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EXHIBIT 1.1
TALITY CORPORATION
COMMON STOCK
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UNDERWRITING AGREEMENT
, 2000
Goldman, Sachs & Co.,
Lehman Brothers Inc.,
UBS Warburg LLC,
SG Cowen Securities Corporation,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Tality Corporation, a Delaware corporation (the "Company") proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
........ shares (the "Firm Shares") and, at the election of the Underwriters, up
to ........ additional shares (the "Optional Shares") of Class A Common Stock,
par value $.001 per share ("Stock") of the Company (the Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof being collectively called the "Shares") and to use the proceeds to
acquire partnership interests in Tality, LP, a Delaware limited partnership (the
"Operating Partnership").
1. Each of the Company and the Operating Partnership, jointly and
severally, represents and warrants to, and agrees with, each of the Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-....) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been
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initiated or threatened by the Commission (any preliminary prospectus included
in the Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the time it
was declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;
(c) The Registration Statement conforms, and any further amendments
to the Registration Statement will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Prospectus and any amendments or supplements to the Prospectus will conform
in all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and will not, as of their applicable
filing dates as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they are made; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by an Underwriter through Goldman, Sachs & Co.
expressly for use therein;
(d) None of the Company, the Operating Partnership or any subsidiary
of the Operating Partnership has sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree involving a material adverse change or a prospective material
adverse change in or affecting the general affairs, management, financial
position, stockholders' equity or partners' equity or results of operations of
the Company, the Operating Partnership and its subsidiaries, taken as a whole;
and, since the respective dates as of which information is given in the
Registration Statement, otherwise than as set forth or contemplated in the
Prospectus and the Prospectus, there has not been any increase in the capital
stock (other than as a result of grants of options exercisable for, or
restricted shares of, Class A Common Stock under the Company's option plans
described in the Registration Statement and exercises of options described in
the Registration Statement), any
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decrease in the capital stock or any change in the long-term debt of the
Company, the Operating Partnership or any subsidiary of the Operating
Partnership or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or partners' equity or
results of operations of the Company, the Operating Partnership and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus;
(e) None of the Company, the Operating Partnership or any subsidiary
of the Operating Partnership owns any real property. The Company, the Operating
Partnership and its subsidiaries have good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere in any
material respect with the use made and proposed to be made of such property by
the Company, the Operating Partnership and its subsidiaries; and any real
property and buildings held under lease by the Company, the Operating
Partnership or any subsidiary of the Operating Partnership are held by them
under valid, subsisting and, to the knowledge of the Company, the Operating
Partnership or subsidiary of the Operating Partnership, as the case may be,
enforceable leases with such exceptions as are not material and do not interfere
in any material respect with the use made and proposed to be made of such
property and buildings by the Company, the Operating Partnership and its
subsidiaries;
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction; the Operating Partnership has been duly formed and is
validly existing as a limited partnership in good standing under the laws of the
State of Delaware, with power and authority (partnership and other) to own its
properties and conduct its business as described in the Prospectus, and has been
duly qualified as a foreign partnership for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification,
or is subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction; and each significant subsidiary, as
such term is defined in Rule 1-02(w) of Regulation S-X (each a "Significant
Subsidiary"), of the Operating Partnership has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(g) The Company does not have any subsidiary (as such term is defined
in the rules and regulations under the Act) except that upon consummation of the
purchase of partnership interests contemplated by the introductory paragraph of
this agreement, the Operating Partnership will be a subsidiary of the Company.
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable and
conform to the description of the Stock contained in the Prospectus; the
Operating Partnership has an authorized capitalization as set forth in the
Prospectus, and all of the issued and outstanding limited partnership units (the
"Partnership Units") have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly or indirectly by Cadence Design
Systems, Inc., free and clear of all liens, encumbrances, equities and claims,
and conform to the description of the Partnership Units contained in the
Prospectus; and all of
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the issued shares of capital stock of each subsidiary of the Operating
Partnership have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Operating
Partnership, free and clear of all liens, encumbrances, equities or claims;
(i) The Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(j) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not (i) conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company, the Operating
Partnership or any Significant Subsidiary of the Operating Partnership is a
party or by which the Company, the Operating Partnership or any Significant
Subsidiary of the Operating Partnership is bound or to which any of the property
or assets of the Company, the Operating Partnership or any Significant
Subsidiary of the Operating Partnership is subject, (ii) result in any violation
of the provisions of the Certificate of Incorporation or By-laws of the Company,
any agreement among stockholders of the Company, the Limited Partnership
Agreement of the Operating Partnership, or any charter document of any
Significant Subsidiary of the Operating Partnership, or (iii) violate any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, the Operating Partnership or any
Significant Subsidiary of the Operating Partnership or any of their properties,
except, in the case of (i) or (iii) above, where such conflict, breach or
violation would not impair the validity of the Shares, delay the consummation of
the transactions contemplated herein or have a material adverse effect or any
prospective material adverse effect on the general affairs, management,
financial position, stockholders' equity or partners' equity or results of
operations of the Company, the Operating Partnership and its subsidiaries, taken
as a whole; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the performance by the Company
of its obligations hereunder, except the registration under the Act of the
Shares and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters;
(k) None of the Company, the Operating Partnership or any Significant
Subsidiary of the Operating Partnership is in (i) violation of its Certificate
of Incorporation or By-laws, in the case of the Company, the Limited Partnership
Agreement of the Operating Partnership, in the case of the Operating
Partnership, any charter document, in the case of the Significant Subsidiaries
of the Operating Partnership, or any agreement among shareholders of the Company
or partners of the Operating Partnership, or in (ii) default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which it is a party or by which it or any of its properties may
be bound, except, in the case of (ii) above, where such default would not have a
material adverse effect or any prospective material adverse effect on the
general affairs, management, financial position, stockholders' equity or
partners' equity or results of operations of the Company, the Operating
Partnership and its subsidiaries, taken as a whole;
(l) The statements set forth in the Prospectus under the caption
"Description of Capital Stock and Partnership Units", insofar as it purports to
constitute a summary of the terms of the Stock, under the captions "Our
Separation from Architect", "Arrangements between Tality and Cadence", "Certain
Transactions" and "Shares Eligible for Future Sale", and under the caption
"Underwriting",
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insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate and complete in all material respects;
(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, the Operating Partnership
or any Significant Subsidiary of the Operating Partnership is a party or of
which any property of the Company, the Operating Partnership or any subsidiary
of the Operating Partnership is the subject which, if determined adversely to
the Company, the Operating Partnership or the subsidiary of the Operating
Partnership, would individually or in the aggregate have a material adverse
effect on the consolidated financial position, stockholders' equity or partners'
equity or results of operations of the Company, the Operating Partnership and
the subsidiaries of the Operating Partnership, taken as a whole; and, to the
Company's, the Operating Partnership's or its subsidiaries' knowledge, no
proceedings that would have such an effect are threatened or overtly
contemplated by governmental authorities or threatened by others;
(n) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(o) Arthur Andersen LLP, who have certified certain financial
statements of the Company and the Operating Partnership, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder; and
(p) Other than as set forth in the Prospectus, the Company, the
Operating Partnership and the subsidiaries of the Operating Partnership own,
possess or license, or can acquire or license on reasonable terms, all patents,
trademarks, servicemarks, trade names, copyrights and trade secrets,
("Intellectual Property") necessary for their business as described in the
Prospectus, in each case, to the knowledge of the Company, the Operating
Partnership and the subsidiaries of the Operating Partnership, without any
conflict with or infringement of the rights of others; except as set forth in
the Prospectus, the Company, the Operating Partnership and the subsidiaries of
the Operating Partnership are not aware of outstanding options, licenses or
agreements of any kind relating to the Intellectual Property of the Company, the
Operating Partnership and the subsidiaries of the Operating Partnership, which
are required to be set forth in the Prospectus, and, except as set forth in the
Prospectus, none of the Company, the Operating Partnership or any subsidiary of
the Operating Partnership is a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property of any other person or
entity which are required to be set forth in the Prospectus; none of the
technology employed by the Company, the Operating Partnership or any subsidiary
of the Operating Partnership has been obtained or is being used by the Company,
the Operating Partnership or any subsidiary of the Operating Partnership in
violation of any contractual or fiduciary obligation binding on the Company, the
Operating Partnership or any subsidiary of the Operating Partnership; except as
disclosed in the Prospectus, none of the Company, the Operating Partnership or
any subsidiary of the Operating Partnership has received any written
communications alleging that the Company, the Operating Partnership or any
subsidiary of the Operating Partnership has violated or infringed, or, by
conducting its business as set forth in the Prospectus, would violate or
infringe any of the Intellectual Property of any other person or entity; neither
the execution nor delivery of this Agreement, nor the operation of the
Company's, the Operating Partnership's and its subsidiaries' business by the
employees of the Company, the Operating Partnership and the subsidiaries of the
Operating Partnership, nor the conduct of the Company's, the Operating
Partnership's and its subsidiaries' business as described in the Prospectus will
result in any breach or violation of the terms, conditions or provisions of,
constitute a default under, any material contract or instrument
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known to the Company, the Operating Partnership or any subsidiary of the
Operating Partnership under which any of such employees is now obligated.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $................, the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at the purchase price per share set
forth in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction, the numerator of which is the maximum number
of Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to ................... Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
sales of shares in excess of the number of Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be purchased
and the date on which such Optional Shares are to be delivered, as determined by
you but in no event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to
Goldman, Sachs & Co., through the facilities of the Depository Trust Company
("DTC"), for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Goldman, Sachs & Co.
at least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on ............., 2000 or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date are
herein called the "Time of Delivery". The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York City
time, on ............., 2000 or such other time and date as Goldman, Sachs & Co.
and the Company may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by Goldman, Sachs & Co.
in the written notice given by Goldman, Sachs & Co. of the
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Underwriters' election to purchase such Optional Shares, or such other time and
date as Goldman, Sachs & Co. and the Company may agree upon in writing. Such
time and date for delivery of the Firm Shares is herein called the "First Time
of Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and each
such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents reasonably requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Sullivan & Cromwell, 1888 Century Park East, Los Angeles, California 90067
(the "Closing Location"), and the Shares will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at 3:00 p.m., California time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. Each of the Company and the Operating Partnership agrees with each of
the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
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(c) Prior to 10:00 A.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as you may reasonably request, and, if the delivery of a prospectus
is required at any time prior to the expiration of nine months after the time of
issue of the Prospectus in connection with the offering or sale of the Shares
and if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act to notify you and upon your request
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), or any
partnership interest, except the interest in the Operating Partnership to be
purchased by the Company as described in the Prospectus, without your prior
written consent;
(f) To furnish to the stockholders of the Company as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity or partners' equity
and cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement), to make
available to the stockholders of the Company consolidated summary financial
information of the Company and its subsidiaries for such quarter in reasonable
detail;
(g) During a period of five years from the consummation of the
purchase and sale of the Firm Shares, as provided herein, to furnish to you
copies of all reports or other communications (financial or other) furnished to
stockholders of the Company, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements
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furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company as
you may from time to time reasonably request (such financial statements to be on
a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to the stockholders of the
Company generally or to the Commission);
(h) To use the net proceeds received by the Company from the sale of
the Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the
Nasdaq National Market;
(j) To file with the Commission such information on Form 10-Q or Form
10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
6. Each of the Company and the Operating Partnership covenants and agrees
with the several Underwriters that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the reasonable cost of word
processing any Agreement among Underwriters, this Agreement, the Blue Sky
Memorandum, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on the Nasdaq
National Market; (v) the filing fees incident to, and the reasonable fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares; (vi) the cost of preparing stock certificates;
(vii) the cost and charges of any transfer agent or registrar; and (viii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees and disbursements of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Operating
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Partnership herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company and the Operating Partnership shall have
performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of each such opinion
is attached as Annex II(a) hereto), dated such Time of Delivery, with respect to
the Company relating to such matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Gibson, Dunn & Crutcher LLP, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is attached as
Annex II(b) hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own, lease and operate its
properties and carry on its business as described in the Prospectus; the
Operating Partnership is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Delaware, and has all requisite
partnership power and authority to own, lease and operate its properties and
carry on its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the Company
(including the Shares being delivered at such Time of Delivery) have been duly
authorized, validly issued, fully paid and non-assessable and have not been
issued in violation of any preemptive rights pursuant to law or in the Company's
Certificate of Incorporation or any agreement between stockholders, and conform
in all material respects to the description of the Stock contained in the
Prospectus; the Operating Partnership has an authorized capitalization as set
forth in the Prospectus and all of the outstanding Partnership Units (including
the Partnership Units being issued at such Time of Delivery), are duly
authorized, validly issued and fully paid and have not been issued in violation
of the Limited Partnership Agreement; and conform to the description of the
Partnership Units contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation and the Operating Partnership has been duly qualified as a limited
partnership for the transaction of business and each of the Company and the
Operating Partnership is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification or is subject to no material liability or
disability by reason of failure to be so qualified in any such
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jurisdiction (such counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company and the Operating Partnership,
provided that such counsel shall state that they believe that both you and they
are justified in relying upon such opinions and certificates);
(iv) The real property and buildings in San Jose, California
held under lease by the Operating Partnership are held by it under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and the Operating Partnership (in giving the opinion in
this clause, such counsel may state they are relying upon opinions of local
counsel, upon opinions of counsel to the lessors of such property and, in
respect to matters of fact, upon certificates of officers of the Company or the
Operating Partnership, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates);
(v) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending to which
the Company, the Operating Partnership or any Significant Subsidiary of the
Operating Partnership is a party or of which any property of the Company, the
Operating Partnership or any Significant Subsidiary of the Operating Partnership
is the subject which, if determined adversely to the Company, the Operating
Partnership or the Significant Subsidiary of the Operating Partnership, would
individually or in the aggregate have a material adverse effect on the current
consolidated financial position, stockholders' equity or partners' equity or
results of operations of the Company, the Operating Partnership and its
subsidiaries, taken as a whole; and, to such counsel's knowledge, no such
proceedings are threatened or overtly contemplated by governmental authorities
or threatened by others;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and the Operating Partnership;
(vii) The execution, delivery and performance of this Agreement
by the Company, and compliance by it therewith (including the issuance and sale
of the Shares being delivered at such Time of Delivery) and the consummation of
the transactions herein contemplated do not and will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument certified by an appropriate officer of the Company as
material to which the Company is a party or by which the Company is bound or to
which any of the material property or assets of the Company is subject, nor will
such action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order, rule or
regulation known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its material properties;
(viii) The execution, delivery and performance of this Agreement
by the Operating Partnership, and compliance by it therewith and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under,
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<PAGE> 12
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument certified by an appropriate officer of the Operating Partnership as
material to which the Operating Partnership is a party or by which the Operating
Partnership is bound or to which any of the material property or assets of the
Operating Partnership is subject, nor will such action result in any violation
of the provisions of the Certificate of Limited Partnership or Limited
Partnership Agreement of the Operating Partnership or any statute or any order,
rule or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Operating Partnership or any of its material
properties;
(ix) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
and the Operating Partnership of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares, and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(x) To the knowledge of such counsel, none of the Company, the
Operating Partnership or any Significant Subsidiary of the Operating Partnership
is in violation of its Certificate of Incorporation or By-laws, in the case of
the Company, the Limited Partnership Agreement of the Operating Partnership, in
the case of the Operating Partnership, its charter documents, in the case of the
Significant Subsidiaries of the Operating Partnership, or any agreement between
stockholders of the Company, or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other material
agreement or instrument to which it is a party or by which it or any of its
properties may be bound;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock and Partnership Units", insofar as it
purports to constitute a summary of the terms of the Stock, under the captions
"Our Separation from Architect", "Arrangements between Tality and Cadence" and
"Certain Transactions", "Shares Eligible for Future Sale" and under the caption
"Underwriting", insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate and complete in all material
respects; and
(xii) The Company is not an "investment company"; and no entity
that, to the knowledge of such counsel, "controls" the Company within the
meaning of the Investment Company Act is an "investment company".
In addition, the opinion of such counsel will state that the Registration
Statement and the Prospectus and any further amendments and supplements thereto
made by the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder; although they do not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (xi) of this section 7(c), they have no
reason to believe that, as of its
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effective date, the Registration Statement or any further amendment thereto made
by the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such counsel
need express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and they
do not know of any amendment to the Registration Statement required to be filed
or of any contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described as
required.
(d) Lyon & Lyon, patent counsel for the Company, shall have furnished
to you their written opinion (a draft of such opinion is attached as Annex II(c)
hereto, dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) To such counsel's knowledge, Cadence Design Systems, Inc.
has not received any claim of infringement of any patent or misappropriation of
any trade secret as it relates to the business and operations of the Company,
the Operating Partnership or any Significant Subsidiary of the Operating
Partnership; and
(ii) Such counsel has reviewed the Registration Statement and
Prospectus, the amendments and supplements thereto, and insofar as they concern
Intellectual Property, such counsel has no reason to believe that either the
Registration Statement or the Prospectus or any amendment or supplement thereto
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein not misleading.
(e) Bird & Bird, U.K. counsel for Symbionics Group Limited
("Symbionics"), shall have furnished to you their written opinion (a draft of
such opinion is attached as Annex II(d) hereto), dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) Symbionics is a corporation duly incorporated, validly
existing and in good standing under the laws of the United Kingdom, and has all
requisite corporate power and authority to own, lease and operate its properties
and carry on its business as described in the Prospectus; and
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<PAGE> 14
(ii) All of the issued shares of capital stock of Symbionics have
been duly authorized and validly issued, are fully paid and non-accessible, and
are owned directly or indirectly by the Operating Partnership, free and clear of
all liens, encumbrances, equities or claims.
(f) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Arthur Andersen, LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(g) (i) None of the Company, the Operating Partnership and any
subsidiary of the Operating Partnership shall have sustained since the date of
the latest audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any change in
the capital stock or long-term debt of the Company, the Operating Partnership or
any subsidiary of the Operating Partnership or any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or partners' equity or results of
operations of the Company, the Operating Partnership and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment of
the Underwriters so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the Nasdaq National Market; (ii)
a suspension or material limitation in trading in the Company's securities on
the Nasdaq National Market; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York or California State
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this clause (iv) in the
judgment of the Underwriters makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the Prospectus;
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(j) The Shares to be sold at such Time of Delivery shall have been
duly listed for quotation on the Nasdaq National Market;
(k) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from Cadence Design Systems, Inc. and each other
stockholder or holder of options to purchase Common Stock of the Company,
substantially to the effect set forth in Subsection 5(e) hereof in form and
substance satisfactory to you;
(l) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(m) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company reasonably
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and (g) of
this Section and as to such other matters as you may reasonably request.
8. (a) Each of the Company and the Operating Partnership will, jointly
and severally, indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company and the Operating Partnership shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company and
the Operating Partnership against any losses, claims, damages or liabilities to
which Cadence Design Systems, Inc., the Company and the Operating Partnership
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman, Sachs
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
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(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, 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 Company 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 in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, 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 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. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) 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 subsection (d). The
amount paid or payable by an
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<PAGE> 17
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) 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 (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Operating Partnership
under this Section 8 shall be in addition to any liability which any of them may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the meaning
of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that it
has so arranged for the purchase of such Shares, you or the Company shall have
the right to postpone such Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
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(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Operating Partnership and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any officer or director or controlling person of
the Company, and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company and the Operating Partnership shall not then be under any liability
to any Underwriter except as provided in Sections 6 and 8 hereof; but, if for
any other reason, any Shares are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company and the Operating Partnership shall then be under no further
liability to any Underwriter except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you at Goldman, Sachs & Co., 32 Old Slip, 21st Floor,
New York, New York 10005, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail to the address of the Company set
forth in the Registration Statement, Attention: Secretary, with a copy to
Gibson, Dunn & Crutcher LLP, One Montgomery Street, 31st Floor, San Francisco,
California 94104, Attention: Gregory J. Conklin, Esq.; provided, however, that
any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered
or sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, Cadence Design Systems, Inc., the Company and the
Operating Partnership and, to the extent provided in Sections 8 and 10 hereof,
the officers and directors of the Company and each person who controls the
Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or
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by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us eight counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Tality Corporation
By:
-------------------------------------
Name:
Title:
Tality, LP
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Lehman Brothers Inc.
UBS Warburg LLC
SG Cowen Securities Corporation
By:
----------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
19
<PAGE> 20
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ------------------
<S> <C> <C>
Goldman, Sachs & Co......................
Lehman Brothers Inc......................
UBS Warburg LLC..........................
SG Cowen Securities Corporation..........
----------- --------------
Total..........................
=========== ==============
</TABLE>
20
<PAGE> 21
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and the Operating Partnership within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim financial
statements, selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited financial
statements of the Company and the Operating Partnership for the periods
specified in such letter, as indicated in their reports thereon, copies of which
have been furnished to the Underwriters and are attached hereto;
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus as indicated in
their reports thereon copies of which have been separately furnished to the
Underwriters and on the basis of specified procedures including inquiries of
officials of the Company and the Operating Partnership who have responsibility
for financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations, nothing
came to their attention that cause them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company and the
Operating Partnership for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years of the Company and the Operating Partnership;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with the
disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
<PAGE> 22
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and Operating Partnership, inspection of the minute
books of the Company and Operating Partnership since the date of the latest
audited financial statements included in the Prospectus, inquiries of officials
of the Company and Operating Partnership responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in such letter, nothing came to their attention that caused them to believe
that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows included
in the Prospectus, as applicable, do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations, or (ii) any material modifications should be
made to the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus, as applicable, do not agree with the
corresponding items in the unaudited consolidated financial statements from
which such data and items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial statements included
in the Prospectus;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited condensed financial
statements referred to in clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to in clause (B)
were not determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus, as applicable, do not comply as to form
in all material respects with the applicable accounting requirements of the Act
and the published rules and regulations thereunder or the pro forma adjustments
have not been properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated capital
stock and partners' equity, as the case may be, (other than issuances of capital
stock and partnership interests upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon conversions of convertible
securities, in each case which were outstanding on the date of the latest
financial statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and the Operating Partnership, or any
decreases in consolidated net current assets or stockholders' equity or
partners' equity or other items specified by the Underwriters, or any increases
in any items specified by the Underwriters, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus, except in
each case for changes, increases or decreases which the
2
<PAGE> 23
Prospectus discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred to in
clause (E) there were any decreases in consolidated net revenues or operating
profit or the total or per share amounts or per partnership interest amounts, as
the case may be, of consolidated net income or other items specified by the
Underwriters, or any increases in any items specified by the Underwriters, in
each case as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Underwriters, except
in each case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Underwriters, which are derived from the general accounting records of the
Company and the Operating Partnership, which appear in the Prospectus, or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such amounts,
percentages and financial information with the accounting records of the Company
and the Operating Partnership and have found them to be in agreement.
3
