EXHIBIT 1.1
2,857,200
CELEBRATE EXPRESS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_____________, 2004
XX XXXXX & CO., LLC
CIBC WORLD MARKETS CORP.
PACIFIC CREST SECURITIES INC.
As Representatives of the several Underwriters
c/o XX Xxxxx & Co., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. Celebrate Express, Inc., a Washington corporation (the
"Company"), and the selling shareholders named in Schedule B hereto (the
"Selling Shareholders"), propose to sell, pursuant to the terms of this
Agreement, to the several underwriters named in Schedule A hereto (the
"Underwriters," or, each, an "Underwriter"), an aggregate of 2,857,200 shares of
Common Stock, $0.001 par value per share (the "Common Stock") of the Company.
The aggregate of 2,857,200 shares so proposed to be sold is hereinafter referred
to as the "Firm Stock". The Company and certain Selling Shareholders also
propose to sell to the Underwriters, upon the terms and conditions set forth in
Section 3 hereof, up to an additional 428,580 shares of Common Stock (the
"Optional Stock"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "Stock". XX Xxxxx & Co., LLC ("XX Xxxxx"), CIBC
World Markets Corp. and Pacific Crest Securities Inc. are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives."
2. (I) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-117459) (the
"Initial Registration Statement") in respect of the Stock 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 "Securities Act") and the rules
and regulations (the "Rules and Regulations") of the Commission
thereunder, 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 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, 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 Securities Act and deemed by virtue of
Rule 430A under the Securities 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 Securities Act, is hereinafter
called the "Prospectus." No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. No order
preventing or suspending the use of any Preliminary Prospectus has been
issued by the Commission.
(b) The Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any amendments or
supplements to either the Registration Statement or the Prospectus, when
they become effective or are filed with the Commission, as the case may
be, will conform) in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as
of the applicable effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 16).
(c) The Company and each of its subsidiaries have been duly incorporated
and are validly existing as corporations under the laws of Washington, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have such
power or authority would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise), results
of operations, business or prospects of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect"). The Company owns or
controls, directly or indirectly, only the following corporations,
partnerships, limited liability partnerships, limited liability companies,
associations or other entities: List Selector & Processing, Inc., a
Washington corporation ("List Selector").
(d) This Agreement has been duly authorized, executed and delivered by
the Company, and is a valid and binding agreement enforceable in
accordance with its terms, except as rights to indemnification hereunder
may be limited by applicable law and except as the enforcement hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles.
(e) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided
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herein, will be duly and validly issued, fully paid and non-assessable and
free of any preemptive or similar rights and will conform to the
description thereof contained in the Prospectus.
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable, have been issued in compliance with federal and state
securities laws, and conform to the description thereof contained in the
Prospectus. None of the outstanding shares of Common Stock was issued in
violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than those
accurately described in the Prospectus. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights granted thereunder, as described in the Prospectus
accurately and fairly present the information required to be shown with
respect to such plans, arrangements, options and rights.
(g) List Selector (i) is not a "significant subsidiary" as such term is
defined in Rule 1-02 of Regulation S-X of the Rules and Regulations, (ii)
has no assets or liabilities (fixed, contingent, liquidated or otherwise)
as of the date hereof, and (iii) is not, and since at least January 2000
has not been, engaged in the conduct of any business.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, constitute a default under, result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, or require the consent of any other
party to (except for such consents as have been obtained), any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
(ii) result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries, or (iii) result in any
violation of statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets other than those
described in the Prospectus, except any conflicts, breaches or violations
that have been validly waived or with respect to (i) and/or (iii) (or,
with respect to List Selector only, clause (ii)), which, singularly or in
the aggregate, would not have a Material Adverse Effect.
(i) Except for the registration of the Stock under the Securities Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and applicable state securities
laws, the National Association of Securities Dealers, Inc. and the Nasdaq
National Market System ("NasdaqNM") in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(j) Deloitte & Touche, LLP, which has expressed its opinion on the
audited financial statements included in the Registration Statement and
the Prospectus, is an independent registered public accounting firm as
required by the Public Company Accounting Oversight Board (PCAOB), the
Securities Act and the Rules and Regulations.
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(k) The financial statements, together with the related notes, included
in the Prospectus and in the Registration Statement fairly present the
financial position and the results of operations and changes in financial
position of the Company at the respective dates or for the respective
periods therein specified. Such statements and related notes have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the
Prospectus. The financial statements, together with the related notes,
included in the Prospectus comply in all material respects with the
Securities Act and the Rules and Regulations. No other financial
statements or supporting schedules or exhibits are required by the
Securities Act or the Rules and Regulations to be included in the
Prospectus.
(l) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, there has not been any change in the capital stock
(other than issuances of options in the ordinary course of business and
pursuant to the Plans disclosed in the Prospectus or the issuance of
Common Stock upon the exercise of outstanding options and warrants, in
each case as disclosed in the Prospectus or on Schedule C hereto) or
long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth
or contemplated in the Prospectus.
(m) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject which is required to be
described in the Registration Statement or the Prospectus and is not
described therein, or which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the
Company to perform its obligations under this Agreement; and to the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others. No material labor
dispute with the employees of the Company exists or, to the Company's
knowledge, is threatened or imminent. The Company has not received any
written notice that any material labor dispute with the employees of any
supplier or shipping company utilized by the Company exists or is
threatened or imminent, which, singularly or in the aggregate, would have
a Material Adverse Effect.
(n) Neither the Company nor any of its subsidiaries (i) is in violation
of its charter or by-laws, (ii) is in default in any respect, and no event
has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject except any violations or defaults with respect to (ii) or (iii)
which, singularly or in the aggregate, would not have a Material Adverse
Effect.
(o) The Company and each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or foreign
regulatory agencies or bodies which are necessary or desirable for the
ownership of their respective properties or the conduct of their
respective businesses as described
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in the Prospectus except where any failures to possess or make the same,
singularly or in the aggregate, would not have a Material Adverse Effect,
and the Company has not received notification of any revocation or
modification of, or non-compliance with, any such license, authorization
or permit and has no reason to believe that any such license, certificate,
authorization or permit will not be renewed.
(p) Neither the Company nor any of its subsidiaries is or, after giving
effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus will become, an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended and the rules and regulations of the Commission thereunder.
(q) Neither the Company nor any of its officers, directors or, to the
knowledge of the Company, affiliates has taken, directly or indirectly,
any action designed or intended to stabilize or manipulate the price of
any security of the Company, or which caused or resulted in, or which
might reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(r) The Company and its subsidiaries own or possess the right to use all
patents, patent applications, trademarks, trademark registrations, service
marks, service xxxx registrations, trade names, domain names, domain name
registrations, copyrights, licenses, inventions, trade secrets and other
intellectual property rights that are necessary for the conduct of their
respective businesses as described in the Prospectus (collectively, the
"Intellectual Property"), and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company
and its subsidiaries with respect to the foregoing. The Intellectual
Property is free and clear of all liens, claims, licenses and
restrictions, except for such as are described in the Prospectus or would
not have a Material Adverse Effect. The Company's business as described in
the Prospectus does not and will not infringe or conflict with any
patents, patent applications, trademarks, service marks, trade names,
domain names, domain name registrations, copyrights, trade secrets,
licenses or other intellectual property or franchise rights of any person.
Except as described in the Prospectus, no claim has been made or, to the
Company's knowledge, threatened against the Company or any of its
subsidiaries alleging the infringement by the Company or such subsidiaries
of any patent, patent application, trademark, service xxxx, trade name,
domain name, domain name registration, copyright, trade secret, license in
or other intellectual property right or franchise right of any person.
The Company has not received any written notice that the execution
or delivery of this Agreement, the carrying on of the business of the
Company and its subsidiaries by the employees and independent contractors
of the Company and its subsidiaries, or the conduct of the business of the
Company and its subsidiaries as now conducted and as proposed to be
conducted, as described in the Prospectus, conflicts with or results in a
breach of the terms, conditions, or provisions of, or constitutes a
default under, any judgment, decree or order of any court or
administrative agency under which any such employee or independent
contractor is now obligated or under any contract, covenant or instrument
under which any such employee or independent contractor is now obligated.
(s) The Company and each of its subsidiaries have good and marketable
title in fee simple to, or have valid, subsisting and enforceable rights
to lease or otherwise use, all items of real or personal property which
are material to the business of the Company and its subsidiaries taken as
a whole, in each case free and clear of all liens, encumbrances, claims
and defects that may result in a Material Adverse Effect, except such
liens set forth in that certain Loan and Security Agreement, dated May 21,
2004, by and between the Company and ORIX Venture Finance, LLC (as
amended, the "ORIX Loan Agreement").
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(t) No labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the Company's knowledge, is imminent which
might be expected to have a Material Adverse Effect. The Company is not
aware that any key employee or significant group of employees of the
Company or any subsidiary plans to terminate employment with the Company
or any such subsidiary.
(u) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan which could have a Material Adverse Effect; each
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any "pension plan"; and
each "pension plan" (as defined in ERISA) for which the Company would have
any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could cause the loss of such
qualification.
(v) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of
toxic or other wastes or other hazardous substances by, due to, or caused
by the Company or any of its subsidiaries upon any of the property now or
previously owned or leased by the Company or any of its subsidiaries, or
upon any other property, in violation of any statute or any ordinance,
rule, regulation, order, judgment, decree or permit or which would, under
any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have, singularly or
in the aggregate with all such violations and liabilities, a Material
Adverse Effect; there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment surrounding
such property of any toxic or other wastes or other hazardous substances
with respect to which the Company or any of its subsidiaries have
knowledge, except for any such disposal, discharge, emission, or other
release of any kind which would not have, singularly or in the aggregate
with all such discharges and other releases, a Material Adverse Effect.
(w) The Company and its subsidiaries each (i) has filed with all
necessary federal, state and foreign income and franchise tax returns,
(ii) has paid all federal state, local and foreign taxes due and payable
for which it is liable, and (iii) does not have any tax deficiency or
claims outstanding or assessed or, to the Company's knowledge, proposed
against it which could reasonably be expected to have a Material Adverse
Effect.
(x) The Company carries, or is covered by, insurance from recognized,
financially sound and reputable institutions with policies in such amounts
and with such deductibles and covering such risks as is adequate for the
conduct of its business and the value of its properties and as is
customary for companies engaged in similar businesses in similar
industries. The Company has no reason to believe that it will not be able
to (i) renew its existing insurance coverage from similar institutions as
may be necessary or appropriate to conduct its business as described in
the Prospectus and at a cost that would not result in a Material Adverse
Effect. The Company has not been denied any insurance coverage which it
has sought after which it has applied.
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(y) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(z) The minute books of the Company have been made available to the
Underwriters and counsel for the Underwriters, and such books (i) contain
a complete summary of all meetings and actions of the board of directors
(including each board committee) and shareholders of the Company since the
time of its respective incorporation through the date of the latest
meeting and action, and (ii) accurately in all material respects reflect
all transactions referred to in such minutes.
(aa) There is no statute, regulation, franchise, lease, contract,
agreement or document required by the Securities Act or by the Rules and
Regulations required to be described in the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or, in the
case of franchises, leases, contracts, agreements or documents, filed
therein as required; and all descriptions of any such statutes,
regulations, franchises, leases, contracts, agreements or documents
contained in the Registration Statement are accurate and complete
descriptions of such statutes, regulations or documents in all material
respects. Other than as described in the Prospectus, no such franchise,
lease, contract, agreement or other document has been suspended or
terminated for convenience or default by the Company or any of the other
parties thereto, and the Company has not received notice or any other
knowledge of any such pending or threatened suspension or termination,
except for such pending or threatened suspensions or terminations that
would not reasonably be expected to, singularly or in the aggregate, have
a Material Adverse Effect.
(bb) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus and which is not so described.
(cc) No person or entity has the right to require registration of shares
of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement or otherwise, except for
persons and entities who have expressly waived such right or who have been
given timely and proper notice and have failed to exercise such right
within the time or times required under the terms and conditions of such
right.
(dd) Neither the Company nor any of its subsidiaries own any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(ee) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering
and sale of the Stock.
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(ff) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(gg) The Stock has been approved for listing subject to notice of
issuance on the NasdaqNM.
(hh) The Company has taken all necessary actions to ensure that, upon and
at all times after the effectiveness of the Registration Statement, it
will be in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx
Act of 2002 and all rules and regulations promulgated thereunder or
implementing the provisions thereof (the "Xxxxxxxx-Xxxxx Act") that are
then in effect and is actively taking steps to ensure that it will be in
compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act not
currently in effect upon and at all times after the effectiveness of such
provisions.
(ii) The Company has taken all necessary actions to ensure that, upon and
at all times after the NasdaqNM shall have approved the Stock for
inclusion, it will be in compliance with all applicable corporate
governance requirements set forth in the Nasdaq Marketplace Rules that are
then in effect and is actively taking steps to ensure that it will be in
compliance with other applicable corporate governance requirements set
forth in the Nasdaq Marketplace Rules not currently in effect upon and at
all times after the effectiveness of such requirements.
(jj) Neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any subsidiary, has
made any contribution or other payment to any official of, or candidate
for, any federal, state or foreign office in violation of any law or of
the character required to be disclosed in the Prospectus.
(kk) There are no transactions, arrangements or other relationships
between and/or among the Company, any of its affiliates (as such term is
defined in Rule 405 of the Securities Act) and any unconsolidated entity,
including, but not limited to, any structure finance, special purpose or
limited purpose entity that could reasonably be expected to affect
materially the Company's liquidity or the availability of or requirements
for its capital resources required to be described in the Prospectus which
have not been described as required.
(ll) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company, except as disclosed in the Prospectus.
(II) REPRESENTATIONS AND WARRANTIES AND AGREEMENTS OF THE SELLING
SHAREHOLDERS. Each Selling Shareholder severally and not jointly represents and
warrants to, and agrees with, the several Underwriters that such Selling
Shareholder:
(a) Has, and immediately prior to each Closing Date (as defined in
Section 3 hereof) will have, good and valid title to the shares of Stock
to be sold by the Selling Shareholder hereunder on such date, free and
clear of all liens, encumbrances, equities or claims; and upon delivery of
such shares and payment therefor pursuant hereto, good and valid title to
such shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters.
(b) Has duly and irrevocably executed and delivered a power of attorney,
in substantially the form heretofore delivered by the Representatives (the
"Power of Attorney"), appointing Xxxxxxx X. Xxxxxx and Xxxxx Xxxxx, and
each of them, as attorney-in-fact (the "Attorneys-in-fact") with authority
to execute and deliver this Agreement on behalf of such Selling
Shareholder, to authorize the delivery of the shares of Stock to be sold
by such Selling Shareholder hereunder and otherwise to act on behalf of
such Selling Shareholder in connection with the transactions contemplated
by this Agreement. The Power of Attorney is a valid and binding agreement
of
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such Selling Shareholder, enforceable in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(c) Has duly and irrevocably executed and delivered a custody agreement,
in substantially the form heretofore delivered by the Representatives (the
"Custody Agreement"), with American Stock Transfer & Trust Company as
custodian (the "Custodian"), pursuant to which certificates in negotiable
form for the shares of Stock to be sold by such Selling Shareholder
hereunder have been placed in custody for delivery under this Agreement.
The Custody Agreement is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms, except as to
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(d) Has full right, power and authority to enter into this Agreement,
the Power of Attorney and the Custody Agreement; the execution, delivery
and performance of this Agreement, the Power of Attorney and the Custody
Agreement by such Selling Shareholder and the consummation by such Selling
Shareholder of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or require the consent,
approval or waiver of any other party to any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is
bound or to which any of the property or assets of such Selling
Shareholder is subject, nor will such actions result, if such Selling
Shareholder is an entity, in any violation of the provisions of the
charter or by-laws of such Selling Shareholder, the articles or
certificate, as applicable, of partnership of such Selling Shareholder or
the deed of trust of such Selling Shareholder, or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Selling Shareholder or the property or
assets of such Selling Shareholder; and, except for the registration of
the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Power of
Attorney or the Custody Agreement by such Selling Shareholder and the
consummation by such Selling Shareholder of the transactions contemplated
hereby and thereby.
(e) The Registration Statement and any post-effective amendment thereto,
at the time it became or becomes effective, did not and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. The Prospectus (including any prospectus wrapper),
as amended or supplemented, as of its filing date, did not and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences apply only to the extent that any information contained in or
omitted from the Registration Statement or any post-effective amendment
thereto, or the Prospectus, or any amendments or supplements thereto, was
in reliance upon and in conformity with written information furnished to
the Company by such Selling Stockholder specifically for inclusion
therein.
9
(f) Such Selling Shareholder has not taken, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any
security of the Company, or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of
the Company.
3. PURCHASE SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, (a) the Company agrees to issue and sell
1,716,984 shares of Common Stock ("the Company Firm Stock") to the several
Underwriters, (b) each Selling Shareholder agrees, severally and not jointly, to
sell to the several Underwriters the number of shares of Common Stock set forth
opposite such Selling Shareholder's name on Schedule B hereto, and (c) each
Underwriter agrees, severally and not jointly, to purchase from the Company and
the Selling Shareholders that number of shares of Firm Stock set forth opposite
the name of such Underwriter in Schedule A hereto (subject to adjustment by XX
Xxxxx to eliminate fractions). The number of shares of Firm Stock to be
purchased by each Underwriter from the Company and each Selling Shareholder
hereunder shall, as nearly as practicable, be in the same proportion as the
number of shares of Firm Stock being purchased by such Underwriter bears to the
total number of shares of Firm Stock to be purchased by all of the Underwriters
hereunder.
The purchase price per share to be paid by the Underwriters to the Company
and the Selling Shareholders for the Stock will be $_____ per share (the
"Purchase Price").
The Company and the Selling Shareholders (or the Custodian on behalf of
the Selling Shareholders) will deliver the Firm Stock to the Representatives for
the respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 Noon, New York time, on the second full business day preceding the
First Closing Date (as defined below)) against payment of the aggregate Purchase
Price therefor by same-day wire transfer to an account at a bank reasonably
acceptable to XX Xxxxx, payable to the order of the Company and American Stock
Transfer & Trust Company as Custodian for the Selling Shareholders, all at the
offices of Xxxxxx Xxxxxx White & XxXxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx 00000. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of each Underwriter hereunder. The time and date of the delivery
and closing shall be at 10:00 A.M., New York time, on ________, 2004, in
accordance with Rule 15c6-1 of the Exchange Act. The time and date of such
payment and delivery are herein referred to as the "First Closing Date". The
First Closing Date and the location and delivery of the Firm Stock may be varied
by agreement among the Company, the Attorney-in-Fact and XX Xxxxx.
The Company and the Selling Shareholders (or the Custodian on behalf of
the Selling Shareholders) shall make the certificates for the Firm Stock
available to the Representatives for examination on behalf of the Underwriters
in New York, New York at least twenty-four hours prior to the First Closing
Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase from Company and the Selling Shareholders all or less
than all of the Optional Stock. The price per share to be paid for the Optional
Stock shall be the Purchase Price. The Company agrees to issue and sell up to
357,150 shares of Common Stock to the several Underwriters and the Selling
Shareholders agree, severally and not jointly, to sell to the Underwriters up to
all of the number of shares of Optional Stock set forth opposite the names of
such Selling Shareholders in Schedule B hereto under the caption "Number of
Optional Shares to be Sold," in such aggregate amounts as determined by the
Representatives in their discretion; provided, however, that in the event the
Representatives shall exercise the right, on behalf of the Underwriters, to
purchase less than all of the Optional Stock, the number of shares of Optional
Stock to be sold by the
10
Company and each Selling Shareholder shall be reduced in the same proportion as
the number of shares of Optional Stock to be purchased by the Underwriters bears
to the number of total shares of Optional Stock subject to the over-allotment
option set forth in this Section 3 (subject to adjustment by XX Xxxxx to
eliminate fractions), and provided further that, in the event the aggregate
number of shares of Optional Stock sold by the Selling Shareholders is less than
the aggregate number of shares of Optional Stock exercised by the
Representatives from the Selling Shareholders, the Company shall sell to the
Underwriters the number of shares of Optional Stock that, together with the
number of shares of Optional Stock sold by the Company and the Selling
Shareholders, equals the number of shares of Optional Stock exercised by the
Representatives. Such shares of Optional Stock shall be purchased from each
Selling Shareholder and the Company for the account of each Underwriter in the
same proportion as the number of shares of Firm Stock set forth opposite such
Underwriter's name bears to the total number of shares of Firm Stock (subject to
adjustment by XX Xxxxx to eliminate fractions). The option granted hereby may be
exercised as to all or any part of the Optional Stock at any time, and from time
to time, not more than thirty (30) days subsequent to the date of this
Agreement. No Optional Stock shall be sold and delivered unless the Firm Stock
previously has been, or simultaneously is, sold and delivered. The right to
purchase the Optional Stock or any portion thereof may be surrendered and
terminated at any time upon notice by XX Xxxxx to the Company and the Selling
Shareholders.
The option granted hereby may be exercised by written notice being given
to the Company and the Selling Shareholders by XX Xxxxx setting forth the number
of shares of the Optional Stock to be purchased by the Underwriters and the date
and time for delivery of and payment for the Optional Stock. Each date and time
for delivery of and payment for the Optional Stock (which may be the First
Closing Date, but not earlier) is herein called the "Option Closing Date" and
shall in no event be earlier than two (2) business days nor later than five (5)
business days after written notice is given. (The Option Closing Date and the
First Closing Date are herein called the "Closing Dates".)
The Selling Shareholders and the Company will deliver the Optional Stock
to the Underwriters (in the form of definitive certificates, issued in such
names and in such denominations as the Representatives may direct by notice in
writing to the Company given at or prior to 12:00 Noon, New York time, on the
second full business day preceding the Option Closing Date against payment of
the aggregate Purchase Price therefor in federal (same day) funds by same day
wire transfer to an account at a bank reasonably acceptable to XX Xxxxx, payable
to the order of the Company and American Stock Transfer & Trust Company as
Custodian for the Selling Shareholders, all at the offices of Xxxxxx Xxxxxx
White & XxXxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of each
Underwriter hereunder. The Selling Shareholders and the Company, if applicable,
shall make the certificates for the Optional Stock available to the
Representatives for examination on behalf of the Underwriters in New York, New
York not later than 10:00 A.M., New York Time, on the business day preceding the
Option Closing Date. The Option Closing Date and the location of delivery of,
and the form of payment for, the Optional Stock may be varied by agreement among
the Selling Shareholders, the Company (if applicable) and XX Xxxxx.
The several Underwriters propose to offer the Stock for sale upon the
terms and conditions set forth in the Prospectus.
4. (I) FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and file such Rule
462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representatives
11
and file such Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the second business day following the execution and
delivery of this Agreement; make no further amendment or any supplement to
the Registration Statement or to the Prospectus to which the
Representatives shall reasonably object by notice to the Company after a
reasonable period to review; advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Representatives with copies thereof; advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, use
promptly its best efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered any event occurs as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the
Securities Act, the Company will promptly notify the Representatives
thereof and upon their request will prepare an amended or supplemented
Prospectus which will correct such statement or omission or effect such
compliance. The Company will furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives may
from time to time reasonably request of such amended or supplemented
Prospectus; and in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the effective
date of the Initial Registration Statement, the Company upon the request
of the Representatives and at the expense of such Underwriter will prepare
promptly an amended or supplemented Prospectus as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the
Securities Act.
(c) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Initial Registration Statement
as originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith.
(d) To deliver promptly to the Representatives in New York City such
number of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Initial Registration Statement as
originally filed with the Commission and each amendment thereto (in each
case including exhibits), (ii) each Preliminary Prospectus, and (iii) the
Prospectus (not later than 9:00 A.M., New York time, of the second
business day following the execution and delivery of this Agreement and
any amended or supplemented Prospectus (not later than 9:00 A.M., New York
City time, on the second business day following the date of such amendment
or supplement).
(e) To make generally available to its shareholders 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 Securities Act), an earnings statement of the Company and its
subsidiaries
12
(which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the
Company, Rule 158).
(f) The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Representatives may designate in writing to the Company and to
continue such qualifications in effect for so long as required for the
distribution of the Stock; provided that the Company and its subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
(g) During the period of five years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the
other Underwriters, (i) as soon as they are available, copies of all
reports or other communications furnished to shareholders and (i) as soon
as they are available, copies of any reports and financial statements
furnished or filed with the Commission pursuant to the Exchange Act or any
national securities exchange or automatic quotation system on which the
Stock is listed or quoted.
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days from the date of the Prospectus
without the prior written consent of XX Xxxxx other than the Company's
sale of the Stock hereunder, provided, however, that the Company may issue
shares of the Common Stock or options to purchase the Common Stock, or
Common Stock upon the exercise of outstanding warrants or options as
described in the Prospectus, pursuant to any stock option, stock bonus or
other stock plan or arrangement described in the Prospectus (not to exceed
the shares available for issuance or grant under such plans or
arrangements as set forth in the Prospectus), but in the case of newly
issued warrants or options, only if the holders of such warrants, options
or shares issued upon exercise of such newly-issued options or warrants
agree or have agreed in writing not to directly or indirectly offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of any
shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock during such 180-day period without the prior
written consent of XX Xxxxx. The Company will cause each officer, director
and shareholder to furnish to the Representatives, prior to the First
Closing Date, a letter, substantially in the form of Exhibit I hereto,
pursuant to which each such person shall agree not to directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of any shares of Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock for a period of 180
days from the date of the Prospectus, without the prior written consent of
XX Xxxxx.
(i) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(j) Prior to each of the Closing Dates the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(k) Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the
13
past practices of the Company and of which the Representatives are
notified), without the prior written consent of the Representatives,
unless in the judgment of the Company and its counsel, and after
notification to the Representatives, such press release or communication
is required by law.
(l) In connection with the offering of the Stock, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as defined
in Regulation M under the Exchange Act) not to, either alone or with one
or more other persons, bid for or purchase, for any account in which it or
any of its affiliated purchasers has a beneficial interest, any Stock, or
attempt to induce any person to purchase any Stock; and not to, and to
cause its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of raising
the price of the Stock.
(m) The Company and its officers or directors will not take, and the
Company will use its best efforts to cause its affiliates not to take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(n) The Company will not take any action prior to the Option Closing
Date which would require the Prospectus to be amended or supplemented
pursuant to Section 4(I)(b).
(o) During the period of one year from the date hereof, the Company
shall at all times comply with all applicable provisions of the
Xxxxxxxx-Xxxxx Act in effect from time to time.
(p) The Company will apply the net proceeds from the sale of the Stock
as set forth in the Prospectus under the heading "Use of Proceeds". The
Company will repay all outstanding indebtedness under the ORIX Loan
Agreement not more than three (3) business days after the First Closing
Date.
(II) FURTHER AGREEMENTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder further agrees, severally and not jointly, with the several
Underwriters as follows:
(a) Such Selling Shareholder will comply in all respects with the letter
agreement substantially in the form of Exhibit I hereto and previously
delivered to the Underwriters by such Selling Shareholder.
(b) Such Selling Shareholder will not take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any
security of the Company, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price
of any security of the Company.
(c) The shares of Stock represented by the certificates held in custody
under the Custody Agreement are for the benefit of and coupled with and
subject to the interests of the Underwriters and the other Selling
Shareholders, and that the arrangement for such custody and the
appointment of the Attorneys-in-fact are irrevocable; that the obligations
of such Selling Shareholder hereunder shall not be terminated by operation
of law, whether by the death or incapacity, liquidation or distribution of
such Selling Shareholder, or any other event, that if such Selling
Shareholder should die or become incapacitated or is liquidated or
dissolved or any other event occurs, before the delivery of the Stock
hereunder, certificates for the Stock to be sold by such Selling
Shareholder shall be delivered on behalf of such Selling Shareholder in
accordance
14
with the terms and conditions of this Agreement and the Custody Agreement,
and action taken by the Attorneys-in-fact or any of them under the Power
of Attorney shall be as valid as if such death, incapacity, liquidation or
dissolution or other event had not occurred, whether or not the Custodian,
the Attorneys-in-fact or any of them shall have notice of such death,
incapacity, liquidation or dissolution or other event.
(d) Such Selling Shareholder will deliver to XX Xxxxx on or prior to the
First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Shareholder is a non-United
States person) or Form W-9 (if the Selling Shareholder is a United States
person) or such other applicable form or statement specified by Treasury
Department regulations in lieu thereof.
5. PAYMENT OF EXPENSES. The Company agrees with the Underwriter to pay (a)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Stock and any taxes payable in that connection; (b) the costs
incident to the registration of the Stock under the Securities Act; (c) the
costs incident to the preparation, printing and distribution of the Registration
Statement, Preliminary Prospectus, Prospectus and any amendments and exhibits
thereto, the costs of printing, reproducing and distributing the Power of
Attorney, the Custody Agreement, the "Agreement Among Underwriters" between the
Representatives and the Underwriters, the Master Selected Dealers' Agreement,
the Underwriters' Questionnaire and this Agreement; (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the National Association of Securities
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(I)(f) and of preparing, printing and distributing Blue Sky
Memoranda and Legal Investment Surveys (including related fees and expenses of
counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Stock; and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company's counsel
and the Company's independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 9, the Underwriters shall pay their
own costs and expenses, including the fees and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
Each Selling Shareholder will pay all fees and expenses incident to the
performance of such Selling Shareholder's obligations under this Agreement which
are not otherwise specifically provided for herein, including but not limited to
any fees and expenses of counsel for such Selling Shareholder, such Selling
Shareholder's pro rata share of fees and expenses of the Custodian and all
expenses and taxes incident to the sale and delivery of the Stock to be sold by
such Selling Shareholder to the Underwriters hereunder; provided, however, that
as between the Company and the Selling Shareholders, this Section 5 shall not
supersede, affect or modify any provisions of that certain Investors' Rights
Agreement dated November 15, 2001, relating to the payment of registration
expenses.
In no event shall the Underwriters be liable for or obligated to pay any fees,
costs or expenses that are required to be paid by the Company or any of the
Selling Shareholders under this Section 5.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the respective representations and warranties of
the Company and the Selling Shareholders contained herein, to the accuracy of
the respective statements of the Company and the Selling Shareholders made in
any certificates pursuant to the provisions hereof, to the performance by the
Company and the Selling Shareholders of their respective obligations hereunder,
and to each of the following additional terms and conditions:
15
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the Commission, and any request for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives. The
Rule 462(b) Registration Statement, if any, and the Prospectus shall have
been timely filed with the Commission in accordance with Section 4(I)(a).
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters,
is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Custody
Agreements, the Powers of Attorney, the Stock, the Registration Statement
and the Prospectus and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the Underwriters, and the Company
and the Selling Shareholders shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Xxxxxx Xxxxxx White & XxXxxxxxx LLP shall have furnished to the
Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Washington and
has all corporate power and authority necessary to own or hold
its properties and to conduct its business as described in the
Registration Statement, except where the failure to have such
power or authority would not have, singularly or in the
aggregate, a Material Adverse Effect. The Company is duly
qualified as a foreign corporation and is in good standing
under the laws of the State of North Carolina.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock
of the Company have been duly authorized and validly issued,
are non-assessable and, to such counsel's knowledge, fully
paid. Such shares conform to the description thereof contained
under the heading "Description of Securities" in the
Prospectus. None of the outstanding shares of capital stock of
the Company was issued in violation of any preemptive or other
similar rights of any security holder of the Company set forth
in the Company's charter or by-laws or any agreement or other
instrument known to such counsel (although such counsel need
not express any opinion as to the authority of any parties
waiving or purporting to waive such rights).
(iii) The Company Stock being delivered on the Closing Date has been
duly authorized and, when issued and delivered to and paid for
by the Underwriters in accordance with this Agreement, will be
validly issued, fully paid and non-assessable and will conform
to the description thereof contained under the heading
"Description of Securities" in the Prospectus.
16
(iv) There are no preemptive or other rights to subscribe for or
to purchase from the Company any shares of the Company Stock
pursuant to the Company's Restated Certificate of
Incorporation, Restated Bylaws or the corporate law of the
state of Washington or, to such counsel's knowledge,
contractual preemptive rights, except for such rights and/or
restrictions that have been waived (although such counsel
need not express any opinion as to the authority of any
parties waiving or purporting to waive such rights).
(v) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement
enforceable against the Company in accordance with its terms
except as rights to indemnification hereunder may be limited
by applicable law and except as enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(vi) The execution and delivery of this Agreement by the Company
and the sale of the Company Stock to the Underwriters
contemplated hereby will not result in (A) a breach of any of
the terms or provisions of, or constitute a default under,
any agreement or instrument that is an exhibit to the
Registration Statement, (B) any violation of the Restated
Articles of Incorporation or Restated Bylaws of the Company,
(C) any violation of any federal or Washington state law,
regulation or rule that such counsel has, in the exercise of
customary professional diligence, recognized as applicable to
a transaction of the type contemplated by the Agreement
(although such counsel need not express any opinion regarding
federal securities laws other than the Securities Act, any
Blue Sky or state securities laws, or as to compliance with
any federal or state antifraud statutes, rules or
regulations, other than as expressly set forth in the last
paragraph of this Section 6(d)), or (D) any violation of any
decree, judgment or order applicable to the Company and of
which such counsel is aware.
(vii) Except for the registration of the Company Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state securities or blue sky laws
in connection with the purchase and distribution of the
Company Stock by the Underwriters (except that such counsel
need not express any opinion as to any necessary
qualification under state securities or blue sky laws of the
various jurisdictions in which the Company Stock is being
offered by the Underwriters), no consent, approval,
authorization or order of, or filing or registration with,
any federal, Washington state governmental or regulatory
agency or body is required in connection with the execution
and delivery of the Agreement by the Company and the sale of
the Company Stock to the Underwriters as contemplated
thereby.
(viii) The statements (A) in the Prospectus under the headings
"Related Party Transactions," "Description of Capital Stock,"
"Shares Eligible for Future Sale," "U.S. Federal Tax
Considerations for Non-U.S. Holders," "Business - Government
Regulation," "Management - Benefit Plans" and "Risk Factors -
Anti-takeover provisions under our charter documents and
Washington law could delay or prevent a change of control and
could also limit the market price of our stock," and (B) in
the Registration Statement, Part II, Items 14 and 15, to the
extent that such descriptions or statements constitute
summaries of matters of law
17
or regulation, or documents referred to therein, fairly
summarize the matters of law and documents described therein
in all material respects.
(ix) To such counsel's knowledge, there are no contracts,
licenses, agreements or leases of a character which are
required to be filed as exhibits to the Registration
Statement which have not been so filed as required.
(x) To such counsel's knowledge, the Company is not in (1)
violation of its charter or bylaws, (2) violation of any
decree, judgment or order applicable to the Company, or (3)
breach of, or, in default under, any provision of any
agreement or instrument which is an exhibit to the
Registration Statement.
(xi) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the
Company is a party or of which any property or asset of the
Company is the subject which are required to be described in
the Prospectus but are not so described or which prevent or
adversely affect the ability of the Company to issue and sell
the Company Stock as contemplated under this Agreement.
(xii) The Registration Statement (including all post-effective
amendments, if any) has become effective under the Securities
Act, any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424, and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued and, to such counsel's knowledge,
no proceeding for that purpose is pending or has been
threatened by the Commission.
(xiii) The Registration Statement, as of its effective date, and the
Prospectus, as of its date, and any further amendments or
supplements thereto made by the Company prior to the Closing
Date, as of their respective dates (other than the financial
statements and other financial data contained therein, as to
which such counsel need not express an opinion) complied as
to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations.
(xiv) To such counsel's knowledge, except as described in the
Prospectus, no person or entity has the right to require the
Company to register shares of Common Stock or other
securities of the Company because of the filing or
effectiveness of the Registration Statement, except for
persons and entities who have expressly waived such right or
who have been given proper notice and have failed to exercise
such right within the time or times required under the terms
and conditions of such right (although such counsel need not
express any opinion as to the authority of any parties
waiving or purporting to waive such rights).
(xv) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable
statutory requirements and with any applicable requirements
of the charter and by-laws of the Company.
(xvi) The Company is not an "investment company" within the meaning
of the Investment Company Act and the rules and regulations
of the Commission thereunder.
18
Such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated the Closing
Date, in form and substance satisfactory to the Representatives, to the
effect that, in connection with the registration of the Company Stock, (x)
such counsel has acted as counsel to the Company and in furtherance
thereof participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at
which the contents of the Registration Statement and Prospectus were
discussed and (y) based upon such counsel's participation as described in
this paragraph and such counsel's review of the Registration Statement and
the Prospectus, no facts have come to such counsel's attention that cause
such counsel to believe that the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment thereto
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 that the
Prospectus or any supplement thereto, at the date of such Prospectus or
such supplement, and at all times up to the date of such counsel's opinion
letter, 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, in light of the circumstances under which they
were made, not misleading; it being understood that such counsel need
express no opinion with respect to the financial statements and other
financial data contained in the Registration Statement or Prospectus.
The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel has not independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and takes no responsibility
therefor except to the extent set forth in the opinion described in
clauses (ii), (iii) and (viii) above.
(e) The respective counsel for each of the Selling Shareholders, as
indicated in Schedule D hereto, each shall have furnished to the
Representatives such counsel's written opinion with respect to each of the
Selling Shareholders for whom they are acting as counsel, addressed to the
Underwriters and dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, substantially to the effect that:
(i) Each Selling Shareholder has full right, power and authority
to enter into this Agreement, the Power of Attorney and the
Custody Agreement; the execution, delivery and performance of
this Agreement, the Power of Attorney and the Custody
Agreement by each Selling Shareholder and the consummation by
each Selling Shareholder of the transactions contemplated
hereby and thereby 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, partnership agreement, operating
agreement or other agreement or instrument known to such
counsel, in each case, to which such Selling Shareholder is a
party or by which such Selling Shareholder is bound or to
which any of the property or assets of such Selling
Shareholder is subject and that is material to such Selling
Shareholder or to such Selling Shareholder's ability to enter
into and perform its obligations under this Agreement, the
Power of Attorney and the Custody Agreement, (ii) result, if
such Selling Shareholder is an entity, in any violation of the
provisions of the charter or by-laws of any Selling
Shareholder, the articles or certificate of incorporation,
partnership or formation of any Selling Shareholder or the
deed of trust of any Selling Shareholder, as applicable, or
(iii) result in any violation of any statute or any order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over any
Selling Shareholder or the property or assets of any Selling
Shareholder; and, except for the registration of the Stock to
be sold by the
19
Selling Shareholders under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or
body is required for the execution, delivery and performance
of this Agreement, the Power of Attorney or the Custody
Agreement by any Selling Shareholder and the consummation by
any Selling Shareholder of the transactions contemplated
hereby and thereby.
(ii) Each of this Agreement, the Custody Agreement and the
Power-of-Attorney has been duly authorized (if the Selling
Shareholder is a corporation, partnership, limited liability
company or other entity), executed and delivered by or on
behalf of each Selling Shareholder. Each of the Custody
Agreement, the Power-of-Attorney and Section 3 of this
Agreement (to the extent the provisions of such Section 3
relate to the over-allotment option) constitutes a valid and
binding obligation of each Selling Shareholder, enforceable in
accordance with its terms except as enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(iii) Upon payment for and delivery to the Underwriters in New York
of the Selling Shareholders' Stock to be sold by each Selling
Shareholder in accordance with the Agreement, assuming each of
the Underwriters is acquiring the Stock sold by the Selling
Shareholder without notice of any adverse claim, no action
based on an adverse claim such shares of Stock may
successfully be asserted against the Underwriters under the
Uniform Commercial Code in effect in the State of New York.
(f) The Representatives shall have received from O'Melveny & Xxxxx LLP,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to such matters as the Underwriters may reasonably
require, and the Company and the Selling Shareholders shall have furnished
to such counsel such documents as they request for enabling them to pass
upon such matters.
(g) At the time of the execution of this Agreement, the Representatives
shall have received from Deloitte & Touche, LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to
the Representatives (i) confirming that they are an independent registered
public accounting firm with respect to the Company and its subsidiaries
within the meaning of the Securities Act and the Rules and Regulations and
(ii) stating the conclusions and findings of such firm with respect to the
financial statements and certain financial information contained in the
Prospectus.
(h) On the Closing Date, the Representatives shall have received a
letter (the "bring-down letter") from Deloitte & Touche, LLP addressed to
the Underwriters and dated the Closing Date confirming, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus as of a date not more than three
business days prior to the date of the bring-down letter), the conclusions
and findings of such firm with respect to the financial information and
other matters covered by its letter delivered to the Representatives
concurrently with the execution of this Agreement pursuant to Section
6(g).
20
(i) The Company shall have furnished to the Representatives a
certificate, dated the Closing Date, of its Chief Executive Officer and
President and its Vice President, Finance stating that (i) such officers
have carefully examined the Registration Statement and the Prospectus and,
in their opinion, the Registration Statement, at the time such
Registration Statement became effective, did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Prospectus, at the date of such Prospectus, did
not include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading, (ii) since the effective date of the Registration
Statement no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the Prospectus,
(iii) to the best of their knowledge after reasonable investigation, as of
the Closing Date, the representations and warranties of the Company in
this Agreement are true and correct and the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and (iv) subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no change in the financial position or results of operation
of the Company and its subsidiaries, or any change, or any development
including a prospective change, in each of the instances in this clause
(iv) that might have a Material Adverse Effect, except as set forth in the
Prospectus.
(j) Each Selling Shareholder, or an Attorney-in-fact on behalf of such
Selling Shareholder, shall have furnished to the Representatives on the
Closing Date a certificate, dated such date, signed by, or on behalf of,
the Selling Shareholder stating that the representations, warranties and
agreements of the Selling Shareholder contained herein are true and
correct as of the Closing Date and that the Selling Shareholder has
complied with all agreements contained herein to be performed by the
Selling Shareholder at or prior to the Closing Date.
(k) (i) Neither the Company nor any of its subsidiaries 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 or (ii) since such date there shall not have been any change in
the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in
clause (i) or (ii), is, in the judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed
with the sale or delivery of the Stock on the terms and in the manner
contemplated in the Prospectus.
(l) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Stock; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance
or sale of the Stock.
(m) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the Company's corporate credit rating
or 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) of the Rules and Regulations
and (ii) no such organization shall have publicly announced that it has
under surveillance or review (other
21
than an announcement with positive implications of a possible upgrading),
its rating of any of the Company's debt securities.
(n) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on The New York Stock Exchange or the The Nasdaq Stock Market or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum range for prices shall
have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, (iii) (A) the United States shall
have become engaged in hostilities, or been the subject of an act of
terrorism, or there shall have been an escalation in hostilities involving
the United States, or there shall have been a declaration of a national
emergency or war by the United States, (B) a "Red" terrorist threat
condition, announced by the Homeland Security Advisory System or similar
agency in the United States, or (C) any detonation, explosion, discharge
or use against any person or entity or nation anywhere in the world of any
weapon of mass destruction has occurred, or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of the Representatives, impracticable or inadvisable to proceed with the
sale or delivery of the Stock on the terms and in the manner contemplated
in the Prospectus.
(o) The NasdaqNM shall have approved the Stock for listing, subject only
to official notice of issuance and evidence of satisfactory distribution.
(p) XX Xxxxx shall have received the written agreements, substantially
in the form of Exhibit I hereto, of the officers, directors and
shareholders of the Company.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers, employees, representatives and agents and each person, if any,
who controls any Underwriter within the meaning of the Securities Act
(collectively the "Underwriter Indemnified Parties" and each, an
"Underwriter Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which
that Underwriter Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto, (ii) the omission or alleged omission
to state in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto a material fact
required to be stated therein or necessary to make the statements therein
not misleading or (iii) any act or failure to act, or any alleged act or
failure to act, by any Underwriter in connection with, or relating in any
manner to, the Stock or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability
or action arising out of or based upon matters covered by clause (i) or
(ii) above, (provided that the Company shall not be liable in the case of
any matter covered by this
22
clause (iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage, liability
or action resulted directly from any such act or failure to act undertaken
or omitted to be taken by such Underwriter through its gross negligence or
willful misconduct) and shall reimburse each Underwriter Indemnified Party
promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter Indemnified Party in connection with investigating or
preparing to defend or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged
omission from the Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company
through the Representatives by or on behalf of any Underwriter
specifically for use therein, which information the parties hereto agree
is limited to the Underwriter's Information (as defined in Section 16);
provided further, however, that the foregoing indemnification agreement
with respect to the Preliminary Prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such loss, claim,
damage or liability purchases Stock, or any officers, employees,
representatives, agents or controlling persons of such Underwriter, if (i)
a copy of the Prospectus (as then amended or supplemented) was required by
law to be delivered to such person at or prior to the written confirmation
of the sale of Stock to such person, (ii) a copy of the Prospectus (as
then amended or supplemented) was not sent or given to such person by or
on behalf of such Underwriter and such failure was not due to
non-compliance by the Company with Section 4(I)(d), and (iii) the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to
each Underwriter Indemnified Party.
(b) Each Selling Shareholder, severally and not jointly, shall indemnify
and hold harmless each Underwriter Indemnified Party, against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof, to which that Underwriter Indemnified may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Selling
Shareholders specifically for inclusion therein, and shall reimburse each
Underwriter Indemnified Party for any legal or other expenses reasonably
incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as
a third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the foregoing indemnification agreement with respect to the Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such loss, claim, damage or liability purchased
Stock, or any officers, employees, representatives, agents or controlling
persons of such Underwriter, (A) if (i) a copy of the Prospectus (as then
amended or supplemented) was required by law to be delivered to such
person at or prior to the written confirmation of the sale of Stock to
such person, (ii) a copy of the Prospectus (as then amended or
supplemented) was not sent or given to such person by or on
23
behalf of such Underwriter and such failure was not due to non-compliance
by the Company with Section 4(I)(d), and (iii) the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability or (B) 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 the Preliminary Prospectus, either of the Registration Statements or
the Prospectus or any amendment or supplement in reliance upon and in
conformity with the Underwriters' Information (as defined in Section 16);
provided further, however, that the liability of any Selling Shareholder
under this subsection (b) shall not exceed the amount of proceeds received
by such Selling Shareholder from the sale of such Selling Shareholder's
Stock hereunder net of applicable underwriting discounts and commissions.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Selling Shareholders might otherwise have and shall
not limit any rights or remedies which may otherwise be available at law
or in equity to each Underwriter Indemnified Party.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company its officers, employees, representatives and
agents, each of its directors and each person, if any, who controls the
Company within the meaning of the Securities Act (collectively the
"Company Indemnified Parties" and each a "Company Indemnified Party") and
the Selling Shareholders, their respective officers, employees,
representatives and agents and each person, if any, who controls the
Selling Shareholders within the meaning of the Securities Act
(collectively, the "Selling Shareholder Indemnified Parties" and each a
"Selling Shareholder Indemnified Party"), against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, to which
the Company Indemnified Parties or the Selling Shareholder Indemnified
Parties may become subject, under the Securities Act or otherwise, insofar
as such loss, claim, damage, liability or action arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Prospectus, the Registration Statement
or the Prospectus or in any amendment or supplement thereto or (ii) 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, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for use therein, and shall reimburse the Company Indemnified
Parties and the Selling Shareholder Indemnified Parties for any legal or
other expenses reasonably incurred by such parties in connection with
investigating or preparing to defend or defending against or appearing as
third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided that the
parties hereto hereby agree that such written information provided by the
Underwriters consists solely of the Underwriters' Information (as defined
in Section 16). This indemnity agreement is not exclusive and will be in
addition to any liability which the Underwriters might otherwise have and
shall not limit any rights or remedies which may otherwise be available at
law or in equity to the Company Indemnified Parties and the Selling
Shareholder Indemnified Parties.
(d) Promptly after receipt by an indemnified party under this Section 7
of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7
except to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it
24
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party and in the reasonable judgment of such counsel
it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense
of the indemnifying party, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for
all such indemnified parties, which firm shall be designated in writing by
XX Xxxxx, if the indemnified parties under this Section 7 consist of any
Underwriter Indemnified Party, or by the Company if the indemnified
parties under this Section 7 consist of any Company Indemnified Parties or
Selling Shareholder Indemnified Parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 7(a), 7(b) and
7(c), shall use all reasonable efforts to cooperate with the indemnifying
party in the defense of any such action or claim. Subject to the
provisions of Section 7(e) below, no indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without
its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the request for
reimbursement, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(f) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section 7(a),
7(b) or 7(c), then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other from the
offering of the Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the
Selling
25
Shareholders on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Shareholders and the Underwriters with respect to
such offering shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Stock purchased under
this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Shareholders
on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission;
provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of
the Underwriters for use in any Preliminary Prospectus, the Registration
Statement or the Prospectus consists solely of the Underwriters'
Information. The Company and the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contributions pursuant to
this Section 7(f) were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7(f) shall be
deemed to include, for purposes of this Section 7(f), 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 7(f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Stock underwritten by it and distributed to the public were
offered to the public less the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7(f), no Selling
Shareholder shall be required to contribute any amount in excess of the
proceeds received by such Selling Shareholder (net of applicable
underwriting discounts and commissions) in connection with the sale of
such Selling Shareholder's Stock, after giving effect to any
indemnification payment by such Selling Shareholder under Section 7(b)
hereof. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The Underwriters' obligations to contribute as provided in this Section
7(f) are several in proportion to their respective underwriting obligations and
not joint. Each Selling Shareholder's obligation to contribute as provided in
this Section 7(f) is several in proportion to the respective number of shares of
Stock to be sold by such Selling Shareholder.
8. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by XX Xxxxx, in its absolute discretion by notice given to and
received by the Company and the Selling Shareholders prior to delivery of and
payment for the Firm Stock if, prior to that time, any of the events described
in Sections 6(k), 6(m) or 6(n) have occurred or if the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8 or 10, (b) the Company fails to tender any
of the Company Firm Stock or Optional Stock for delivery to the Underwriters for
any reason not permitted under this Agreement, (c) the Selling Shareholders
collectively fail to tender all of the Selling Shareholder Stock for delivery to
the
26
Underwriters for any reason not permitted under this Agreement or (d) the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement, the Company shall reimburse the Underwriters for the fees and
expenses of their counsel and for such other out-of-pocket expenses as shall
have been reasonably incurred by them in connection with this Agreement and the
proposed purchase of the Stock, consistent with Section 5, and upon demand the
Company shall pay the full amount thereof to XX Xxxxx; provided, however, that
if this Agreement is terminated pursuant to subsection (c) above, no Selling
Shareholder shall be required to reimburse the Underwriters for fees and
expenses unless such Selling Shareholder has failed to tender the Stock for
delivery to the Underwriters for any reason permitted under this Agreement and
the other Selling Shareholders have not tendered additional shares of its Common
Stock to cover such shortage. If this Agreement is terminated pursuant to
Section 8 or 10 by reason of the default of one or more Underwriters, neither
the Company nor any Selling Shareholder shall be obligated to reimburse any
defaulting Underwriter on account of those expenses.; provided, however, that
the foregoing shall not limit any reimbursement obligation of the Company to any
non-defaulting Underwriter under this Section 9.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares of Stock underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares of Stock which such defaulting Underwriter or Underwriters
agreed but failed to purchase. If any Underwriter or Underwriters shall so
default and the aggregate number of shares with respect to which such default or
defaults occur is more than ten percent (10%) of the total number of shares of
Stock underwritten and arrangements satisfactory to the Representatives and the
Company for the purchase of such shares by other persons are not made within
forty-eight (48) hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company and
the Selling Shareholders shall have the right to postpone the applicable Closing
Date for a period of not more than five (5) full business days in order that the
Company and the Selling Shareholders may 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 promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of shares to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Company, the Selling Shareholders or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
any non-defaulting Underwriter, the Selling Shareholders or the Company, except
expenses to be paid or reimbursed pursuant to Sections 5 and 9 and except the
provisions of Section 7 shall not terminate and shall remain in effect.
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and the Selling Shareholders and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the persons mentioned in the preceding sentence any
legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Company and the Selling Shareholders contained in this Agreement shall also be
for the benefit of the Underwriter Indemnified Parties, and the indemnities of
the several Underwriters shall also be for the benefit of the Company
27
Indemnified Parties and the Selling Shareholder Indemnified Parties. It is
understood that the Underwriter's responsibility to the Company is solely
contractual in nature and the Underwriters do not owe the Company, or any other
party, any fiduciary duty as a result of this Agreement.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company, the Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Shareholders, the Company or any person controlling any of them and shall
survive delivery of and payment for the Stock.
13. NOTICES. All statements, requests, notices and agreements hereunder shall
be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to XX Xxxxx & Co., LLC Attention: [ ] (Fax: 212-[
]);
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Celebrate Express, Inc. Attention: Xxxxxxx X.
Xxxxxx (Fax: 000-0000);
(c) if to any of the Selling Shareholders, shall be delivered or sent by
mail, telex or facsimile transmission to such Selling Shareholder at the
address set forth on Schedule B hereto; provided, however, that any notice
to an Underwriter pursuant to Section 7 shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address
set forth in its acceptance telex to the Representatives, which address
will be supplied to any other party hereto by the Representatives upon
request. Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof.
Any party to this Agreement may change its address for notice by sending
to the other parties to this Agreement written notice of a new address for such
purpose.
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. UNDERWRITERS' INFORMATION. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters,
(ii) the table of underwriters participating in the offering in the first
paragraph of the heading "Underwriting," and (iii) the statements concerning the
Underwriters contained in the third paragraph under the heading "Underwriting"
(which paragraph begins "The underwriters propose to offer the shares . . .").
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters; and any action taken under this Agreement by any of the
Attorneys-in-Fact will be binding on all the Selling Shareholders.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph
28
or provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders and the
Representatives.
20. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
Any person executing and delivering this Agreement as Attorney-in-Fact for the
Selling Shareholders represents by so doing that he or she has been duly
appointed as Attorney-in-Fact by such Selling Shareholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact to
take such action.
[Signature Page Follows]
29
If the foregoing is in accordance with your understanding of the agreement
among the Company, the Selling Shareholders and the several Underwriters, kindly
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
CELEBRATE EXPRESS, INC.
By: ____________________________
Name:
Title:
SELLING SHAREHOLDERS LISTED
IN SCHEDULE B
By: [Attorney-in-fact]
By:______________________________
[Attorney-in-fact]
Acting [on [his] [her] [their] own behalf and]on
behalf of the Selling Shareholders listed in
Schedule B.
Accepted as of
the date first above written:
XX XXXXX & CO., LLC
CIBC WORLD MARKETS CORP.
PACIFIC CREST SECURITIES INC.
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the
foregoing Agreement.
By: XX XXXXX & CO., LLC
By: ______________________________
Name:
Title:
30
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
---- ---------- ----------
XX Xxxxx & Co., LLC
---------- ----------
CIBC World Markets Corp.
---------- ----------
Pacific Crest Securities Inc.
---------- ----------
Total
========== ==========
31
SCHEDULE B
Number of Number of
Firm Optional
Shares to Shares to
Selling Shareholders be Sold be Sold
-------------------- ---------- ----------
[Name and address]
---------- ----------
Total
========== ==========
32
SCHEDULE C
TRANSACTIONS SINCE AUGUST 31, 2004
33
SCHEDULE D
SELLING SHAREHOLDER COUNSEL
34
EXHIBIT I
[Form of Lock-Up Agreement]
[Date]
XX Xxxxx & Co., LLC
CIBC World Markets Corp.
Pacific Crest Securities, Inc.
As Representatives of the
several Underwriters
c/o XX Xxxxx & Co., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Celebrate Express, Inc. -- Shares of Common Stock
Ladies and Gentlemen:
In order to induce XX Xxxxx & Co., LLC ("XX Xxxxx"), CIBC World Markets
Corp. and Pacific Crest Securities, Inc. (collectively with XX Xxxxx, the
"Representatives"), to enter into a certain underwriting agreement with
Celebrate Express, Inc., a Washington corporation (the "Company"), with respect
to the initial public offering (the "Offering") of shares of the Company's
Common Stock, par value $0.001 per share ("Common Stock"), the undersigned
hereby agrees that for a period of 180 days following the date of the final
prospectus filed by the Company with the Securities and Exchange Commission in
connection with the Offering (the "Lock-Up Period"), the undersigned will not,
without the prior written consent of XX Xxxxx, directly or indirectly, (i)
offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose
of, any shares of Common Stock (including, without limitation, Common Stock
which may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations promulgated under the Securities Exchange Act of
1934, as the same may be amended or supplemented from time to time (such shares,
the "Beneficially Owned Shares")) or securities convertible into or exercisable
or exchangeable into Common Stock, (ii) enter into any swap, hedge or similar
agreement or arrangement that transfers, in whole or in part, the economic risk
of ownership of the Beneficially Owned Shares or securities convertible into or
exercisable or exchangeable into Common Stock or (iii) engage in any short
selling of the Common Stock.
If (i) the Company issues an earnings release, or material news or a
material event relating to the Company occurs, in either case during the last 17
days of the Lock-Up Period, or (ii) prior to the expiration of the Lock-Up
Period, the Company announces that it will release earnings results during the
16-day period beginning on the last day of the Lock-Up Period, the restrictions
imposed by this letter agreement shall continue to apply until the expiration of
the 18-day period beginning on the date of issuance of the earnings release or
the occurrence of the material news or material event.
The restrictions contained in the foregoing paragraphs shall not apply to
(1) any transfer of shares of Common Stock or any security convertible into
Common Stock (a) as a bona fide gift or gifts, (b) to any trust for the benefit
of the undersigned or the undersigned's immediate family, (c) by will or
intestacy to the undersigned's legal representative, heir or legatee, or (d) if
the undersigned is a partnership or corporation or similar entity, as a
distribution to partners or stockholders of the undersigned; provided that each
donee, transferee or distributee shall execute and deliver to XX Xxxxx a
duplicate form of this
35
letter agreeing to be bound by the same restrictions; or (2) any sale of shares
of Common Stock in the Offering pursuant to the underwriting agreement.
In addition, the undersigned hereby waives any and all notice requirements
and rights to request or demand registration pursuant to the Securities Act of
1933, as amended, pursuant to any agreement, understanding or otherwise,
including any registration rights agreement to which the undersigned and the
Company may be party, of any shares of Common Stock that are registered in the
name of the undersigned or that are Beneficially Owned Shares, such waiver to be
effective with respect to the period from the date hereof until the expiration
of the Lock-Up Period. The undersigned hereby agrees that, to the extent that
the terms of this letter agreement conflict with or are in any way inconsistent
with any agreement, understanding or otherwise to which the undersigned and the
Company may be a party, this letter agreement supersedes such agreement or
understanding.
Anything contained herein to the contrary notwithstanding, any person to
whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this letter agreement, other than
persons to whom shares are sold in the Offering pursuant to the underwriting
agreement.
In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
Company's transfer agent with respect to any of the undersigned's shares of
Common Stock or Beneficially Owned Shares.
Notwithstanding anything herein to the contrary, if the closing of the
Offering has not occurred prior to January 30, 2005, this letter agreement shall
be of no further force or effect.
[Signatory]
By: _______________________________
Name:
Title:
36
