Exhibit 1.01
5,000,000 SHARES
FORMFACTOR, INC.
COMMON STOCK (PAR VALUE $0.001 PER SHARE)
UNDERWRITING AGREEMENT
October ___, 2003
October ___, 2003
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
FormFactor, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule I hereto (the
"UNDERWRITERS"), and certain stockholders of the Company (the "SELLING
STOCKHOLDERS") named in Schedule II hereto severally propose to sell to the
several Underwriters, an aggregate of 5,000,000 shares of the Company's Common
Stock, par value $0.001 (the "FIRM SHARES"), of which 1,499,866 shares are to be
issued and sold by the Company and 3,500,134 shares are to be sold by the
Selling Stockholders, each Selling Stockholder selling the amount set forth
opposite such Selling Stockholder's name on Schedule II hereto.
The Company also proposes to issue and sell to the several Underwriters
not more than an additional 750,000 shares of its Common Stock, par value $0.001
(the "ADDITIONAL SHARES") if and to the extent that you, as Managers of the
offering, shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "SHARES." The shares of Common Stock, par value
$0.001 of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK." The
Company and the Selling Stockholders are hereinafter sometimes collectively
referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS."
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "REGISTRATION STATEMENT" shall be deemed to include such Rule 462
Registration Statement.
1
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Underwriters that:
(a) Based on advice from the Commission, the Registration Statement
has become effective; no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such purpose
are pending before or, to the knowledge of the Company, threatened by the
Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly by
the Company, free and clear of all liens, encumbrances, equities or
claims. Other than FormFactor Germany GmbH, FormFactor Magyarovszag
Licencia Hasznosito, FormFactor K.K., FormFactor Korea, Inc. and
FormFactor Europe Limited, the Company has no subsidiaries that are
"significant subsidiaries" as defined in Rule 1-02(w) of Regulation S-X of
the Securities Act (the "SIGNIFICANT SUBSIDIARIES").
2
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid
and non-assessable.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(i) Each Selling Stockholder, officer and director of the Company
holding the Company's outstanding securities as of the date hereof has
executed a "lock-up" agreement substantially in the form of Exhibit A
hereto.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states or the bylaws and rules and
regulations of the NASD in connection with the offer and sale of the
Shares.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(l) There are no legal or governmental proceedings pending or, to
the knowledge of the Company threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company
or any of its subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described or
filed as required.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
3
(n) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
(o) Except as otherwise described in the Registration Statement, the
Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(q) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement, except as have been duly waived.
(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company
and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) the Company has
not purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock other than ordinary and customary dividends; and (iii) there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries, except in each case as
described in the Prospectus.
(s) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, taken as a whole, in each case free and
clear of all liens, encumbrances and defects except such as are described
in the Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such
4
property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its
subsidiaries, in each case except as described in the Prospectus.
(t) The Company and its subsidiaries own or possess, license or can
acquire or license on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing except as
described in the Prospectus or which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse affect on the Company and its subsidiaries, taken as a
whole.
(u) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in the Prospectus, or,
to the knowledge of the Company, is imminent; and the Company is not
aware, but without conducting any independent investigation, of any
existing, threatened or imminent labor disturbance by the employees of any
of its principal suppliers, manufacturers or contractors that could have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(v) The Company and its subsidiaries are insured by the insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Prospectus.
(w) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company and
its subsidiaries, taken as a whole, except as described the Prospectus.
(x) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in
5
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) The Common Stock has been approved for listing on the Nasdaq
Stock Exchange.
2. Representations and Warranties of the Selling Stockholders. Each of the
Selling Stockholders represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Stockholder and
Equiserve, as Custodian, relating to the deposit of the Shares to be sold
by such Selling Stockholder (the "CUSTODY AGREEMENT") and the Power of
Attorney appointing certain individuals as such Selling Stockholder's
attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
"POWER OF ATTORNEY") will not contravene any provision of applicable law,
or the certificate of incorporation or by-laws of such Selling Stockholder
(if such Selling Stockholder is a corporation), or any agreement or other
instrument binding upon such Selling Stockholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
such Selling Stockholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for
the performance by such Selling Stockholder of its obligations under this
Agreement or the Custody Agreement or Power of Attorney of such Selling
Stockholder, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.
(c) Such Selling Stockholder has, and on the Closing Date will have,
valid title to, or a valid "security entitlement" within the meaning of
Section 8-501 of the New York Uniform Commercial Code in respect of, the
Shares to be sold by such Selling Stockholder free and clear of all
security interests, claims, liens, equities or other encumbrances and the
legal right and power, and all authorization and approval required by law,
to enter into this Agreement, the Custody Agreement and the Power of
Attorney and to sell, transfer and deliver the Shares to be sold by such
Selling Stockholder or a security entitlement in respect of such Shares.
(d) The "lock up" agreement substantially in the form of Exhibit A
hereto, the Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Stockholder and are
valid and binding agreements of such Selling Stockholder.
6
(e) Certificates in negotiable form for the Shares to be sold by
such Selling Stockholder have been placed in custody under a Custody
Agreement for delivery under this Agreement with the Custodian; such
Selling Stockholder specifically agrees that the Shares represented by the
certificates so held in custody for such Selling Stockholder are subject
to the interests of the several Underwriters and the Company, that the
arrangements made by such Selling Stockholder shall not be terminated by
any act of such Selling Stockholder or by operation of law, whether by the
death or incapacity of such Selling Stockholder (or, in the case of a
Selling Stockholder who is not an individual, the dissolution or
liquidation of such Selling Stockholder) or the occurrence of any other
event prior to _______________, 2003 if such death, incapacity,
dissolution, liquidation or other such event should occur before the
delivery of such Shares hereunder, certificates for such Shares shall be
delivered by the Custodian in accordance with the terms and conditions of
this Agreement as if such death, incapacity, dissolution, liquidation or
other event had not occurred, regardless of whether the Custodian shall
have received notice of such death, incapacity, dissolution, liquidation
or other event.
(f) Delivery of the Shares to be sold by such Selling Stockholder
and payment therefor pursuant to this Agreement will pass valid title to
such Shares, free and clear of any adverse claim within the meaning of
Section 8-102 of the New York Uniform Commercial Code, to each Underwriter
who has purchased such Shares without notice of an adverse claim.
(g) All information furnished in writing by or on behalf of such
Selling Stockholder for use in the Registration Statement and Prospectus
is, and on the Closing Date will be, true, correct, and complete, and does
not, and on the Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make such
information not misleading.
(h) Such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 are
not true and correct, is familiar with the Registration Statement and
Prospectus and has no knowledge of any material fact, condition or
information not disclosed in the Prospectus that has had, or may have, a
material adverse effect on the Company and its subsidiaries, taken as a
whole. Such Selling Stockholder is not prompted by any information
concerning the Company or its subsidiaries which is not set forth in the
Prospectus to sell its Shares pursuant to this Agreement.
(i) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in, the stabilization or manipulation of the
price of any security of the Company or facilitate the sale or resale of
the Shares.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $____ a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to adjustments to eliminate
fractional shares as you
7
may determine) that bears the same proportion to the number of Firm Shares set
forth on Schedule I opposite the name of such Underwriter bears to the total
number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 750,000 Additional Shares at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice of each election to
exercise the option not later than 30 days after the date of this Agreement. Any
exercise notice shall specify the number of Additional Shares to be purchased by
the Underwriters and the date on which such shares are to be purchased. Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Shares nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 5 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. On each
day, Option Closing Date, (as defined below), if any, that Additional Shares are
to be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
total number of Additional Shares to be purchased on such Option Closing Date
(as defined below) as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities convertible into or exercisable or exchangeable for Common
Stock ("SECURITIES"), in cash or otherwise, and in addition, the Company hereby
agrees that, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the Underwriters, it will not (3) file any
registration statement with the Commission relating to the offering of any
shares of Common Stock or any Securities (the restrictions contained in (1), (2)
and (3) above are collectively referred to herein as the "RESTRICTIONS");
provided, however, that each Selling Stockholder may engage in any of the
transactions permitted in the form of "lock-up" agreement attached hereto as
Exhibit A and executed by each of the Selling Stockholders. In addition, the
foregoing sentence shall not apply to (A) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing and is described in the Prospectus or (B) the grant of
options or the issuance of shares of Common Stock by the Company to employees,
officers, directors, advisors or consultants of the Company pursuant to employee
benefit plans described in the Prospectus. With respect to the Company, the
Restrictions shall terminate on March 15, 2004. With respect to each Selling
Stockholder, the Restrictions shall terminate with respect to fifty percent
(50%) of the Common Stock and Securities owned, directly or indirectly as of
date hereof by such Selling Stockholder, less the number of
8
shares of Common Stock sold by such Selling Stockholder hereunder, on the close
of business on February 15, 2004, and with respect to all remaining Common Stock
and Securities owned, directly or indirectly, by such Selling Stockholder and
subject to the Restrictions, on the close of business on March 15, 2004.
In addition, each Selling Stockholder agrees that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending on March 15, 2004, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. Each Selling Stockholder
also agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
shares of Common Stock except in compliance with the foregoing restrictions.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$_____ a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by
you at a price that represents a concession not in excess of $______ a share
under the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on_____, 2003, or at such other time on the same or such other date, not
later than_______, 2003, as shall be designated in writing by you. The time and
date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the corresponding
notice described in Section 3 or at such other time on the same or on such other
date, in any event not later than _______, 2003, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to as
the "OPTION CLOSING DATE."
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay
9
for the Shares on the Closing Date are subject to the condition that the
Registration Statement shall have become effective not later than 5:00 p.m. (New
York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed on behalf of the Company by
an executive officer of the Company, to the effect set forth in Section
6(a)(i) above and to the effect that the representations and warranties of
the Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied in all material respects
with all of the agreements and satisfied all of the conditions on its part
to be performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Fenwick & West LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
corporate authority to own its property and to conduct its business
as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would
10
not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(ii) the authorized capital stock of the Company conforms as
to legal matters in all material respects to the description thereof
contained in the Prospectus;
(iii) the shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued and non-assessable, and, to such counsel's knowledge, fully
paid;
(iv) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive rights contained
in the Company's certificate of incorporation or by-laws, each as
amended to date, or to such counsel's knowledge, any similar rights
contained in any other agreements or instruments binding upon the
Company;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the
certificate of incorporation or by-laws, each as amended to date, of
the Company or, to such counsel's knowledge, any material agreement
or other instrument binding upon the Company or any of its
subsidiaries filed as an exhibit to the Registration Statement or,
to such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any Significant Subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states or bylaws and
rules and regulations of the NASD (as to which such counsel
expresses no opinion) in connection with the offer and sale of the
Shares;
(vii) the statements relating to legal matters, legal
documents or legal proceedings included in (A) the Prospectus under
the captions "Risk Factors - Provisions of our certificate of
incorporation and bylaws or Delaware law might discourage, delay or
prevent a change or control of our company or changes in our
management, and therefore, depress the trading price of our common
stock," "Management - Indemnification of Directors and Officers and
Limitation of Liability," "Shares Eligible for Future Sale,"
"Description of Capital Stock" and "Underwriters" and (B) the
Registration Statement in Items 14 and 15, in each case insofar as
such statements constitute summaries of the legal matters, legal
11
documents, or legal proceedings referred to therein, fairly
summarize in all material respects such matters, documents or
proceedings;
(viii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required;
(ix) the Company is not, and after giving effect to the
offering and sale of the Shares and the immediate application of the
proceeds thereof as described in the Prospectus would not be,
required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(x) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(xi) the execution and delivery by each Selling Stockholder
of, and the performance by such Selling Stockholder of its
obligations under, this Agreement and the Custody Agreement and
Powers of Attorney of such Selling Stockholder will not contravene
any provision of applicable law, or the certificate of incorporation
or by-laws of such Selling Shareholder (if such Selling Shareholder
is a corporation), or, to such counsel's knowledge, any agreement or
other instrument binding upon such Selling Stockholder or, to such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Selling Stockholder, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Stockholder of its
obligations under this Agreement or the Custody Agreement or Power
of Attorney of such Selling Stockholder, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with offer and sale of the Shares;
(xii) Assuming that the Underwriters purchase the Shares to be
sold by the Selling Stockholders pursuant to this Agreement for
value, in good faith and without notice of any adverse claims, the
delivery of stock certificates representing the Shares to be sold by
the Selling Shareholders, indorsed to the Underwriters, will
transfer to the Underwriters all rights of the Selling Stockholders
in such Shares, free and clear of any adverse claim (within the
meaning of Section 8-102 of the New York Uniform Commercial Code);
(xiii) the "lock up" agreement substantially in the form of
Exhibit A hereto, the Custody Agreement and the Power of Attorney of
each Selling Stockholder have been duly authorized, executed and
delivered by such Selling Stockholder and are valid and binding
agreements of such Selling Stockholder;
12
(xiv) nothing has come to the attention of such counsel that
causes such counsel to believe that (A) the Registration Statement
or the Prospectus (except for the financial statements and notes
thereto and financial statement schedules and other financial and
statistical data included therein, as to which such counsel need not
express any belief) do not comply as to form in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, (B)
the Registration Statement or the Prospectus included therein
(except for the financial statements and notes thereto and financial
statement schedules and other financial and statistical data
included therein, as to which such counsel need not express any
belief) at the time the Registration Statement became effective
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 (C) the Prospectus (except
for the financial statements and notes thereto and financial
statement schedules and other financial and statistical data
included therein, as to which such counsel need not express any
belief) as of its date or as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(d) The Underwriters shall have received on the Closing Date
opinions of Komaromi es Eros Ugyvedi Iroda, Squire, Sanders & Dempsey
L.L.P. (Brussels), Squire Sanders & Dempsey (London), SSD Law Offices and
Kim & Chang, each outside counsel for the Company's Significant
Subsidiaries, dated the Closing Date, in the forms attached hereto as
Exhibit B, Exhibit C, Exhibit D, Exhibit E and Exhibit F, respectively.
(e) The Underwriters shall have received on the Closing Date an
opinion of Gray Cary Ware & Freidenrich LLP, counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in Sections
6(c)(iv), 6(c)(v), 6(c)(vii) (but with respect to 6(c)(vii), only as to
the statements in the Prospectus under "Underwriters") and 6(c)(xiv)
above.
With respect to Section 6(c)(xiv) above, Fenwick & West LLP and Gray Cary
Ware & Freidenrich LLP may state that their beliefs are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
The opinions of Fenwick & West LLP, Komaromi es Eros Ugyvedi Iroda, Squire
Sanders & Dempsey LLP (Brussels), Squire Sanders & Dempsey (London), SSD
Law Offices and Kim & Chang described in Sections 6(c) and 6(d) above and
the opinion of Stuart Merkadeau described in Section 6(f) below shall be
rendered to the Underwriters at the request of the Company and shall so
state therein.
(f) The Underwriters shall have received on the Closing Date an
opinion of Stuart Merkadeau, Senior Vice President, General Counsel and
Secretary of the Company, dated the Closing Date, to the effect that:
13
(i) the statements relating to legal matters, legal documents
or legal proceedings included in the Prospectus under the captions
"Risk Factors - From time to time, we might be subject to claims of
infringement of other parties' proprietary rights, or to claims that
our intellectual property rights are invalid or unenforceable, which
could result in significant expense and loss of intellectual
property rights and "Business - Intellectual Property," in each case
insofar as such statements constitute summaries of the legal
matters, legal documents, or legal proceedings referred to therein,
fairly summarize in all material respects such matters, documents or
proceedings.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriters, from PricewaterhouseCoopers, LLP, independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in
the Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and the Selling Stockholders, the officers
and directors of the Company, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, 5 signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 7(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
14
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending June 30, 2004 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) To not release any holder of the Company's securities from its
contractual obligations to the Company, as a result of the Company's
initial public offering of common stock in June 2003, under any stock
option, incentive or stock purchase plan, or any other agreement or plan
including, but not limited to, the Sixth Amended and Restated Rights
Agreement dated July 13, 2001, not to offer, pledge, sell, contract to
sell, or otherwise transfer or dispose of, directly or indirectly, any of
the Company's securities prior to the close of business on December 8,
2003, without the prior written consent of Morgan Stanley & Co.
Incorporated.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and counsel for the
Selling Stockholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
15
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all fees, expenses and costs incident to listing
the Shares on the Nasdaq National Market, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, (ix) the document production charges and expenses associated with printing
this Agreement, and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in this
Section 8, Section 9 entitled "Indemnity and Contribution," and the last
paragraph of Section 11 below, the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock transfer
taxes payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have
16
cured the defect giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of noncompliance by the Company with Section
7(a) hereof.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the other Selling Stockholders, the
directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and each Underwriter, each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and each affiliate of any Underwriter within the meaning of Rule
405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Selling Stockholder furnished in writing by or on behalf of such Selling
Stockholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto; and
provided, further, that liability of such Selling Stockholder under this Section
9(b) shall be limited to an amount equal to the net proceeds to such Selling
Stockholder from the sale of the Shares sold by such Selling Stockholder under
this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company and
Selling Stockholder to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Sections 9(a), 9(b) or 9(c), such person
(the "INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Indemnifying Party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate
17
due to actual or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in respect of the legal expenses of any
Indemnified Party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (i) the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Underwriters and all
persons, if any, who control any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act or who are
affiliates of any Underwriter within the meaning of Rule 405 under the
Securities Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Section and (iii) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Selling Stockholders and all persons, if any, who control any Selling
Stockholder within the meaning of either such Section, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons and affiliates of
any Underwriters, such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholders and such control persons of any Selling Stockholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Stockholders under the Powers of Attorney. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an Indemnified Party shall have requested an Indemnifying Party to
reimburse the Indemnified Party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Party of the aforesaid request and (ii)
such Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an Indemnified Party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Party under such paragraph, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by Indemnifying Party or Parties on the one hand and the
Indemnified Party or Parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the Indemnifying Party or Parties on the one hand and of the
Indemnified Party or Parties on the other hand in connection with the
18
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Sellers on the one hand and the Underwriters
on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by each Seller and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Seller
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Seller or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 9 are several in proportion
to the respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Stockholders contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter, any
person controlling any Underwriter or any affiliate of any Underwriter, any
Selling Stockholder or any person controlling a Selling Stockholder, or the
Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Shares.
10. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile
19
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a material disruption in securities settlement, payment or
clearance services in the United States shall have occurred, (iv) any moratorium
on commercial banking activities shall have been declared by Federal or New York
State authorities or (v) there shall have occurred any outbreak or escalation of
hostilities, or any change in financial markets or any calamity or crisis that,
in your judgment, is material and adverse and which, singly or together with any
other event specified in this clause (v), makes it, in your judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the
Shares on the terms and in the manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Stockholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholders. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased on such Option Closing Date, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option
Closing Date or (ii) purchase not less than the number of Additional Shares that
such non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the
20
conditions of this Agreement, or if for any reason any Seller shall be unable to
perform its obligations under this Agreement, the Sellers will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
21
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
FORMFACTOR, INC.
By:
-------------------------------------
Name: Jens Meyerhoff
Title: Chief Financial Officer and
Senior Vice President of Operations
The Selling Stockholders named in
Schedule I hereto, acting severally
By:
---------------------------------
Name:
Attorney-in-Fact
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By:
---------------------------------
Name: William R. Salisbury
Title: Managing Director
22
SCHEDULE I
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
Morgan Stanley & Co. Incorporated........................
Goldman, Sachs & Co......................................
------------
Total:.......................................... 5,000,000
SCHEDULE II
NUMBER OF FIRM SHARES
SELLING STOCKHOLDER TO BE SOLD
------------
TOTAL: 3,500,134
============
EXHIBIT A
LOCK-UP AGREEMENT
-----------------
October 7, 2003
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") and Goldman, Sachs & Co. (collectively, the "UNDERWRITERS")
propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
with FormFactor, Inc., a Delaware corporation (the "COMPANY"), providing for the
public offering (the "PUBLIC OFFERING") by the several Underwriters of shares
(the "SHARES") of the Common Stock, par value $0.001 per share, of the Company
(the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not:
(1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock ("SECURITIES"); or
(2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2) above
(collectively, the "RESTRICTIONS") is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise.
The Restrictions shall commence on the date hereof and shall terminate
with respect to fifty percent (50%) of the Common Stock and Securities owned,
directly or indirectly as of the effective date of the registration statement
relating to the Public Offering by the undersigned, less the number of Shares of
Common Stock, if any, sold by the undersigned in the Public Offering, on the
close of business on February 15, 2004 (the "FIRST TERMINATION DATE"), and with
respect to all remaining Common Stock and Securities owned, directly or
indirectly, by the undersigned and subject to the Restrictions, on the close of
business on March 15, 2004 (the "SECOND TERMINATION DATE").
The Restrictions shall not apply to (a) the sale of any Shares to the
Underwriters pursuant to the Underwriting Agreement; (b) transactions relating
to shares of Common Stock or Securities acquired in open market transactions
after the completion of the Public Offering; (c) bona fide gifts or other
transfers for no consideration of shares of Common Stock or Securities; (d)
distributions of shares of Common Stock or Securities to partners, members or
stockholders of the undersigned; (e) if the undersigned is a corporation,
transfers of shares of Common Stock or Securities to an affiliate or affiliates
of such corporation; or (f) acquisitions from the Company of any shares of
Common Stock or Securities. In the case of any gift, transfer, distribution or
acquisition pursuant to clause (c), (d), (e) or (f) in the foregoing sentence,
(i) each donee, distributee, transferee or recipient shall, prior to the
effectiveness of the transfer, execute and deliver to Morgan Stanley an executed
duplicate form of this Lock-up Agreement and (ii) no filing by any party (donor,
donee, transferor, transferee, distributor, distributee or recipient) under
Section 16(a) of the Securities Exchange Act of 1934, as amended, shall be
required or shall be made voluntarily in connection with such transfer or
distribution (other than a filing on Form 5 made after the Second Termination
Date).
In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending on the Second Termination Date,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock. 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 the undersigned's shares of Common Stock
except in compliance with the foregoing restrictions.
In the event the Public Offering has not been consummated on or before
December 8, 2003, this Lock-up Agreement shall lapse and become null and void.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
-----------------------
(Name)
-----------------------
(Address)
EXHIBIT B
1. The Company is a limited liability company (in Hungarian: "Korlatolt
Felelossegu Tarsasag") registered, duly organized and validly existing as a
limited liability company under the laws of the Republic of Hungary, has not had
its status suspended or forfeited, has the corporate power and authority to own
its properties and to carry on its business as described in the Managing
Directors' Certificate and is duly qualified to transact business in Hungary.
2. The outstanding capital of the Company is represented by one quota (the
capital of a Hungarian limited liability company, Korlatolt Felelossegu
Tarsasag, is represented by quotas instead of shares of stock) having a nominal
value of USD 15,000. The Company has complied with all applicable legal and
procedural requirements in creating its quota, including any requirement to
obtain necessary approvals from the Company's managing directors, quotaholders
and appropriate government authorities. Such approvals were obtained pursuant to
and in accordance with the legal requirements thereof. The quota of the Company
is fully paid, nonassessable and fully owned by the Parent and we have no
knowledge of any liens, encumbrances, equities or claims thereon.
EXHIBIT C
1. The Company is a limited liability corporation ("Gesellschaft mit
beschrankter Haftung - "GmbH," as per its German initials) duly organized and
validly existing under the laws of Germany, with requisite corporate power to
own and operate its properties and assets and it is as such qualified to carry
on the business as stated in the Prospectus.
2. The Company is duly qualified to transact business in each jurisdiction
in which it conducts business or owns or leases property outside of Germany.
3. The Company Register does not included any information according to
which the Company was suspended or in liquidation.
4. The stock of the Company consists of one private ownership share of a
nominal value of 25.000, Euro. The Company's Basic Capital of 25,000, Euro has
been fully paid up. All private ownership shares are held by FormFactor Hungary
Ltd. Such private ownership shares are not subject to any liens or encumbrances.
EXHIBIT D
1. FormFactor Europe Limited (the "Company") is a company limited by
shares duly incorporated on 27 January 1999 and is validly existing and
registered under number 3705871 under the laws of England and Wales;
2. The Company is in good standing in accordance with the terms of the
Good Standing Certificate;
3. The Company has, as its principal object in the Memorandum of
Association, the power and authority to own its property, to conduct the
business described in the Prospectus and to act as a general commercial company
together with various ancillary objects;
4. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or to be in good standing would not
have a material adverse effect on the Company, taken as a whole; and
5. The Company has share capital of 10,000 ordinary shares of nominal
value of L1.00 each, of which 100 have been validly issued, are non-assessable
and are fully paid up and are registered in the name of FORMFACTOR, INC., free
and clear of all registered liens or registered encumbrances and, to our
knowledge, free and clear of all liens, encumbrances, equities or claims.
EXHIBIT E
1. The Company is a corporation validly incorporated and existing under
the laws of Japan, has not had its corporate status suspended or forfeited and
has requisite corporate power and authority to own and operate its properties
and assets and to carry on the business in which it is now engaged as described
in the Prospectus.
1.5 There was a defect in the original incorporation of the Company which
has since been duly cured and there are no adverse legal consequences to the
Company resulting from the defect in the incorporation of the Company.
2. The Company is duly qualified to transact its business in Japan. There
are no restrictions under Japanese law as to qualification of the Company to
transact business in any foreign jurisdictions. It is beyond the jurisdiction of
Japanese law as to if the Company is qualified to do business in a foreign
country.
3. The outstanding capital stock of the Company consists of 800 shares of
common stock, and all the outstanding shares have been duly authorized and
validly issued, are fully paid, nonassessable and held of record by the Parent.
There are no encumbrances on these shares as effective against the Company.
EXHIBIT F
1. That the Company has been duly incorporated, is validly existing as a
corporation and in good standing under the laws of Korea, has the corporate
power and authority to own its property and conduct its business as described in
the Prospectus, is duly qualified to transact business in Korea, and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or to be in good standing would not have a material adverse effect on
the Company, taken as a whole; and
2. That all of the issued units of contribution of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable, and
are owned by FormFactor Germany GmbH and FormFactor Hungary Licensing Limited
Liability Company, free and clear of all liens, pledges, encumbrances, or other
security interests.