repairs
occurs
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as a result of Lessee's use, any prior use, the elements or the age of such
portion of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing system, including fire alarm and/or
smoke detection systems and equipment, fire hydrants, fixtures, walls (interior
and exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Lessee's expense, take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of, the Premises, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under its
control. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. If Lessee occupies the Premises for seven (7) years or
more, Lessor may require Lessee to repaint the exterior of the buildings on the
Premises as reasonably required, but not more frequently than once every seven
(7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises. Lessee and Lessor expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to, or which affords Lessee the right to make
repairs at the expense of Lessor or to terminate this Lease by reason of, any
needed repairs.
7.3 Utility Installations. Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
is used in this Lease to refer to all carpeting, window coverings, air lines,
power panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about the Premises. The
term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements on the Premises from that which
are provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor as defined
in Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations to the
interior of the Premises (excluding the roof), as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during the term of this
Lease as extended does not exceed $25,000.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor. Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee's providing Lessor
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor under Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect itself, Lessor
and the Premises against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor in an amount equal to one and one-half
times the amount of such contested lien claim or demand, indemnifying Lessor
against liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorney's fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or
become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises. Lessor
may, at any time and at its option, elect in writing to Lessee to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per subparagraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
earlier termination of this Lease, become the property of Lessor and remain upon
and be surrendered by Lessee with the Premises.
(b) Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, with all
of the improvements, parts and surfaces thereof clean and free of debris and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice or by Lessee
performing all of its obligations under this Lease. Except as otherwise agreed
or specified in writing by Lessor, the Premises, as surrendered, shall include
the Utility Installations. The obligation of Lessee shall include the repair of
any damage occasioned by the installation, maintenance or removal of Lessee's
Trade Fixtures, furnishings, equipment, and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Law and/or good practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per this Lease.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $1,000,000 per occurrence. Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice for any amount due.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability parity of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $1,000,000 occurrence
with an "Additional Insured-Managers or Lessors of Premises" Endorsement and
contain the "Amendment of the Pollution Exclusion" for damage caused by heat,
smoke or fumes from a hostile fire. The policy shall not contain any intra-
insured exclusions as between Insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
(b) Carried By Lessor. In the event Lessor is the Insuring Party,
Lessor shall also maintain liability insurance described in Paragraph 8.2(a),
above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.
8.3 Property Insurance-Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds
of trust or ground leases on the Premises ("Lender(s)"), Insuring loss
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or damage to the Premises. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from if time to
time, or the amount required by Lenders, but in no event more than the
commercially reasonable and available insurable value thereof if, by reason of
the unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations shall be insured by Lessee
under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall Insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for any additional costs
resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Premises required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
properly insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9.1(c).
(b) Rental Value. The Insuring Party shall, in addition, obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any scheduled
rental increases). Said insurance shall provide that in the event the Lease is
terminated by reason of an insured loss, the period of Indemnity for such
coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or if the Premises are part of a group of buildings owned by Lessor which are
adjacent to the Premises, the Lessee shall pay for any increase in the premiums
for the property insurance of such building or buildings if said increase is
caused by Lessee's acts, omissions, use or occupancy of the Premises.
(d) Tenant's Improvements. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Lessee Owned Alterations and Utility
Installations in, on, or about the Premises similar in coverage to that carried
by the Insuring Party under Paragraph 8.3. Such Insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the slate where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other railing as may be required by a Lender having a lien
on the Premises, as set forth in the most current issue of "Best's Insurance
Guide. Lessee shall not do or permit to be done anything which shall invalidate
the insurance policies referred to in this Paragraph 8. If Lessee is the
Insuring Party, Lessee shall cause to be delivered to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of such insurance with the insureds and loss payable clauses as required by this
Lease. No such policy shall be cancellable or subject to modification except
after thirty (30) days prior written notice to Lessor. Lessee shall at least
thirty (30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. If the Insuring Party
shall fail to procure and maintain the insurance required to be carried by the
Insuring Party under this Paragraph 8, the other Party may, but shall not be
required to, procure and maintain the same, but at Lessee's expense.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing; air conditioning or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less than 50%
of the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to Improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which was caused by an event required to be covered by the Insurance described
in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Partial Damage--Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make the insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If in such case Lessor does not so elect, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.
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9.3 Partial Damage--Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessee's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease, Lessee
shall have the right within ten (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage-Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of such notice, this Lease shall
continue in full force and effect. "Commence" as used in this Paragraph shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.
9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to investigate
and remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater, give written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
investigation and remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except to the extent of
an amount equal to twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with the funds required of
Lessee or satisfactory assurance thereof within thirty (30) days following
Lessee's said commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such investigation and remediation
as soon as reasonably possible and the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination. If a Hazardous Substance Condition
occurs for which Lessee is not legally responsible, there shall be abatement of
Lessee's obligations under this Lease to the same extent as provided in
Paragraph 9.6(a) for a period of not to exceed twelve months.
9.8 Termination--Advance Payments. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 (a) Payment of Taxes. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such proration. If Lessee shall
fail to pay any Real Property Taxes required by this Lease to be paid by Lessee,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand.
(b) Advance Payment. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the current Real Property Taxes applicable to the
Premises, and to require such current year's Real Property Taxes to be paid in
advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be that
equal monthly amount which, over the number of months remaining before the month
in which the applicable tax installment would become delinquent (and without
interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated installment of taxes to be paid. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before delinquency. If the amounts paid to Lessor by Lessee
under the provisions of this Paragraph are insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums as are
necessary to pay such obligations. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional Security
Deposit under Paragraph 5.
10.2 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. The term "Real Property Taxes" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in applicable law taking
effect, during the term of this Lease, including, but not limited to a change in
the ownership of the Premises or in the improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
Initials R.W.
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10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal properly shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided in Paragraph 10.1(b).
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"assignment") or sublet all or any part of Lessee's interest in this Lease or in
the Premises without Lessor's prior written consent given under and subject to
the terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five
percent (25%) or more of the voting control of Lessee shall constitute a change
in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of the execution
by Lessor of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, at whichever time said Net Worth of
Lessee was or is greater, shall be considered an assignment of this Lease by
Lessee to which Lessor may reasonably withhold its consent. "Net Worth of
Lessee" for purposes of this Lease shall be the net worth of Lessee (excluding
any guarantors) established under generally accepted accounting principles
consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unconsented to assignment or subletting as a noncurable Breach, Lessor
shall have the right to either: (i) terminate this Lease, or (ii) upon thirty
(30) days written notice ("Lessor's Notice"), increase the monthly Base Rent to
fair market rental value or one hundred ten percent (110%) of the Base Rent then
in effect, whichever is greater. Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in effect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) after the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
any one else responsible for the performance of the Lessee's obligations under
this Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the current monthly Base Rent,
whichever is greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
(g) The occurrence of a transaction described in Paragraph 12.1(c)
shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased to an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
amount required to establish such Security Deposit a condition to Lessor's
consent to such transaction.
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of this or any
other assignment of such sublease to Lessor, nor by reason of the collection of
the rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublessee, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said Default. A "Default" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.
Initials R.W.
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(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third party,
as and when due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this Lease, or the failure
of Lessee to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) days following written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of ten (10) days
following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature or Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. (S)101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to lake possession of substantially all of Lessee's assets
located at the Premises or of Lessee's Interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity
of the remaining provisions.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a guarantor, (ii) the termination of a guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a guarantor's refusal to honor the guaranty, or (v) a
guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurance or security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the guarantors that existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor, if any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13.1, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of the leasing commission paid by Lessor applicable to the unexplored
term of this Lease. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee's Default or Breach of this Lease shall not waive Lessor's right to
recover damages under this Paragraph. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding the unpaid rent and damages as are recoverable
therein, or Lessor may reserve therein the right to recover all or any part
thereof in a separate suit for such rent and/or damages. If a notice and grace
period required under subparagraphs 13.1(b), (c) or (d) was not previously
given, a notice to pay rent or quit, or to perform or quit, as the case may be,
given to Lessee under any statute authorizing the forfeiture of leases for
unlawful detainer shall also constitute the applicable notice for grace period
purposes required by subparagraphs 13.1(b), (c) or (d). In such case, the
applicable grace period under subparagraphs 13.1(b), (c) or (d) and under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two such grace periods shall constitute both an unlawful detainer and a Breach
of this Lease entitling Lessor to the remedies provided for in this Lease and/or
by said statute.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the slate wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Inducement Recapture in Event Of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "'Inducement Provisions" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance,
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by the holders of any ground lease, mortgage or deed of trust covering the
Premises whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor's obligation
is such that more than thirty (30) days after such notice are reasonably
required for its performance, then Lessor shall not be in breach of this Lease
if performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority lakes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the land area
not occupied by any building, is taken by condemnation, Lessee may, at Lessee's
option, to be exercised in writing within ten (10) days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority shall
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have taken possession) terminate this Lease as of the date the condemning
authority takes such possession, if Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the building located on the Premises.
No reduction of Base Rent shall occur if the only portion of the Premises taken
is land on which there is no building. Any award for the taking at all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any compensation separately awarded to
Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures.
In the event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of its net severance damages received, over and above
the legal and other expenses incurred by Lessor in the condemnation matter,
repair any damage to the Premises caused by such condemnation, except to the
extent that Lessee has been reimbursed therefor by the condemning authority,
Lessee shall be responsible for the payment of any amount in excess of such net
severance damages required to complete such repair.
15. Broker's Fee.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes of this
Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to said
Brokers jointly, or in such separate shares as they may mutually designate in
writing, a fee as set forth in a separate written agreement between Lessor and
said Brokers (or in the event there is no separate written agreement between
Lessor and said Brokers, the sum of $ ________________) for brokerage services
rendered by said Brokers to Lessor in this transaction.
15.3 Unless Lessor and Brokers have otherwise agreed in writing, Lessor
further agrees that: (a) if Lessee exercises any Option (as defined in Paragraph
39.1) or any Option subsequently granted which is substantially similar to an
Option granted to Lessee in this Lease, or (b) if Lessee acquires any rights to
the Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or (c) if Lessee remains in possession of the Premises,
with the consent of Lessor, after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Brokers a fee in accordance with the schedule of said Brokers in effect at
the time of the execution of this Lease.
15.4 Any buyer or transferee of Lessor's Interest in this Lease, whether
such transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Each Broker shall be a
third party beneficiary of the provisions of this Paragraph 15 to the extent of
its interest in any commission arising from this Lease and may enforce that
right directly against Lessor and its successors.
15.5 Lessee and Lessor each represent and warrant to the other that it has
had no dealings with any person, firm, broker or lender (other than the Brokers,
if any named in Paragraph 1.10) in connection with the negotiation of this Lease
and/or the consummation of the transaction contemplated hereby, and that no
broker or other person, firm or entity other than said named Brokers is entitled
to any commission or finder's fee in connection with said transaction. Lessee
and Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. Tenancy Statement.
16.1 Each Party (as "Responding Party") shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Tenancy Statement" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises, any
part thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective,
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. Notices.
23.1 All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by messenger or courier service) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon, if sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier, if any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail, if notice is received on
a Sunday or legal holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
by Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
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28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorney's Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, "Prevailing Party"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withhold
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation therefor. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit shall be refunded to Lessee without
interest Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgment that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. Guarantor.
37.1 If there are to be any Guarantors of this Lease per Paragraph 1.11,
the form of the guaranty to be executed by each such Guarantor shall be in the
form most recently published by the American Industrial Real Estate Association,
and each said Guarantor shall have the same obligations as Lessee under this
Lease, including but not limited to the obligation to provide the Tenancy
Statement and Information called for by Paragraph 16.
37.2 It shall constitute a Default of the Lessee under this Lease if any
such Guarantor fails or refuses, upon reasonable request by Lessor to give: (a)
evidence of the due execution of the guaranty called for by this Lease,
including the authority of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said guaranty, and including
in the case of a corporate Guarantor, a certified copy of a resolution of its
board of directors authorizing the making of such guaranty, together with a
certificate of incumbency showing the signatures of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.
PAGE 9
<PAGE>
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) In the event that Lessor has given to Lessee three
(3) or more notices of Default under Paragraph 13.1, whether or not the Defaults
are cured, during the twelve (12) month period immediately preceding the
exercise of the Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three or more notices of Default under Paragraph 13.1 during any twelve
month period, whether or not the Defaults are cured, or (iii) if Lessee commits
a Breach of this Lease.
40. Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Offer. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple Parties shall be the joint and several
responsibility of all persons or entitles named herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED. THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF
ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR
BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES: THE PARTIES SHALL RELY SOLELY UPON THE
ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE
CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
<TABLE>
<S> <C>
Executed at San Francisco Executed at San Jose
------------------------------------- ------------------------------
on 4/7/97 on April 4, 1997
---------------------------------------------- ---------------------------------------
by LESSOR: by LESSEE:
LEWIS DUCKOR 0MNIVISION, INC.
- ------------------------------------------------ -----------------------------------------
- ------------------------------------------------ -----------------------------------------
By /s/ Lewis Duckor By /s/ Raymond Wu
---------------------------------------------- ---------------------------------------
Name Printed: LEWIS DUCKOR Name Printed: RAYMOND WU
----------------------------------- ----------------------------
Title: OWNER Title: DIRECTOR
------------------------------------------ -----------------------------------
By /s/ Lewis Duckor By
---------------------------------------------- ---------------------------------------
Name Printed: LEWIS DUCKOR Name Printed:
----------------------------------- ---------------------------
Title: OWNER Title:
------------------------------------------ ----------------------------------
Address: 1750 TAYLOR STREET, #1103 Address: 926-930 THOMPSON PLACE
---------------------------------------- --------------------------------
SAN FRANCISCO, CA 94133 SUNNYVALE, CA 94086
- ------------------------------------------------ -----------------------------------------
Tel. No.(415) 673-2527 Fax No. (415) 673-7316 Tel. No.(408) 241-9658 Fax No. ( )____
----- ------- ----- ------------------- ---- --------
</TABLE>
NET
NOTICE: These forms are often modified to meet changing requirements of law and
Industry needs. Always write or call to make sure you are utilizing the
most current form: American Industrial Real Estate Association, 345
South Figueroa Street, Suite M-l, Los Angeles, CA 90071. (213) 687-
8777, Fax No. (213) 687-8616.
PAGE 10
<PAGE>
ADDENDUM TO THAT LEASE DATED APRIL 4, 1997 BY AND BETWEEN LEWIS DUCKOR, AS
LESSOR; AND OMNIVISION, INC. AS LESSEE FOR THAT PROPERTY LOCATED AT 926-930
THOMPSON PLACE, SUNNYVALE, CALIFORNIA.
ADDITIONAL PROVISIONS:
49) Rent Schedule: Lessee shall pay base rent to Lessor according to the
-------------------
following rent schedule:
Months of Occupancy Rent per Month NNN
1-12 $20,216.00
13-60 $22,344.00
50) Interior Improvements: A) Lessor's scope of work: Lessor, at Lessor's
------------------------------------------------------
cost shall provide the following improvements to be made to the Premises
with a completion prior to Lease Commencement (see the attached floorplan,
"Exhibit A" for the corresponding location of these improvements): (a)
remove all cubicals and low walls on the 926 side; (b) Paint the entire
interior and exterior of the Premises (c) Re-carpet the office areas in
both the 926 and 930 side of the Premises, (d) Provide dropped ceiling with
distributed HVAC, lighting and carpet or VCT in the rear portion of the 930
side of the Premises that is currently open warehouse (this area will be a
single, large open room). Lessor shall do its best to have these
improvements completed prior to May 1, 1997. However, should the completion
date fall beyond May 1, 1997, the Lease Commencement Date shall simply be
moved to the date when these improvements are substantially completed, and
the Premises are in condition for Lessee to occupy. In addition, Lessor
represents that the building systems will be in good, working order at
Lease Commencement. B.) Lessee's scope of work: Lessee, at Lessee's sole
---------------------------
cost and expense, may after Lease Commencement perform the following
improvements to the Premises: (a) install two offices on the 930 side, (b)
change two offices into a single conference room on the 930 side, (c)
change three offices on the 926 side into a lab area, (d) install a double
door in the opening in the rear portion between the 926 and 930 side of the
Premises where there is currently a roll-up door, provided that the roll-up
door remains (in a secured, roll-up position) in place so its use may be
salvaged subsequent to the expiration of the Lease term or any extension
thereof. Any additional Lessee Alterations shall be performed at Lessee's
sole cost, performed to the current building codes and standards, and be
subject to Lessors reasonable and timely approval. Lessor shall notify
Lessee of' Lessee's responsibility to remove any Lessee Alteration no less
than ninety (90) days prior to the Lease Expiration.
51) Renewal Option: Provided Lessee is not in default of the terms of the
--------------------
Lease, Lessee shall have one option to extend the Lease Term for an
additional five (5) years at 100% of the prevailing market rates, provided,
however, that the rent shall not be lower than the rent paid in the last
year of the original Lease Term. Lessee must give Lessor written notice of
its intent to exercise this Renewal Option no less than 120 prior to Lease
Expiration.
52) ADA Compliance: Lessee acknowledges that the condition of the Premises
--------------------
is not in compliance with the guidelines as set forth in the Americans with
------
Disabilities Act (ADA), and that Lessor will not be responsible for any
cost associated with bringing the building into compliance with said
guidelines. Lessee agrees to accept the Premises without any Lessor-
provided upgrades to comply with said ADA Guidelines.
53) Environmental: Lessor shall not hold Lessee responsible for any pre-
-------------------
Lease Commencement presence of Hazardous Materials on the Premises.
However, Lessor shall not indemnify nor hold Lessee harmless, nor defend
Lessee from any claims made relating from said conditions, except those
caused by Lessor's negligence or willful misconduct. Lessee shall indemnify
and hold Lessor harmless from any and all claims made relating to the
presence of Hazardous Materials on the site whose existence occurred during
the Lease Term or any extension thereof.
AGREED--ACCEPTED
LESSOR LESSEE
/s/ Lewis Duckor /s/ Raymond Wu
-------------------------------- --------------------------
DATE: 4/7/97 DATE: 4/4/97
-------------------------------- --------------------------
<PAGE>
926-930 Thompson Place, Sunnyvale
Floorplan
[Graphic]
"EXHIBIT A"
<PAGE>
EXHIBIT 10.6
FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is entered into as of July 15,
1999, between LEWIS DUCKOR ("Lessor") and OMNIVISION, INC. ("Lessee").
1. UNDERLYING FACTS/RECITALS
1.1 On or about April 4, 1997, Lessor and Lessee entered into that
certain Standard Industrial/Commercial Single-Tenant Lease-Net (the "Lease")
covering improved real property commonly known as 926-930 Thompson Place,
Sunnyvale, California (the "Premises"). All defined terms not otherwise defined
in this Amendment shall have the same meaning as set forth in the Lease.
1.2 The Original Term of the Lease is for 5 years, commencing May 1,
1997 and ending April 30, 2002.
1.3 Lessor desires to improve the roof of the building and Lessee is
willing to share in the cost of such improvements in exchange for a 1-year
extension of the Original Term.
1.4 The parties desire to amend the Lease on the terms and conditions
set forth below.
2. ROOF IMPROVEMENT
2.1 Apportionment of Cost. The total cost of improving the roof of the
---------------------
building located on the Premises is $16,635, pursuant to a May 18, 1999 letter
from Frederick's Roofing. Lessee hereby agrees to pay 50% of the total cost or
$8,317.50.
2.2 Payment of Costs. Lessee shall pay its share of the cost, or
----------------
$8,317.50, as follows:
(a) $4,000 upon execution of this Amendment;
(b) $1,000 per month for 3 consecutive months, commencing on
August 1, 1999, and continuing through October 1, 1999; and
(c) The balance or $1,317.50, payable on November 1, 1999.
3. EXTENSION OF ORIGINAL TERM
In consideration of and subject to Lessee paying $8,317.50 in
accordance with paragraph 2.2, Lessor and Lessee hereby amend paragraph 1.3 of
the Lease to provide that the Original Term shall be 6 years, commencing May 1,
1997, and ending April 30, 2003. Base Rent during the additional year shall be
at
<PAGE>
the same rate as during months 13-60 under the Lease. If Lessee fails to make
any payments in accordance with paragraph 2.2 above, Lessee acknowledges and
agrees that the Original Term of the Lease shall remain at 5 years, expiring on
April 30, 2002, without any further action by Lessor.
4. CONFIRMATION OF LEASE
Except as expressly set forth in this Amendment, all of
the provisions of the Lease shall remain unchanged and in full
force and effect.
LESSOR
/s/ Lewis Duckor
-------------------------------------
Lewis Duckor
LESSEE
Omnivision, Inc.
By: /s/ Andy Shia
---------------------------------
Raymond Wu ANDY SHIA FOR RAYMOND W
Its: 7/23/99
-------------------------
-2-
<PAGE>
EXHIBIT 10.7
Non-exclusive Distributor Agreement
This Agreement made as of JAN. 1ST , 1998 by and between OmniVision
------------------- ----
Technologies, Inc., a California corporation having its principal office at 930
Thompson Place, Sunnyvale, CA, 94086 USA ("OmniVision") and WORLD PEACE
-----------
INDUSTRIAL CO., LTD. , a
- ---------------------------------------------------------------------
corporation, having its principal place of business at
- -------------------------
8F. 76, CHENG KUNG ROAD, SEC. 1, NANKANG, TAIPEI. TAIWAN
- --------------------------------------------------------------------------------
("Distributor").
- ---------------------------------------------------------------
The parties agree as follows:
1. Distributorship
OmniVision appoints Distributor as a non-exclusive distributor for the products
designed and manufactured by OmniVision (hereinafter referred to as "Products"
or "Product"), as listed on Exhibit A attached hereto. Exhibit A will be updated
and distributed to Distributor by OmniVision from time to time. Distributor
agrees not to carry any other products, which in OmniVision sole judgment, are
directly competitive to OmniVision Products.
Distributor's appointment covers Distributor's marketing location ("territory")
shown on Exhibit B attached hereto and, if so agreed in writing by both parties,
additional marketing locations established by Distributor. Distributor may
relocate the business locations at Distributor's discretion as said on Exhibit
B.
Distributor is appointed to make sales to certain identified potential customers
(the Customers) specified in Exhibit C, as that Exhibit may be modified from
time to time. Distributor may make sales to additional potential customers
within the Territory provided that such potential customers are not otherwise
identified as Customers of another OmniVision Distributor, or as an OmniVision
house account. OmniVision reserves the right to appoint additional Product.
sales distributors in the same geographical area. Distributor shall maintain an
adequate and aggressive sales organization at all times during the term of this
Agreement in order to assure maximum distribution of Products.
2. Sales
Subject to the terms of this Agreement, OmniVision agrees to sell and
Distributor agrees to buy Products for resale. However, OmniVision shall not be
required to sell any Products to Distributor if the manufacturing or sale of
such Product has been discontinued by OmniVision, or if such Product is or
becomes unavailable, or if OmniVision should withdraw such Product from sale to
distributors.
3. Prices
The Price Schedule will include all Products available for purchase by
Distributor as well as the unit prices for each of the Products. The Price
Schedule normally will be updated once a quarter by OmniVision and released to
Distributor. If there is any delay of this update, the Distributor shall use the
latest received Price Schedule as the purchasing price for OmniVision Products.
All
- ------------------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
prices are subject to change or withdrawal by OmniVision without prior notice to
Distributor, although OmniVision shall use its best efforts to give prior notice
to Distributor of any change in the prices. Except as otherwise provided in this
Agreement, all sales of Products to Distributor shall be at OmniVision's price
in effect when Distributor's order is accepted by OmniVision.
4. Taxes
Distributors located within the United States of America must submit a current
Resale License for each ship-to location operated by the Distributor. The
Distributor is responsible for any and all local, State or Federal taxes and is
responsible for abiding by all tax laws and regulations which may apply
regarding the resale of OmniVision Products. Distributors located outside of the
United States of America are responsible for paying any duties, taxes, fees or
any other charges which may be levied by governmental authorities in the Country
where shipments are made.
5. Reports
Distributor shall provide OmniVision with a Monthly Resale Report, Monthly
Inventory Report, and Monthly Quote Report, defined below. These reports shall
be made available to OmniVision by Distributor each month. These reports shall
be received, by OmniVision within fifteen (15) days from the Distributor's sales
dosing date of each month OmniVision and Distributor may mutually agree to
modify the specific details of these reports to accommodate specific
requirements or conditions of the Territory or Customers.
a. The Monthly Resale Report will summarize the following information
provided to OmniVision by Distributor: customer name, sales location and zip
code, invoice or credit number (if applicable), shipment date, invoice date if
different from shipment date, type of sales (i.e., stock shipment, drop
shipment, sample sale, billing adjustment, customer return, sales to other re-
sellers, etc.).
b. The Monthly Inventory Report shall list products, by OmniVision part
number, shipped to Distributor, and all transactions to and by Distributor
during the month. OmniVision may stop shipments of Products to Distributor to
facilitate verification of inventory levels.
c. The Monthly Quote Report summarizes the new Product Quotes, old Product
Quotes that have expired, and the status of all other OmniVision Product
quotes.
6. Terms
All Products are sold to Distributor by OmniVision based on the following
shipment terms: F.O.B. OmniVision's warehouse. Terms of payment are: COD or T/T
in advance before credit checking approval and credit line set by OmniVision
credit department. After credit checking and credit line approved, the payment
term will be net amount of invoice due within thirty (30) days from the date of
invoice. Invoice shall be sent on or soon after the date of shipment.
Distributor shall not take any credit or offset against accounts owing
OmniVision without OmniVision's prior written authorization. OmniVision may at
any time, either generally or with respect to any specific order by Distributor,
change the amount or duration of credit to be allowed to Distributor, including
requiring cash in advance of shipment to Distributor (or COD term), if
Distributor has failed to pay previous invoices when due or if Distributor's
credit worthiness, in OmniVision's judgment, makes such action necessary. To
assist OmniVision determining Distributor's creditworthiness, Distributor has
furnished or agrees to furnish OmniVision immediately with a
- ------------------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
copy of its financial statements for the most recent fiscal year for which
audited statements are available, and during the term of this Agreement
Distributor shall furnish OmniVision copies of Distributor's financial
statements each fiscal quarter and audited financial statements every fiscal
year. "Financial Statements" means balance sheet at the end of the financial
period, income statement of the specified period, and "audited" means examined
or reviewed by a certified public accountant. The financial statements shall be
furnished to OmniVision no later than thirty (30) days of Distributor's fiscal
quarter end or sixty (60) days of Distributor's fiscal year end.
7. Acceptance of Orders
a. All orders sent by Distributor to OmniVision must be in writing,
including changes to existing orders.
b. Distributor shall address all orders to OmniVision's Sales Department.
Inquires concerning availability, delivery or technical information should
be directed to OmniVision's Marketing Department. All orders are subject to
acceptance by OmniVision, and OmniVision reserves the right to reject any
order given by Distributor even if a price quotation has been made
previously.
c. OmniVision will package Products in a standard package or container, but
OmniVision may change such package or container at any time without prior
notice to Distributor, or use a standard bulk or quantity package for any
shipment. Distributor may specify a carrier, but if no carrier is specified,
OmniVision may select a suitable carrier without notice thereof to
Distributor.
d. Sales and shipments will be made on the terms and conditions set forth
herein and on OmniVision's order confirmation form in effect at the time of
order. If a term set forth in this Agreement is inconsistent with
OmniVision's order confirmation form, the former shall govern. Unless
otherwise in writing, OmniVision shall not in any event be bound by the
terms and conditions of Distributor's purchase order forms or any other
forms submitted by Distributor.
e. Delivery dates given by OmniVision for orders placed by Distributor shall
be considered OmniVision's best estimates only. To cancel a purchase order
or delay delivery, Distributor must first give OmniVision written notice
thereof and OmniVision shall have until the end of five (5) full business or
working days after such notice is actually received by OmniVision in which
to process, after (but not before) which such order may be canceled if
Distributor so requests.
- ------------------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
8. Commission Sales
Distributor may act as a commission sales representative for identified
potential customers ("The Customers") specified on Exhibit C. as that Exhibit
may, by mutual agreement, be modified from time to time.
a. Distributor shall solicit orders for Products from the Customers, and
shall forward all such orders to OmniVision in a timely manner. OmniVision
shall accept or reject each such order and shall notify Distributor and the
Customer placing such order of acceptance or rejection. OmniVision may accept
an order conditioned on such different or additional terms as OmniVision may
deem appropriate. Distributor shall have no power or authority to accept or
reject any order on behalf of OmniVision, but Distributor may communicate to
Customers the standard pricing then available. Quotation of pricing other that
the standard pricing must be approved by OmniVision in advance.
b. OmniVision shall pay commissions to Distributor based on net receipts
attributable to direct sales from OmniVision to Customers limed on Exhibit C,
but only to such authorized Customers. Such commissions will constitute full
compensation for all of Distributor services under this Agreement. Commissions
shall be calculated based on net actual receipts, and shall be subject to
reduction and charge back for returns as well as for other necessary
reimbursements by OmniVision to purchasers agreed to as part of the sale of
the Products. Net receipts means the amount of receipts from a purchaser
attributable to the invoice price of goods sold, excluding any receipts
attributable to shipping, handling, taxes, duties, insurance, or other amounts
not attributable to the price of goods sold.
c. Should OmniVision and Distributor mutually decide to deliver Products sold
on a commission bases from the Distributor inventory, then OmniVision will
credit any difference between the Customer price and the Distributor inventory
purchase price to the Distributor commission account.
d. Payment of compensation to Distributor shall be made on a monthly basis by
OmniVision, within thirty (30) clays following the close of each month in
which commissions accrue under this Agreement. True copies of invoices and
proof of payment shall be made available and, upon written request by
Distributor, will be provided with payment of commissions.
9. Force Majeure
OmniVision assumes no obligation, and shall not be liable to Distributor, for
any delay or failure to deliver Products by reason of any contingencies beyond
OmniVision's control or beyond the control of OmniVision's suppliers including
but not limited to force majeure; strikes; labor disputes; lockouts or other
labor trouble; fire; earthquake; flood; civil commotion; war; riot; act of God;
casualties; accidents; shortages of transportation facilities; detention of
goods by custom authorities; loss of goods in public or private warehouses;
quotas or actions of any government, foreign or domestic, or any other agency or
subdivision thereof; delays in the delivery of raw or finished materials; parts
or completed merchandise by the suppliers thereof; or other casualty
contingency, or cause beyond the reasonable control of or occurring without the
fault of OmniVision or of OmniVision's suppliers, or otherwise unavoidable, or
because OmniVision's volume of orders at any time renders deliveries in the
ordinary course of business impractical. In such event, OmniVision shall have
the right, at its election and without liability to Distributor, to
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
(i) cancel all or rely portion of this Agreement; or (ii) perform the Agreement
as so restricted or modified to the extent determined by OmniVision in its sole
and absolute discretion; or (iii) perform the Agreement within a reasonable time
after the causes for non-performance or delay have terminated.
10. Inventory
Distributor will establish and maintain an inventory of Products adequate to
support sales revenue plans developed with OmniVision and will cooperate with
OmniVision in periodic reviews of inventory quantifies. Distributor shall
maintain and use its facilities in such a manner to ensure proper care for the
Products including, at a minimum, proper temperature and humidity controls;
proper anti-static equipment; and proper facilities to permit incoming, outgoing
or other inspections of the Products.
OmniVision shall have the right at all times to purchase the Products from
Distributor. In the event OmniVision purchases Products from Distributor,
OmniVision shall pay Distributor the invoice price charged to Distributor by
OmniVision for such Products, less prior credits allowed by OmniVision with
respect to such Products under this Agreement or any predecessor agreements.
11. Returns
a. Distributor shall obtain OmniVision's prior authorization for any return
of Products. Such authorization will not be unreasonably withheld for return
of Products which are obsolete, defective, or shipped to but not ordered by
Distributor. Distributor shall send all authorized return of Products within
thirty (30) days after receiving OmniVision's authorization, or such returns
will be refused. All returns shall be shipped F.O.B. destination, freight
prepaid, to OmniVision specified location. Return of Products not expressly
authorized hereunder will be refused by OmniVision and returned to Distributor
at Distributor's expense.
b. Return of defective Products under OmniVision's product warranty policy is
governed by that policy.
c. Credit replacement will be allowed for returned Products only if
OmniVision's examination discloses to its satisfaction that the Products has
not been improperly handled or used. Credit or replacement will be allowed for
returned Products based on the price in effect on the day they are received by
OmniVision, or the purchase price paid by Distributor less prior credit
allowed under Section 5, whichever is less.
d. Unless specially approved by OmniVision, OmniVision will not accept return
of Products which were purchased and shipped from OmniVision more than six (6)
months prior to the requested date of return.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
12. Inventory Records and Inspection
Distributor shall keep current stock, cost and sale records of its inventory of
Products. Distributor's records shall accurately and sufficiently itemize and
describe the kind, type and quantity of such inventory and the cost thereof.
Distributor shall at any reasonable time allow OmniVision, or any of its agents,
to examine, audit or inspect such inventory wherever located and, for such
purposes, to enter Distributor's premises whenever any of such inventory may be
found; or, at OmniVision's option and expense, permit OmniVision to pick up
portions of Distributor's inventory for count by OmniVision and return, provided
Distributor's business is not unreasonably disrupted hereby.
13. Trademark
Distributor may so long as this Agreement is in force, and only for the purpose
of advertising and selling Products indicate to the public that it is an
authorized distributor of products manufactured by OmniVision Technologies,
Inc., and advertise such Products under the trademark "OmniVision". Distributor
shall not alter or remove any trademark or trade name applied to the Products in
the manufacture thereof. Permission to display the word "OmniVision" or any
other OmniVision proprietary word or symbol is only as started above and nothing
herein shall grant to Distributor any right, title or interest in the word
"OmniVision" (either alone or in association with other words or names), or any
part thereof or in any other trademark or trade name by OmniVision or its
related companies or in any copyright or good will of OmniVision or related
companies, nor is any permission or right given hereby to Distributor to use any
such trademark or trade name in connection with its corporate firm trade name or
tradestyle, nor shall Distributor permit a corresponding use of such trade mark
or trade name by a dealer.
14. Advertising and Advertising Assistance
OmniVision may advertise Products and list Distributor's name in its
advertising. Distributor may advertise and promote the sale of Products through
all appropriate media including wade show exhibits, catalogue and direct
mailing, space advertising, educational meetings and sales aids. OmniVision
agrees to allow Distributor to provide a complete listing in Distributor's
catalogue of all Products carried by Distributor.
15. Literature
OmniVision will supply Distributor with reasonable quantifies of distributor
price lists and schedules which shall list Products available to be sold by
Distributor. OmniVision may suggest resale prices in its resale price schedules,
but Distributor, in its sole discretion, shall determine prices charged by
Distributor for Products. Distributor shall maintain an adequate supply of
printed sales, technical and product application information as OmniVision may,
from time to time, make available. Such printed material may or may not be
provided free of charge, subject to OmniVision's current literature pricing
policy. If OmniVision approves, at Distributor's request, Distributor's
customers may be added to OmniVision's mailing list.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
16. Confidentiality
OmniVision may, from time to time, during the term of this Agreement, furnish to
Distributor confidential information and know-how relating to Products. This
information may be furnished orally or in written form including descriptive
material, diagrams, specifications and other documents. Distributor agrees that
all such confidential information and know-how made available to it by
OmniVision shall be kept strictly confidential by it, and it agrees not to
divulge any such information or know-how to others without the prior written
consent of OmniVision. Distributor further agrees that it will not use any
confidential information or know-how in connection with the manufacture by it or
by others, on its behalf, of any Products or items similar thereto. The
obligations of Distributor to preserve the secrecy of the technical information
and know-how supplied to it by OmniVision shall survive any termination of this
Agreement.
17. Compliance with Laws
Neither party shall commit any act or request the other party to commit any act
which would violate either the letter or spirit of the export control laws,
rules or regulations, and neither party shall fail to take any action reasonably
within its capacity to assure compliance with such laws, rules or regulations.
Distributor represents and warrants that it shall not, directly or indirectly,
export, re-export or transship Products and/or technical data ("the
Commodities") in violation of any applicable export control laws promulgated and
administered by the government of any country having jurisdiction over the
parties or the transaction(s) contemplated herein.
OmniVision shall have the right to refuse to accept distributor's orders for
Commodities, or to deliver Commodities to fulfill any previously accepted
Distributor order, if OmniVision determines, in good faith, that such proposed
sale or other disposition of the Commodities poses an unreasonable risk of a
violation of any applicable export control law or regulation.
In the event OmniVision refuses to deliver Commodities to fulfill previously
accepted Distributor orders as set forth in the paragraph immediately preening,
or the necessary export or re-export authorizations are not obtained within a
reasonable period of time, OmniVision, at its option, may cancel the order or
contract, without penalty.
18. Term and Termination
a. The term of this Agreement shall be one (1) year commencing as of the
date first shown on the first page of this document, and this Agreement
shall automatically be renewed thereafter for additional one (1) year
periods at the anniversary dates hereof unless this Agreement is otherwise
terminated as elsewhere provided herein. Neither party is under any
obligation, express or implied, to renew this Agreement or to otherwise
continue their distributorship relationship after this Agreement expires.
After termination, this Agreement shall continue to govern any transactions
between OmniVision and Distributor that arose prior to expiration. This
Agreement may be terminated before expiration of its term by either party
upon written notice to the other party thirty (30) clays in advance, or for
cause in accordance with sub-paragraph (b) below. OmniVision shall have the
right to terminate this Agreement for cause with respect to any of
Distributor's marketing locations, while not terminating the Agreement with
respect to the balance of such locations.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
b. OmniVision shall have the right to terminate this Agreement immediately by
written notice to Distributor, if Distributor fails to comply with any of the
terms and conditions set forth in this Agreement, or if Distributor fails to
perform to OmniVision's satisfaction. If either party hereto shall become
insolvent or admit in writing its inability to pay its debts as they mature,
or makes an assignment for the benefit of its creditors, or to conduct its
operations in the normal course of business, or if either party hereto shall
fail to perform any of the obligations imposed upon it under the terms of this
Agreement irrespective of the nature of the obligations or the type of breach,
the other party shall have the right to immediately terminate this Agreement
by written notice.
c. Upon termination or expiration of this Agreement, OmniVision shall
purchase and Distributor agrees to sell, under OmniVision's terms and
conditions, Distributor's inventory of Products which (i) after testing and
inspection OmniVision determines to be undamaged and in good condition; (ii)
were purchased by Distributor from OmniVision or mother authorized distributor
no more than six (6) months prior to the date of termination or expiration;
(iii) appear on the Inventory Report as of the date of termination or
expiration; and (vi) were identified by OmniVision as returnable as of the
date of purchase and remain returnable as of the date of termination or
expiration (the "Returnable Inventory"). Products that do not meet these
criteria are not returnable. Distributor shall ship the Returnable Inventory
to OmniVision: F.O.B. OmniVision's warehouse, freight prepaid.
If this Agreement expires, or is terminated by OmniVision for its convenience
or by Distributor for cause, the price which OmniVision shall pay for
Returnable Inventory shall be the OmniVision price to Distributor in effect as
of the date of termination or expiration, or the purchase price paid by
Distributor less prior credit allowed, whichever is less. If this Agreement is
terminated by OmniVision for cause, OmniVision shall purchase the Returnable
Inventory at such price less fifteen percent (15%). Further, upon termination
or expiration of this Agreement, OmniVision at its option may cancel any or
all unfilled orders by Distributor.
d. Upon the termination or expiration of this Agreement, neither party shall
be liable to the other for any damages, expenditures, loss of profits or
prospective profits of any kind or nature sustained or arising out of or
alleged to have been sustained or to have arisen out of such termination or
expiration.
e. The termination or expiration of this Agreement shall not relieve or
release either party from making payments which may be owing to the other
party under the terms of this Agreement.
19. Injunction; Governing Law
a. All covenants herein may be enforced by way of injunction obtained from
any duly constituted court having jurisdiction, upon prima facie proof that
either party intends to engage in conduct which would violate the terms of
this Agreement. Such remedy shall be in addition to any other remedies
available to the parties for the breach or threatened breach of this
Agreement.
b. This Agreement and rights of the parties hereto shill be construed and
determined in accordance with the laws of the State of California, USA.
20. Miscellaneous
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
a. The relationship created between the parties hereto is that of seller and
purchaser, and neither party nor any of its employees, dealers, customers or
agents shall be deemed to be representatives, agents or employees of the other
party for any purchase whatsoever, nor shall they or any of them have any
authority or right to assume or create any obligation of any kind or nature,
express or implied, on behalf of the other party, nor to accept service of any
legal process of any kind addressed to or intended for the other party.
b. Each party hereto warrants and represents to the other that it is legally
free to enter into this Agreement, that the execution hereof has been duly
authorized, and that the terms and conditions of this Agreement, and each
party's obligations hereunder, do not conflict with or violate any terms or
conditions of any other agreement or commitment by which such party is bound.
c. This Agreement is intended to be the sole and complete statement of the
obligations of the parties relating to the subject matter hereof; and
supersedes all previous understandings, agreements, negotiations and proposals
as to this Agreement. Except as otherwise provided herein no provisions of
this Agreement shall be deemed waived, amended or modified by any party unless
such waiver, amendment or modification shall be in writing and dully signed by
the party against whom the waiver or modification is sought to be enforced.
The paragraph headings are for purposes of convenience only.
d. This Agreement may be executed in several counterparts, each of which
shall be deemed the original, but all of which shall constitute one and the
same instrument.
e. Neither party shall voluntarily or by operation of law, assign this
Agreement or any right accruing to it hereunder or delegate any duty owed by
it, without the prior written consent of the other party. This Agreement shall
inure to the benefit of and be binding upon the parties hereto, their
respective permitted successors in interest and permitted assigns.
f. Notices hereunder shall be deemed properly given if in writing and given
by telegram, telex, facsimile, certified mail or personal delivery, addressed
to the parties at their addresses set forth above or any substitute address
established after notice, and shall be deemed effective upon sending or
personal delivery.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree and have affixed their signatures
as of the date ad year first written above.
OmniVision Distributor
By /S/ Shaw Hong By /S/ Mike Chang
--------------------------- -------------------------
Print Name Shaw Hong Print Name Mike Chang
------------------- -----------------
Title President Title President
------------------------ ----------------------
Date Jan. 1, 1998 Date Jan 1, 1998
------------------------- -----------------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
Exhibit A
- ---------
Exhibit A
---------
OmniVision Product List
Part Number Product Description
- ----------- ----------------------------------------------------------
OV5016 B&W analog 320x240 EIA or 352x288 CCIR device
OV5026 B&W analog 320x240 EIA device w/mirror image
OV5036 B&W analog 320x240 EIA (60 Hz) device with N/50
OV5017 B&W digital 384x288 device
OV7210 B&W digital 704x480 (60 Hz) 704x576 (50 Hz) device
OV6023 Color analog RGB/YUV 352x240 device
OV6510 Color analog RGB 356x292 device for external PAL encoder
OV6610 Color digital 356x292 CCIR601 device
OV510 USB interface device
OmniVision Distributor
Signature /s/ Shaw Hong Signature /s/ Mike Chang
---------------- -----------------
Date Jan. 1, 1998 Date Jan 1, 1998
---------------- --------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
Exhibit B
- ---------
Exhibit B
---------
Distribution Territory
The following Territories are business locations which are defined to be the
marketing locations for Distributor. Unless discussed and agreed by both
parties, the following Territories are the only appointed business territories
for Distributor:
***
OmniVision Distributor
Signature /s/ Shaw Hong Signature /s/ Mike Chang
---------------- ----------------
Date 6/25/99 Date 6/25/99
----------------- ----------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
Exhibit C
Exhibit C
---------
Distributor Customers
Distributor is appointed to make sales to the following identified potential
Customers:
OmniVision Distributor
Signature /s/ Shaw Hong Signature /S/ Mike Chang
---------------- ----------------
Date Jan. 1, 1998 Date Jan. 1, 1998
------------ ------------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
EXHIBIT 10.8
Confidential Foundry Agreement
This Confidential Foundry Agreement is made effective March 13, 1998.
OmniVision Technologies, Inc. (OmniVision) is a California Corporation that
designs and markets CMOS image sensor related products, including color sensor
products. OmniVision has developed a considerable level of technical expertise
and experience in the design and manufacturing of CMOS image sensor related
products. OmniVision would like to develop a foundry relationship with PSC.
Powerchip Semiconductor Corp. (PSC) is a Taiwan, ROC corporation that is in the
business of manufacturing integrated circuits on a foundry basis for other
companies. PSC would like to manufacture CMOS image sensors, including the
process for adding color filters to such sensors.
For the mutual benefit of both panics it is agreed as follows:
1. OmniVision agrees to place an order(s) with PSC for prototype manufacturing
of OmniVision's CMOS image sensor related products. PSC agrees ***, except
that OmniVision will pay one mask set fee to cover all prototype versions
until the product becomes ready for mass production.
2. OmniVision agrees to evaluate the results of the prototype production units
and to share the results with PSC engineers in a joint effort to improve
and to qualify the PSC manufacturing process.
3. PSC agrees to provide the engineering manpower necessary to work with the
OmniVision engineers in evaluating the prototype results and in introducing
the necessary changes to the manufacturing process to improve the results.
4. PSC agrees to place a high priority on the pilot of OmniVision's prototype
units in order to provide a fast turn around for evaluating the results.
5. Once PSC's manufacturing process is qualified for the manufacturing of
OmniVision's CMOS products, including the color filter process, OmniVision
agrees to begin placing production level orders with PSC for OmniVision's
product(s).
6. PSC agrees to give OmniVision an ***, which are contributed by OmniVision
input.
7. PSC agrees to give OmniVision ***.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
8. All confidential information disclosed by either party as a result of
carrying out the activities described in this Agreement is subject to the
separate mutual Non-Disclosure Agreement to be signed by both parties.
Accordingly, the parties have duly authorized their respective representatives
to execute this Agreement and bind them to its terms as of the date set forth
above.
OmniVision Technologies, Inc. Powerchip Semiconductor Corp.
- ----------------------------- -----------------------------
/s/ Shaw Hong /s/ Michael Tsai
- ------------- ----------------
Shaw Hong Michael Tsai
President Senior Vice President
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
EXHIBIT 10.9
Non-exclusive Distributor Agreement
This Agreement made as of JULY, 1ST, 1998 by and between OmniVision
Technologies, Inc., a California corporation having its principal office at 930
Thompson Place, Sunnyvale, CA, 94086 USA ("OmniVision") and Holy Stone
----------
Enterprise CO., LTD _____________________________________________________, a
- -------------------
limited corporation, having its principal place of business at 1FL, NO. 62, SEC
- ------- ----------------
2, HUANG SHAN RD., NEI HU DIST., TAIPEI, TAIWAN, ROC __________________________
- ----------------------------------------------------
("Distributor").
The parties agree as follows:
1. Distributorship
OmniVision appoints Distributor as a non-exclusive distributor for the products
designed and manufactured by OmniVision (hereinafter referred to as "Products"
or "Product"), as listed on Exhibit A attached hereto. Exhibit A will be updated
and distributed to Distributor by OmniVision from time to time. Distributor
agrees not to carry any other products, which in OmniVision's sole judgment, are
directly competitive to OmniVision's Products.
Distributor's appointment covers Distributor's marketing location ("Territory")
shown on Exhibit B attached hereto and, if so agreed in writing by both parties,
additional marketing locations established by Distributor. Distributor may
relocate the business locations at Distributor's discretion as said on Exhibit
B.
Distributor is appointed to make sales to certain identified potential customers
("the Customers") specified in Exhibit C, as that Exhibit may be modified from
time to time. Distributor may make sales to additional potential customers
within the Territory provided that such potential customers are not otherwise
identified as Customers of another OmniVision Distributor, or as an OmniVision
house account. OmniVision reserves the right to appoint additional Product sales
distributors in the same geographical area. Distributor shall maintain an
adequate and aggressive sales organization at all times during the term of this
Agreement in order to assure maximum distribution of Products.
2. Sales
Subject to the terms of this Agreement, OmniVision agrees to sell and
Distributor agrees to buy Products for resale. However, OmniVision shall not be
required to sell any Products to Distributor if the manufacturing or sale of
such Product has been discontinued by OmniVision, or if such Product is or
becomes unavailable, or if OmniVision should withdraw such Product from sale to
distributors.
3. Prices
The Price Schedule will include all Products available for purchase by
Distributor as well as the unit prices for each of the Products. The Price
Schedule normally will be updated once a quarter by OmniVision and released to
Distributor. If there is any delay of this update, the Distributor shall use the
latest received Price Schedule as the purchasing price for OmniVision Products.
All prices are subject to change or withdrawal by OmniVision without prior
notice to Distributor, although
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OmniVision shall use its best efforts to give prior notice to Distributor of any
change in the prices. Except as otherwise provided in this Agreement, all sales
of Products to Distributor shall be at OmniVision's price in effect when
Distributor's order is accepted by OmniVision.
4. Taxes
Distributors located within the United States of America must submit a current
Resale License for each ship-to location operated by the Distributor. The
Distributor is responsible for any and all local, State or Federal taxes and is
responsible for abiding by all tax laws and regulations which may apply
regarding the resale of OmniVision Products. Distributors located outside of the
United States of America are responsible for paying any duties, taxes, fees or
any other charges which may be levied by governmental authorities in the Country
where shipments are made.
5. Reports
Distributor shall provide OmniVision with a Monthly Resale Report, Monthly
Inventory Report, and Monthly Quote Report, defined below. These reports shall
be made available to OmniVision by Distributor each month. These reports shall
be received by OmniVision within fifteen (15) days from the Distributor's sales
closing date of each month. OmniVision and Distributor may mutually agree to
modify the specific details of these reports to accommodate specific
requirements or conditions of the Territory or Customers.
a. The Monthly Resale Report will summarize the following information
provided to OmniVision by Distributor: customer name, sales location and
zip code, invoice or credit number (if applicable), shipment date, invoice
date if different from shipment date, type of sales (i.e., stock shipment,
drop shipment, sample sale, billing adjustment, customer return, sales to
other re-sellers, etc.).
b. The Monthly Inventory Report shall list products, by OmniVision part
number, shipped to Distributor, and all transactions to and by Distributor
during the month. OmniVision may stop shipments of Products to Distributor
to facilitate verification of inventory levels.
c. The Monthly Quote Report summarizes the new Product Quotes, old Product
Quotes that have expired, and the status of all other OmniVision Product
quotes.
6. Terms
All Products are sold to Distributor by OmniVision based on the following
shipment terms: F.O.B. OmniVision's warehouse. Terms of payment are: COD or T/T
in advance before credit checking approval and credit line set by OmniVision
credit department. After credit checking and credit line approved, the payment
term will be net amount of invoice due within thirty (30) days from the date of
invoice. Invoice shall be sent on or soon after the date of shipment.
Distributor shall not take any credit or offset against accounts owing
OmniVision without OmniVision's prior written authorization. OmniVision may at
any time, either generally or with respect to any specific order by Distributor,
change the amount or duration of credit to be allowed to Distributor, including
requiring cash in advance of shipment to Distributor (or COD term), if
Distributor has failed to pay previous invoices when due or if Distributor's
creditworthiness, in OmniVision's judgment, makes such action necessary. To
assist OmniVision determining Distributor's creditworthiness, Distributor has
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furnished, or agrees to furnish OmniVision immediately with a copy of its
financial statements for the most recent fiscal year for which audited
statements are available, and during the term of this Agreement Distributor
shall furnish OmniVision copies of Distributor's financial statements each
fiscal quarter and audited financial statements every fiscal year. "Financial
Statements" means balance sheet at the end of the financial period, income
statement of the specified period, and "audited" means examined or reviewed by a
certified public accountant. The financial statements shall be furnished to
OmniVision no later than thirty (30) days of Distributor's fiscal quarter end or
sixty (60) days of Distributor's fiscal year end.
7. Acceptance of Orders
a. All orders sent by Distributor to OmniVision must be in writing,
including changes to existing orders.
b. Distributor shall address all orders to OmniVision's Sales Department.
Inquires concerning availability, delivery or technical information should
be directed to OmniVision's Marketing Department. All orders are subject to
acceptance by OmniVision, and OmniVision reserves the right to reject any
order given by Distributor even if a price quotation has been made
previously.
c. OmniVision will package Products in a standard package or container,
but OmniVision may change such package or container at any time without
prior notice to Distributor, or use a standard bulk or quantity package for
any shipment. Distributor may specify a carrier, but if no carrier is
specified, OmniVision may select a suitable carrier without notice thereof
to Distributor.
d. Sales and shipments will be made on the terms and conditions set forth
herein and on OmniVision's order confirmation form in effect at the time of
order. If a term set forth in this Agreement is inconsistent with
OmniVision's order confirmation form, the former shall govern. Unless
otherwise in writing, OmniVision shall not in any event be bound by the
terms and conditions of Distributor's purchase order forms or any other
forms submitted by Distributor.
e. Delivery dates given by OmniVision for orders placed by Distributor
shall be considered OmniVision's best estimates only. To cancel a purchase
order or delay delivery, Distributor must first give OmniVision written
notice thereof and OmniVision shall have until the end of five (5) full
business or working days after such notice is actually received by
OmniVision in which to process, after (but not before) which such order may
be canceled if Distributor so requests.
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8. Commission Sales
Distributor may act as a commission sales representative for identified
potential customers ("the Customers") specified on Exhibit C, as that Exhibit
may, by mutual agreement, be modified from time to time.
a. Distributor shall solicit orders for Products from the Customers, and
shall forward all such orders to OmniVision in a timely manner. OmniVision
shall accept or reject each such order and shall notify Distributor and the
Customer placing such order of acceptance or rejection. OmniVision may
accept an order conditioned on such different or additional terms as
OmniVision may deem appropriate. Distributor shall have no power or
authority to accept or reject any order on behalf of OmniVision, but
Distributor may communicate to Customers the standard pricing then
available. Quotation of pricing other that the standard pricing must be
approved by OmniVision in advance.
b. OmniVision shall pay commissions to Distributor based on net receipts
attributable to direct sales from OmniVision to Customers listed on Exhibit
C, but only to such authorized Customers. Such commissions will constitute
full compensation for all of Distributor's services under this Agreement.
Commissions shall be calculated based on net actual receipts, and shall be
subject to reduction and charge back for returns as well as for other
necessary reimbursements by OmniVision to purchasers agreed to as part of
the sale of the Products. Net receipts means the amount of receipts from a
purchaser attributable to the invoice price of goods sold, excluding any
receipts attributable to shipping, handling, taxes, duties, insurance, or
other mounts not attributable to the price of goods sold.
c. Should OmniVision and Distributor mutually decide to deliver Products
sold on a commission bases from the Distributor's inventory, then
OmniVision will credit any difference between the Customer price and the
Distributor's inventory purchase price to the Distributor's commission
account.
d. Payment of compensation to Distributor shall be made on a monthly basis
by OmniVision, within thirty (30) days following the close of each month in
which commissions accrue under this Agreement. True copies of invoices and
proof of payment shall be made available and, upon written request by
Distributor, will be provided with payment of commissions.
9. Force Majeure
OmniVision assumes no obligation, and shall not be liable to Distributor, for
any delay or failure to deliver Products by reason of any contingencies beyond
OmniVision's control or beyond the control of OmniVision's suppliers including
but not limited to force majeure; strikes; labor disputes; lockouts or other
labor trouble; fire; earthquake; flood; civil commotion; war; riot; act of God;
casualties; accidents; shortages of transportation facilities; detention of
goods by custom authorities; loss of goods in public or private warehouses;
quotas or actions of any government, foreign or domestic, or any other agency or
subdivision thereof; delays in the delivery of raw or finished materials; parts
or completed merchandise by the suppliers thereof; or other casualty
contingency, or cause beyond the reasonable control of or occurring without the
fault of OmniVision or of OmniVision's suppliers, or otherwise unavoidable, or
because OmniVision's volume of orders at any time renders deliveries in the
ordinary course of business impractical. In such event, OmniVision
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shall have the right, at its election and without liability to Distributor, to
(i) cancel all or any portion of this Agreement; or (ii) perform the Agreement
as so restricted or modified to the extent determined by OmniVision in its sole
and absolute discretion; or (iii) perform the Agreement within a reasonable time
after the causes for non-performance or delay have terminated.
10. Inventory
Distributor will establish and maintain an inventory of Products adequate to
support sales revenue plans developed with OmniVision and will cooperate with
OmniVision in periodic reviews of inventory quantities. Distributor shall
maintain and use its facilities in such a manner to ensure proper care for the
Products including, at a minimum, proper temperature and humidity controls;
proper anti-static equipment; and proper facilities to permit incoming, outgoing
or other inspections of the Products.
OmniVision shall have the right at all times to purchase the Products from
Distributor. In the event OmniVision purchases Products from Distributor,
OmniVision shall pay Distributor the invoice price charged to Distributor by
OmniVision for such Products, less prior credits allowed by OmniVision with
respect to such Products under this Agreement or any predecessor agreements.
11. Returns
a. Distributor shall obtain OmniVision's prior authorization for any
return of Products. Such authorization will not be unreasonably withheld
for return of Products which are obsolete, defective, or shipped to but not
ordered by Distributor. Distributor shall send all authorized return of
Products within thirty (30) days after receiving OmniVision's
authorization, or such returns will be refused. All returns shall be
shipped F.O.B. destination, freight prepaid, to OmniVision specified
location. Return of Products not expressly authorized hereunder will be
refused by OmniVision and returned to Distributor at Distributor's expense.
b. Return of defective Products under OmniVision's product warranty policy
is governed by that policy.
c. Credit replacement will be allowed for returned Products only if
OmniVision's examination discloses to its satisfaction that the Products
has not been improperly handled or used. Credit or replacement will be
allowed for returned Products based on the price in effect on the day they
are received by OmniVision, or the purchase price paid by Distributor less
prior credit allowed under Section 5, whichever is less.
d. Unless specially approved by OmniVision, OmniVision will not accept
return of Products which were purchased and shipped from OmniVision more
than six (6) months prior to the requested date of return.
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12. Inventory Records and Inspection
Distributor shall keep current stock, cost and sale records of its inventory of
Products. Distributor's records shall accurately and sufficiently itemize and
describe the kind, type and quantity of such inventory and the cost thereof.
Distributor shall at any reasonable time allow OmniVision, or any of its agents,
to examine, audit or inspect such inventory wherever located and, for such
purposes, to enter Distributor's premises whenever any of such inventory may be
found; or, at OmniVision's option and expense, permit OmniVision to pick up
portions of Distributor's inventory for count by OmniVision and return, provided
Distributor's business is not unreasonably disrupted thereby.
13. Trademark
Distributor may so long as this Agreement is in force, and only for the purpose
of advertising and selling Products indicate to the public that it is an
authorized distributor of products manufactured by OmniVision Technologies,
Inc., and advertise such Products under the trademark "OmniVision". Distributor
shall not alter or remove any trademark or trade name applied to the Products in
the manufacture thereof. Permission to display the word "OmniVision" or any
other OmniVision proprietary word or symbol is only as started above and nothing
herein shall grant to Distributor any right, title or interest in the word
"OmniVision" (either alone or in association with other words or names), or any
part thereof or in any other trademark or trade name by OmniVision or its
related companies or in any copyright or good will of OmniVision or related
companies, nor is any permission or right given hereby to Distributor to use any
such trademark or trade name in connection with its corporate firm trade name or
tradestyle, nor shall Distributor permit a corresponding use of such trade mark
or trade name by a dealer.
14. Advertising and Advertising Assistance
OmniVision may advertise Products and list Distributor's name in its
advertising. Distributor may advertise and promote the sale of Products through
all appropriate media including trade show exhibits, catalogue and direct
mailing, space advertising, educational meetings and sales aids. OmniVision
agrees to allow Distributor to provide a complete listing in Distributor's
catalogue of all Products carried by Distributor.
15. Literature
OmniVision will supply Distributor with reasonable quantities of distributor
price lists and schedules which shall list Products available to be sold by
Distributor. OmniVision may suggest resale prices in its resale price schedules,
but Distributor, in its sole discretion, shall determine prices charged by
Distributor for Products. Distributor shall maintain an adequate supply of
printed sales, technical and product application information as OmniVision may,
from time to time, make available. Such printed material may or may not be
provided free of charge, subject to OmniVision's current literature pricing
policy. If OmniVision approves, at Distributor's request, Distributor's
customers may be added to OmniVision's mailing list.
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16. Confidentiality
OmniVision may, from time to time, during the term of this Agreement, furnish to
Distributor confidential information and know-how relating to Products. This
information may be furnished orally or in written form, including descriptive
material, diagrams, specifications and other documents. Distributor agrees that
all such confidential information and know-how made available to it by
OmniVision shall be kept strictly confidential by it, and it agrees not to
divulge any such information or know-how to others without the prior written
consent of OmniVision. Distributor further agrees that it will not use any
confidential information or know-how in connection with the manufacture by it or
by others, on its behalf, of any Products or items similar thereto. The
obligations of Distributor to preserve the secrecy of the technical information
and know-how supplied to it by OmniVision shall survive any termination of this
Agreement.
17. Compliance with Laws
Neither party shall commit any act or request the other party to commit any act
which would violate either the letter or spirit of the export control laws,
rules or regulations, and neither party shall fail to take any action reasonably
within its capacity to assure compliance with such laws, rules or regulations.
Distributor represents and warrants that it shall not, directly or indirectly,
export, re-export or transship Products and/or technical data ("the
Commodities") in violation of any applicable export control laws promulgated and
administered by the government of any country having jurisdiction over the
parties or the transaction(s) contemplated herein.
OmniVision shall have the right to refuse to accept distributor's orders for
Commodities, or to deliver Commodities to fulfill any previously accepted
Distributor order, if OmniVision determines, in good faith, that such proposed
sale or other disposition of the Commodities poses an unreasonable risk of a
violation of any applicable export control law or regulation.
In the event OmniVision refuses to deliver Commodities to fulfill previously
accepted Distributor orders as set forth in the paragraph immediately preceding,
or the necessary export or re-export authorizations are not obtained within a
reasonable period of time, OmniVision, at its option, may cancel the order or
contract, without penalty.
18. Term and Termination
a. The term of this Agreement shall be one (1) year commencing as of the
date first shown on the first page of this document, and this Agreement
shall automatically be renewed thereafter for additional one (1) year
periods at the anniversary dates hereof unless this Agreement is otherwise
terminated as elsewhere provided herein. Neither party is under any
obligation, express or implied, to renew this Agreement or to otherwise
continue their distributorship relationship after this Agreement expires.
After termination, this Agreement shall continue to govern any transactions
between OmniVision and Distributor that arose prior to expiration. This
Agreement may be terminated before expiration of its term by either party
upon written notice to the other party thirty (30) days in advance, or for
cause in accordance with sub-paragraph (b) below. OmniVision shall have the
right to terminate this Agreement for cause with respect to any of
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Distributor's marketing locations, while not terminating the Agreement with
respect to the balance of such locations.
b. OmniVision shall have the right to terminate this Agreement immediately
by written notice to Distributor, if Distributor fails to comply with any
of the terms and conditions set forth in this Agreement, or if Distributor
fails to perform to OmniVision's satisfaction. If either party hereto shall
become insolvent or admit in writing its inability to pay its debts as they
mature, or makes an assignment for the benefit of its creditors, or to
conduct its operations in the normal course of business, or if either party
hereto shall fail to perform any of the obligations imposed upon it under
the terms of this Agreement irrespective of the nature of the obligations
or the type of breach, the other party shall have the right to immediately
terminate this Agreement by written notice.
c. Upon termination or expiration of this Agreement, OmniVision shall
purchase and Distributor agrees to sell, under OmniVision's terms and
conditions, Distributor's inventory of Products which (i) after testing and
inspection OmniVision determines to be undamaged and in good condition;
(ii) were purchased by Distributor from OmniVision or another authorized
distributor no more than six (6) months prior to the date of termination or
expiration; (iii) appear on the Inventory Report as of the date of
termination or expiration; and (vi) were identified by OmniVision as
returnable as of the date of purchase and remain returnable as of the date
of termination or expiration (the "Returnable Inventory"). Products that do
not meet these criteria are not returnable. Distributor shall ship the
Returnable Inventory to OmniVision: F.O.B. OmniVision's warehouse, freight
prepaid.
If this Agreement expires, or is terminated by OmniVision for its
convenience or by Distributor for cause, the price which OmniVision shall
pay for Returnable Inventory shall be the OmniVision price to Distributor
in effect as of the date of termination or expiration, or the purchase
price paid by Distributor less prior credit allowed, whichever is less. If
this Agreement is terminated by OmniVision for cause, OmniVision shall
purchase the Returnable Inventory at such price less fifteen percent (15%).
Further, upon termination or expiration of this Agreement, OmniVision at
its option may cancel any or all unfilled orders by Distributor.
d. Upon the termination or expiration of this Agreement, neither party
shall be liable to the other for any damages, expenditures, loss of profits
or prospective profits of any kind or nature sustained or arising out of or
alleged to have been sustained or to have arisen out of such termination or
expiration.
e. The termination or expiration of this Agreement shall not relieve or
release either party from making payments which may be owing to the other
party under the terms of this Agreement.
19. Injunction; Governing Law
a. All covenants herein may be enforced by way of injunction obtained from
any duly constituted court having jurisdiction, upon prima facie proof that
either party intends to engage in conduct which would violate the terms of
this Agreement. Such remedy shall be in addition to any other remedies
available to the parties for the breach or threatened breach of this
Agreement.
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b. This Agreement and rights of the parties hereto shall be construed and
determined in accordance with the laws of the State of California, USA.
20. Miscellaneous
a. The relationship created between the parties hereto is that of seller
and purchaser, and neither party nor any of its employees, dealers,
customers or agents shall be deemed to be representatives, agents or
employees of the other party for any purchase whatsoever, nor shall they or
any of them have any authority or right to assume or create any obligation
of any kind or nature, express or implied, on behalf of the other party,
nor to accept service of any legal process of any kind addressed to or
intended for the other party.
b. Each party hereto warrants and represents to the other that it is
legally free to enter into this Agreement, that the execution hereof has
been duly authorized, and that the terms and conditions of this Agreement,
and each party's obligations hereunder, do not conflict with or violate any
terms or conditions of any other agreement or commitment by which such
party is bound.
c. This Agreement is intended to be the sole and complete statement of the
obligations of the parties relating to the subject matter hereof, and
supersedes all previous understandings, agreements, negotiations and
proposals as to this Agreement. Except as otherwise provided herein, no
provisions of this Agreement shall be deemed waived, amended or modified by
any party unless such waiver, amendment or modification shall be in writing
and dully signed by the party against whom the waiver or modification is
sought to be enforced. The paragraph headings are for purposes of
convenience only.
d. This Agreement may be executed in several counterparts, each of which
shall be deemed the original, but all of which shall constitute one and the
same instrument.
e. Neither party shall voluntarily or by operation of law, assign this
Agreement or any right accruing to it hereunder or delegate any duty owed
by it, without the prior written consent of the other party. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, their
respective permitted successors in interest and permitted assigns.
f. Notices hereunder shall be deemed properly given if in writing and
given by telegram, telex, facsimile, certified mail or personal delivery,
addressed to the parties at their addresses set forth above or any
substitute address established after notice, and shall be deemed effective
upon sending or personal delivery.
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IN WITNESS WHEREOF, the parties hereto agree and have affixed their signatures
as of the date and year first written above.
OmniVision Distributor
By /s/ Jack Wang By /s/ Bill Tang
-------------------------------- ----------------------
Print Name Jack Wang Print Name Bill Tang
----------------------- ---------------
Title Director, Asia Business Title President
----------------------------- --------------------
Date July 2, 1998 Date July 1, 1998
----------------------------- ---------------------
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Exhibit A
- ---------
Exhibit A
---------
OmniVision Product List
Part Number Product Description
- ----------- -----------------------------------------------------
OV5016 B&W analog 320x240 EIA or 352x288 CCIR device
OV5026 B&W analog 320x240 EIA device w/mirror image
OV5036 B&W analog 320x240 EIA (60 Hz) device with N/50
OV5017 B&W digital 384x288 device
OV7210 B&W digital 704x480 (60Hz) 704x576 (50 Hz) device
OV6023 Color analog RGB/YUV 352x240 device
OV6510 Color analog RGB 356x292 device for external PAL encoder
OV6610 Color digital 356x292 CCIR601 device
OV510 USB interface device
OmniVision Distributor
Signature _______________________ Signature ______________________
Date _________________________ Date ________________________
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<PAGE>
Exhibit B
- ---------
Exhibit B
---------
Distribution Territory
The following Territories are the business locations which are defined to be the
marketing locations for Distributor. Unless discussed and agreed by both
parties, the following Territories are the only appointed business territories
for Distributor:
OmniVision Distributor
Signature______________________ Signature_____________________
Date________________________ Date_______________________
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Exhibit C
Exhibit C
---------
Distributor Customers
Distributor is appointed to make sales to the following identified potential
Customers:
OmniVision Distributor
Signature___________________________ Signature____________________
Date_____________________________ Date______________________
Page 13
<PAGE>
EXHIBIT 10.10
OmniVision
Software License Agreement
This software license agreement (the "Software License Agreement") is entered
into as of the date last signed below ("Effective Date"), between OmniVision
Technologies. Inc. ("OmniVision"), a California corporation with its principal
office at 930 Thompson Place, Sunnyvale, CA, 94086 USA, and Creative Technology
Ltd. ("Creative"), a Singapore corporation, with its principal office at 31
International Business Park, Creative Resource, Republic of Singapore, 609921.
In consideration of the mutual promises contained in this Software License
Agreement, the parties agree as follows:
1. SOFTWARE DEFINITION
-------------------
1.1 OmniVision's software program(s) ("Software") that are required or
useful for the proper operation and support of the Products and any
upgrades, improvements, modifications or enhancements thereto,
including but not limited to those listed on Attachment A. Software
provided under this Software License Agreement shall be considered
Products sold or otherwise distributed to Creative pursuant to the
Letter between the parties dated _______, 1999. Except as specified
herein, all capitalized terms shall be defined as set forth in the
Letter.
2. CREATIVE CERTIFICATION
----------------------
2.1 Creative hereby certifies that the Software to be licensed under this
Software License Agreement will be used on its behalf as a
manufacturer of products incorporating OmniVision's Sensor and/or
Chip. Creative further certifies that the Software will be
incorporated into a Creative Product or can be distributed separate
from a Creative Product so long as it is intended for use with a
Creative Product. (E.G., Creative may distribute the Software via its
website or as upgrades or bug fixes via floppy disk or email.)
2.2 Creative hereby acknowledges that the license specifically excludes
the right to sell or lease the Software as a free-standing software
product separate from Creative's product or system.
3. RIGHT TO CREATE CREATIVE PRODUCTS
---------------------------------
3.1 OmniVision hereby grants to Creative and its affiliates a
nonexclusive, royalty-free. perpetual, fully paid-up, irrevocable
world-wide license, with the right to sublicense, to use and prepare
derivative works of the licensed Software and documentation. As used
herein, the term "use" includes the right to make,
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
1
<PAGE>
have made, copy, reproduce, modify, perform, display, and distribute
in any manner the Software. OmniVision warrants that it has the right
to grant the licenses granted to Creative hereunder, and that the
Software shall perform. operate, and function as set forth in the
specifications For such Software attached hereto as Attachment B.
3.2 Creative shall be entitled to distribute the Creative Products
directly to end-users or through distributors or other third party
intermediaries, including multiple tiers thereof.
3.3 Subject to the limited rights and licenses granted to Creative in this
Section 3. OmniVision shall retain ownership of the licensed Software
and related documentation.
3.4 The parties acknowledge that Creative shall own all modifications and
derivative works made by Creative to the Software and all intellectual
property rights there in and related thereto.
4. CONFIDENTIALITY
---------------
4.1 The parties acknowledge that the Non-Disclosure Agreement entered into
by them dated February 19, 1998 shall govern the disclosure of
Confidential Information between the parties.
5. UPDATES/ERRORS
--------------
5.1 OMNIVISION shall provide updates, upgrades, fixes improvements, or new
versions of the Software ("Updates") promptly as they become available
and shall make best efforts to notify, Creative at least sixty (60)
days prior to introduction of such new Updates. Updates shall be
deemed a part of the Software licensed hereunder.
5.2 Should OmniVision become aware of any errors or be notified by,
Creative of any errors in the Software. OmniVision shall take
appropriate measures to correct such errors and shall provide such
corrections no later than ten (10) days after receipt of notice of
such errors. OmniVision shall provide at OmniVision's sole expense,
assistance in correcting difficulties caused by errors.
6. PROPRIETARY RIGHTS.
-------------------
6.1 No rights other than those rights expressly granted in Section 3 are
conveyed by this Software License Agreement. Except is expressly set
forth in the Letter or in this Software License Agreement. OmniVision
does not grant to Creative any right, title or interest in or to the
Software now or in the future covered by this Software License
Agreement or in or to any of OmniVision's
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
2
<PAGE>
domestic or international patents, trademarks, trade names,
inventions. copyrights, know how, and trade secrets relating to the
design, manufacture. operation or service of the Software or
documentation.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this Software
License Agreement set forth above.
OmniVision Technologies, Inc. Creative Technology Ltd.
- ----------------------------- ------------------------
By: /s/ Robert J. Stroh By:_________________________
------------------------
Robert J. Stroh
- --------------------------- ____________________________
(Print Name) (Print Name)
Title Vice President Title_______________________
--------------------
Date Feb. 1, 1999 Date________________________
- ---------------------------
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
3
<PAGE>
Attachment A
Software
The following OmniVision software programs and/or documentation are covered by
this Software License Agreement:
1. ***
2. ***
3. ***
4. ***
5. ***
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
4
<PAGE>
Attachment B
Software Specifications [still under review]
1. Video data stream at resolutions of 160x120, 320x240, 352x288 and 640x480
and at color depths of YUV420 (12bit), RGB (16bit), and RGB (24bit) for all
resolutions.
2. Must provide access to applications via both the Windows Device Model
interface and the Video For Windows interface.
3. Must adhere to Microsoft's and Intel's PC98 and PC99 requirements.
4. Must pass all of Microsoft Corporation's WHQL tests related to video input
devices.
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
5
<PAGE>
domestic or international patents, trademarks, trade names, inventions.
copyrights, know how, and trade secrets relating to the design,
manufacture. operation or service of the Software or documentation.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this Software
License Agreement set forth above.
OmniVision Technologies, Inc. Creative Technology Ltd.
By:_____________________________ By: /s/ Robert J. Stroh
-----------------------------
XXX
________________________________ --------------------------------
(Print Name) (Print Name)
Title___________________________ Title Vice President
---------------------------
Date Date
________________________________ ________________________________
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
6
<PAGE>
domestic or international patents, trademarks, trade names, inventions.
copyrights, know how, and trade secrets relating to the design,
manufacture. operation or service of the Software or documentation.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this Software
License Agreement set forth above.
OmniVision Technologies, Inc. Creative Technology Ltd.
- ----------------------------- ----------------------------
By: /s/ Robert J. Stroh By: /s/ XXX
----------------------- -------------------------
Robert J. Stroh XXX
- --------------------------- ----------------------------
(Print Name) (Print Name)
Title Vice President Title Vice President
-------------------- -----------------------
Date Date
Feb. 1, 1999 Feb. 1, 1999
- --------------------------- ____________________________
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
7
<PAGE>
EXHIBIT 10.11
Non-exclusive Distributor Agreement
This Agreement made as of Oct. 22th, 1999 by and between OmniVision
--------- --
Technologies, Inc., a California corporation having its principal office at 930
Thompson Place, Sunnyvale, CA, 94086 USA ("OmniVision") and Wintek Electronics
------------------
Co. ,Ltd., a Taiwan Company corporation, having its principal place of business
- --------- --------------
at 3F-3 ,NO. 197, SEC. 4 ,NANKING E. ROAD, TAIPEI, TAIWAN, R.O.C.
- ----------------------------------------------------------------
("Distributor").
The parties agree as follows:
1. Distributorship
OmniVision appoints Distributor as a non-exclusive distributor for the products
designed and manufactured by OmniVision (hereinafter referred to as "Products"
or "Product"), as listed on Exhibit A attached hereto. Exhibit A will be updated
and distributed to Distributor by OmniVision from time to time. Distributor
agrees not to carry any other products, which in OmniVision's sole judgment, are
directly competitive to OmniVision's Products.
Distributor's appointment covers Distributor's marketing location ("Territory")
shown on Exhibit B attached hereto and, if so agreed in writing by both parties,
additional marketing locations established by Distributor. Distributor may
relocate the business locations at Distributor's discretion as said on Exhibit
B.
Distributor is appointed to make sales to certain identified potential customers
("the Customers") specified in Exhibit C, as that Exhibit may be modified from
time to time. Distributor may make sales to additional potential customers
within the Territory provided that such potential customers are not otherwise
identified as Customers of another OmniVision Distributor, or as an OmniVision
house account. OmniVision reserves the right to appoint additional Product sales
distributors in the same geographical area. Distributor shall maintain an
adequate and aggressive sales organization at all times during the term of this
Agreement in order to assure maximum distribution of Products.
2. Sales
Subject to the terms of this Agreement, OmniVision agrees to sell and
Distributor agrees to buy Products for resale. However, OmniVision shall not be
required to sell any Products to Distributor if the manufacturing or sale of
such Product has been discontinued by OmniVision, or if such Product is or
becomes unavailable, or if OmniVision should withdraw such Product from sale to
distributors.
3. Prices
The Price Schedule will include all Products available for purchase by
Distributor as well as the unit prices for each of the Products. The Price
Schedule normally will be updated once a quarter by OmniVision and released to
Distributor. If there is any delay of this update, the Distributor shall use the
latest received Price Schedule as the purchasing price for OmniVision Products.
All prices are subject to change or withdrawal by OmniVision without prior
notice to Distributor,
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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although OmniVision shall use its best efforts to give prior notice to
Distributor of any change in the prices. Except as otherwise provided in this
Agreement, all sales of Products to Distributor shall be at OmniVision's price
in effect when Distributor's order is accepted by OmniVision.
4. Taxes
Distributors located within the United States of America must submit a current
Resale License for each ship-to location operated by the Distributor. The
Distributor is responsible for any and all local, State or Federal taxes and is
responsible for abiding by all tax laws and regulations which may apply
regarding the resale of OmniVision Products. Distributors located outside of the
United States of America are responsible for paying any duties, taxes, fees or
any other charges which may be levied by governmental authorities in the Country
where shipments are made.
5. Reports
Distributor shall provide OmniVision with a Monthly Resale Report, Monthly
Inventory Report, and Monthly Quote Report, defined below. These reports shall
be made available to OmniVision by Distributor each month. These reports shall
be received by OmniVision within fifteen (15) days from the Distributor's sales
closing date of each month. OmniVision and Distributor may mutually agree to
modify the specific details of these reports to accommodate specific
requirements or conditions of the Territory or Customers.
a. The Monthly Resale Report will summarize the following information
provided to OmniVision by Distributor: customer name, sales location and
postal code, invoice or credit number (if applicable), shipment date,
invoice date if different from shipment date, type of sales (i.e., stock
shipment, drop shipment, sample sale, billing adjustment, customer return,
sales to other re-sellers, etc.).
b. The Monthly Inventory Report shall list products, by OmniVision part
number, shipped to Distributor, and all transactions to and by Distributor
during the month. OmniVision may stop shipments of Products to Distributor
to facilitate verification of inventory levels.
c. The Monthly Quote Report summarizes the new Product Quotes, old
Product Quotes that have expired, and the status of all other OmniVision
Product quotes.
6. Terms
All Products are sold to Distributor by OmniVision based on the following
shipment terms: F.O.B. OmniVision's warehouse. Terms of payment are: COD or T/T
in advance before credit checking approval and credit line set by OmniVision
credit department. After credit checking and credit line approved, the payment
term will be net amount of invoice due within thirty (30) days from the date of
invoice. Invoice shall be sent on or soon after the date of shipment.
Distributor shall not take any credit or offset against accounts owing
OmniVision without OmniVision's prior written authorization. OmniVision may at
any time, either generally or with respect to any specific order by Distributor,
change the amount or duration of credit to be allowed to Distributor, including
requiting cash in advance of shipment to Distributor (or COD term), if
Distributor has failed to pay previous invoices when due or if Distributor's
creditworthiness, in OmniVision's judgment, makes such action necessary. To
assist OmniVision determining Distributor's creditworthiness, Distributor has
furnished, or agrees to furnish
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
Page 2
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OmniVision immediately with a copy of its financial statements for the most
recent fiscal year for which audited statements are available, and during the
term of this Agreement Distributor shall furnish OmniVision copies of
Distributor's financial statements each fiscal quarter and audited financial
statements every fiscal year. "Financial Statements" means balance sheet at the
end of the financial period, income statement of the specified period, and
"audited" means examined or reviewed by a certified public accountant. The
financial statements shall be furnished to OmniVision no later than thirty (30)
days of Distributor's fiscal quarter end or sixty (60) days of Distributor's
fiscal year end.
7. Acceptance of Orders
a. All orders sent by Distributor to OmniVision must be in writing,
including changes to existing orders.
b. Distributor shall address all orders to OmniVision's Sales Department.
Inquires concerning availability, delivery or technical information should
be directed to OmniVision's Marketing Department. All orders are subject to
acceptance by OmniVision, and OmniVision reserves the right to reject any
order given by Distributor even if a price quotation has been made
previously.
c. OmniVision will package Products in a standard package or container,
but OmniVision may change such package or container at any time without
prior notice to Distributor, or use a standard bulk or quantity package for
any shipment. Distributor may specify a carrier, but if no carrier is
specified, OmniVision may select a suitable carrier without notice thereof
to Distributor.
d. Sales and shipments will be made on the terms and conditions set forth
herein and on OmniVision's order confirmation form in effect at the time of
order. If a term set forth in this Agreement is inconsistent with
OmniVision's order confirmation form, the former shall govern. Unless
otherwise in writing, OmniVision shall not in any event be bound by the
terms and conditions of Distributor's purchase order forms or any other
forms submitted by Distributor.
e. Delivery dates given by OmniVision for orders placed by Distributor
shall be considered OmniVision's best estimates only. To cancel a purchase
order or delay delivery, Distributor must first give OmniVision written
notice thereof and OmniVision shall have until the end of five (5) full
business or working days after such notice is actually received by
OmniVision in which to process, after (but not before) which such order may
be canceled if Distributor so requests.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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<PAGE>
8. Commission Sales
Distributor may act as a commission sales representative for identified
potential customers ("the Customers") specified on Exhibit C, as that Exhibit
may, by mutual agreement, be modified from time to time.
a. Distributor shall solicit orders for Products from the Customers, and
shall forward all such orders to OmniVision in a timely manner. OmniVision
shall accept or reject each such order and shall notify Distributor and the
Customer placing such order of acceptance or rejection. OmniVision may
accept an order conditioned on such different or additional terms as
OmniVision may deem appropriate. Distributor shall have no power or
authority to accept or reject any order on behalf of OmniVision, but
Distributor may communicate to Customers the standard pricing then
available. Quotation of pricing other that the standard pricing must be
approved by OmniVision in advance.
b. OmniVision shall pay commissions to Distributor as set forth in
Exhibit D, as that Exhibit may, by mutual agreement, be modified from time
to time, based on net receipts attributable to direct sales from OmniVision
to Customers listed on Exhibit C, but only to such authorized Customers.
Such commissions will constitute full compensation for all of Distributor's
services under this Agreement. Commissions shall be calculated based on net
actual receipts, and shall be subject to reduction and charge back for
returns as well as for other necessary reimbursements by OmniVision to
purchasers agreed to as part of the sale of the Products. Net receipts
means the amount of receipts from a purchaser attributable to the invoice
price of goods sold, excluding any receipts attributable to shipping,
handling, taxes, duties, insurance, or other amounts not attributable to
the price of goods sold.
c. Should OmniVision and Distributor mutually decide to deliver Products
sold on a commission bases from the Distributor's inventory, then
OmniVision will credit any difference between the Customer price and the
Distributor's inventory purchase price to the Distributor's commission
account.
d. Payment of compensation to Distributor shall be made on a monthly
basis by OmniVision, within thirty (30) days following the close of each
month in which commissions accrue under this Agreement. True copies of
invoices and proof of payment shall be made available and, upon written
request by Distributor, will be provided with payment of commissions.
9. Force Majeure
OmniVision assumes no obligation, and shall not be liable to Distributor, for
any delay or failure to deliver Products by reason of any contingencies beyond
OmniVision's control or beyond the control of OmniVision's suppliers including
but not limited to force majeure; strikes; labor disputes; lockouts or other
labor trouble; fire; earthquake; flood; civil commotion; war; riot; act of God;
casualties; accidents; shortages of transportation facilities; detention of
goods by custom authorities; loss of goods in public or private warehouses;
quotas or actions of any government, foreign or domestic, or any other agency or
subdivision thereof; delays in the delivery of raw or finished materials; parts
or completed merchandise by the suppliers thereof; or other casualty
contingency, or cause beyond the reasonable control of or occurring without the
fault of OmniVision or of OmniVision's suppliers, or otherwise unavoidable, or
because OmniVision's volume of orders at any time renders deliveries in the
ordinary course of business impractical. In such event, OmniVision shall have
the right, at its election and without liability to Distributor, to
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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(i) cancel all or any portion of this Agreement; or (ii) perform the Agreement
as so restricted or modified to the extent determined by OmniVision in its sole
and absolute discretion; or (iii) perform the Agreement within a reasonable time
after the causes for non-performance or delay have terminated.
10. Inventory
Distributor will establish and maintain an inventory of Products adequate to
support sales revenue plans developed with OmniVision and will cooperate with
OmniVision in periodic reviews of inventory quantities. Distributor shall
maintain and use its facilities in such a manner to ensure proper care for the
Products including, at a minimum, proper temperature and humidity controls;
proper anti-static equipment; and proper facilities to permit incoming, outgoing
or other inspections of the Products.
OmniVision shall have the right at all times to purchase the Products from
Distributor. In the event OmniVision purchases Products from Distributor,
OmniVision shall pay Distributor the invoice price charged to Distributor by
OmniVision for such Products, less prior credits allowed by OmniVision with
respect to such Products under this Agreement or any predecessor agreements.
11. Returns
a. Distributor shall obtain OmniVision's prior authorization for any
return of Products. Such authorization will not be unreasonably withheld
for return of Products which are obsolete, defective, or shipped to but not
ordered by Distributor. Distributor shall send all authorized return of
Products within thirty (30) days after receiving OmniVision's
authorization, or such returns will be refused. All returns shall be
shipped F.O.B. destination, freight prepaid, to OmniVision specified
location. Return of Products not expressly authorized hereunder will be
refused by OmniVision and returned to Distributor at Distributor's expense.
b. Return of defective Products under OmniVision's product warranty
policy is governed by that policy.
c. Credit replacement will be allowed for returned Products only if
OmniVision's examination discloses to its satisfaction that the Products
has not been improperly handled or used. Credit or replacement will be
allowed for returned Products based on the price in effect on the day they
are received by OmniVision, or the purchase price paid by Distributor less
prior credit allowed under Section 5, whichever is less.
d. Unless specially approved by OmniVision, OmniVision will not accept
return of Products which were purchased and shipped from OmniVision more
than six (6) months prior to the requested date of return.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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12. Inventory Records and Inspection
Distributor shall keep current stock, cost and sale records of its inventory of
Products. Distributor's records shall accurately and sufficiently itemize and
describe the kind, type and quantity of such inventory and the cost thereof.
Distributor shall at any reasonable time allow OmniVision, or any of its agents,
to examine, audit or inspect such inventory wherever located and, for such
purposes, to enter Distributor's premises whenever any of such inventory may be
found; or, at OmniVision's option and expense, permit OmniVision to pick up
portions of Distributor's inventory for count by OmniVision and return, provided
Distributor's business is not unreasonably disrupted thereby.
13. Trademark
Distributor may so long as this Agreement is in force, and only for the purpose
of advertising and selling Products indicate to the public that it is an
authorized distributor of products manufactured by OmniVision Technologies,
Inc., and advertise such Products under the trademark "OmniVision". Distributor
shall not alter or remove any trademark or trade name applied to the Products in
the manufacture thereof. Permission to display the word "OmniVision" or any
other OmniVision proprietary word or symbol is only as started above and nothing
herein shall grant to Distributor any right, title or interest in the word
"OmniVision" (either alone or in association with other words or names), or any
part thereof or in any other trademark or trade name by OmniVision or its
related companies or in any copyright or good will of OmniVision or related
companies, nor is any permission or right given hereby to Distributor to use any
such trademark or trade name in connection with its corporate firm trade name or
tradestyle, nor shall Distributor permit a corresponding use of such trade mark
or trade name by a dealer.
14. Advertising and Advertising Assistance
OmniVision may advertise Products and list Distributor's name in its
advertising. Distributor may advertise and promote the sale of Products through
all appropriate media including trade show exhibits, catalogue and direct
mailing, space advertising, educational meetings and sales aids. OmniVision
agrees to allow Distributor to provide a complete listing in Distributor's
catalogue of all Products carried by Distributor.
15. Literature
OmniVision will supply Distributor with reasonable quantities of distributor
price lists and schedules which shall list Products available to be sold by
Distributor. OmniVision may suggest resale prices in its resale price schedules,
but Distributor, in its sole discretion, shall determine prices charged by
Distributor for Products. Distributor shall maintain an adequate supply of
printed sales, technical and product application information as OmniVision may,
from time to time, make available. Such printed material may or may not be
provided free of charge, subject to OmniVision's current literature pricing
policy. If OmniVision approves, at Distributor's request, Distributor's
customers may be added to OmniVision's mailing list.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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16. Confidentiality
OmniVision may, from time to time, during the term of this Agreement, furnish to
Distributor confidential information and know-how relating to Products. This
information may be furnished orally or in written form, including descriptive
material, diagrams, specifications and other documents. Distributor agrees that
all such confidential information and know-how made available to it by
OmniVision shall be kept strictly confidential by it, and it agrees not to
divulge any such information or know-how to others without the prior written
consent of OmniVision. Distributor further agrees that it will not use any
confidential information or know-how in connection with the manufacture by it or
by others, on its behalf, of any Products or items similar thereto. The
obligations of Distributor to preserve the secrecy of the technical information
and know-how supplied to it by OmniVision shall survive any termination of this
Agreement.
17. Compliance with Laws
Neither party shall commit any act or request the other party to commit any act
which would violate either the letter or spirit of the export control laws,
rules or regulations, and neither party shall fail to take any action reasonably
within its capacity to assure compliance with such laws, rules or regulations.
Distributor represents and warrants that it shall not, directly or indirectly,
export, re-export or transship Products and/or technical data ("the
Commodities") in violation of any applicable export control laws promulgated and
administered by the government of any country having jurisdiction over the
parties or the transaction(s) contemplated herein.
OmniVision shall have the right to refuse to accept distributor's orders for
Commodities, or to deliver Commodities to fulfill any previously accepted
Distributor order, if OmniVision determines, in good faith, that such proposed
sale or other disposition of the Commodities poses an unreasonable risk of a
violation of any applicable export control law or regulation.
In the event OmniVision refuses to deliver Commodities to fulfill previously
accepted Distributor orders as set forth in the paragraph immediately preceding,
or the necessary export or re-export authorizations are not obtained within a
reasonable period of time, OmniVision, at its option, may cancel the order or
contract, without penalty.
18. Term and Termination
a. The term of this Agreement shall be one (1) year commencing as of the
date first shown on the first page of this document, and this Agreement
shall automatically be renewed thereafter for additional one (1) year
periods at the anniversary dates hereof unless this Agreement is otherwise
terminated as elsewhere provided herein. Neither party is under any
obligation, express or implied, to renew this Agreement or to otherwise
continue their distributorship relationship after this Agreement expires.
After termination, this Agreement shall continue to govern any transactions
between OmniVision and Distributor that arose prior to expiration. This
Agreement may be terminated before expiration of its term by either party
upon written notice to the other party thirty (30) days in advance, or for
cause in accordance with sub-paragraph (b) below. OmniVision shall have the
right to terminate this Agreement for cause with respect to any of
Distributor's marketing locations, while not terminating the Agreement with
respect to the balance of such locations.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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b. OmniVision shall have the right to terminate this Agreement
immediately by written notice to Distributor, if Distributor fails to
comply with any of the terms and conditions set forth in this Agreement, or
if Distributor fails to perform to OmniVision's satisfaction. If either
party hereto shall become insolvent or admit in writing its inability to
pay its debts as they mature, or makes an assignment for the benefit of its
creditors, or to conduct its operations in the normal course of business,
or if either party hereto shall fail to perform any of the obligations
imposed upon it under the terms of this Agreement irrespective of the
nature of the obligations or the type of breach, the other party shall have
the right to immediately terminate this Agreement by written notice.
c. Upon termination or expiration of this Agreement, OmniVision shall
purchase and Distributor agrees to sell, under OmniVision's terms and
conditions, Distributor's inventory of Products which (i) after testing and
inspection OmniVision determines to be undamaged and in good condition;
(ii) were purchased by Distributor from OmniVision or another authorized
distributor no more than six (6) months prior to the date of termination or
expiration; (iii) appear on the Inventory Report as of the date of
termination or expiration; and (vi) were identified by OmniVision as
returnable as of the date of purchase and remain returnable as of the date
of termination or expiration (the "Returnable Inventory"). Products that do
not meet these criteria are not returnable. Distributor shall ship the
Returnable Inventory to OmniVision: F.O.B. OmniVision's warehouse, freight
prepaid.
If this Agreement expires, or is terminated by OmniVision for its
convenience or by Distributor for cause, the price which OmniVision shall
pay for Returnable Inventory shall be the OmniVision price to Distributor
in effect as of the date of termination or expiration, or the purchase
price paid by Distributor less prior credit allowed, whichever is less. If
this Agreement is terminated by OmniVision for cause, OmniVision shall
purchase the Returnable Inventory at such price less fifteen percent (15%).
Further, upon termination or expiration of this Agreement, OmniVision at
its option may cancel any or all unfilled orders by Distributor.
d. If OmniVision terminates this agreement for cause, then Distributor
shall not be entitled to receive any commission payments otherwise payable
after OmniVision terminates this agreement. If this agreement expires, or
is terminated by OmniVision for its convenience or by Distributor for
cause, then Distributor shall receive commissions for any sales made by
Distributor prior to the date of expiration or termination that result in
shipment of Products to an Account in the Territory within one-hundred-
twenty (120) days of the expiration or termination.
e. Upon the termination or expiration of this Agreement, neither party
shall be liable to the other for any damages, expenditures, loss of profits
or prospective profits of any kind or nature sustained or arising out of or
alleged to have been sustained or to have arisen out of such termination or
expiration.
f. The termination or expiration of this Agreement shall not relieve or
release either party from making payments which may be owing to the other
party under the terms of this Agreement.
19. Injunction; Governing Law
a. All covenants herein may be enforced by way of injunction obtained
from any duly constituted court having jurisdiction, upon prima facie proof
that either party intends to
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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engage in conduct which would violate the terms of this Agreement. Such
remedy shall be in addition to any other remedies available to the parties
for the breach or threatened breach of this Agreement.
b. This Agreement and rights of the parties hereto shall be construed and
determined in accordance with the laws of the State of California, USA.
20. Miscellaneous
a. The relationship created between the parties hereto is that of seller
and purchaser, and neither party nor any of its employees, dealers,
customers or agents shall be deemed to be representatives, agents or
employees of the other party for any purchase whatsoever, nor shall they or
any of them have any authority or right to assume or create any obligation
of any kind or nature, express or implied, on behalf of the other party,
nor to accept service of any legal process of any kind addressed to or
intended for the other party.
b. Each party hereto warrants and represents to the other that it is
legally free to enter into this Agreement, that the execution hereof has
been duly authorized, and that the terms and conditions of this Agreement,
and each party's obligations hereunder, do not conflict with or violate any
terms or conditions of any other agreement or commitment by which such
party is bound.
c. This Agreement is intended to be the sole and complete statement of
the obligations of the parties relating to the subject matter hereof, and
supersedes all previous understandings, agreements, negotiations and
proposals as to this Agreement. Except as otherwise provided herein, no
provisions of this Agreement shall be deemed waived, amended or modified by
any party unless such waiver, amendment or modification shall be in writing
and dully signed by the party against whom the waiver or modification is
sought to be enforced. The paragraph headings are for purposes of
convenience only.
d. This Agreement may be executed in several counterparts, each of which
shall be deemed the original, but all of which shall constitute one and the
same instrument.
e. Neither party shall voluntarily or by operation of law, assign this
Agreement or any right accruing to it hereunder or delegate any duty owed
by it, without the prior written consent of the other party. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, their
respective permitted successors in interest and permitted assigns.
f. Notices hereunder shall be deemed properly given if in writing and
given by telegram, telex, facsimile, certified mail or personal delivery,
addressed to the parties at their addresses set forth above or any
substitute address established after notice, and shall be deemed effective
upon sending or personal delivery.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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IN WITNESS WHEREOF, the parties hereto agree and have affixed their signatures
as of the date and year first written above.
OmniVision Distributor
By /s/ Raymond Wu By /s/ Jerry Kao
---------------------- ----------------------------
Print Name RAYMOND WU Print Name JERRY KAO
-------------- -------------------
Title Exec. V.P. Title President
-------------------- -------------------------
Date 10/22/99 Date 10/22/1999
--------------------- -------------------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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<PAGE>
Exhibit A
- ---------
Exhibit A
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OmniVision Product List
Part Number Product Description
- ----------- -------------------
OV5016 B&W analog 320x240 EIA or 352x288 CCIR device
OV5026 B&W analog 320x240 EIA device w/mirror image
OV5036 B&W analog 320x240 EIA (60 Hz) device with N/50
OV5116 B&W analog 320x240 EIA or 352x288 CCIR device
OV5017 B&W digital 384x288 device
OV7410 B&W analog 512x492 EIA or 628x582 CCIR device
OV7110 B&W digital 644x484 device
OV6023 Color analog RGB/YUV 352x240 device
OV6620 Color digital 356x292 CCIR601 device
OV7910 Color analog 510x492 NTSC or 628x582 PAL device
OV7610 Color digital 644x484 device
OV511 USB interface device
OmniVision Distributor
Signature /s/ Raymond Wu Signature /s/ Jerry Kao
-------------- -----------------
Date 10/22/99 Date 10/22/1999
-------------- -----------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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Exhibit B
- ---------
Exhibit B
---------
Distribution Territory
The following Territories are the business locations which are defined to be the
marketing locations for Distributor. Unless discussed and agreed by both
parties, the following Territories are the only appointed business territories
for Distributor:
OmniVision Distributor
Signature /s/ Raymond Wu Signature /s/ Jerry Kao
------------------ -----------------
Date 10/22/99 Date 10/22/1999
------------------ -----------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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Exhibit C
Exhibit C
---------
Distributor Customers
Distributor is appointed to make sales to the following identified potential
Customers:
OmniVision Distributor
Signature /s/ Raymond Wu Signature /s/ Jerry Kao
--------------------- -----------------
Date 10/22/99 Date 10/22/1999
--------------------- -----------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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Exhibit D
Exhibit D
---------
Commission
The commission rates for sales of the Products made on a commission basis as
described in Section 8 Commission Sales is as follows:
----------------
Type of Sale Commission Rate
------------ ---------------
1. Product delivered from OmniVision ***
OmniVision Distributor
Signature /s/ Raymond Wu Signature /s/ Jerry Kao
--------------------- -----------------
Date 10/22/99 Date 10/22/1999
--------------------- -----------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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EXHIBIT 10.12
Confidential Foundry Agreement
This Confidential Foundry Agreement is made effective December 13, 1999.
OmniVision Technologies, Inc. (OmniVision) is a California Corporation that
designs and markets CMOS image sensor related products, including color sensor
products. OmniVision has developed a considerable level of technical expertise
and experience in the design and manufacturing of CMOS imager sensor related
products. OmniVision would like to develop a foundry relationship with Shanghai
HuaHong NEC Electronics Co., Ltd. (HuaHong-NEC).
HuaHong-NEC is a joint venture company located in Shanghai China that is in the
business of manufacturing integrated circuits on a foundry basis for other
companies. HuaHong-NEC would like to manufacture CMOS image sensors, including
the possibility of process for adding color filters to such sensors.
For the mutual benefit of both parties it is agreed as follows:
1. HuaHong-NEC will provide OmniVision with 0.35 u technologies cell
library, device spice model and layout rule.
2. OmniVision agrees to place an order(s) with HuaHong-NEC for prototype
manufacturing of OmniVision's CMOS image sensor related products.
HuaHong-NEC agrees ***, except that OmniVision will pay one mask set
fee to cover all prototype versions until the product becomes ready
for mass production.
3. OmniVision agrees to evaluate the results of the prototype production
units and to share the results with HuaHong-NEC engineers in a joint
effort to improve and to qualify the HuaHong-NEC manufacturing
process.
4. HuaHong-NEC agrees to provide the engineering manpower necessary to
work with the OmniVision engineers in evaluating the prototype results
and in introducing the necessary changes to the manufacturing process
to improve the results.
5. HuaHong-NEC agrees to place a high priority on the pilot of
OmniVision's prototype units in order to provide a fast turn around
for evaluating the results.
6. Once HuaHong-NEC's manufacturing process is qualified for the
manufacture of OmniVision's CMOS products, OmniVision agrees to begin
placing production level orders with HuaHong-NEC for OmniVision's
product(s).
7. HuaHong-NEC agrees to give OmniVision ***, which are contributed by
OmniVision input.
8. HuaHong-NEC agrees to give OmniVision ***.
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
9. All Confidential information disclosed by either party as a result of
carrying out the activities described in this Agreement is subject to
the separate mutual Non-Disclosure Agreement to be signed by both
parties.
Accordingly, the parties have duly authorized their respective
representatives to execute this Agreement and bind them to its terms as of
the date set forth above.
OmniVision Technologies, Inc. Shanghai HuaHong NEC Electronics Co. Ltd
----------------------------- ----------------------------------------
/s/ Shaw Hong /s/ Toshio Ohta
----------------------------- ----------------------------------
Shaw Hong Toshio Ohta
President E.V.P
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
EXHIBIT 10.13
SALES AGREEMENT
This agreement is made and entered into this day of May 07, 1999 by and between
------------
Omnivision Technologies, Inc. a cooperation duly organized and existing under
- -----------------------------
the law of Republic of China, whose principal business address is 930 Thompson
------------
Place Sunnyvale, California 94086 USA (Herein after "CUSTOMER"), CoAsia
- ------------------------------------- ------
Microelectronics Corp., an authorized ASIC agent of SAMSUNG Electronics Co.,
- ---------------------
Ltd. in Taiwan, a cooperation duly organized and existing under the law of
Republic of China, whose principal business address is 25F. Int'l Trade Bldg.,
No. 333, Keelung Rd., Sec 1, Taipei, Taiwan, R.O.C. (herein after "COASIA") and
SAMSUNG Electronics Co., Ltd. a cooperation duly organized and existing under
- -----------------------------
the law of Republic of Korea, having an office at 250, 2-Ka, Tespyong-Ro,
Joong-Ku, Seoul Korea (herein after "SAMSUNG").
WITNESSETH
Whereas, CUSTOMER desires for SAMSUNG to develop and produce the integrated
circuit in accordance with the specifications for OVT851 attached hereby as
------
EXHIBIT A provided by CUSTOMER (herein after "IC" or "ICs" in plural).
Whereas CUSTOMER desires to purchase from SAMSUNG through COASIA and SAMSUNG
desires to sell through COASIA the ICs that are developed and produced by
SAMSUNG hereunder.
Now, there, in consideration of the promises and of mutual representations,
warranties and agreement set forth herein, the parties hereto agree as follows:
1. DEFINITION OF IC
. CUSTOMER Name : OV511PLUS
---------
. Process : Standard Cell STD85(0.5mm), Triple Layer Metal
----------------------------------------------
. Gate Count : 100K Logic Gates
----------------------------------------------
. Package : 100OFP
----------------------------------------------
. Special Cells : None
----------------------------------------------
2. NON-RECURRING ENGINEERING (NRE) CHARGES
SAMSUNG will develop the ICs pursuant to specification as specified in EXHIBIT
A. The ICs shall be developed at SAMSUNG's own standard process and control
criteria. Such development includes the mask tooling and 150 pieces engineering
-----------
samples for CUSTOMER, CUSTOMER will pay COASIA US*** by telegraphic transfer
--
(herein after "T/T") totally for the development costs of the said ICs.
*Free NRE project.
- ------------------
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*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
1
<PAGE>
3. THE DEVELOPMENT SCHEDULE OF IC
. The approval of post-layout simulation by CUSTOMER : D day
. Engineering samples delivery by SAMSUNG : D day + 6 weeks
-------
. Approval of the engineering sample by CUSTOMER : D day = 8 weeks
-------
4. UNIT PRICE & PAYMENT
The unit price of this ICs are as following:
. Unit Price : 1 ~100K pieces US$***
Above 100K pieces US$***
* All those prices C.I.F. C.K.S. Airport of Taipei, Taiwan or C.I.F.
-----------------------------------------------------------------
U.S.A.
-----
. Payment term : at sight Letter of Credit (herein after "L/C") or
T/T in Advance.
Customer will purchase from SAMSUNG a minimum quantity of 50K pieces of ICs
----------
after approval of sample. The purchase order (herein after "P/O") must be issued
by CUSTOMER subject to terms and conditions in this AGREEMENT 8 weeks before
CUSTOMER expecting shipping date, and the L/C must be open within 4 weeks before
delivery of ICs.
5. RESCHEDULING AND CANCELLATION
A. CUSTOMER may reschedule delivery dates of the ICs a maximum of two (2)
months from the original scheduled shipment date, subject to the
following:
Reschedule Request Quantity, which can be rescheduled
------------------ ----------------------------------
Over 56 days 100% of original purchase order quantity
------------
15 ~ 56 days 20% of original purchase order quantity
------------
0 ~ 14 days Original purchase order quantity cannot be
-----------
rescheduled.
In every case, COASIA must be notified of production reschedules at most
once (1) per month.
B. Cancellation by CUSTOMER of its P/O for the ICs scheduled for delivery
shall be subject to the following:
Cancellation Period CUSTOMER's Liability
------------------- --------------------
Over 56 days No Liability
------------
36 ~56 days 50% of original purchase price
-----------
22 ~35 days 70% of original purchase price
-----------
0 ~21 days 100% of original purchase price
----------
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
2
<PAGE>
6. CONFIDENTIALITY
Any one of three parties does not disclose the confidential document or
information provided by the rest two parties to the other parties without
written consent of that party (or parties, which document of information. This
AGREEMENT falls under the scope of the Mutual Non-Disclosure Agreement signed by
------------------------
the parties.
7. INDEMNITY
The CUSTOMER accepts responsibility for all liabilities resulting from of
products or intellectual property right by third parties with respect to the
products being purchased under this agreement, and indemnifies SAMSUNG against
such claims.
8. OWNERSHIP
The MASK right of the IC other than the layout right of the IC is solely owned
by SAMSUNG, but the right of suing IC is solely owned by CUSTOMER, SAMSUNG and
COASIA shall not produce and/or market, or sell the IC to any third party
(including all other SAMSUNG's Divisions) without CUSTOMER's prior
authorization. The P/O from CUSTOMER to SAMSUNG through COASIA will
automatically authorize SAMSUNG to produce and sell the IC to CUSTOMER or third
party (including all other SAMSUNG's Divisions) designated in writing, by
CUSTOMER. If the sample does not perform or this agreement terminates, SAMSUNG
will automatically destroy the masks.
9. TERM OF CONTRACT
This AGREEMENT will be effective from the date signed by both parties and shall
extend for a term of two (2) years from this date.
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
3
<PAGE>
10. GOVERNING LAW
This AGREEMENT shall be constructed and governed in accordance with the laws of
Republic of China.
For and on behalf of
SAMSUNG ELECTRONICS CO, LTD. OMNIVISION TECHNOLOGIES, INC.
/s/ U. Y. Jeong /s/ Raymond Wu
- ------------------------------------- --------------
NAME: U. Y. Jeong NAME: Raymond Wu
TITLE: PRESIDENT/Samsung Electronics
Taiwan Co., Ltd. TITLE: V.P. Business Development
DATE: , 1999 DATE: 6/17/1999
CoAsia MICROELECTRONICS CORP.
/s/ Harrison J. Lee
- ------------------------------------
NAME: HARRISON J. LEE
TITLE: GENERAL MANAGER
DATE: , 1999
- -------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
4
<PAGE>
EXHIBIT 10.14
AGREEMENT
This agreement is made and entered into this day of Jun. 17, 1998 by and between
-------------
Omnivision Technologies, Inc. a cooperation duly organized and existing under
- -----------------------------
the law of Republic of China, whose principal business address is 930 Thompson
------------
Place Sunnyvale, California 94086 USA (Herein after "CUSTOMER"), CoAsia
- ------------------------------------- ------
Microelectronics Corp., an authorized ASIC agent of SAMSUNG in Taiwan, a
- ---------------------
cooperation duly organized and existing under the law of Republic of China,
whose principal business address is 25F. Int'l Trade Bldg., No.333, Keelung Rd.,
Sec. 1, Taipei, Taiwan, R.O.C. (Herein after "CoAsia") and SAMSUNG ELECTRONICS
-------------------
TAIWAN CO., LTD. A cooperation duly organized and existing under the law of
- ---------------
Republic of China, having an office at Int'l Trade Bldg., 30F, NO.333, Keelung
Rd., Sec. 1, Taipei, Taiwan, R.O.C. (Herein after "SAMSUNG" or "SET")
WITNESSETH
Whereas, CUSTOMER desires for SAMSUNG to develop and produce the integrated
--------
circuit in accordance with the specifications for QV511 attached hereby as
-----
EXHIBIT A provided by CUSTOMER (Herein after "IC" or "ICs" in plural)
--------
Whereas CUSTOMER desires to purchase from SAMSUNG through CoAsia and Samsung
--------
desires to sell through CoAsia the ICs that are developed and produced by
SAMSUNG hereunder.
Now, there, in consideration of the promises and of mutual representations,
warranties and agreement set forth herein, the parties hereto agree as follows:
Definition: OV511--Gate Array; Master--KG8244D T.L.M.; G/L--look gates; 100QFP
1. NON-RECURRING ENGINEERING (NRE) CHARGES
SAMSUNG will develop the ICs pursuant to specification as specified
in EXHIBIT A. The ICs shall be developed at SAMSUNG's own
standard process and control criteria. Such development includes the mask
tooling and 150 pcs units of a sample production. CUSTOMER will pay
---------
US$*** for the development costs of the said IC. The half of this fee will
------
be paid by T/T when this AGREEMENT becomes effective, and the rest will be
paid upon the delivery of sample to customer.
- ------------------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
1/3
<PAGE>
2. THE DEVELOPMENT SCHEDULE OF IC
. OV511
. The approval of post-layout simulation by customer : D day
. Sample delivery of 150 pcs units by SAMSUNG : D day + 18 days
. Approval of the sample by customer : D day + 25 days
3. UNIT PRICE & PAYMENT
The unit price of this ICs are as following"
1.3K/lot pcs US$***
3K.100K/lot pcs US$***
100K/lot pcs US$***
Payment Term: C.I.F. Taiwan or C.I.F. U.S.A.; L/C at sight
CUSTOMER will purchase from SAMSUNG a minimum quantity of 50K pcs of ICs
--------
during one year after approval of sample.
4. CANCELLATION
A. CUSTOMER can not cancel P/O on or after the schedule delivery date
--------
stipulated in P/O or within 8 weeks before such scheduled delivery date
unless CUSTOMER pays 100% total prices of ICs to SEC.
--------
B. CUSTOMER can cancel P/O earlier than 8 weeks before such scheduled
--------
delivery date by notifying in writing such cancellation to SAMSUNG.
5. CONFIDENTIALITY
Either party does not disclose the confidential document or information
provided by the other party to third parties without the prior written
consent of the other party.
6. INDEMNITY
The CUSTOMER accepts responsibility for all liabilities resulting from of
--------
products or intellectual property right by third parties with respect to
ICs, and indemnifies SAMSUNG against such claims.
- ------------------
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
2/3
<PAGE>
7. OWNERSHIP
The mask right of the IC other than the layout right of the IC is solely
owned by SAMSUNG, But the right of using IC is solely owned by Customer,
SAMSUNG and CoAsia shall not produce and/or sell the IC to any third party
(including all other SAMSUNG Divisions) without Customer's authorization.
The database belongs to CUSTOMER. The purchasing order from Customer to
SAMSUNG through CoAsia will automatically authorize SAMSUNG to produce and
sell the IC to Customer or third party (including all other SAMSUNG
Divisions) designated by Customer. If the sample doesn't work or this
agreement terminates, SAMSUNG will automatically destroy the masks.
8. TERM OF CONTRACT
This AGREEMENT will be effective from the date signed by both parties and
shall extend for a term of 2 years from the approval of the ICs sample by
CUSTOMER.
9. GOVERNING LAW
This AGREEMENT shall be constructed and governed in accordance with R.O.C.
law.
For and on behalf of
SAMSUNG ELECTRONICS TAIWAN CO, LTD. OMNIVISION TECHNOLOGIES, INC.
/s/ H. S. KIM /s/ JACK WANG
------------- -------------
NAME: H. S. KIM NAME: JACK WANG
TITLE: PRESIDENT TITLE: DIRECTOR, ASIA BUSINESS
DATE: Jun. 17, 1998 DATE: Jun. 17, 1998
CoAsia MICROELECTRONICS CORP.
/s/ Harrison J. Lee
-------------------
NAME: HARRISON J. LEE
TITLE: GENERAL MANAGER
DATE: Jun. 17, 1998
3/3
<PAGE>
EXHIBIT 10.15
OmniVision Technologies, Inc
930 Thompson Place
Sunnyvale, CA 94086
Gentlepersons,
This letter ("Letter") will confirm the terms of our agreement for the
purchase by Creative Technology Ltd. and its affiliates and subsidiaries
(collectively, "Creative") of OmniVision's 0V7610 sensor ("Sensor") and 0V511
compression chip ("Chip") (collectively, the "Product"). The terms and
conditions contained in this Letter shall govern the purchase and sale of
Product and are intended to supplement the terms and conditions set forth in the
purchase orders for the Products ("Purchase Order"), a current sample of which
is attached hereto as Exhibit A. The terms of the then current Purchase Order
are herein incorporated by reference and shall be binding on both parties;
provided, however, that to the extent the terms of the then current Purchase
Order conflict or are inconsistent with the terms of this Letter, the terms of
this Letter shall govern.
1. Term. The term of this Letter shall be three (3) years, commencing on the
- -- ----
date this Letter is signed by both parties. In the event that either party
commits a material breach of its obligations hereunder and such breach remains
uncured for ten (10) calendar days after written notice to the breaching party,
the non-breaching party may immediately terminate this Letter in its entirety.
Notwithstanding such termination, outstanding Purchase Orders shall remain
subject to this Letter until filled.
2. Forecasts. Once a month, Creative shall furnish a rolling, non-binding six-
- -- ---------
week forecast of projected purchases of Products ("Forecast"), but any such
Forecast is for planning purposes only and does not constitute a commitment of
any type by Creative. Creative shall have no obligation to purchase any quantity
of Product beyond those specified in the First P.O., as defined below.
3. Purchase Orders. Creative may purchase Products by issuing a Purchase Order
- -- ---------------
no less than thirty (30) days from the required delivery, date for such order. A
Purchase Order represents Creative's obligation to buy, and OmniVision's
obligation to sell and deliver Product to Creative in the quantity set forth in
the Purchase Order so long as, and to the extent that, such quantity is within
*** of Creative's Forecast. Creative has the right to cancel any Purchase
Order, in whole or in part, if OmniVision fails to make deliveries in accordance
with the terms, including without limitation, the time schedule, set forth in a
Purchase Order.
a. First Purchase Order. OmniVision shall supply all Products ordered
-- --------------------
under the Purchase Order, dated February 2, 1999, attached hereto as Exhibit B
("First P.O."). Fifteen Thousand units of each of the Sensor and the Chip
ordered under the First P.O. shall be received by Creative no later than March
23, 1999 and the remainder of the Products ordered under the First P.O. shall be
received by Creative no later than March 31, 1999 (March 23, 1999 and March 31,
1999 each hereinafter called a "Delivery Date"); provided, however, that
Creative may cancel or modify all or any part of the First P.O., at its
discretion, at any time prior to thirty days before a Delivery Date, or, within
thirty days of a Delivery Date, if: (1) Creative's product which incorporates
the Product ("Creative Product") fails Creative's internal testing procedures;
or (2) the Creative Product fails to pass FCC or CE approval in a timely
fashion. In the event that OmniVision cannot or does not meet the March 23, 1999
delivery date. Creative may terminate the First P.O. in part or in its entirety.
The price of Products ordered under the First P.O. shall be that set forth in
Section 4a herein.
b. February Purchase Order for Product Samples. In the month of February,
-- -------------------------------------------
Creative intends to issue an additional Purchase Order for 150 units of each of
the Sensor and the Chip. Creative shall receive such Products within fourteen
(14) calendar day's from the date of such Purchase Order. The pricing for such
Products shall be that set forth in Section 4a herein.
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
<TABLE>
<CAPTION>
4. Pricing
- -- -----------
Prices for Products shall be as follows: Sensor Chip
----------- ----------
<S> <C> <C>
a. Products purchased under First P.O.:
Receipt by Creative by applicable Delivery Date: $***/unit $***/unit
Receipt by Creative after applicable Delivery Date: $***/unit $***/unit
b. Subsequent Purchase Orders:
Units 0 -- 25,000 $***/unit $***/unit
Units 25,001 and over. $***/unit $***/unit
</TABLE>
Prices include all direct, indirect and incidental charges related to the
sale and delivery of the Product including, without limitation, packaging,
packing, storing, insurance costs, freight shipping charges, duties and charges
of any kind, and any and all sales, use, excise and similar taxes. F.O.B. point
is Creative, Singapore. Payment terms are net 45 days following date of receipt
of Product at the delivery destination provided by Creative.
5. Engineer Resources and Support. OmniVision shall provide, at no charge (for
- -- ------------------------------
either time expended or costs incurred, including, without limitation, travel
expenses), assistance in commercializing the Product as requested by Creative,
including, without limitation, technical assistance and engineering, resources
in the following areas: optical testing, FCC approval, and Creative's internal
testing procedures. Such assistance shall include, at a minimum, providing two
(2) engineers for two (2) weeks at Creative's Singapore facilities.
6. Samples. OmniVision shall deliver, at no charge to Creative, twenty (20)
- -- -------
samples of each of the Sensor and the Chip, no later than February 2, 1999.
OmniVision shall notify Creative as soon as possible of revisions to the
Product, and shall provide twenty (20) samples of each new revision as soon as
practicable, but in no event less than sixty (60) days prior to commercial
availability of such revisions.
7. ***
- -- -----
a. ***
--
b. Product Availability. OmniVision warrants that in the event OmniVision
-- --------------------
suffers a shortage of Product such that it will not be able to fill all of its
customers' orders, ***. OmniVision further warranty that it will immediately
notify Creative in writing, in the event it believes it will not be able to fill
a Creative P.O. in a timely fashion. Such notification will include, without
limitation, the reason for the failure to fill the P.O.
c. New Products. OmniVision shall notify Creative, ***, of its plans for
-- ------------
new products. Prior to offering for sale any such new product, OmniVision will
first consult with Creative and allow Creative to place a purchase order for
such new product ***.
d. Audit Rights. Creative shall be entitled to have an independent auditor
-- ------------
review OmniVision's records during reasonable business hours to determine
compliance with Section 7. In the event the auditor determines that OmniVision
has failed to comply with the terms of this Section 7, OmniVision shall be
responsible for paying the costs of the independent auditor review.
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
8. Warranties and Indemnities
- -- --------------------------
a. Intellectual Property Warranty. OmniVision warrants that the Products
-- ------------------------------
furnished hereunder and the sale, use or incorporation of the Products into a
Creative Product do not infringe or misappropriate any patent, copyright, trade
secret, trademark, publicity, privacy, or other rights of any person.
b. Product Warranty. OmniVision warrants that the Products shall be free
-- ----------------
from defects in material, manufacturing, design and workmanship and shall
conform to their specifications for a period of fifteen (15) months from
Creative's receipt of Product ("Warranty Period"). In the event a Product has a
defect that constitutes a breach of this warranty, OmniVision shall use its best
efforts to repair the defect, or at Creative's option, (1) accept return of the
Product and provide a replacement of the same Product or (2) refund to Creative
the total amount paid by Creative to OmniVision for such Product.
c. Year 2000 Warranty. OmniVision warrants that each Product delivered
-- ------------------
hereunder accurately processes date/time data (including, but not
limited to, calculating, comparing, and sequencing) from, into, and
between the twentieth and twenty-first centuries, and the years 1999
and 2000 and leap year calculations and when used in combination with
other information technology, shall accurately process date/time data
if the other information technology properly exchanges date/time data
with it. OmniVision shall indemnify and hold Creative harmless from
any damages, costs, liabilities or expenses, including attorneys' fees
and other legal costs arising out of a breach of the above warranty
and will use its best efforts to immediately correct any deficiencies
relating thereto.
d. Indemnification. OmniVision shall hereby protect, defend, indemnify and
---------------
save Creative and its affiliates harmless from all liabilities, damages, and
losses, including without limitation, settlements, costs, and expenses
(including without limitation, attorneys fees and costs) which Creative or its
affiliates may incur or be obligated to pay as a result of any and all claims,
demands, causes of action or judgements of every nature whatsoever in favor of
any person or entity, arising out of or related to any breach of any warranty or
representation in this Letter or the Exhibits or resulting from OmniVision's
performance hereunder.
9. Logos. OmniVision may include its logo on the Sensor, but shall under no
- -- -----
circumstances identify the Chip with its logo or any other indication of its
source, other than lot and part number. OmniVision shall allow a space on the
Chip for inclusion of the Creative label.
10. Non-Disclosure. OmniVision expressly acknowledges that the existence of any
- --- --------------
relationship between it and Creative is highly confidential. OmniVision may not
use Creative's name in advertisements or press releases or otherwise disclose
the existence or content of this Letter or its relationship with Creative
without the prior written consent of a duly authorized officer of Creative.
Creative and OmniVision acknowledge that disclosures of either party's
confidential information under this Letter and the Exhibits shall be subject to
the terms and conditions of the non-disclosure agreement in place between the
parties dated February 19, 1998 ("Non-Disclosure Agreement") and attached hereto
as Exhibit C.
11. Software License. OmniVision grants Creative a non-exclusive, irrevocable,
- --- ----------------
royalty-free, worldwide, right and license to use all software required for the
proper operation and support of the Products (collectively, "Software") as set
forth in the Software license in place between the parties dated , 1999
------
("Software License Agreement") and attached hereto as Exhibit D.
12. Remedies. The rights and remedies provided to Creative herein shall be
- --- --------
cumulative and in addition to any other rights and remedies provided under the
Uniform Commercial Code, or otherwise at law or equity. OmniVision's sole remedy
in the event of breach of contract by Creative shall be the right
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
to recover damages in an amount equal to the difference between market price to
third parties at the time of breach and contract price.
13. Miscellaneous. This Letter, and the exhibits attached hereto, represent the
- --- -------------
entire agreement with respect to the subject matter hereof and supersede all
prior discussions, proposals and agreements between the parties relating to the
subject matter hereof. This Letter and the exhibits (except as expressly set
forth in this Letter) can be modified only by a written amendment duly signed by
persons authorized to sign agreements on behalf of both parties and shall not be
supplemented or modified by any course of dealing or trade usage. This Letter
and the exhibits shall be interpreted and governed in all respects according to
the laws of the State of California, excluding its choice of law provisions.
Agreed to by: Agreed to by:
OMNIVISION TECHNOLOGIES, INC. CREATIVE TECHNOLOGY LTD.
/s/ Robert J. Stroh
- ------------------- -----------------------
SIGNATURE SIGNATURE
Robert J. Stroh
- --------------- -----------------------
PRINT NAME PRINT NAME
Vice President
- -------------- -----------------------
TITLE TITLE
February 1, 1999
- ---------------- -----------------------
DATE DATE
*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated March 6, 2000 relating to the financial statements of
OmniVision Technologies, Inc., which report appears in such Registration
Statement. We also consent to the reference to us under the heading "Experts"
in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Jose, California
March 6, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OMNIVISION
TECHNOLOGY, INC.'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> YES
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> APR-30-1999 JAN-31-2000
<PERIOD-START> MAY-01-1998 MAY-01-1999
<PERIOD-END> APR-30-1999 JAN-31-2000
<EXCHANGE-RATE> 1 1
<CASH> 5,374 6,370
<SECURITIES> 0 0
<RECEIVABLES> 1,733 4,275
<ALLOWANCES> 0 0
<INVENTORY> 2,241 6,166
<CURRENT-ASSETS> 9,451 17,559
<PP&E> 1,085 2,157
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 10,536 19,716
<CURRENT-LIABILITIES> 6,106 8,270
<BONDS> 0 0
0 0
12 12
<COMMON> 1 4
<OTHER-SE> 4,417 11,430
<TOTAL-LIABILITY-AND-EQUITY> 10,536 19,716
<SALES> 0 0
<TOTAL-REVENUES> 5,243 25,111
<CGS> 7,559 14,463
<TOTAL-COSTS> 5,602 5,738
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 396 138
<INCOME-PRETAX> (7,522) 5,048
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (7,522) 5,048
<EPS-BASIC> (10.39) 1.75
<EPS-DILUTED> (10.39) .31
</TABLE>
