EXHIBIT 1.1
CHEAP TICKETS, INC.
5,000,000 Shares Common Stock/1/
Underwriting Agreement
August ____, 1999
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxx Xxxxxxxx Xxxxxxx
CIBC World Markets Corp.
Xxxxx Xxxxx Xxxxxx & Company, LLC
As Representatives of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Section 1. Introductory. Cheap Tickets, Inc., a Delaware corporation
("Company"), has an authorized capital stock consisting of 10,000,000 shares of
Preferred Stock, par value $0.01 per share, none of which were outstanding as of
August ____, 1999 and 70,000,000 shares of Common Stock, par value $0.001 per
share ("Common Stock"), of which [21,483,171] shares were outstanding as of such
date. The Company proposes to issue and sell an aggregate of 2,500,000 shares of
its authorized but unissued Common Stock, and certain stockholders of the
Company (collectively referred to as the "Selling Stockholders" and named in
Schedule B) propose to sell 2,479,000 shares of the Company's issued and
outstanding Common Stock, and 21,000 shares of the Company's Common Stock that
will be issued to certain Selling Stockholders on the First Closing Date (as
hereinafter defined) upon exercise of currently outstanding options, to the
several underwriters named in Schedule A as it may be amended by the Pricing
Agreement hereinafter defined ("Underwriters"), who are acting severally and not
jointly. Collectively, such total of 5,000,000 shares of Common Stock proposed
to be sold by the Company and the Selling Stockholders is hereinafter referred
to as the "Firm Shares." In addition, certain of the Selling Stockholders,
namely Xxxxxxxx-Xxxxx Specialty Retail Group III, L.P., the Xxxxxxx X. Xxxxxxx
Revocable Trust, as amended, and the Xxxxxx Xxxxxx Xxxxxxx Revocable Trust, as
amended, propose to grant to the Underwriters an option to purchase up to an
aggregate of 750,000 additional shares of Common Stock ("Option Shares") as
provided in Section 5 hereof. The Firm Shares and, to the extent such option is
exercised, the Option Shares, are hereinafter collectively referred to as the
"Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon as you
___________________
/1/ Plus an option to acquire up to 750,000 additional shares from certain of
the Selling Stockholders to cover over-allotments.
deem advisable after the registration statement hereinafter referred to becomes
effective, if it has not yet become effective, and the Pricing Agreement
hereinafter defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, the Selling Stockholders and the Representatives,
acting on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Company, the Selling Stockholders and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this
Agreement, as supplemented by the Pricing Agreement. From and after the date of
the execution and delivery of the Pricing Agreement, this Agreement shall be
deemed to incorporate the Pricing Agreement.
The registration statement referred to in Section 2(a) below (as amended,
if applicable) at the time it becomes effective and the prospectus constituting
a part thereof (including the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) and/or Rule 434), as from time to time amended or
supplemented, are hereinafter referred to as the "Registration Statement," and
the "Prospectus," respectively, except that if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Shares which differs from the Prospectus on file at the
Commission at the time the Registration Statement became or becomes effective
(whether or not such revised prospectus is required to be filed by the Company
pursuant to Rule 424(b)), the term Prospectus shall refer to such revised
prospectus from and after the time it was provided to the Underwriters for such
use. If the Company elects to rely on Rule 434 of the 1933 Act, all references
to "Prospectus" shall be deemed to include, without limitation, the form of
prospectus and the term sheet, taken together, provided to the Underwriters by
the Company in accordance with Rule 434 of the 1933 Act ("Rule 434 Prospectus").
Any registration statement (including any amendment or supplement thereto or
information which is deemed part thereof) filed by the Company under Rule 462(b)
("Rule 462(b) Registration Statement") shall be deemed to be part of the
"Registration Statement" as defined herein, and any prospectus (including any
amendment or supplement thereto or information which is deemed part thereof)
included in such registration statement shall be deemed to be part of the
"Prospectus," as defined herein, as appropriate. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."
When used herein, "best knowledge" or "knowledge" of a person or entity or
"to the best of such counsel's knowledge" means actual knowledge of such person,
entity or counsel after due inquiry and investigation. For purposes of this
Agreement, the knowledge of Xxxxxxx X. Xxxxxxx is imputed to the Xxxxxxx X.
Xxxxxxx Revocable Trust, as amended and the Xxxxxxx Family Unitrust, the
knowledge of Xxxxxx X. Xxxxxxx is imputed to the Xxxxxx Xxxxxx Xxxxxxx Trust, as
amended and the Xxxxxxx Family Unitrust, and the knowledge of Xxxxxx X. Xxxxxxxx
and Xxxx Xxxxx is imputed to Xxxxxxxx-Xxxxx Specialty Retail Group III, L.P.
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The Company and each of the Selling Stockholders hereby confirm their
agreements with the Underwriters as follows:
Section 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that, except as disclosed in
the Registration Statement or the Prospectus, as the case may be:
(a) A registration statement on Form S-1 (File No. 333-84323) and a
related preliminary prospectus with respect to the Shares have been
prepared and filed with the Securities and Exchange Commission
("Commission") by the Company in conformity with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "1933 Act;" unless indicated to
the contrary, all references herein to specific rules are rules promulgated
under the 0000 Xxx); and the Company has so prepared and has filed such
amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof and will file such additional
amendments thereto and such amended prospectuses as may hereafter be
required. There have been or will promptly be delivered to you three
signed copies of such registration statement and amendments, three copies
of each exhibit filed therewith, and conformed copies of such registration
statement and amendments (but without exhibits) and of the related
preliminary prospectus or prospectuses and final forms of prospectus for
each of the Underwriters.
(b) The Company does not have any subsidiaries as defined in Rule
1.02 of Regulation S-X.
(c) The Company has not received any order of the Commission
preventing or suspending the use of any preliminary prospectus, and has not
received any notice that proceedings for that purpose are pending or
contemplated by the Commission, and each preliminary prospectus has
conformed in all material respects with the requirements of the 1933 Act
and, as of its date, has not included any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein not misleading; and when the Registration Statement became or
becomes effective, and at all times subsequent thereto, up to the First
Closing Date or the Second Closing Date hereinafter defined, as the case
may be, the Registration Statement, including the information deemed to be
part of the Registration Statement at the time of effectiveness pursuant to
Rule 430A(b), if applicable, and the Prospectus and any amendments or
supplements thereto, contained or will contain all statements that are
required to be stated therein in accordance with the 1933 Act and in all
material respects conformed or will in all material respects conform to the
requirements of the 1933 Act, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company
makes no representation or warranty as to information contained in or
omitted from any preliminary prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for use
in the preparation thereof.
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(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its place of
incorporation, with the corporate power and authority to own its properties
and conduct its business as described in the Prospectus; the Company is
duly qualified to do business as a foreign corporation under the
corporation law of, and is in good standing as such in, each jurisdiction
in which it owns or leases properties, has an office, or in which business
is conducted and such qualification is required except in any such case
where the failure to so qualify or be in good standing would not have a
material adverse effect upon the condition (financial or otherwise),
business, assets, results of operations or prospects of the Company or upon
the Company's ability to perform its obligations under this Agreement or
the transactions contemplated hereby (a "Material Adverse Effect"); and no
proceeding of which the Company has knowledge has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.
(e) As of the date of this Agreement, except with respect to the
exercise of any vested stock options, the Company has an authorized and
outstanding capitalization as described under the caption "Capitalization"
in the Prospectus. The issued and outstanding shares of capital stock of
the Company as set forth in the Prospectus have been duly authorized and
validly issued, are fully paid and nonassessable, and conform in all
material respects to the description thereof contained in the Prospectus;
and there is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of, any
share of capital stock of the Company; and there is outstanding no security
or other instrument that by its terms is convertible into or exchangeable
for capital stock of the Company, and there is no commitment, plan or
arrangement to issue such a security or instrument.
(f) The Shares to be sold by the Company have been duly authorized
and when issued, delivered and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and will conform in all
material respects to the description thereof contained in the Prospectus.
(g) The making and performance by the Company of this Agreement and
the Pricing Agreement have been duly authorized by all necessary corporate
action and will not violate any provision of the Company's charter or
bylaws and will not result in the breach, or be in contravention, of any
provision of any material agreement, franchise, License (as hereinafter
defined), indenture, mortgage, deed of trust, or other instrument to which
the Company is a party or by which the Company or its property may be bound
or affected, or any order, rule or regulation applicable to the Company of
any court (foreign, federal, state, local or otherwise), arbitration or
other alternative dispute forum, foreign, federal, state, local or other
government or governmental department, agency, board, commission, bureau or
instrumentality or other regulatory authority (collectively, "Governmental
Authority") having jurisdiction over the Company or any of its properties,
or any order of any Governmental Authority entered in any proceeding to
which the Company was or is now a party or by which it is bound. No
consent, approval, authorization or other
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order of any Governmental Authority is required for the execution and
delivery of this Agreement or the Pricing Agreement or the consummation of
the transactions contemplated herein or therein, except for compliance with
the 1933 Act and state or province securities laws applicable to the public
offering of the Shares by the several Underwriters and clearance of such
offering with the National Association of Securities Dealers, Inc.
("NASD"). This Agreement has been duly executed and delivered by the
Company.
(h) The accountants who have expressed their opinions with respect to
the financial statements and schedules included in the Registration
Statement are independent accountants as required by the 1933 Act.
(i) The financial statements and schedules of the Company included in
the Registration Statement, including the notes thereto, present fairly the
financial position of the Company as of the respective dates of such
financial statements, and the results of operations and cash flows of the
Company for the respective periods covered thereby, all in conformity with
generally accepted accounting principles consistently applied throughout
the periods involved; and the financial information set forth in the
Prospectus under the captions "Summary Financial and Operating Data" and
"Selected Financial and Operating Data" presents fairly on the basis stated
in the Prospectus, the information set forth therein.
(j) The Company is not in violation of its charter or bylaws or in
default under any consent decree, order, writ, judgment, award or
injunction of any Governmental Authority, or in default with respect to any
material provision of any lease, loan agreement, note, franchise, License
(as hereinafter defined), permit or other contract obligation to which it
is a party; and there does not exist any state of facts which constitutes
an event of default as defined in such documents or which, with notice or
lapse of time or both, would constitute such an event of default, in each
case, except for defaults which neither singly nor in the aggregate are
material to the Company.
(k) There are no material legal or governmental proceedings pending,
or to the Company's knowledge, threatened to which the Company is or may be
a party or of which material property owned or leased by the Company is or
may be the subject, or which are related to environmental or discrimination
matters which are not disclosed in the Prospectus, or which question the
validity of this Agreement or the Pricing Agreement or any action taken or
to be taken pursuant hereto or thereto.
(l) There are no holders of securities of the Company having rights
to registration thereof in connection with this Registration Statement,
preemptive rights or rights of first refusal to purchase Common Stock from
the Company, except as disclosed in the Prospectus. All such holders of
registration rights who are not Selling Stockholders have waived such
rights with respect to the offering being made by the Prospectus.
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(m) The Company has good and marketable title to all the properties
and assets reflected as owned in the financial statements hereinabove
described (or elsewhere in the Prospectus), subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those, if any, reflected
in such financial statements (or elsewhere in the Prospectus) or which are
not material to the Company. The Company holds its leased properties which
are material to the Company under valid and binding leases.
(n) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
(o) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, the Company has not
incurred any material liabilities or obligations, direct or contingent, nor
entered into any material transactions not in the ordinary course of
business and there has not been any material adverse change in their
condition (financial or otherwise), business, assets, results of operations
or prospects nor any material change in their capital stock, short-term
debt or long-term debt. Except as disclosed in writing to the
Representatives prior to the date hereof, the Company has not received
notice (either formally or informally) of the non-renewal or anticipated
non-renewal of one or more contracts currently maintained by the Company
with any of its suppliers or customers, which non-renewal(s) would or could
be expected to have a Material Adverse Effect.
(p) There is no material document of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(q) The Company owns and possesses all right, title and interest in
and to, or has duly licensed from third parties a valid, enforceable right
to use, all patents, patent rights, trade secrets, inventions, know-how,
trademarks, trade names, copyrights, service marks and other proprietary
rights ("Trade Rights") material to the business of the Company. The
Company has not received any notice of infringement, misappropriation or
conflict from any third party as to such material Trade Rights which has
not been resolved or disposed of and the Company has not infringed,
misappropriated or otherwise conflicted with material Trade Rights of any
third parties, which infringement, misappropriation or conflict would have
a Material Adverse Effect.
(r) The conduct of the business of the Company is in compliance in
all respects with applicable foreign, federal, state, local and other laws
and regulations, except where the failure to be in compliance would not
have a Material Adverse Effect. The Company has no knowledge of, nor has
the Company received notice of, any violation or alleged violation by the
Company of any such laws or regulations.
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(s) All offers and sales of the Company's capital stock prior to the
date hereof were at all relevant times either exempt from the registration
requirements of the 1933 Act or duly registered under the 1933 Act, and
were duly registered with or the subject of an available exemption from the
registration requirements of the applicable state or province securities
laws.
(t) The Company has filed all necessary foreign, federal and state
income, franchise, value-added, sales and use and similar tax returns and
have paid all taxes shown as due thereon, and there is no tax deficiency
that has been, or to the knowledge of the Company might be, asserted
against the Company or any of its properties or assets that would or could
be expected to have a Material Adverse Effect.
(u) A registration statement relating to the Common Stock has been
declared effective by the Commission pursuant to the Exchange Act and the
Common Stock is duly registered thereunder. The Shares have been approved
for listing on the Nasdaq National Market, subject to notice of issuance or
sale of the Shares, as the case may be.
(v) The Company is not, and does not intend to conduct its businesses
in a manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act of 1940, as amended ("Investment
Company Act").
(w) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-
198, An Act Relating to Disclosure of Doing Business with Cuba, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in
the Prospectus, if any, concerning the Company's business with Cuba or with
any person or affiliate located in Cuba changes in any material way, the
Company will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(x) The Company has obtained all material licenses, permits,
certificates, authorizations, approvals or consents (collectively, the
"Licenses") required by any Governmental Authority to properly and legally
operate or conduct the business in which it is engaged on the date hereof
and which are necessary or desirable for the successful conduct of its
business as conducted and as proposed to be conducted. Each License has
been duly obtained, is valid and in full force and effect, is renewable by
its terms or in the ordinary course of business without the need to comply
with any special qualifications or procedures or to pay any amount other
than routine filing fees. The Company (i) is not subject to any pending or
threatened administrative or judicial proceeding to revoke, cancel or
declare any License granted to it invalid in any respect, (ii) is not
acting outside the scope and authority granted to
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it pursuant to any such License, and is not otherwise in default or in
violation with respect to any such License, and no event has occurred which
constitutes, or with due notice or lapse of time or both may constitute, a
default by it or a violation of, any License and (iii) has not permitted
any License granted to it to lapse since its original effective date,
except where such lapse did not have a Material Adverse Effect. The Company
has completed and submitted, on a timely basis, all reports and filings
associated with its business as are required by any Governmental Authority.
(y) The Company carries, or is covered by, insurance in such amounts
and covering such risks as is adequate for the conduct of its business and
the value of their properties and as is customary for companies engaged in
similar businesses in similar industries.
Section 3. Representations, Warranties and Covenants of the Selling
Stockholders. Each Selling Stockholder severally represents and warrants to,
and agrees with, the Company and the Underwriters as follows:
(a) Such Selling Stockholder (other than F. Xxxxxxx Xxxxxxxxxxx, in
respect of Shares to be sold by him subject to option, who as of the date
of this Agreement has good and valid title to the option exercisable for
such Shares) has, and on the First Closing Date or the Second Closing Date
(as hereinafter defined), as the case may be, will have, valid marketable
title to the Shares proposed to be sold by such Selling Stockholder
hereunder on such date and full right, power and authority to enter into
this Agreement, the Pricing Agreement and the Custody Agreement and Power
of Attorney (defined below) and to sell, assign, transfer and deliver such
Shares hereunder, free and clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property rights; and upon
delivery of and payment for such Shares hereunder, the Underwriters will
acquire valid marketable title thereto, free and clear of all voting trust
arrangements, liens, encumbrances, equities, claims and community property
rights.
(b) The making and performance by such Selling Stockholder, if it is
not an individual, of this Agreement, the Pricing Agreement and the Custody
Agreement and Power of Attorney have been duly authorized by all necessary
action (corporate or otherwise) and (i) will not violate any provision of
such Selling Stockholder's charter, bylaws, partnership agreement, or trust
agreement, as the case may be, and (ii) will not result in the breach, or
be in contravention, of any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust, or other instrument to which such
Selling Stockholder or any subsidiary thereof is a party or by which such
Selling Stockholder, any subsidiary thereof or the property of any of them
may be bound or affected, or any order, rule or regulation applicable to
such Selling Stockholder or any such subsidiary of any court or
Governmental Authority having jurisdiction over such Selling Stockholder or
any such subsidiary or any of their respective properties, or any order of
any court or Governmental Authority entered in any proceeding to which such
Selling Stockholder or any such subsidiary was or is now a party or by
which it is bound, and which, in the case of clause (ii) above, would have
a material adverse effect on such Selling Stockholder's ability to perform
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its obligations under this Agreement, the Pricing Agreement and the Custody
Agreement and Power of Attorney.
(c) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which might be reasonably
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(d) Such Selling Stockholder has executed and delivered a Custody
Agreement and Power of Attorney among the Selling Stockholders, Xxxxxxx X.
Xxxxxxx and Xxxx Xxxxx (the "Agents"), and American Securities Transfer and
Trust, Inc., as custodian ("Custodian") (the "Custody Agreement and Power
of Attorney"), naming the Agents as such Selling Stockholder's attorneys-
in-fact (and, by the execution by any Agent of this Agreement, such Agent
hereby represents and warrants that he has been duly appointed as attorney-
in-fact by the Selling Stockholders pursuant to the Custody Agreement and
Power of Attorney) for the purpose of entering into and carrying out this
Agreement and the Pricing Agreement; and the Custody Agreement and Power of
Attorney has been duly authorized and executed by such Selling Stockholder
and a copy thereof has been delivered to you; and such Selling Stockholder
(other than F. Xxxxxxx Xxxxxxxxxxx, in respect of Shares to be sold by him
subject to option) has deposited in custody, under the Custody Agreement
and Power of Attorney, certificates in negotiable form for the Shares to be
sold hereunder by such Selling Stockholder, for the purpose of further
delivery pursuant to this Agreement. F. Xxxxxxx Xxxxxxxxxxx, in respect of
Shares to be sold by him subject to option, further represents, warrants
and agrees that he has delivered to the Company an irrevocable exercise
notice to subscribe for, and acquire from the Company, the total number of
Shares to be sold by him to the Underwriters as set forth on Schedule B,
with such subscription to be effective on the First Closing Date
immediately prior to the purchase of the Firm Shares by the Underwriters
hereunder and payment in cash of an aggregate amount equal to the exercise
price per Share for the Shares to be sold by him subject to option, and has
deposited in custody with the Custodian stock powers (reasonably
satisfactory to the Underwriters) duly endorsed in blank for the total
number of Shares to be sold by him subject to option.
(e) Such Selling Stockholder agrees that the Shares to be sold by
such Selling Stockholder on deposit with the Custodian are subject to the
interests of the Company, the Underwriters and the other Selling
Stockholders, that the arrangements made for such custody, and the
appointment of the Agents pursuant to the Custody Agreement and Power of
Attorney, are to that extent irrevocable, and that the obligations of such
Selling Stockholder hereunder and under the Custody Agreement and Power of
Attorney shall not be terminated except as provided in this Agreement or in
the Custody Agreement and Power of Attorney by any act of such Selling
Stockholder, by the death or incapacity of such Selling Stockholder or, in
the case of a trust or estate, by the death of the trustee or trustees or
the executor or executors or the termination of such trust or estate, or,
in the case of a partnership or corporation, by the dissolution, winding-up
or other event affecting the legal life of such entity, or
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by the occurrence of any other event. If any individual Selling
Stockholder, trustee or executor should die or become incapacitated, or any
such trust, estate, partnership or corporation should be terminated, or if
any other event should occur before the delivery of the Shares hereunder,
the documents evidencing Shares then on deposit with the Custodian (or
issuable upon exercise of the option pursuant to the irrevocable option
exercise delivered to the Company and transferable pursuant to the stock
powers on deposit with the Custodian) shall be delivered by the Custodian
in accordance with the terms and conditions of this Agreement as if such
death, incapacity, termination or other event had not occurred, regardless
of whether or not the Custodian shall have received notice thereof. Each
Agent has been authorized by such Selling Stockholder to execute and
deliver this Agreement and the Pricing Agreement and the Custodian has been
authorized to receive and acknowledge receipt of the proceeds of sale of
the Shares to be sold by such Selling Stockholder against delivery thereof
and each Agent and the Custodian have been duly and validly authorized to
carry out all transactions contemplated in this Agreement, the Pricing
Agreement and the Custody Agreement and Power of Attorney and to otherwise
act on behalf of such Selling Stockholder.
(f) Each preliminary prospectus, insofar as it has related to such
Selling Stockholder and, to the knowledge of such Selling Stockholder in
all other respects, as of its date, has not included any untrue statement
of a material fact or omitted to state a material fact necessary to make
the statements therein not misleading; and at the time of effectiveness of
the Registration Statement, and at all times subsequent thereto, up to the
First Closing Date or the Second Closing Date hereinafter defined, as the
case may be, neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as it relates to such Selling Stockholder,
and, to the knowledge of such Selling Stockholder in all other respects,
included or will include any untrue statement of a material fact or omitted
or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that the
foregoing clause shall have no effect if information has been given by such
Selling Stockholder to the Company and the Representatives in writing which
would eliminate or remedy any such untrue statement or omission.
(g) Such Selling Stockholder has executed a lock-up agreement
substantially in the form of Exhibit B hereto.
(h) Such Selling Stockholder has no knowledge that the
representations and warranties of the Company set forth in Section 2 of
this Agreement are not true and correct in all material respects.
(i) No consent, approval, authorization or other order of any court
or Governmental Authority is required for the execution and delivery of
this Agreement, the Pricing Agreement or the Custody Agreement and Power of
Attorney by such Selling Stockholder or the consummation of the
transactions contemplated herein or therein by such Selling Stockholder,
except for compliance with the 1933 Act and
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blue sky laws applicable to the public offering of the Shares by the
several Underwriters and clearance of such offering with the NASD.
(j) This Agreement, the Pricing Agreement and the Custody Agreement
and Power of Attorney have been duly authorized, executed and delivered by
such Selling Stockholder and constitute the legal, valid and binding
obligations of such Selling Stockholder.
(k) This Agreement, the Pricing Agreement and the Custody Agreement
and Power of Attorney are legal, valid and binding agreements of such
Selling Stockholder, except as enforceability of the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights and by the exercise of judicial discretion in
accordance with general principles applicable to equitable and similar
remedies.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or on the First Closing Date, as
hereinafter defined, a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form of statement specified by
Treasury Department regulations in lieu thereof).
Section 4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and the Selling Stockholders that the information set forth (a) on
the cover page of the Prospectus with respect to price, underwriting discount
and terms of the offering and (b) under "Underwriting" in the Prospectus was
furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and is correct and
complete in all material respects.
Section 5. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and the Selling Stockholders,
severally and not jointly, agree to sell to the Underwriters named in Schedule A
hereto, and the Underwriters agree, severally and not jointly, to purchase from
the Company, and the Selling Stockholders, respectively, 2,500,000 Firm Shares
from the Company and the respective number of Firm Shares set forth opposite the
names of the Selling Stockholders in Schedule B hereto at the price per share
set forth in the Pricing Agreement. The obligation of each Underwriter to the
Company shall be to purchase from the Company that number of full shares which
(as nearly as practicable, as determined by you) bears to 2,500,000, the same
proportion as the number of Shares set forth opposite the name of such
Underwriter in Schedule A hereto bears to the total number of Firm Shares to be
purchased by all Underwriters under this Agreement. The obligation of each
Underwriter to each Selling Stockholder shall be to purchase from such Selling
Stockholder the number of full shares which (as nearly as practicable, as
determined by you) bears to that number of Firm Shares set forth opposite the
name of such Selling Stockholder in Schedule B hereto, the same proportion as
the number of Shares set forth opposite the name of such Underwriter in Schedule
A hereto bears to the total number of
-11-
Firm Shares to be purchased by all Underwriters under this Agreement. The public
offering price and the purchase price shall be set forth in the Pricing
Agreement.
The Company and the Custodian will deliver to you certificates for the Firm
Shares at the offices of counsel for the Underwriters or through the facilities
of The Depository Trust Company against receipt of a wire transfer reference
number issued by the Federal Reserve System evidencing payment of the purchase
price therefore by the several Underwriters by wire transfer of immediately
available funds, to the respective accounts specified in writing by the Company
and the Custodian, at or before 11:00 A.M., Chicago Time, (a) on the third
business day after the effective date of this Agreement, (b) if this Agreement
is executed and delivered and becomes effective after 3:30 P.M., Chicago Time,
the fourth business day after the effective date of this Agreement, or (c) at
such other time on such other day, not later than ten business days after the
effective date of this Agreement, as shall be agreed upon by the Representatives
and the Company (the "First Closing Date"). Such certificates will be in such
denominations and registered in such names as you request by notice to the
Company prior to 10:00 A.M., Chicago Time, on the second business day preceding
the First Closing Date.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
Xxxxxxxx-Xxxxx Specialty Retail Group III, L.P., the Xxxxxxx X. Xxxxxxx
Revocable Trust, as amended and the Xxxxxx Xxxxxx Xxxxxxx Revocable Trust, as
amended hereby jointly and severally grant an option to the several Underwriters
to purchase, severally and not jointly, up to an aggregate of 750,000 Option
Shares, at the same purchase price per share to be paid for the Firm Shares, for
use solely in covering any over-allotments made by the Underwriters in the sale
and distribution of the Firm Shares. The option granted hereunder may be
exercised at any time (but not more than once) within 30 days after the date of
the public offering upon notice by you to such Selling Stockholders setting
forth the aggregate number of Option Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date, shall not be earlier than three nor later than 10 full business
days after delivery of such notice of exercise. The number of Option Shares to
be purchased by each Underwriter shall be determined by multiplying the number
of Option Shares to be sold by each such Selling Stockholder pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Shares to be purchased by such Underwriter as set forth opposite its name in
Schedule A and the denominator of which is the total number of Firm Shares
(subject to such adjustments to eliminate any fractional share purchases as you
in your absolute discretion may make). The manner of payment for and delivery of
the Option Shares shall be the same as for the Firm Shares as specified in the
preceding paragraph.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Shares, to make payment
and to receipt therefor. You, individually and not as the Representatives of
the Underwriters, may make payment for any Shares to be purchased by any
Underwriter whose funds shall not have been received by
-12-
you by the First Closing Date or the Second Closing Date, as the case may be,
for the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any obligation hereunder.
Section 6. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will advise you and the Selling Stockholders promptly
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, or of any notification of the suspension of
qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceedings for that purpose, and will also advise
you and the Selling Stockholders promptly of any request of the Commission
for amendment or supplement of the Registration Statement, of any
preliminary prospectus or of the Prospectus, or for additional information.
(b) The Company will give you and the Selling Stockholders notice of
its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any Rule 462(b)
Registration Statement or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs
from the prospectus on file at the Commission at the time the Registration
Statement became or becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) and any term
sheet as contemplated by Rule 434) and will furnish you and the Selling
Stockholders with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file any such amendment or supplement or use any such
prospectus to which you or counsel for the Underwriters shall reasonably
object.
(c) If the Company elects to rely on Rule 434 of the 1933 Act, the
Company will prepare a term sheet that complies with the requirements of
Rule 434. If the Company elects not to rely on Rule 434, the Company will
provide the Underwriters with copies of the form of prospectus, in such
numbers as the Underwriters may reasonably request, and file with the
Commission such prospectus in accordance with Rule 424(b) of the 1933 Act
by the close of business in New York City on the second business day
immediately succeeding the date of the Pricing Agreement. If the Company
elects to rely on Rule 434, the Company will provide the Underwriters with
copies of the form of Rule 434 Prospectus, in such numbers as the
Underwriters may reasonably request, by the close of business in New York
on the business day immediately succeeding the date of the Pricing
Agreement.
(d) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any event occurs as a result of
which the Prospectus, including any amendments or supplements, would
include an 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, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or
-13-
supplement the Prospectus, including any amendments or supplements thereto
and including any revised prospectus which the Company proposes for use by
the Underwriters in connection with the offering of the Shares which
differs from the prospectus on file with the Commission at the time of
effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with
the 1933 Act, the Company promptly will advise you thereof and will
promptly prepare and file with the Commission an amendment or supplement
(in form and substance satisfactory to counsel for the Underwriters) which
will correct such statement or omission or an amendment which will effect
such compliance; and, in case any Underwriter is required to deliver a
prospectus nine months or more after the effective date of the Registration
Statement, the Company upon request, but at the expense of such
Underwriter, will prepare promptly such prospectus or prospectuses as may
be necessary to permit compliance with the requirements of Section 10(a)(3)
of the 1933 Act.
(e) The Company will not, prior to the earlier of the Second Closing
Date or termination or expiration of the option relating to the Option
Shares, enter into any material transaction without the prior written
consent of the Underwriters, which consent shall not be unreasonably
withheld, other than in the ordinary course of business, except as
contemplated by the Prospectus
(f) The Company will not acquire any capital stock of the Company
prior to the earlier of the Second Closing Date or termination or
expiration of the option relating to the Option Shares nor will the Company
declare or pay any dividend or make any other distribution upon the Common
Stock payable to stockholders of record on a date prior to the earlier of
the Second Closing Date or termination or expiration of the option relating
to the Option Shares, except in either case as contemplated by the
Prospectus.
(g) As soon as practicable, but in any event not later than 15 months
after the effective date of the Registration Statement, the Company will
make generally available to its security holders an earnings statement
(which need not be audited) covering a period of at least 12 months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the
1933 Act.
(h) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an
Underwriter or dealer, the Company will furnish to you at its expense,
subject to the provisions of subsection (d) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the
purposes contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the securities laws of such
jurisdictions as you designate, and will continue such qualifications in
effect so long as reasonably
-14-
required for the distribution of the Shares. In connection with such
qualification or registration of the Shares, the Company shall not be
required to qualify as a foreign corporation or to file a general consent
to service of process in any such jurisdiction where it is not currently
qualified or where it would be subject to taxation as a foreign
corporation.
(j) During the period of five years hereafter, the Company will
furnish you and each of the other Underwriters with a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company
with the Commission, any securities exchange or the NASD, (ii) as soon as
practicable after the release thereof, of each material press release in
respect of the Company, (iii) as soon as available, of each report of the
Company mailed to stockholders and (iv) any additional information of a
public nature concerning the Company or its business that you may
reasonably request.
(k) The Company will use the net proceeds received by it from the
sale of the Shares being sold by it in the manner specified in the
Prospectus.
(l) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule
430A and/or Rule 434, then immediately following the execution of the
Pricing Agreement, the Company will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A, Rule 424(b)
and/or Rule 434, copies of an amended Prospectus, or, if required by such
Rule 430A and/or Rule 434, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted. If required, the Company will prepare and file, or transmit for
filing, a Rule 462(b) Registration Statement not later than the date of the
execution of the Pricing Agreement. If a Rule 462(b) Registration
Statement is filed, the Company shall make payment of, or arrange for
payment of, the additional registration fee owing to the Commission
required by Rule 111.
(m) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the Nasdaq National Market
which may from time to time be applicable to the Company.
(n) The Company agrees not to offer, sell, contract to sell or
otherwise dispose of any Common Stock or securities convertible into Common
Stock (except Common Stock issued pursuant to currently outstanding
options, warrants or convertible securities), or to announce an intent to
do any of the foregoing, for a period of 90 days after this Agreement
becomes effective without the prior written consent of Xxxxxxx Xxxxx &
Company, L.L.C. The Company has obtained similar agreements from each of
its officers and directors. At or before the time the Pricing Agreement is
executed, the Company shall have delivered to you a lock-up agreement
substantially in the form of Exhibit B hereto from each of the Company's
officers and directors, from each stockholder known to the Company to
beneficially hold, in the aggregate, 5% or more of the Company's capital
stock and from each of the Selling Stockholders, in which each such person
agrees not to offer, sell, contract to sell or otherwise dispose of any
Common Stock or any securities exercisable for or
-15-
convertible into Common Stock for a period of 90 days after the date of
such lock-up agreement without the prior written consent of Xxxxxxx Xxxxx &
Company, L.L.C.
(o) The Company will promptly deliver to the Representatives copies
of all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the 1933
Act.
(p) Prior to the First Closing Date, the Company will issue no press
release or other communication to the public, directly or indirectly, with
respect to the Company or any of its subsidiaries or with respect to the
financial condition, results of operations, business, properties, assets or
liabilities of any of them, or the offering of the Shares, without your
prior consent, which consent shall not be unreasonably withheld.
Section 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company's obligations hereunder,
including without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing and distribution of the Registration Statement, each
preliminary prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Pricing Agreement and the blue sky memorandum, (ii) all costs,
fees and expenses (including reasonable legal fees and disbursements of counsel
for the Underwriters) incurred by the Underwriters in connection with qualifying
or registering all or any part of the Shares for offer and sale under applicable
state or province securities laws, including the preparation of a blue sky
memorandum relating to the Shares and clearance of such offering with the NASD;
and (iii) all fees and expenses of the Company's transfer agent, printing of the
certificates for the Shares and all transfer taxes, if any, with respect to the
sale and delivery of the Shares to the several Underwriters.
Section 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company and the Selling Stockholders herein set forth as of the date hereof
and as of the First Closing Date or the Second Closing Date, as the case may be,
to the accuracy of the statements of officers of the Company made pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
additional conditions:
-16-
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 1:00 P.M.,
Chicago Time, on the first full business day after the date of this
Agreement, or such later time as shall have been consented to by you but in
no event later than 1:00 P.M., Chicago Time, on the third full business day
following the date hereof; and prior to the First Closing Date or the
Second Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending
or, to the knowledge of the Company, the Selling Stockholders or you, shall
be contemplated by the Commission. If the Company has elected to rely upon
Rule 430A and/or Rule 434, the information concerning the public offering
price of the Shares and price-related information shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within the
prescribed period and the Company will provide evidence satisfactory to the
Representatives of such timely filing (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rules 430A and 424(b)). If a Rule
462(b) Registration Statement is required, such Registration Statement
shall have been transmitted to the Commission for filing and become
effective within the prescribed time period and, prior to the First Closing
Date, the Company shall have provided evidence of such filing and
effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the state or
province securities laws of such jurisdictions as shall have been specified
by the Representatives.
(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of
the certificates representing the Shares, the execution and delivery of
this Agreement and the Pricing Agreement, and all corporate proceedings and
other legal matters incident thereto, and the form of the Registration
Statement and the Prospectus (except financial statements) shall have been
approved by counsel for the Underwriters.
(d) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of fact, which, in the opinion of counsel for
the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein
or necessary to make the statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or its subsidiaries, whether or not arising in the ordinary
course of business, which, in the judgment of the Representatives, makes it
impractical or inadvisable to proceed with the public offering or purchase
of the Shares as contemplated hereby.
-17-
(f) There shall have been furnished to you, as Representatives of the
Underwriters, on the First Closing Date or the Second Closing Date, as the
case may be, except as otherwise expressly provided below:
(i)(a) An opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters
and dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own its
properties and conduct its business as described in the
Prospectus. The Company is duly qualified to transact business as
a foreign corporation and is in good standing in the States of
Hawaii, California, Colorado, New York and Washington. There are
no other jurisdictions other than the above where the failure to
qualify to do business as a foreign corporation would have a
Material Adverse Effect;
(2) this Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company and constitute
the legal, valid and binding obligations of the Company;
(3) the Shares have been duly authorized and, upon delivery
to the Underwriters against payment therefor in accordance with
the terms of this Agreement and the Pricing Agreement, will be
validly issued, fully paid and nonassessable and will be free of
any pledge, lien, encumbrance, claim or rights of first refusal
in favor of stockholders with respect to any of the Shares or the
issuance or sale thereof (other than any pledge, lien,
encumbrance, claim or right of first refusal of a purchaser of
Shares); and the issuance of the Shares is not subject to
preemptive rights. The Shares to be sold hereunder have been duly
and validly authorized and qualified for inclusion on the Nasdaq
National Market, subject to notice of issuance;
(4) all outstanding shares of the Company's Common Stock
have been duly authorized, validly issued and are fully paid and
nonassessable and free of preemptive rights;
(5) the execution and delivery of this Agreement and the
Pricing Agreement and the performance by the Company of its terms
will not violate any federal securities laws, and will not
violate any statute, order, rule or regulation of any
Governmental Authority having jurisdiction over the Company
except where the violation would not have a Material Adverse
Effect;
-18-
(6) the execution and delivery of this Agreement and the
Pricing Agreement and the performance by the Company of their
terms do not violate or result in a violation of the Company's
certificate of incorporation or bylaws or any judgment, order or
decree, known to such counsel, of any court or arbiter, to which
the Company is a party, and, to such counsel's knowledge, will
not constitute a material breach of the terms, conditions or
provisions of or constitute a default under any material
contract, undertaking, indenture or other agreement or instrument
by which the Company or its property is now bound or to which the
Company is now a party;
(7) the authorized capital stock of the Company, of which
there is outstanding the amount set forth in the Registration
Statement and the Prospectus, except with respect to the exercise
of any vested stock options, conforms in all material respects to
the description thereof contained under the heading "Description
of Capital Stock" in the Prospectus;
(8) the Registration Statement has become effective under
the 1933 Act, and such counsel is not aware after due inquiry and
investigation that any stop order suspending the effectiveness
thereof has been issued or any proceedings for that purpose have
been instituted or are pending or threatened under the 1933 Act;
(9) the Registration Statement and Prospectus, as of the
effective date thereof, complied as to form in all material
respects with the requirements of the 1933 Act (except as to the
financial statements, supporting schedules, footnotes and other
financial and statistical information included therein, as to
which such counsel expresses no opinion). Such counsel does not
know of any statutes, rules and regulations required to be
described or referred to in the Registration Statement or
Prospectus that are not described;
(10) the statements under the captions "Management -- Stock
Plans" and "--401(k) Plan," "Description of Capital Stock" and
"Risk Factors -- Substantial sales of our common stock could
adversely affect our stock price" in the Prospectus, insofar as
such statements constitute a summary of documents referred to
therein or matters of law, are accurate summaries and fairly and
correctly present, in all material respects, the information
required to be disclosed with respect to such documents and
matters by the 1933 Act and the rules and regulations thereunder;
(11) there are no material legal or governmental proceedings
pending or threatened, and no contract or other document, known
to such counsel of a character required to be described in the
Registration
-19-
Statement or Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed, as
required;
(12) no authorization, approval or consent of any court or
governmental authority or agency is required in connection with
the transactions contemplated by this Agreement and the Pricing
Agreement, except such as have been obtained under the Act and
such as may be required under state securities or blue sky laws
in connection with the purchase and distribution of the Shares by
the several Underwriters;
(13) to the best of such counsel's knowledge, the Company
is not in violation of its charter or in breach of, or in default
under (nor has any event occurred which, with notice, lapse of
time or both would constitute a breach of, or default under) any
indenture, lease, credit agreement or other agreement or
instrument to which the Company is a party or by which the
Company's properties may be bound are affected, where such
violation or breach or default could have a Material Adverse
Effect;
(14) except as disclosed in the Prospectus, no person has
the right, contractual or otherwise, to cause the Company to
issue, or register pursuant to the 1933 Act, any shares of
capital stock of the Company, in connection with the issuance and
sale of the Shares to be sold by the Company and the Selling
Stockholders to the Underwriters pursuant to this Agreement;
(15) the Company is not an "investment company" or a person
"controlled by" an "investment company" within the meaning of the
Investment Company Act;
(16) each Selling Stockholder has full right, power and
authority to enter into this Agreement, the Pricing Agreement and
the Custody Agreement and Power of Attorney, and to sell,
transfer and deliver the Shares to be sold on the First Closing
Date or the Second Closing Date, as the case may be, by such
Selling Stockholders hereunder and good and marketable title to
such Shares so sold, free and clear of all voting trust
arrangements, liens, encumbrances, equities, claims and community
property rights whatsoever, has been transferred to the
Underwriters (who counsel may assume to be bona fide purchasers)
who have purchased such Shares hereunder;
(17) with respect to each Selling Stockholder, this
Agreement, the Pricing Agreement and the Custody Agreement and
Power of Attorney have been duly authorized, executed and
delivered by or on behalf of each such Selling Stockholder and
constitute the legal, valid and binding obligations of each
Selling Stockholder; the
-20-
Agents and the Custodian for each such Selling Stockholder have
been duly and validly authorized to carry out all transactions
contemplated herein and in the Pricing Agreement and the Custody
Agreement and Power of Attorney on behalf of each such Selling
Stockholder; and no consent, approval, authorization or order of
any Governmental Authority is required for the consummation of
the transactions contemplated by this Agreement, the Pricing
Agreement and the Custody Agreement and Power of Attorney in
connection with the sale of Shares to be sold by such Selling
Stockholders hereunder, except such as have been obtained under
the 1933 Act and such as may be required under applicable state
or province securities laws in connection with the purchase and
distribution of such Shares by the Underwriters and the clearance
of such offering with the NASD;
(18) this Agreement, the Pricing Agreement and the Custody
Agreement and Power of Attorney are legal, valid and binding
agreements of each Selling Stockholder except as enforceability
of the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights and by the exercise of judicial discretion in
accordance with general principles applicable to equitable and
similar remedies and except with respect to those provisions
relating to indemnities for liabilities arising under the 1933
Act, as to which no opinion need be expressed; and
(19) to the best of such counsel's knowledge, all offers
and sales of the Company's capital stock from and including the
initial public offering to the date hereof were at all relevant
times either exempt from the registration requirements of the
1933 Act or duly registered under the 1933 Act and were duly
registered with or the subject of an available exemption from the
registration requirements of the applicable state or province
securities laws.
(i)(b) An opinion of Ching & Xxx, local counsel for the Company,
addressed to the Underwriters and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) to the best of such counsel's knowledge, the Company
has obtained all material Licenses required by any Governmental
Authority to properly and legally operate or conduct the business
in which it is engaged on the Closing Date and which are
necessary or desirable for the successful conduct of its business
as it is conducted and proposed to be conducted, and each such
material License has been duly obtained, is valid and in full
force and effect, and is renewable by its terms or in the
ordinary course of business without the need to comply with any
special qualification procedures or to pay any amount other than
routine filing fees. To the best of such counsel's knowledge, the
Company (a) is not subject to any pending or threatened
administrative or judicial proceeding to revoke, cancel or
declare any material
-21-
License granted to it invalid in any respect, (b) is not acting
outside the scope and authority granted to it pursuant to any
such License, or otherwise in default or in violation with
respect to any such material License, and no event has occurred
which constitutes, or with due notice or lapse of time or both
may constitute, a default by it or a violation of, any material
License and (c) has not permitted any material License granted to
it to lapse since its original effective date;
(2) the execution and delivery of this Agreement and the
Pricing Agreement and the performance by the Company of their
terms, to such counsel's knowledge, will not constitute a
material breach of the terms, conditions or provisions of or
constitute a default under any License by which the Company or
its property is now bound or to which the Company is now a party;
and
(3) to the best of such counsel's knowledge, all offers
and sales of the Company's capital stock prior to the initial
public offering were at all relevant times either exempt from the
registration requirements of the 1933 Act or duly registered
under the 1933 Act and were duly registered with or the subject
of an available exemption from the registration requirements of
the applicable state or province securities laws.
In addition, each such counsel shall state that they have
participated in conferences with the Representatives and with
representatives of the Company and its accountants, and with respect
to the opinion being furnished pursuant to subsection (i)(a) above,
with the Selling Stockholders, concerning the Registration Statement
and the Prospectus and have considered the matters required to be
stated therein and the statements contained therein, although such
counsel has not independently verified the accuracy, completeness or
fairness of such statements. Based upon and subject to the foregoing,
each such counsel has no reason to believe that either the
Registration Statement (including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to
Rule 430A(b) and/or Rule 434, if applicable) or the Prospectus, or the
Registration Statement or the Prospectus as amended or supplemented
(except for the financial statements and other statistical or
financial data included therein as to which each such counsel need
express no opinion), as of their respective effective or issue dates,
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as amended or
supplemented, if applicable, as of the First Closing Date or the
Second Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made.
-22-
In rendering such opinion, each such counsel may state that
they are relying upon the certificate of the Company's Chief Executive
Officer, and the transfer agent for the Common Stock, as to the number
of shares of Common Stock at any time or times outstanding. Each such
counsel may also rely, as to factual matters, on certificates of the
Selling Stockholders and of officers of the Company and of state or
province officials, and as to certain legal matters, on opinions of
counsel, in which case their opinion is to state that they are so
doing and copies of such opinions or certificates are to be attached
to the opinion unless such opinions or certificates (or, in the case
of certificates, the information therein) have been furnished to the
Representatives in other form and provided that such counsel shall
state that they believe that both the Underwriters and they are
justified in relying upon such opinions and certificates.
(ii) Such opinion or opinions of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx,
counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares to be sold by
the Company, the Registration Statement and the Prospectus and other
related matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents and shall have exhibited
to them such papers and records as they request for the purpose of
enabling them to pass upon such matters.
(iii) A certificate of the chief executive officer and the
principal financial officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect
that:
(1) the representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or the
Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such
Closing Date; and
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best knowledge
of the respective signers, no proceedings for that purpose have
been instituted or are pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty of
the Company as to the facts required in the immediately foregoing
clauses (1) and (2) of this subparagraph to be set forth in such
certificate.
-23-
(iv) A certificate of each Selling Stockholder dated the First
Closing Date or the Second Closing Date, as the case may be, to the
effect that the representations and warranties of such Selling
Stockholder set forth in Section 3 of this Agreement are true and
correct as of such date and the Selling Stockholder has complied with
all the agreements and satisfied all the conditions on the part of
such Selling Stockholder to be performed or satisfied at or prior to
such date.
(v) At the time the Pricing Agreement is executed and also on
the First Closing Date or the Second Closing Date, as the case may be,
there shall be delivered to you a letter addressed to you, as
Representatives of the Underwriters, from PricewaterhouseCoopers LLP,
independent auditors, the first one to be dated the date of the
Pricing Agreement, the second one to be dated the First Closing Date
and the third one (in the event of a second closing) to be dated the
Second Closing Date, to the effect set forth in Schedule C. There
shall not have been any change or decrease specified in the letters
referred to in this subparagraph which makes it impractical or
inadvisable in the judgment of the Representatives to proceed with the
public offering or purchase of the Shares as contemplated hereby.
(vi) At or before the time the Pricing Agreement is executed,
there shall be delivered to you a lock-up agreement substantially in
the form of Exhibit B hereto from each of the Company's officers and
directors, from each stockholder known to the Company to beneficially
hold, in the aggregate, 5% or more of the Company's capital stock and
from each of the Selling Stockholders, in which each such person
agrees not to offer, sell, contract to sell or otherwise dispose of
any Common Stock or any securities exercisable for or convertible into
Common Stock, or to announce an intent to do any of the foregoing or
to exercise any registration rights with respect to any of the
foregoing, for a period of 90 days after the date of such lock-up
agreement without the prior written consent of Xxxxxxx Xxxxx &
Company, L.L.C.
(vii) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, which approval
shall not be unreasonably withheld. The Company shall furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as you request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and the Selling
Stockholders without liability on the part of any Underwriter or the Company or
any Selling Stockholder, except for the expenses to be paid or reimbursed by the
Company pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof.
-24-
Section 9. Reimbursement of Underwriters' Expenses. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company or the
Selling Stockholders to perform any agreement herein or to comply with any
provision hereof, unless such failure to satisfy such condition or to comply
with any provision hereof is due to the default or omission of any Underwriter,
the Company agrees to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been reasonably incurred by you and them in connection
with the proposed purchase and sale of the Shares. Any such termination shall be
without liability of any party to any other party except that the provisions of
this Section, Section 7 and Section 11 shall at all times be effective and shall
apply.
Section 10. Effectiveness of Registration Statement. You, the Company and
the Selling Stockholders will use your, its and their best efforts to cause the
Registration Statement to become effective, if it has not yet become effective,
and to prevent the issuance of any stop order suspending the effectiveness of
the Registration Statement and, if such stop order be issued, to obtain as soon
as possible the lifting thereof.
Section 11. Indemnification. (a) The Company and each Selling Stockholder,
agree, severally and not jointly, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the 1933 Act or the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the 1933 Act, the Exchange Act or other foreign,
federal or state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation if such settlement is effected with
the written consent of the Company and/or such Selling Stockholders, as the case
may be), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
(with respect to each Selling Stockholder, insofar only as any such statement is
related to such Selling Stockholder and to the knowledge of such Selling
Stockholder in all other respects), including the information deemed to be part
of the Registration Statement at the time of effectiveness pursuant to Rule 430A
and/or Rule 434, if applicable, any preliminary prospectus, the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
will reimburse each Underwriter and each such controlling person for any legal
or other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that neither the Company nor any
Selling Stockholder will be liable in any such case to the extent that (i) 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 Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives, specifically for use therein; or (ii) if such statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus and (1) any such loss, claim, damage or liability suffered or
incurred by any Underwriter (or any person who controls any Underwriter)
resulted from an action, claim or suit by any person who
-25-
purchased Shares which are the subject thereof from such Underwriter in the
offering and (2) such Underwriter failed to deliver or provide a copy of the
Prospectus to such person at or prior to the confirmation of the sale of such
Shares in any case where such delivery is required by the 1933 Act. In addition
to their other obligations under this Section 11(a), the Company agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 11(a),
it will reimburse the Underwriters on a monthly basis for all reasonable legal
and other expenses incurred for one separate firm of attorneys (in addition to
any local counsel) at any time for all such Underwriters which shall be
designated in writing by Xxxxxxx Xxxxx & Company, L.L.C. in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's and the Selling Stockholders
obligation to reimburse the Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. This indemnity agreement will be in addition to any
liability which the Company or the Selling Stockholders may otherwise have.
Neither the Company nor the Selling Stockholders shall be liable for any
settlement of such action, suit or proceeding effected without its or their
written consent, as the case may be, which consent shall not be unreasonably
withheld.
Without limiting the full extent of (i) the Company's and the Selling
Stockholders' agreement to indemnify each Underwriter (and controlling persons
thereof, if any), as herein provided, (ii) the liability of the Company and the
Selling Stockholders with respect to the breach by the Company or the Selling
Stockholders of any representation, warranty or covenant of such person or
entity contained in this Agreement (or in any certificate delivered pursuant
hereto) and (iii) the liability of any Selling Stockholder with respect to the
breach by such Selling Stockholders of any representation, warranty or covenant
contained in Section 3 of this Agreement (or in any certificate of such Selling
Stockholder delivered pursuant hereto), notwithstanding anything contained in
this Agreement to the contrary, each Selling Stockholder shall be liable under
(A) the indemnification agreements contained in the first paragraph of this
Section 11(a) and (B) the contribution provisions contained in Section 11(d) of
this Agreement, only for an amount not exceeding, in the aggregate, the proceeds
received by such Selling Stockholder from the sale of Shares hereunder. The
Company and the Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters and controlling persons under this
Agreement, as to the respective amounts of such liability for which each of them
shall be responsible.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, each Selling Stockholder and each person, if any, who controls the
Company within the meaning of the 1933 Act or the Exchange Act, against any
losses, claims, damages or liabilities to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject
under the 1933 Act, the Exchange Act or other foreign, federal or state
statutory law or regulation, at common law or otherwise (including in settlement
of any litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the
-26-
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with Section 4 of this
Agreement or any other written information furnished to the Company by such
Underwriter through the Representatives specifically for use in the preparation
thereof; and will reimburse any legal or other expenses reasonably incurred by
the Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. In addition to their other obligations under this
Section 11(b), the Underwriters agree that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in this Section 11(b), they will reimburse the Company
and the Selling Stockholders on a monthly basis for all reasonable legal and
other expenses incurred for one separate firm of attorneys (in addition to any
local counsel) at any time for the Company and the Selling Stockholders which
shall be designated in writing by the Company in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company and the
Selling Stockholders for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have. No Underwriter shall be liable for any
settlement of such action, suit or proceeding effected without the written
consent of all of the Underwriters, which consent shall not be unreasonably
withheld.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the
-27-
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defense in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by the
Representatives in the case of paragraph (a) representing all indemnified
parties not having different or additional defenses or potential conflicting
interest among themselves who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability arising out of such proceeding.
(d) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Selling Stockholders and the Underwriters from the offering of the Shares 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, the Selling Stockholders and the Underwriters in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling Stockholders
and the Underwriters shall be deemed to be in the same proportion in the case of
the Company and the Selling Stockholders as the total price paid to the Company
and the Selling Stockholders for the Shares by the Underwriters (net of
underwriting discount but before deducting expenses), and in the case of the
Underwriters as the underwriting discount received by them bears to the total of
such amounts paid to the Company and the Selling Stockholders and received by
the Underwriters as underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the Selling Stockholders and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the Company
or by the Selling Stockholders or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages and liabilities referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim.
-28-
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section, no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section are several in proportion to their
respective underwriting commitments and not joint.
(e) The provisions of this Section shall survive any termination of this
Agreement.
Section 12. Default of Underwriters. It shall be a condition to the
agreement and obligation of the Company and the Selling Stockholders to sell and
deliver the Shares hereunder, and of each Underwriter to purchase the Shares
hereunder, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all Shares agreed to be purchased by
such Underwriter hereunder upon tender to the Representatives of all such Shares
in accordance with the terms hereof. If any Underwriter or Underwriters default
in their obligations to purchase Shares hereunder on the First Closing Date and
the aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representatives may make arrangements satisfactory to the Company and
the Selling Stockholders for the purchase of such Shares by other persons,
including any of the Underwriters, but if no such arrangements are made by such
date the non-defaulting Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Shares which such
defaulting Underwriters agreed but failed to purchase on such date. If any
Underwriter or Underwriters so default and the aggregate number of Shares with
respect to which such default or defaults occur is more than the above
percentage and arrangements satisfactory to the Representatives and the Company
and the Selling Stockholders for the purchase of such Shares by other persons
are not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company
or the Selling Stockholders, except for the expenses to be paid by the Company
pursuant to Section 7 hereof and except to the extent provided in Section 11
hereof.
In the event that Shares to which a default relates are to be purchased by
the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
-29-
Section 13. Effective Date. This Agreement shall become effective upon
execution and delivery of this Agreement and the Pricing Agreement.
Section 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling Stockholders
to any Underwriter (except for the expenses to be paid or reimbursed
pursuant to Section 7 hereof and except to the extent provided in Section
11 hereof) or of any Underwriter to the Company or the Selling
Stockholders.
(b) This Agreement may also be terminated by you prior to the First
Closing Date, and the option referred to in Section 5, if exercised, may be
cancelled at any time prior to the Second Closing Date, if (i) trading in
securities on the New York Stock Exchange shall have been suspended or
minimum prices shall have been established on such exchange, or (ii) a
banking moratorium shall have been declared by Illinois, New York, or
United States authorities, or (iii) there shall have been any change in
financial markets or in political, economic or financial conditions which,
in the opinion of the Representatives, either renders it impracticable or
inadvisable to proceed with the offering and sale of the Shares on the
terms set forth in the Prospectus or materially and adversely affects the
market for the Shares, or (iv) there shall have been an outbreak of major
armed hostilities between the United States and any foreign power which in
the opinion of the Representatives makes it impractical or inadvisable to
offer or sell the Shares. Any termination pursuant to this paragraph (b)
shall be without liability on the part of any Underwriter to the Company or
the Selling Stockholders or on the part of the Company to any Underwriter
or Selling Stockholders (except for expenses to be paid or reimbursed
pursuant to Section 7 hereof and except to the extent provided in Section
11 hereof).
Section 15. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
principals, members, officers or directors or any controlling person, or the
Selling Stockholders, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder.
Section 16. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered, telecopied or telegraphed
and confirmed to you c/o Xxxxxxx Xxxxx & Company, L.L.C., 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attn: Xxxx X. Xxxxxxxxx, Fax (000) 000-0000, with a
copy to Xxxxxx X. Xxxxx, Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, 0000 Xxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, Fax (312) 876-
-30-
7934; and if sent to the Company will be mailed, delivered or telegraphed and
confirmed to the Company at its corporate headquarters with a copy to Xxxxx X.
Xxxxxx, Esq., Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000, Fax (000) 000-0000; and if sent to Xxxxxxxx-
Xxxxx Specialty Retail Group III, L.P. will be mailed, delivered or telegraphed
and confirmed to Xxxxxxxx-Xxxxx Specialty Retail Group, 0000 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxx Xxxxxxx, Xxxxx 00000; and if sent to any of the other Selling
Stockholders will be mailed, delivered, telecopied or telegraphed and confirmed
to such Selling Stockholder at the Company's corporate headquarters or to such
other address as they have previously furnished to the Company and the
Representatives in writing.
Section 17. Successors. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 11,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any of
the Underwriters merely by reason of such purchase.
Section 18. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
Section 19. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
Section 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
Section 21. Applicable Law. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
[Remainder of page intentionally left blank]
-31-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
CHEAP TICKETS, INC.
By:
Chief Executive Officer
SELLING STOCKHOLDERS
By:_____________________________________
[Name]
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXX XXXXXXXX XXXXXXX
CIBC WORLD MARKETS CORP.
XXXXX XXXXX XXXXXX & COMPANY, LLC
Acting as Representatives of the
several Underwriters named in
Schedule A.
XXXXXXX XXXXX & COMPANY, L.L.C.
By:
A Principal
-32-
Schedule A
--------------------------------------------------------------------------------
Underwriter Number of Firm
Shares to be
Purchased
--------------------------------------------------------------------------------
Xxxxxxx Xxxxx & Company, L.L.C.......................
--------------------------------------------------------------------------------
Xxxx Xxxxxxxx Xxxxxxx................................
--------------------------------------------------------------------------------
CIBC World Markets Corp.
--------------------------------------------------------------------------------
Xxxxx Xxxxx Xxxxxx & Company, LLC
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL................................................
--------------------------------------------------------------------------------
-33-
Schedule B
Selling Stockholders
Maximum Number
Number of Firm of Option Shares
Name Shares To Be Sold To Be Sold
---- ----------------- ----------------
Company 2,500,000
Xxxxxxx X. Xxxxxxx Revocable Trust, as amended 468,312 187,500
Xxxxxx Xxxxxx Xxxxxxx Revocable Trust, as amended 468,313 187,500
Xxxxxxx Family Unitrust 250,000
Xxxxxxxx-Xxxxx Specialty Retail 1,186,625 375,000
Group III, L.P.
Xxxxx X. Xxxxxxxxx 105,750
F. Xxxxxxx Xxxxxxxxxxx 21,000(1)
---------- -------
TOTAL 5,000,000 750,000
========== =======
(1) All of such shares will be issued to the Selling Stockholder upon exercise
of a related option on the First Closing Date, immediately prior to the sale of
such shares to the Underwriters.
-34-
Schedule C
Comfort Letter for Cheap Tickets, Inc.
To Be Delivered by PricewaterhouseCoopers LLP
(1) They are independent public accountants with respect to the Company
and its subsidiaries within the meaning of the 1933 Act.
(2) In their opinion the financial statements and schedules of the Company
and its subsidiaries included in the Registration Statement and the financial
statements of the Company from which the information presented under the
captions "Summary Financial Data" and "Selected Financial Data" has been derived
which are stated therein to have been examined by them comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company responsible for financial and accounting matters
as to transactions and events subsequent to December 31, 1998, a reading of
minutes of meetings of the stockholders and directors of the Company since
December 31, 1998, a reading of the latest available interim unaudited financial
statements of the Company (with an indication of the date thereof) and other
procedures as specified in such letter, nothing came to their attention which
caused them to believe that (i) the unaudited financial statements of the
Company included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act or
that such unaudited financial statements are not fairly presented in accordance
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, (ii) the amounts in "Summary Financial Data" and
"Selected Financial Data" included in the Prospectus do not agree with or are
not derivable from the corresponding amounts in the audited financial statements
or unaudited financial statements (as applicable) from which such amounts were
derived, and (iii) at a specified date not more than five days prior to the date
thereof in the case of the first letter and not more than two business days
prior to the date thereof in the case of the second and third letters, there was
any change in the capital stock or long-term debt or short-term debt (other than
normal payments) of the Company on a basis or any decrease in net current assets
or stockholders' equity as compared with amounts shown on the latest unaudited
balance sheet of the Company included in the Registration Statement or for the
period from the date of such balance sheet to a date not more than five days
prior to the date thereof in the case of the first letter and not more than two
business days prior to the date thereof in the case of the second and third
letters, there were any decreases, as compared with the corresponding period of
the prior year, in net sales, income before income taxes or in the total or per
share amounts of net income except, in all instances, for changes or decreases
which the Prospectus discloses have occurred or may occur or which are set forth
in such letter.
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(4) They have carried out specified procedures, which have been agreed to
by the Representatives, with respect to certain information in the Prospectus
specified by the Representatives, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company.
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EXHIBIT A
CHEAP TICKETS, INC.
___________ Shares Common Stock/2/
PRICING AGREEMENT
, 1999
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxx Xxxxxxxx Xxxxxxx
CIBC World Markets Corp.
As Representatives of the Several
Underwriters
c/o Xxxxxxx Xxxxx & Company
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated ____________, 1999
(the "Underwriting Agreement") relating to the sale by the Company and the
Selling Stockholders and the purchase by the several Underwriters for whom
Xxxxxxx Xxxxx & Company, L.L.C., Xxxx Xxxxxxxx Xxxxxxx, CIBC World Markets Corp.
and Xxxxx Xxxxx Xxxxxx & Company, LLC are acting as representatives (the
"Representatives"), of the above Shares. All terms herein shall have the
definitions contained in the Underwriting Agreement except as otherwise defined
herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and each
of the Selling Stockholders agree with the Representatives as follows:
1. The public offering price per share for the Shares shall be
$__________.
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $_________, being an amount equal to the public offering
price set forth above less $________ per share.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
several Underwriters,
___________________
/2/ Plus an option to acquire up to _________ additional shares to cover over-
allotments.
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including you, all in accordance with its terms. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall be considered one and the
same agreement.
Very truly yours,
CHEAP TICKETS, INC.
By:
Chief Executive Officer
SELLING STOCKHOLDERS
By:________________________________
Name:
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXX XXXXXXXX XXXXXXX
CIBC WORLD MARKETS CORP.
XXXXX XXXXX XXXXXX & COMPANY, LLC
Acting as Representatives of the
several Underwriters named in
Schedule A.
XXXXXXX XXXXX & COMPANY, L.L.C.
By:
A Principal
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EXHIBIT B
______________________
Print Stockholder Name
CHEAP TICKETS, INC.
LOCK-UP AGREEMENT
Xxxxxxx Xxxxx & Company, Xxxx Xxxxxxxx Xxxxxxx,
CIBC World Markets Corp. and Xxxxx Xxxxx
Xxxxxx & Company LLC, as Representatives
c/o Xxxxxxx Xxxxx & Company
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Re: Cheap Tickets, Inc.
Ladies and Gentlemen:
In order to induce Xxxxxxx Xxxxx & Company, Xxxx Xxxxxxxx Xxxxxxx, CIBC
World Markets Corp. and Xxxxx Xxxxx Xxxxxx & Company, LLC (the
"Representatives") to enter in to a certain underwriting agreement (the
"Underwriting Agreement") with Cheap Tickets, Inc., a Delaware corporation (the
"Company") and the Selling Stockholders named therein, with respect to the
public 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 90
days following the date the Underwriting Agreement becomes effective, the
undersigned will not, without the prior written consent of the Xxxxxxx Xxxxx &
Company, L.L.C., directly or indirectly, offer, sell, 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 Act
of 1933, as the same may be amended or supplemented from time to time (such
shares, the "Beneficially Owned Shares") or any securities exercisable for or
convertible into Common Stock, or to announce an intent to do any of the
foregoing or to exercise any registration rights with respect to any of the
foregoing.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer any Shares either during his or her lifetime or on death by
will or intestacy to his or her immediate family or to a trust the beneficiaries
of which are exclusively the undersigned and/or a member or of his or her
immediate family or to a charitable organization; provided, however, that in any
such case it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding the Shares
transferred subject to the provisions of this Agreement, and there shall be no
further transfer of such Shares except in accordance with this Agreement. For
purposes of this Agreement, "immediate family" shall mean spouse, lineal
descendant, father, mother, brother or sister of
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the transferor and "charitable organization" shall mean an organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
Notwithstanding the foregoing, if the undersigned is a partnership, the
partnership may transfer any Shares to a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner, and any partner who is an
individual may transfer such Shares by gift, will or intestate succession to his
or her spouse or lineal descendants or ancestors; and if the undersigned is a
corporation, the corporation may transfer such Shares to any shareholder or
subsidiary of such corporation and any shareholder who is an individual may
transfer Shares by gift, will, or intestate succession to his or her immediate
family or to a charitable organization; provided, however, that in any such
case, it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding the Shares
subject to the provisions of this Agreement, and there shall be no further
transfer of such Shares except in accordance with this Agreement.
The undersigned agrees that the provisions of this agreement shall be
binding also upon the successors, assigns, heirs and personal representatives of
the undersigned. The undersigned agrees and consents to the placing of legends
and/or the entry of stop transfer instructions with the Company's transfer agent
against the transfer of any shares of Common Stock or Beneficially Owned Shares
held by the undersigned except in compliance with this Agreement.
It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Shares, you will release us from our obligations under this
Agreement.
Very truly yours,
_____________________________
(Signature)
_____________________________
(Title)
_____________________________
(Date)
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