Exhibit 1.1
CRAY INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
, 2006
Xxxxxx Xxxxxx Partners LLC
Xxxxxxx & Company, LLC
X.X. Xxxxxxxxx, Towbin, LLC
Xxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx, Inc.
As representatives of the Underwriters
named in Schedule I hereto,
c/o Thomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Cray Inc., a Washington corporation (the "Company"), proposes, subject
to the terms and conditions stated herein, to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of [____] shares of
common stock (the "Stock") of the Company, and, at the election of the
Underwriters in the circumstances specified in Section 2 hereof, up to [____]
additional shares of Stock. The [____] shares to be sold by the Company are
herein called the "Firm Shares" and the [____] additional shares to be sold by
the Company are herein called the "Optional Shares." The Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "Shares."
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-137694) (as
amended by all pre-effective amendments thereto, the "Initial Registration
Statement") in respect of the Shares has been filed with the Securities and
Exchange Commission (the "Commission"); the Initial Registration Statement and
any post-effective amendment thereto have been declared effective by the
Commission; other than a registration statement, if any, increasing the size of
the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed under the Act with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and, to the best of the
Company's knowledge, no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act is hereinafter called
a "Preliminary Prospectus"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 6(a) hereof and deemed by virtue of Rule 430A under the
Act to be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement"; the Preliminary Prospectus
relating to the Shares that was included in the Registration Statement
immediately prior to the Applicable Time (as defined in Section 1(c) hereof) is
hereinafter called the "Pricing Prospectus"; such final prospectus, in the form
first filed pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; and any "issuer free writing prospectus" as defined in Rule 433
under the Act relating to the Shares is hereinafter called an "Issuer Free
Writing Prospectus"; all references in this Agreement to the Initial
Registration Statement, the Rule 462(b) Registration Statement, a Preliminary
Prospectus, the Pricing Prospectus and the Prospectus, or any amendments or
supplements to any of the foregoing, shall be deemed to refer to and include any
documents incorporated by reference therein (the "Incorporated Documents"), and
shall include any copy thereof filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System);
(b) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Xxxxxx Xxxxxx Partners LLC
expressly for use therein;
(c) For the purposes of this Agreement, the "Applicable Time" is
[____] p.m. (Eastern time) on the date of this Agreement. The Pricing
Prospectus, as supplemented by the Issuer Free Writing Prospectuses, if any,
listed on Schedule II(a) hereto, taken together as of the Applicable Time, did
not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and each Issuer
Free Writing Prospectus, if any, listed on Schedule II(a) or Schedule II(b)
hereto does not conflict with the information contained in the Registration
Statement, the Pricing Prospectus or the Prospectus and each such Issuer Free
Writing Prospectus, as supplemented by and taken together with the Pricing
Prospectus as of the Applicable Time, did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to statements or omissions made in an Issuer Free Writing
Prospectus in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Xxxxxx Xxxxxx Partners LLC
expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to
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any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through Xxxxxx
Xxxxxx Partners LLC expressly for use therein;
(e) Each of the Incorporated Documents conformed when so filed in
all material respects to the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the applicable rules and regulations
of the Commission thereunder and did not, as of their respective filing dates,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading;
(f) The Company does not own, directly or indirectly, any shares
of stock or any other equity securities of any corporation or have any equity
interest in any corporation, firm, partnership, joint venture, association or
other entity, other than the subsidiaries listed in Exhibit 21.1 to the Initial
Registration Statement, the Company's equity interest in Computational
Engineering International, Inc. and equity securities held for investment
purposes. Cray Federal Inc. is the only subsidiary of the Company that both (i)
had revenue (including inter-company revenue) greater than 5% of the
consolidated revenues of the Company for the nine months ended September 30,
2006, and (ii) employs more than 5% of the total employees of the Company and
its subsidiaries as of the date hereof.
(g) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in or
incorporated by reference into the Pricing Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Pricing
Prospectus, except for such loss or interference as would not, individually or
in the aggregate, have a material adverse effect on the business, prospects,
operations, assets, condition (financial or otherwise), shareholders' equity or
results of operations of the Company and its consolidated subsidiaries taken as
a whole (a "Material Adverse Effect"); and, since the respective dates as of
which information is given in the Registration Statement and the Pricing
Prospectus, there has not been any material change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the business, operations, assets, condition (financial or
otherwise) or results of operations of the Company and its consolidated
subsidiaries taken as a whole, otherwise than as set forth or contemplated in
the Pricing Prospectus;
(h) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except for the security interest in the Company's real
and personal property in favor of Xxxxx Fargo Foothill, Inc. ("WFF") and except
such as are described in the Pricing Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries; and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries;
(i) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Washington, with corporate power
and authority to own its properties and conduct its business as described in the
Pricing Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or
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leases properties or conducts any business so as to require such qualification,
or is subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction; and each subsidiary of the Company has
been duly incorporated and is validly existing as a corporation and, to the
extent applicable, is in good standing under the laws of its jurisdiction of
incorporation;
(j) The Company has an authorized capitalization as set forth in
the Pricing Prospectus, and all of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued, are fully paid and
non-assessable and conform in all material respects to the description of the
Stock contained in the Pricing Prospectus and the Prospectus; and all of the
outstanding shares of capital stock or other ownership interests of each
subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable and (except for directors' qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except for the pledge of the stock of subsidiaries of the
Company to WFF and except to such extent as would not, individually or in the
aggregate, have a Material Adverse Effect;
(k) The Shares have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be validly issued
and fully paid and non-assessable and will conform to the description of the
Stock contained in the Pricing Prospectus and the Prospectus;
(l) The issue and sale of the Shares to be sold by the Company and
the compliance by the Company with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give rise to a right of termination under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, except for such breaches,
violations or rights of termination as would not, individually or in the
aggregate, have a Material Adverse Effect, nor will such action result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, except for such violations as would
not, individually or in the aggregate, have a Material Adverse Effect, nor will
such action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company;
(m) No consent, approval, authorization, order, registration,
qualification, permit, license, exemption, filing or notice (each an
"Authorization") of, from, with or to any court, tribunal, government,
governmental or regulatory authority, self-regulatory organization or body
(each, a "Regulatory Body") is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by this
Agreement, except (A) the registration of the Shares under the Act; (B) such
consents, approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws or the bylaws and
rules of the National Association of Securities Dealers, Inc. in connection with
the purchase and distribution of the Shares by the Underwriters; and (C) such
other Authorizations the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect; and no event has occurred that allows
or results in, or after notice or lapse of time or both would allow or result
in, revocation, suspension, termination or invalidation of any such
Authorization or any other impairment of the rights of the holder or maker of
any such Authorization;
(n) All corporate action (including any action by the
shareholders) necessary for the Company to consummate the transactions
contemplated in this Agreement has been obtained and is in effect;
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(o) Neither the Company nor any of its subsidiaries is (A) in
violation of its Articles of Incorporation or Bylaws or other organizational
documents or (B) in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be bound,
except for such defaults specified under subparagraph (B) herein that would not,
individually or in the aggregate, have a Material Adverse Effect;
(p) The statements set forth in the Pricing Prospectus and the
Prospectus under the caption "Description of Capital Stock and Convertible
Notes," insofar as they purport to constitute a summary of the terms of the
Stock, are accurate and complete in all material respects;
(q) Other than as set forth in the Pricing Prospectus, there are
no legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(r) Except as disclosed in the Initial Registration Statement, the
Pricing Prospectus and the Prospectus (i) the Company and its subsidiaries have
sufficient trademarks, trade names, patents, patent rights, mask works,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), licenses, approvals and governmental authorizations to conduct
their businesses as now conducted and, to the best of the Company's knowledge,
none of the material intellectual property rights owned or licensed by the
Company is invalid or unenforceable, (ii) the Company has no knowledge of any
infringement by it or any of its subsidiaries of trademarks, trade name rights,
patents, patent rights, mask work rights, inventions, copyrights, licenses,
trade secrets or other similar rights of others, where such infringement would
reasonably be expected to have a Material Adverse Effect, (iii) the Company is
not aware of any infringement, misappropriation or violation by others of, or
conflict by others with rights of the Company with respect to, any of the
foregoing intellectual property rights, and (iv) there is no claim being made
against the Company or any of its subsidiaries, or to the best of the Company's
knowledge, any employee of the Company or any of its subsidiaries, regarding
trademark, trade name, patent, mask work, inventions, copyright, license, trade
secret or other infringement which would reasonably be expected to have a
Material Adverse Effect;
(s) The Company and its subsidiaries possess all certificates,
certifications, registrations, notifications, orders, licenses, authorizations,
approvals and permits (collectively, "Permits") issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses and such Permits are valid and in full force and
effect, except for Permits where the failure to possess, or the invalidity of
which, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and its subsidiaries are in compliance with the terms and
conditions of such Permits, except where the failure to comply would not have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Permit which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect;
(t) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses
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in which they are engaged; and neither the Company nor any of its subsidiaries
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect;
(u) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance in all respects with any such
permit, license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate, have a Material Adverse
Effect;
(v) To the best of the Company's knowledge, there are no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, individually or in the aggregate,
have a Material Adverse Effect;
(w) The Company and each of its subsidiaries has filed all
federal, state, local and foreign income tax returns which have been required to
be filed and has paid or made provision to pay all taxes shown as due thereon
and assessments received by it to the extent that such taxes or assessments have
become due, except where the failure to file such returns or pay, or make
provision to pay, all such taxes and assessments would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has any tax deficiency which has been or, to the best of the
knowledge of the Company, might be asserted or threatened against it which would
reasonably be expected to have a Material Adverse Effect;
(x) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof, will not be
an "investment company", as such term is defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act");
(y) At the time of filing the Initial Registration Statement, the
Company was not an "ineligible issuer," as defined in Rule 405 under the Act;
(z) The Company meets the eligibility requirements set forth in
Section VII of Form S-1 necessary in order to incorporate by reference
information, including the Incorporated Documents, into the Initial Registration
Statement, the Pricing Prospectus and the Prospectus;
(aa) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the Company
to file a registration statement under the Act with respect to any securities of
the Company (other than with respect to the shares of common stock underlying
the warrant held by WFF) or to require the Company to include such securities
with the Shares registered pursuant to the Initial Registration Statement other
than as have been waived in writing in connection with the offering contemplated
thereby;
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(bb) Each of Xxxxxxxx Xxxxxxxx PLLC and Deloitte & Touche LLP, who
have certified certain financial statements of the Company and its subsidiaries,
are independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(cc) The financial statements of the Company and its subsidiaries
(including all notes and schedules thereto) included in or incorporated by
reference into the Registration Statement, the Pricing Prospectus and Prospectus
present fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
shareholders' equity and cash flows of the Company and its subsidiaries for the
periods specified in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved; and the summary and
selected financial data included in or incorporated by reference into the
Registration Statement, the Pricing Prospectus and the Prospectus presents
fairly the information shown therein as at the respective dates and for the
respective periods specified and are derived from the consolidated financial
statements set forth in or incorporated by reference into the Registration
Statement, the Pricing Prospectus and the Prospectus and other financial
information;
(dd) The Company maintains a system of internal control over
financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that complies with the requirements of the Exchange Act and has
been designed by the Company's principal executive officer and principal
financial officer, or under their supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. The Company's internal control over financial reporting
is effective and the Company is not aware of any material weaknesses in its
internal control over financial reporting;
(ee) Since the date of the latest audited financial statements of
the Company included in or incorporated by reference into the Pricing
Prospectus, there has been no change in the Company's internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting;
(ff) The Company maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with
the requirements of the Exchange Act; such disclosure controls and procedures
have been designed to ensure that material information relating to the Company
and its subsidiaries is made known to the Company's principal executive officer
and principal financial officer by others within those entities; and such
disclosure controls and procedures are effective;
(gg) There are no outstanding guarantees or other contingent
obligations (other than guarantees and other obligations of the Company and its
subsidiaries in favor of WFF) or any off-balance sheet arrangements of the
Company or any of its subsidiaries that could reasonably be expected to have a
Material Adverse Effect;
(hh) The Company's senior management and audit committee have
reviewed and agreed with the selection, application and disclosure of critical
accounting policies and have consulted with the Company's independent registered
public accounting firm with regard to such disclosure;
(ii) No relationship, direct or indirect, exists between or among
the Company, on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company, on the other hand, which is required to
be described in the Registration Statement, the Pricing Prospectus and the
Prospectus and which is not so described. There are no outstanding loans,
advances or guarantees of indebtedness by the Company to
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or for the benefit of any of the executive officers or directors of the Company
in violation of Section 402 of the Xxxxxxxx-Xxxxx Act of 2002 or that are
required to be described in the Initial Registration Statement, the Pricing
Prospectus and the Prospectus and not so described;
(jj) To the actual knowledge of the Company, no person associated
with or acting on behalf of the Company, including without limitation any
director, officer, agent or employee of the Company or its subsidiaries has,
directly or indirectly, while acting on behalf of the Company or its
subsidiaries (A) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (B)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds, (C) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended or (D) made any other unlawful payment;
(kk) Except as contemplated by this Agreement and as disclosed in
the Registration Statement, the Pricing Prospectus and the Prospectus, no person
is entitled to receive from the Company a brokerage commission, finder's fee or
other like payment in connection with the transactions contemplated herein;
(ll) Neither the Company nor any of its subsidiaries or controlled
affiliates does business with the government of, or with any person located in
any country in a manner that violates in any material respect any of the
economic sanctions programs or similar sanctions-related measures of the United
States as administered by the United States Treasury Department's Office of
Foreign Assets Control; and the net proceeds from this offering will not be used
to fund any operations in, finance any investments in or make any payments to
any country, or to make any payments to any person, in a manner that violates
any of the economic sanctions of the United States administered by the United
States Treasury Department's Office of Foreign Assets Control;
(mm) There is no document, contract, permit or instrument of a
character required to be described in the Initial Registration Statement, the
Pricing Prospectus or the Prospectus or to be filed as an exhibit to the Initial
Registration Statement which is not described or filed as required. All such
contracts described in the Initial Registration Statement, the Pricing
Prospectus or the Prospectus or filed as an exhibit to the Initial Registration
Statement to which the Company or any of its subsidiaries is a party have been
duly authorized, executed and delivered by the Company or such subsidiary,
constitute valid and binding agreements of the Company or such subsidiary;
(nn) Except for stock issuances disclosed in the Initial
Registration Statement, the Company has not sold or issued any shares of Stock
during the six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the Act, other than
shares of Stock issued pursuant to the Company's equity incentive plans, its
employee stock purchase plan and its 401(k) Savings Plan and Trust;
(oo) statistical, industry-related and market-related data
included in the Initial Registration Statement, the Pricing Prospectus and the
Prospectus are based on or derived from sources which the Company reasonably and
in good faith believes are reliable and accurate in all material respects;
(pp) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed, or
which would reasonably be expected, to cause or result, under the
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Act or otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares; and
(qq) Neither the Company nor any of its subsidiaries or controlled
affiliates does business with the government of Cuba or with any person located
in Cuba within the meaning of Section 517.075, Florida Statutes.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at a purchase
price per share of $[___], the number of Firm Shares (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying the aggregate
number of Firm Shares to be sold by the Company by a fraction, the numerator of
which is the aggregate number of Firm Shares to be purchased by such Underwriter
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the aggregate number of Firm Shares to be purchased by
all of the Underwriters from the Company hereunder and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that portion of the number of Optional Shares as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to [____] Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering sales of shares
in excess of the number of Firm Shares. Any such election to purchase Optional
Shares may be exercised only by written notice from you to the Company, given
within a period of 30 calendar days after the date of this Agreement and setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by you but in no
event earlier than the First Time of Delivery (as defined in Section 4 hereof)
or, unless you and the Company otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Shares in book-entry form which
will be deposited by or on behalf of the Company with the Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the Shares
to Xxxxxx Xxxxxx Partners LLC, for the account of each Underwriter, against
payment by or on behalf of each such Underwriter of the purchase price therefor
by wire transfer of Federal (same-day) funds to the account specified by the
Company to Xxxxxx Xxxxxx Partners LLC by causing DTC to credit the Shares to the
account of Xxxxxx Xxxxxx Partners LLC at DTC. The time and date of such delivery
and payment shall be, with respect to the Firm Shares, [____] a.m., New York
time, on [_______], or such other time and date as Xxxxxx Xxxxxx Partners LLC
and the Company may agree upon in writing, and, with respect to the Optional
Shares, [____] a.m., New York time, on the date specified by Xxxxxx Xxxxxx
Partners LLC in the written notice given by Xxxxxx Xxxxxx Partners LLC of the
Underwriters' election to purchase such Optional Shares, or such other time and
date as Xxxxxx Xxxxxx Partners LLC and the Company may agree upon in writing.
Such time and
9
date for delivery of the Firm Shares is herein called the "First Time of
Delivery," such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery," and each
such time and date for delivery is herein called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 9 hereof, including the
cross receipt for the Shares, will be delivered at the offices of Stoel Rives
LLP, Xxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000 (the "Closing Location"),
and the Shares will be delivered at the office of DTC or its designated
custodian (the "Designated Office"), all at such Time of Delivery. A meeting
will be held at the Closing Location at [____] p.m., New York City time, on the
New York Business Day next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York
City are generally authorized or obligated by law or executive order to close.
5. The Company acknowledges and agrees that (i) the purchase and sale
of the Shares pursuant to this Agreement is an arm's-length commercial
transaction between the Company, on the one hand, and the several Underwriters,
on the other, (ii) in connection therewith and with the process leading to such
transaction each Underwriter is acting solely as a principal and not the agent
or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or
fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters)
or any other obligation to the Company except the obligations expressly set
forth in this Agreement and (iv) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that the Underwriters, or any of them, has rendered advisory
services of any nature or respect, or owes a fiduciary or similar duty to the
Company, in connection with such transaction or the process leading thereto.
This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company, on the one hand, and the
Underwriters, or any of them, on the other, with respect to the subject matter
hereof.
The Company and each of the Underwriters hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or the Prospectus
prior to the last Time of Delivery which shall be disapproved by you promptly
after reasonable notice thereof; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof
(including copies of any Incorporated Documents); to file promptly all material
required to be filed by the Company with the Commission pursuant to Rule 433(d)
under the Act; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any
10
Preliminary Prospectus or other prospectus in respect of the Shares, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or other prospectus or
suspending any such qualification, to promptly use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with written and electronic copies of the Prospectus
in New York City in such quantities as you may reasonably request (including
copies of any Incorporated Documents), and, if the delivery of a prospectus (or
in lieu thereof, the notice referred to in Rule 173(a) under the Act) is
required at any time prior to the expiration of nine months after the time of
issue of the Prospectus in connection with the offering or sale of the Shares
and if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the Act) is delivered, not misleading, or, if for any other reason
it shall be necessary during such same period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many written and electronic copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance
(including copies of any Incorporated Documents), and in case any Underwriter is
required to deliver a prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Act) in connection with sales of any of the Shares at any
time nine months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many written and electronic copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of the Act
(including copies of any Incorporated Documents);
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earning statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the initial Lock-Up Period (as such term is defined in
the Form of Lock-up Agreement attached as Annex III hereto), not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than the grant of options or the
issuance of Stock pursuant to the Company's equity incentive plans, its employee
stock purchase plans and its 401(k) Savings
11
Plan and Trust existing on, or upon the conversion or exchange of convertible or
exchangeable securities or the exercise of warrants or other rights outstanding
as of, the date of this Agreement), without your prior written consent;
provided, however, that if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or announces material news or a
material event or (2) prior to the expiration of the initial Lock-Up period, the
Company announces that it will release earnings results during the 15-day period
following the last day of the initial Lock-Up Period, then in each case the
Lock-Up Period will be automatically extended until the expiration of the 18-day
period beginning on the date of release of the earnings results or the
announcement of the material news or material event, as applicable, unless
Xxxxxx Xxxxxx Partners LLC waives, in writing, such extension; the Company will
provide the representatives and any co-managers and each shareholder subject to
the Lock-Up Period pursuant to the lock-up letters described in Section 9(i)
with prior notice of any such announcement that gives rise to an extension of
the Lock-Up Period;
(f) During a period of five years from the effective date of the
Registration Statement, unless otherwise publicly available in electronic format
on the website of the Company or the Commission, to furnish to its shareholders
as soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders' equity and
cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement), to make
available to its shareholders consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, unless otherwise publicly available in electronic format
on the website of the Company or the Commission, to furnish to you copies of all
reports or other communications (financial or other) furnished to shareholders
as a group, and to deliver to you (i) as soon as they are available, copies of
any reports and financial statements furnished to or filed with the Commission
or any national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional information concerning the business
and financial condition of the Company as you may from time to time reasonably
request;
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Pricing
Prospectus and the Prospectus under the caption "Use of Proceeds";
(i) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act; and
(j) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the online offering
of the Shares (the "License"); provided, however, that the License shall be used
solely for the purpose described above, is granted without any fee and may not
be assigned or transferred.
7. (a) The Company represents and agrees that, without the prior
consent of Xxxxxx Xxxxxx Partners LLC, it has not made and will not make any
offer relating to the Shares that would constitute a "free
12
writing prospectus" as defined in Rule 405 under the Act; each Underwriter
represents and agrees that, without the prior consent of the Company and Xxxxxx
Xxxxxx Partners LLC, it has not made and will not make any offer relating to the
Shares that would constitute a free writing prospectus; any such free writing
prospectus the use of which has been consented to by the Company and Xxxxxx
Xxxxxx Partners LLC is listed on Schedule II hereto;
(b) The Company has complied and will comply with the requirements
of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission or retention where required and
legending; and the Company represents that it has satisfied and agrees that it
will satisfy the conditions under Rule 433 under the Act to avoid a requirement
to file with the Commission any electronic road show;
(c) The Company agrees that if at any time following issuance of
an Issuer Free Writing Prospectus any event occurred or occurs as a result of
which such Issuer Free Writing Prospectus would conflict with the information in
the Registration Statement, the Pricing Prospectus or the Prospectus or would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, the Company will give prompt
notice thereof to Xxxxxx Xxxxxx Partners LLC and, if requested by Xxxxxx Xxxxxx
Partners LLC, will prepare and furnish without charge to each Underwriter an
Issuer Free Writing Prospectus or other document which will correct such
conflict, statement or omission; provided, however, that this representation and
warranty shall not apply to any statements or omissions in an Issuer Free
Writing Prospectus made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Xxxxxx Xxxxxx
Partners LLC expressly for use therein.
8. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing, reproduction and filing of the Registration
Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus and
the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses, if any, in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 6(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification; (iv) all fees and expenses in connection
with listing the Shares on the NASDAQ Global Market; (v) the filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, securing any required review by the NASD of the terms of the
sale of the Shares; (vi) the cost of preparing stock certificates; (vii) the
cost and charges of any transfer agent or registrar and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, and Sections 10 and 13
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, stock transfer taxes on resale of any of the Shares
by them, and any advertising expenses connected with any offers they may make.
9. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that
13
the Company shall have performed all of its obligations hereunder theretofore to
be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) under the Act within the applicable time period
prescribed for such filing by the rules and regulations under the Act and in
accordance with Section 6(a) hereof; all material required to be filed by the
Company pursuant to Rule 433(d) under the Act shall have been filed with the
Commission within the applicable time period prescribed for such filing by Rule
433; if the Company has elected to rely upon Rule 462(b) under the Act, the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; no stop order suspending or preventing the use of
the Prospectus or any Issuer Free Writing Prospectus shall have been initiated
or threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Fenwick & West LLP, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions, dated such Time of Delivery,
in the form attached as Annex II(a) hereto;
(c) Stoel Rives LLP, counsel for the Company, shall have furnished
to you their written opinion and letter, dated such Time of Delivery, in the
form attached as Annex II(b) hereto;
(d) Xxxxxxx X. Xxxxxxx, the General Counsel of the Company, shall
have furnished to you his written opinion, dated such Time of Delivery, in the
form attached as Annex II(c) hereto;
(e) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, Xxxxxxxx Xxxxxxxx
PLLC shall have furnished to you a letter or letters, dated the respective dates
of delivery thereof, in form and substance satisfactory to you, to the effect
set forth in Annex I hereto (the executed copy of the letter delivered prior to
the execution of this Agreement is attached as Annex I(a) hereto and a draft of
the form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
or incorporated by reference into the Pricing Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Pricing Prospectus, and (ii) since the respective dates as
of which information is given in the Pricing Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, operations, assets, condition (financial
or otherwise) or results of operations of the Company and its consolidated
subsidiaries, otherwise than as set forth or contemplated in the Pricing
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of Xxxxxx Xxxxxx Partners LLC so material and adverse
as to make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Pricing Prospectus;
14
(g) On or after the Applicable Time there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the NYSE or on NASDAQ; (ii) a suspension or material
limitation in trading in the Company's securities on NASDAQ; (iii) a general
moratorium on commercial banking activities declared by either Federal or New
York or California State authorities or a material disruption in commercial
banking or securities settlement or clearance services in the United States;
(iv) the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war or (v) the
occurrence of any other calamity or crisis or any change in financial, political
or economic conditions in the United States or elsewhere, if the effect of any
such event specified in clause (iv) or (v) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) The Shares to be sold at such Time of Delivery shall have been
duly listed, subject to notice of issuance, on NASDAQ;
(i) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of the Company's directors and
executive officers, substantially to the effect set forth in Annex III hereto;
(j) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(k) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery (except that those
representations and warranties which address matters only as of a specific date
shall have been true and correct only as of that date), as to the performance by
the Company of all of its respective obligations hereunder to be performed at or
prior to such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to be
furnished certificates as to the matters set forth in subsections (a) and (f) of
this Section.
10. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or
supplement thereto, or any Issuer Free Writing Prospectus or any Incorporated
Documents, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus or any
Incorporated Documents, in reliance upon and in conformity with
15
written information furnished to the Company by any Underwriter through Xxxxxx
Xxxxxx Partners LLC expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the Pricing
Prospectus or the Prospectus, or any amendment or supplement thereto, or any
Issuer Free Writing Prospectus, 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 Pricing Prospectus or the Prospectus,
or any amendment or supplement thereto, or any Issuer Free Writing Prospectus,
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Xxxxxx Xxxxxx Partners LLC expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party
16
shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 10 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 10 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company) and to each person, if any, who
controls the Company within the meaning of the Act.
11. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that it
has so arranged for the purchase of such Shares, you or the Company shall have
the right to postpone a Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments or
supplements to the Registration Statement or the
17
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all of the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 8 hereof and
the indemnity and contribution agreements in Section 10 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
12. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
13. If this Agreement shall be terminated pursuant to Section 11
hereof, the Company shall then not be under any liability to any Underwriter
except as provided in Sections 10 and 13 hereof; but, if for any other reason
any Shares are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company
shall then be under no further liability to any Underwriter in respect of the
Shares not so delivered except as provided in Sections 10 and 13 hereof.
14. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxx Xxxxxx Partners LLC on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxx Xxxxxx
Partners LLC, Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000,
18
Attention: General Counsel; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: General Counsel; provided, however, that
any notice to an Underwriter pursuant to Section 10(c) hereof shall be delivered
or sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you on request;
provided, however, that notices under Section 6(e) shall be in writing, and if
to the Underwriters shall be delivered or sent by mail, telex or facsimile
transmission to you as the representatives at Xxxxxx Xxxxxx Partners LLC, Xxx
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000, Attention: General
Counsel; if to any other signatory to an agreement referred to in Section 9(i),
to the address listed on the signature page thereto. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 10 and 12 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
19. Notwithstanding anything herein to the contrary, the Company is
authorized to disclose to any persons the U.S. federal and state income tax
treatment and tax structure of the potential transaction contemplated by this
Agreement and all materials of any kind (including tax opinions and other tax
analyses) provided to the Company relating to that treatment and structure,
without the Underwriters imposing any limitation of any kind. However, any
information relating to the tax treatment and tax structure shall remain
confidential (and the foregoing sentence shall not apply) to the extent
necessary to enable any person to comply with securities laws. For this purpose,
"tax structure" is limited to any facts that may be relevant to that treatment.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Representatives plus one
for each counsel, of any counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
19
[COMPANY]
By:
------------------------------------
Name:
Title:
Accepted as of the date hereof at San Francisco, California
XXXXXX XXXXXX PARTNERS LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
On behalf of each of the Underwriters
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ------------------
Xxxxxx Xxxxxx Partners LLC..........................................
Xxxxxxx & Company, LLC
X.X. Xxxxxxxxx, Towbin, LLC
Xxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx, Inc.
------------ ------------
Total.......................................................... [ ] [ ]
------------ ------------
SCHEDULE II(a)
ISSUER FREE WRITING PROSPECTUSES
[LIST ANY FWPS INCLUDED IN PRICING DISCLOSURE PACKAGE]
SCHEDULE II(b)
ISSUER FREE WRITING PROSPECTUSES
[LIST ANY ELECTRONIC ROAD SHOWS AND OTHER FWPS NOT INCLUDED IN PRICING
DISCLOSURE PACKAGE]
ANNEX I
FORM OF COMFORT LETTER
ANNEX II(a)
FORM OF OPINION OF UNDERWRITERS' COUNSEL
ANNEX II(b)
FORM OF OPINION OF COMPANY COUNSEL
ANNEX II(c)
FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
ANNEX III
FORM OF LOCK-UP AGREEMENT
CRAY INC.
LOCK-UP AGREEMENT
September __, 2006
Xxxxxx Xxxxxx Partners LLC
Xxxxxxx & Company, LLC
X.X. Xxxxxxxxx, Towbin, LLC
Xxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx, Inc.
c/o Thomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Re:
Cray Inc. Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") on behalf of the several Underwriters named in
Schedule I to such agreement (collectively, the "Underwriters"), with
Cray Inc.,
a Washington corporation (the "Company"), providing for a public offering of the
Common Stock of the Company (the "Shares") pursuant to a Registration Statement
on Form S-1 (the "Registration Statement") filed with the Securities and
Exchange Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell
the Shares, and of other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period specified in the following paragraph (the "Lock-Up Period"), the
undersigned will not offer, sell, contract to sell, pledge (except a pledge for
the benefit of the Company pursuant to an agreement entered or to be entered
into between the Company and the undersigned), grant any option to purchase,
make any short sale or otherwise dispose of any shares of
Common Stock of the
Company, or any options or warrants to purchase any shares of
Common Stock of
the Company, or any securities convertible into, exchangeable for or that
represent the right to receive shares of
Common Stock of the Company, whether
now owned or hereafter acquired, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the SEC (collectively the
"Undersigned's Shares"). The foregoing restriction is expressly agreed to
preclude the undersigned from engaging in any hedging or other transaction which
is designed to or which reasonably could be expected to lead to or result in a
sale or disposition of the Undersigned's Shares even if such Shares would be
disposed of by someone other than the undersigned. Such prohibited hedging or
other transactions would include without
limitation any short sale or any purchase, sale or grant of any right (including
without limitation any put or call option) with respect to any of the
Undersigned's Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from such Shares.
The initial Lock-Up Period will commence on the date of the
initial filing of the Registration Statement with the SEC and continue for 90
days after the public offering date set forth on the final prospectus used to
sell the Shares (the "Public Offering Date") pursuant to the Underwriting
Agreement; provided, however, that if (1) during the last 17 days of the initial
Lock-Up Period, the Company releases earnings results or announces material news
or a material event or (2) prior to the expiration of the initial Lock-Up
Period, the Company announces that it will release earnings results during the
15-day period following the last day of the initial Lock-Up Period, then in each
case the Lock-Up Period will be automatically extended until the expiration of
the 18-day period beginning on the date of release of the earnings results or
the announcement of the material news or material event, as applicable, unless
Xxxxxx Xxxxxx Partners LLC waives, in writing, such extension.
The undersigned hereby acknowledges that the Company has agreed in the
Underwriting Agreement to provide written notice of any event that would result
in an extension of the Lock-Up Period pursuant to the previous paragraph to the
undersigned (in accordance with Section 6(e) of the Underwriting Agreement) and
agrees that any such notice properly delivered will be deemed to have been given
to, and received by, the undersigned. The undersigned hereby further agrees
that, prior to engaging in any transaction or taking any other action that is
subject to the terms of this Lock-Up Agreement during the period from the date
of this Lock-Up Agreement to and including the 34th day following the expiration
of the initial Lock-Up Period, it will give notice thereof to the Company and
will not consummate such transaction or take any such action unless it has
received written confirmation from the Company that the Lock-Up Period (as such
may have been extended pursuant to the previous paragraph) has expired.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, or (iii) with the prior written consent of Xxxxxx Xxxxxx Partners LLC on
behalf of the Underwriters. For purposes of this Lock-Up Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. In addition, notwithstanding the foregoing, if the
undersigned is an entity, the entity may transfer the capital stock of the
Company to any wholly-owned subsidiary of such entity; 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 such
capital stock subject to the provisions of this Agreement and there shall be no
further transfer of such capital stock except in accordance with this Agreement,
and provided further that any such transfer shall not involve a disposition for
value. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of the Undersigned's Shares except in compliance with the foregoing
restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns. This Lock-Up Agreement shall lapse and
become null and void (i) upon written notice
from the Company to Xxxxxx Xxxxxx Partners LLC that the Company does not intend
to proceed with the public offering or wishes to terminate the engagement of
Xxxxxx Xxxxxx Partners LLC as an Underwriter of the public offering, (ii) if the
Underwriting Agreement is not executed by the parties thereto prior to March 31,
2007 or (iii) the Public Offering Date shall not have occurred on or before
March 31, 2007 provided that in the cases of (ii) and (iii), the Company may, by
written notice to you prior to March 31, 2007, extend such date to June 30,
2007.
[Signature Page Follows]
Very truly yours,
-------------------------
Exact Name of Shareholder
-------------------------
Authorized Signature
-------------------------
Title
[Signature Page to Lock-Up Agreement]
