7,825,000 Shares FLOW INTERNATIONAL CORPORATION Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
7,825,000 Shares
FLOW INTERNATIONAL CORPORATION
Common Stock
September 1, 2009
Xxxx Capital Partners, LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
Flow International Corporation, a Washington corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to Xxxx Capital Partners, LLC
(the “Underwriter”) an aggregate of 7,825,000 authorized but unissued shares (the
“Underwritten Shares”) of Common Stock, par value $0.01 per share (the “Common
Stock”), of the Company. The Company has granted the Underwriter the option to purchase an
aggregate of up to 1,173,750 additional shares of Common Stock (the “Additional Shares”) as
may be necessary to cover over-allotments made in connection with the offering. The Underwritten
Shares and Additional Shares are collectively referred to as the “Shares.”
The Company and the Underwriter hereby confirm their agreement as follows:
1. Registration Statement and Prospectus. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3
(File No. 333-160076) under the Securities Act of 1933, as amended (the “Securities Act”)
and the rules and regulations (the “Rules and Regulations”) of the Commission thereunder,
and such amendments to such registration statement (including post effective amendments) as may
have been required to the date of this Agreement. Such registration statement, as amended
(including any post effective amendments) has been declared effective by the Commission. Such
registration statement, including amendments thereto (including post effective amendments thereto)
at such time, the exhibits and any schedules thereto at such time, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act at such time and the
documents and information otherwise deemed to be a part thereof or included therein by Rule 430B
under the Securities Act or otherwise pursuant to the Rules and Regulations at such time, is herein
called the “Registration Statement.” If the Company has filed or files an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462
Registration Statement”), then any reference herein to the term Registration Statement shall
include such Rule 462 Registration Statement.
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The Company is filing with the Commission pursuant to Rule 424 under the Securities Act a
final prospectus supplement relating to the Shares to a form of prospectus included in the
Registration Statement. Such prospectus in the form in which it appears in the Registration
Statement is hereinafter called the “Base Prospectus,” and such final prospectus supplement
as filed, along with the Base Prospectus, is hereinafter called the “Final Prospectus.”
Such Final Prospectus in the form in which it shall be filed with the Commission pursuant to Rule
424(b) under the Securities Act (including the Base Prospectus as so supplemented) is hereinafter
called a “Prospectus.” Any reference herein to the Base Prospectus, the Final Prospectus
or a Prospectus shall be deemed to include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act as of the date of such Prospectus.
For purposes of this Agreement, all references to the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus, the Final Prospectus, the Prospectus or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering and Retrieval system, if applicable. All references in
this Agreement to financial statements and schedules and other information which is “described,”
“contained,” “included” or “stated” in the Registration Statement, the Rule 462 Registration
Statement, the Base Prospectus, the Final Prospectus or the Prospectus (or other references of like
import) shall be deemed to mean and include all such financial statements, pro forma financial
information and schedules and other information which is incorporated by reference in or otherwise
deemed by the Rules and Regulations to be a part of or included in the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration Statement, the Rule
462 Registration Statement, the Base Prospectus, the Final Prospectus or the Prospectus shall be
deemed to mean and include the subsequent filing of any document under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), that is deemed to be incorporated therein by
reference therein or otherwise deemed by the Rules and Regulations to be a part thereof.
2. Representations and Warranties of the Company Regarding the Offering.
(a) The Company represents and warrants to, and agrees with, the Underwriter, as of the date
hereof and as of the Closing Date (as defined in Section 4(c) below), except as otherwise
indicated, as follows:
(i) At each time of effectiveness, at the date hereof and at the Closing Date, the
Registration Statement and any post-effective amendment thereto complied or will comply in
all material respects with the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements
therein not misleading. The Time of Sale Disclosure Package (as defined in Section
2(a)(iii)(A)(1) below) as of the date hereof and at the Closing Date, and the Final
Prospectus, as amended or supplemented, at the time of filing pursuant to Rule 424(b) under
the Securities Act and at the Closing Date, did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties set forth in the two
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immediately preceding sentences shall not apply to statements in or omissions from the
Registration Statement or any Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter specifically for use in the
preparation thereof. The Registration Statement (including each document incorporated by
reference therein) contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or suspending the
effectiveness or use of the Registration Statement or any Prospectus is in effect and no
proceedings for such purpose have been instituted or are pending, or, to the knowledge of
the Company, are contemplated or threatened by the Commission.
(ii) The documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus, when they became effective or were filed with
the Commission, as the case may be, conformed in all material respects to the requirements
of the Securities Act or the Exchange Act, as applicable, were filed on a timely basis with
the Commission and none of such documents, when they were filed (or, if amendments to such
documents were filed, when such amendments were filed), contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(iii) (A) The Company has provided a copy to the Underwriter of each Issuer Free
Writing Prospectus (as defined below) used in the sale of Shares. The Company has filed all
Issuer Free Writing Prospectuses required to be so filed with the Commission, and no order
preventing or suspending the effectiveness or use of any Issuer Free Writing Prospectus is
in effect and no proceedings for such purpose have been instituted or are pending, or, to
the knowledge of the Company, are contemplated or threatened by the Commission. When taken
together with the rest of the Time of Sale Disclosure Package or the Final Prospectus, since
its first use and at all relevant times since then, no Issuer Free Writing Prospectus has,
does or will include (1) any untrue statement of a material fact or omission 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, or (2) information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement or the Final Prospectus. The representations and warranties set forth in the
immediately preceding sentence shall not apply to statements in or omissions from the Time
of Sale Disclosure Package, the Final Prospectus or any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof. As used in this paragraph and
elsewhere in this Agreement:
(1) “Time of Sale Disclosure Package” means the Base Prospectus and the
Final Prospectus, including each Issuer Free Writing Prospectus.
(2) “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act, relating to the Shares
that (A) is required to be filed with the Commission by the Company,
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or (B) is exempt from filing pursuant to Rule 433(d)(5)(i) or (d)(8) under the
Securities Act, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g) under the Securities Act.
(B) At the time of filing of the Registration Statement and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act or an “excluded issuer” as defined in Rule 164 under the Securities Act.
(C) Each Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period, all other conditions as may be
applicable to its use as set forth in Rules 164 and 433 under the Securities Act, including
any legend, record-keeping or other requirements.
(iv) The financial statements of the Company, together with the related notes, included
or incorporated by reference in the Registration Statement, the Time of Sale Disclosure
Package and the Final Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and fairly present the financial
condition of the Company as of the dates indicated and the results of operations and changes
in cash flows for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods involved; and the
supporting schedules included in the Registration Statement present fairly the information
required to be stated therein. No other financial statements, pro forma financial
information or schedules are required under the Securities Act to be included or
incorporated by reference in the Registration Statement, the Time of Sale Disclosure Package
or the Final Prospectus. To the Company’s knowledge, Deloitte & Touche LLP, which has
expressed its opinion with respect to the financial statements and schedules filed as a part
of the Registration Statement and included in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus is an independent public accounting firm with
respect to the Company within the meaning of the Securities Act and the Rules and
Regulations.
(v) The Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or Section 21E of
the Exchange Act) contained or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package or the Final Prospectus.
(vi) All statistical or market-related data included or incorporated by reference in
the Registration Statement, the Time of Sale Disclosure Package or the Final Prospectus are
based on or derived from sources that the Company reasonably believes to be reliable and
accurate, and the Company has obtained the written consent to the use of such data from such
sources, to the extent required.
(vii) The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and
is included or approved for inclusion on the Nasdaq Global Market. There is no action
pending by the Company or, to the Company’s knowledge, the Nasdaq
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Global Market to delist the Common Shares from the Nasdaq Global Market, nor has the
Company received any notification that the Nasdaq Global Market is contemplating terminating
such listing. When issued, the Shares will be listed on the Nasdaq Global Market.
(viii) The Company has not taken, directly or indirectly, any action that is designed
to or that has constituted or that would reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(ix) The Company is not and, after giving effect to the offering and sale of the
Shares, will not be an “investment company,” as such term is defined in the Investment
Company Act of 1940, as amended.
(x) The Company was at the time of filing the Registration Statement, and at the date
hereof, remains eligible to use Form S-3 under the Securities Act.
(b) Any certificate signed by any officer of the Company and delivered to the Underwriter or
to the Underwriter’s counsel shall be deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
3. Representations and Warranties Regarding the Company.
(a) The Company represents and warrants to and agrees with, the Underwriter, except as set
forth in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, as
follows:
(i) Each of the Company and its subsidiaries has been duly organized and is validly
existing as a corporation and each of the Company’s subsidiaries is in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its subsidiaries has
the corporate power and authority to own its properties and conduct its business as
currently being carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or leases real property
or in which the conduct of its business makes such qualification necessary and in which the
failure to so qualify would have or is reasonably likely to result in a material adverse
effect upon the business, prospects, properties, operations, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries, taken as a whole,
or in its ability to perform its obligations under this Agreement (“Material Adverse
Effect”).
(ii) The Company has the requisite corporate power and authority to enter into this
Agreement and to authorize, issue and sell the Shares as contemplated by this Agreement.
This Agreement has been duly authorized, executed and delivered by the Company, and
constitutes a valid, legal and binding obligation of the Company, enforceable in accordance
with its terms, except as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be
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limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(iii) The execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any law, rule or regulation to
which the Company or any subsidiary is subject, or by which any property or asset of the
Company or any subsidiary is bound or affected except to the extent that such violations is
not reasonably likely to result in a Material Adverse Effect, (B) conflict with, result in
any violation or breach of, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or other
instrument (the “Contracts”) or obligation or other understanding to which the
Company or any subsidiary is a party of by which any property or asset of the Company or any
subsidiary is bound or affected, except to the extent that such conflict, default,
termination, amendment, acceleration or cancellation right is not reasonably likely to
result in a Material Adverse Effect, or (C) result in a breach or violation of any of the
terms and provisions of, or constitute a default under, the Company’s articles of
incorporation or by-laws.
(iv) Neither the Company nor any of its subsidiaries is in violation, breach or default
under its articles of incorporation, by-laws or other equivalent organizational or governing
documents, except where the violation, breach or default in the case of a subsidiary of the
Company is not reasonably likely to result in a Material Adverse Effect.
(v) All consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or performance
of this Agreement have been obtained or made, other than such consents, approvals, orders
and authorizations the failure of which to make or obtain is not reasonably likely to result
in a Material Adverse Effect.
(vi) All of the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been issued in
compliance with all applicable securities laws, and conform to the description thereof in
the Registration Statement, the Time of Sale Disclosure Package and the Prospectus. Except
for the issuances of options or restricted stock in the ordinary course of business, since
the respective dates as of which information is provided in the Registration Statement, the
Time of Sale Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants, agreements, contracts
or other rights in existence to purchase or acquire from the Company any shares of the
capital stock of the Company. The Shares, when issued, will be duly authorized and validly
issued, fully paid and nonassessable, will be issued in compliance with all applicable
securities laws, and will be free of preemptive, registration or similar rights.
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(vii) Each of the Company and its subsidiaries has filed all returns (as
hereinafter defined) required to be filed with taxing authorities prior to the date
hereof or has duly obtained extensions of time for the filing thereof. Each of the Company
and its subsidiaries has paid all taxes (as hereinafter defined) shown as due on such
returns that were filed and has paid all taxes imposed on or assessed against the Company or
such respective subsidiary, except for any such taxes currently being contested in good
faith as is not reasonably likely to result in a Material Adverse Effect. The provisions
for taxes payable, if any, shown on the financial statements filed with or as part of the
Registration Statement are sufficient for all accrued and unpaid taxes, whether or not
disputed, and for all periods to and including the dates of such consolidated financial
statements. Except as disclosed in writing to the Underwriter, (i) no issues have been
raised (and are currently pending) by any taxing authority in connection with any of the
returns or taxes asserted as due from the Company or its subsidiaries, and (ii) no waivers
of statutes of limitation with respect to the returns or collection of taxes have been given
by or requested from the Company or its subsidiaries. The term “taxes” mean all
federal, state, local, foreign, and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties or other taxes, fees, assessments, or charges of any kind
whatever, together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto. The term “returns” means all returns, declarations,
reports, statements, and other documents required to be filed in respect to taxes.
(viii) Since the respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus, (a) neither the Company
nor any of its subsidiaries has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions other than in the ordinary course of
business, (b) the Company has not declared or paid any dividends or made any distribution of
any kind with respect to its capital stock; (c) there has not been any change in the capital
stock of the Company or any of its subsidiaries (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the exercise of
outstanding options or warrants or the issuance of restricted stock awards or restricted
stock units under the Company’s existing stock awards plan, or any new grants thereof in the
ordinary course of business), (d) there has not been any material change in the Company’s
indebtedness, and (e) there has not been the occurrence of any Material Adverse Effect.
(ix) There is not pending or, to the knowledge of the Company, threatened, any action,
suit or proceeding to which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company is the subject before or by any court or governmental
agency, authority or body, or any arbitrator or mediator, which is reasonably likely to
result in a Material Adverse Effect.
(x) The Company and each of its subsidiaries holds, and is in compliance with, all
franchises, grants, authorizations, licenses, permits, easements, consents, certificates and
orders (“Permits”) of any governmental or self-regulatory agency, authority or body
required for the conduct of its business, and all such Permits
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are in full force and effect,
in each case except where the failure to hold, or comply with,
any of them is not reasonably likely to result in a Material Adverse Effect.
(xi) The Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus as being owned by them that are material to the
business of the Company, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects, except those that are not reasonably likely to
result in a Material Adverse Effect. To the knowledge of the Company, property held under
lease by the Company and its subsidiaries is held by them under valid, subsisting and
enforceable leases with only such exceptions with respect to any particular lease as do not
interfere in any material respect with the conduct of the business of the Company and its
subsidiaries.
(xii) The Company and each of its subsidiaries owns or possesses or has valid right to
use all patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses, inventions, trade secrets
and similar rights (“Intellectual Property”) necessary for the conduct of the
business of the Company and its subsidiaries as currently carried on and as described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus. To the
knowledge of the Company, no action or use by the Company or any of its subsidiaries will
involve or give rise to any infringement of, or license or similar fees for, any
Intellectual Property of others, except where such action, use, license or fee is not
reasonably likely to result in a Material Adverse Effect. Neither the Company nor any of
its subsidiaries has received any notice alleging any such infringement or fee that is
reasonably likely to result in a Material Adverse Effect.
(xiii) The Company and each of its subsidiaries has complied with, is not in violation
of, and has not received any notice of violation relating to any law, rule or regulation
relating to the conduct of its business, or the ownership or operation of its property and
assets, including, without limitation, (A) the Currency and Foreign Transactions Reporting
Act of 1970, as amended, or any money laundering laws, rules or regulations, (B) any laws,
rules or regulations related to health, safety or the environment, including those relating
to the regulation of hazardous substances, (C) the Xxxxxxxx-Xxxxx Act and the rules and
regulations of the Commission thereunder, (D) the Foreign Corrupt Practices Act of 1977 and
the rules and regulations thereunder, and (E) the Employment Retirement Income Security Act
of 1974 and the rules and regulations thereunder, in each case except where the failure to
be in compliance is not reasonably likely to result in a Material Adverse Effect.
(xiv) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, representative, agent or affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the Shares
contemplated hereby, or lend, contribute or otherwise make
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available such proceeds to any
person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(xv) The Company and each of its subsidiaries 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 its properties and as is customary for companies engaged in similar businesses in
similar industries.
(xvi) No labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent that is reasonably likely to result
in a Material Adverse Effect.
(xvii) Neither the Company, its subsidiaries nor, to its knowledge, any other party is
in violation, breach or default of any Contract that is reasonably likely to result in a
Material Adverse Effect.
(xviii) No supplier, customer, distributor or sales agent of the Company has notified
the Company that it intends to discontinue or decrease the rate of business done with the
Company, except where such decrease is not reasonably likely to result in a Material Adverse
Effect.
(xix) There are no claims, payments, issuances, arrangements or understandings for
services in the nature of a finder’s, consulting or origination fee with respect to the
introduction of the Company to the Underwriter or the sale of the Shares hereunder or any
other arrangements, agreements, understandings, payments or issuances with respect to the
Company that may constitute Items of Value (as defined under the Rules and Regulations of
FINRA) to the Underwriter or another FINRA member.
(xx) Except for certain payments to Xxxxxxxx Xxxxx that have been disclosed to the
Underwriter in writing, the Company has not made any direct or indirect payments (in cash,
securities or otherwise) to (i) any person, as a finder’s fee, investing fee or otherwise,
in consideration of such person raising capital for the Company or introducing to the
Company persons who provided capital to the Company, (ii) any FINRA member, or (iii) any
person or entity that has any direct or indirect affiliation or association with any FINRA
member within the 12-month period prior to the date on which the Registration Statement was
filed with the Commission (“Filing Date”) or thereafter.
(xxi) None of the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating FINRA member,
except as specifically authorized herein.
(xxii) To the Company’s knowledge, no (i) officer or director of the Company or its
subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities or that of
its subsidiaries (other than The Guardian Life Insurance Company of America) or (iii) owner
of any amount of the Company’s unregistered securities acquired within the 180-day period
prior to the Filing Date, has any direct or indirect affiliation or association with any
FINRA member. The Company will advise the Underwriter and its
9
counsel if it becomes aware
that any officer, director or stockholder of the Company or its subsidiaries is or becomes
an affiliate or associated person of a FINRA member
participating in the offering.
(xxiii) Other than the Underwriter, no person has the right to act as an underwriter or
as a financial advisor to the Company in connection with the transactions contemplated
hereby.
4. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to issue and sell the
Underwritten Shares to the Underwriter, and the Underwriter agrees to purchase the Underwritten
Shares. The purchase price for 4,761,905 of the Underwritten Shares shall be $1.9425 per share and
the purchase price for 3,063,095 of the Underwritten Shares shall be $1.953 per share.
(b) The Company hereby grants to the Underwriter the option to purchase some or all of the
Additional Shares and, upon the basis of the warranties and representations and subject to the
terms and conditions herein set forth, the Underwriter shall have the right to purchase all or any
portion of the Additional Shares at $1.953 as may be necessary to cover over-allotments made in
connection with the transactions contemplated hereby. This option may be exercised by the
Underwriter at any time (but not more than once) on or before the thirtieth day following the date
hereof, by written notice to the Company (the “Option Notice”). The Option Notice shall
set forth the aggregate number of Additional Shares as to which the option is being exercised, and
the date and time when the Additional Shares are to be delivered (such date and time being herein
referred to as the “Option Closing Date”); provided, however, that the Option Closing Date
shall not be earlier than the Closing Date (as defined below) nor earlier than the first business
day after the date on which the option shall have been exercised nor later than the fifth business
day after the date on which the option shall have been exercised unless the Company and the
Underwriter otherwise agree.
Payment of the purchase price for and delivery of the Additional Shares shall be made at the
Option Closing Date in the same manner and at the same office as the payment for the Underwritten
Shares as set forth in subparagraph (c) below. For the purpose of expediting the checking of the
certificate for the Additional Shares by the Underwriter, the Company agrees to make a form of such
certificate available to the Underwriter for such purpose at least one full business day preceding
the Option Closing Date.
(c) The Underwritten Shares will be delivered by the Company to the Underwriter against
payment of the purchase price therefor by wire transfer of same day funds payable to the order of
the Company at the offices of Xxxx Capital Partners, LLC, 00 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX
00000, or such other location as may be mutually acceptable, at 6:00 a.m. PST, on the third (or if
the Underwritten Shares are priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after
4:30 p.m. Eastern time, the fourth) full business day following the date hereof, or at such other
time and date as the Underwriter and the Company determine pursuant to Rule 15c6-1(a) under the
Exchange Act, or, in the case of the Additional
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Shares, at such date and time set forth in the
Option Notice. The time and date of delivery of the Underwritten Shares or the Additional Shares,
as applicable, is referred to herein as the “Closing
Date.” If the Underwriter so elects, delivery of the Underwritten Shares and
Additional Shares may be made by credit through full fast transfer to the account at The Depository
Trust Company designated by the Underwriter. Certificates representing the Shares, in definitive
form and in such denominations and registered in such names as the Underwriter may request upon at
least two business days’ prior notice to the Company, will be made available for checking and
packaging not later than 10:30 a.m. PDT on the business day next preceding the Closing Date at the
above addresses, or such other location as may be mutually acceptable.
5. Covenants.
(a) The Company covenants and agrees with the Underwriter as follows:
(i) During the period beginning on the date hereof and ending on the later of the
Closing Date or such date as determined by the Underwriter the Prospectus is no longer
required by law to be delivered in connection with sales by an underwriter or dealer (the
“Prospectus Delivery Period”), prior to amending or supplementing the Registration
Statement, including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Underwriter for review and
comment a copy of each such proposed amendment or supplement, and the Company shall not file
any such proposed amendment or supplement to which the Underwriter reasonably objects.
(ii) From the date of this Agreement until the end of the Prospectus Delivery Period,
the Company shall promptly advise the Underwriter in writing (A) of the receipt of any
comments of, or requests for additional or supplemental information from, the Commission,
(B) of the time and date of any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to the Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus, (C) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package or any Issuer Free Writing Prospectus, or of any proceedings
to remove, suspend or terminate from listing or quotation the Common Stock from any
securities exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of such purposes.
If the Commission shall enter any such stop order at any time during the Prospectus Delivery
Period, the Company will use its reasonable efforts to obtain the lifting of such order at
the earliest possible moment. Additionally, the Company agrees that it shall comply with
the provisions of Rules 424(b), 430A and 430B, as applicable, under the Securities Act and
will use its reasonable efforts to confirm that any filings made by the Company under Rule
424(b) or Rule 433 were received in a timely manner by the Commission (without reliance on
Rule 424(b)(8) or 164(b) of the Securities Act).
11
(iii) (A) During the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the
Rules and Regulations, as from time to time in force, and by the
Exchange Act, as now and hereafter amended, so far as necessary to permit the
continuance of sales of or dealings in the Shares as contemplated by the provisions hereof,
the Time of Sale Disclosure Package, the Registration Statement and the Prospectus. If
during such period any event occurs the result of which the Prospectus (or if the Prospectus
is not yet available to prospective purchasers, the Time of Sale Disclosure Package ) would
include an untrue statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary or appropriate in the opinion of the
Company or its counsel or the Underwriter or its counsel to amend the Registration Statement
or supplement the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package ) to comply with the Securities Act or to
file under the Exchange Act any document that would be deemed to be incorporated by
reference in the Prospectus in order to comply with the Securities Act or the Exchange Act,
the Company will promptly notify the Underwriter and will amend the Registration Statement
or supplement the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package) or file such document (at the expense of
the Company) so as to correct such statement or omission or effect such compliance.
(B) If at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development the result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information contained in the Registration
Statement or any Prospectus or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company has promptly notified or promptly will notify the Underwriter
and has promptly amended or will promptly amend or supplement, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or
omission.
(iv) The Company shall take or cause to be taken all necessary action to qualify the
Shares for sale under the securities laws of such jurisdictions as the Underwriter
reasonably designates and to continue such qualifications in effect so long as required for
the distribution of the Shares, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified, to execute a general consent to service of
process in any state or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise subject.
(v) The Company will furnish to the Underwriter and counsel for the Underwriter copies
of the Registration Statement, each Prospectus, any Issuer Free Writing Prospectus, and all
amendments and supplements to such documents, in each case as soon as available and in such
quantities as the Underwriter may from time to time reasonably request.
12
(vi) The Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be audited)
covering a 12-month period that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Rules and Regulations.
(vii) The Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, will pay or cause to be paid (A) all expenses
(including transfer taxes allocated to the respective transferees) incurred in connection
with the delivery to the Underwriter of the Shares, (B) all expenses and fees (including,
without limitation, fees and expenses of the Company’s counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the Registration Statement
(including the financial statements therein and all amendments, schedules, and exhibits
thereto), the Shares, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free
Writing Prospectus and any amendment thereof or supplement thereto, (C) all reasonable
filing fees and reasonable fees and disbursements of the Underwriter’s counsel incurred in
connection with the qualification of the Shares for offering and sale by the Underwriter or
by dealers under the securities or blue sky laws of the states and other jurisdictions that
the Underwriter shall designate, (D) the fees and expenses of any transfer agent or
registrar, (E) the reasonable filing fees and reasonable fees and disbursements of
Underwriter’s counsel incident to any required review and approval by FINRA, of the terms of
the sale of the Shares, (F) listing fees, if any, for the listing or quotation of the Shares
on the Nasdaq Global Market, (G) fees and disbursements of the Company’s auditor incurred in
delivering the letter(s) described in Section 6(f) of this Agreement, (viii) reasonable fees
and disbursements of counsel to the Underwriter, and (ix) the costs and expenses of the
Company and the Underwriter in connection with the marketing of the offering and the sale of
the Securities to prospective investors including, but not limited to, those related to any
presentations or meetings undertaken in connection therewith including, without limitation,
expenses associated with the production of road show slides and graphics, fees and expenses
of any consultants engaged with the written consent of the Company in connection with the
road show presentations, travel, lodging and other expenses incurred by the officers of the
Company and any such consultants, and the cost of any aircraft or other transportation
chartered by the Company in connection with the road show ; provided, however, that the
maximum amount payable by the Company for Underwriter’s counsel fees, disbursements,
underwriter FINRA fees, roadshow expenses and other out-of-pocket expenses pursuant to this
Section 5(a)(vii) shall be $75,000.
(viii) The Company intends to apply the net proceeds from the sale of the Shares to be
sold by it hereunder for the purposes set forth in the Time of Sale Disclosure Package and
in the Final Prospectus.
(ix) The Company has not taken and will not take, directly or indirectly, during the
Prospectus Delivery Period, any action designed to or which might reasonably be expected to
cause or result in, or that has constituted, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.
13
(x) The Company represents and agrees that, unless it obtains the prior
written consent of the Underwriter, and the Underwriter represents and agrees that,
unless it obtains the prior written consent of the Company, it has not made and will not
make any offer relating to the Shares that would constitute an Issuer Free Writing
Prospectus. Any such free writing prospectus consented to by the Company and the
Underwriter is hereinafter referred to as a “Permitted Free Writing Prospectus.”
The Company represents that it has treated or agrees that it will treat each Permitted Free
Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has
complied or will comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending and
record-keeping.
(xi) The Company hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period ending 90 days after the date hereof
(“Lock-Up Period”), (i) offer, pledge, issue, sell, contract to sell, purchase,
contract to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or exchangeable for
Common Stock; or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise; or (iii) file any registration
statement with the Commission relating to the offering of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock. The
restrictions contained in the preceding sentence shall not apply to (1) the Shares to be
sold hereunder, (2) the issuance of Common Stock upon the exercise of options or warrants
disclosed as outstanding in the Registration Statement (excluding exhibits thereto) or the
Prospectus, or (3) the issuance of employee stock options not exercisable during the Lock-Up
Period and the grant of restricted stock awards or restricted stock units pursuant to equity
incentive plans described in the Registration Statement (excluding exhibits thereto) and the
Prospectus. Notwithstanding the foregoing, if (x) the Company issues an earnings release or
material news, or a material event relating to the Company occurs, during the last 17 days
of the Lock-Up Period, or (y) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the 16-day period beginning on the
last day of the Lock-Up Period, the restrictions imposed by this clause shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event, unless the Underwriter
waives such extension in writing.
(xii) Any further documents so filed and incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package or the Final Prospectus, when such documents
are filed with the Commission, will conform in all material respects to the requirements of
the Exchange Act, and will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
14
6. Conditions of the Underwriter’s Obligations. The obligations of the Underwriter
hereunder to purchase the Shares are subject to the accuracy, as of the date hereof and at the
Closing Date (as if made at the Closing Date), of and compliance with all representations,
warranties and agreements of the Company contained herein, the performance by the Company of its
obligations hereunder and the following additional conditions:
(a) If filing of the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, is required under the Securities Act or the Rules and Regulations, the Company
shall have filed the Prospectus (or such amendment or supplement) or such Issuer Free Writing
Prospectus with the Commission in the manner and within the time period so required (without
reliance on Rule 424(b)(8) or 164(b) under the Securities Act); the Registration Statement shall
remain effective; no stop order suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462 Registration Statement, or any amendment thereof, nor suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free
Writing Prospectus shall have been issued; no proceedings for the issuance of such an order shall
have been initiated or threatened; any request of the Commission or the Underwriter for additional
information (to be included in the Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, any Issuer Free Writing Prospectus or otherwise) shall have been complied with to the
Underwriter’s reasonable satisfaction.
(b) FINRA shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) The Underwriter shall not have reasonably determined, and advised the Company, that the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus, or any amendment
thereof or supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue statement
of fact which, in the Underwriter’s reasonable opinion, is material, or omits to state a fact
which, in the Underwriter’s reasonable opinion, is material and is required to be stated therein or
necessary to make the statements therein not misleading.
(d) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded
any of the Company’s securities by any “nationally recognized statistical organization,” as that
term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and (ii)
no such organization shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company’s securities.
(e) On the Closing Date, there shall have been furnished to the Underwriter the opinion and
negative assurance letters of K&L Gates LLP, dated the Closing Date and addressed to the
Underwriter, in form and substance reasonably satisfactory to the Underwriter, to the effect set
forth in Schedule I.
(f) The Underwriter shall have received a letter of Deloitte & Touche LLP, on the date hereof
and on the Closing Date addressed to the Underwriter, confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualifications of accountants under Rule 2-01 of
15
Regulation S-X of the
Commission, and confirming, as of the date of each such letter (or, with
respect to matters involving changes or developments since the respective dates as of which
specified financial information is given in the Time of Sale Disclosure Package, as of a date not
prior to the date hereof or more than five days prior to the date of such letter), the conclusions
and findings of said firm with respect to the financial information and other matters required by
the Underwriter.
(g) On the Closing Date, there shall have been furnished to the Underwriter a certificate,
dated the Closing Date and addressed to the Underwriter, signed by the chief executive officer and
the chief financial officer of the Company, in their capacity as officers of the Company, to the
effect that:
(i) The representations and warranties of the Company in this Agreement are true and
correct, in all material respects, as if made at and as of the Closing Date, 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 the Closing Date;
(ii) No stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the qualification of
the Shares for offering or sale, or (C) suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, has been issued,
and no proceeding for that purpose has been instituted or, to their knowledge, is
contemplated by the Commission or any state or regulatory body; and
(iii) There has been no occurrence of any event resulting or reasonably likely to
result in a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date.
(h) On or before the date hereof, the Underwriter shall have received duly executed “lock-up”
agreements, in a form acceptable to the Underwriter, between the Underwriter and Xxxxxxx X. Xxxxx,
Xxxxx X. Xxxxx, Xxxx X. Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxxx.
(i) The Company shall have furnished to the Underwriter and its counsel such additional
documents, certificates and evidence as the Underwriter or its counsel may have reasonably
requested.
If any condition specified in this Section 6 shall not have been fulfilled when and as
required to be fulfilled, this Agreement may be terminated by the Underwriter by notice to the
Company at any time at or prior to the Closing Date and such termination shall be without liability
of any party to any other party, except that Section 5(a)(vii), Section 7 and Section 8 shall
survive any such termination and remain in full force and effect.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless the Underwriter, its
affiliates, directors and officers and employees, and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of
16
the Exchange
Act, from and against any losses, claims, damages or liabilities to which the
Underwriter or such person may become subject, under the Securities Act or otherwise
(including in settlement of any litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including the information deemed to be a
part of the Registration Statement at the time of effectiveness and at any subsequent time pursuant
to Rules 430A and 430B of the Rules and Regulations, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto (including any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Registration Statement or the
Prospectus), 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, in light of the circumstances under which they were made, not
misleading, (ii) in whole or in part, any inaccuracy in the representations and warranties of the
Company contained herein, or (iii) in whole or in part, any failure of the Company to perform its
obligations hereunder or under law, and will reimburse the Underwriter for any legal or other
expenses reasonably incurred by it in connection with evaluating, investigating or defending
against such loss, claim, damage, liability or action; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage, liability or action
arises out of or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Time of Sale Disclosure Package, 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 the
Underwriter specifically for use in the preparation thereof.
(b) The Underwriter will indemnify, defend and hold harmless the Company, its affiliates,
directors, officers and employees, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any
losses, claims, damages or liabilities to which the Company may become subject, under the
Securities Act 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 an untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement, the Time of
Sale Disclosure Package, 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,
the Time of Sale Disclosure Package, 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 the Underwriter specifically for use in the preparation thereof, and
will reimburse the Company for any legal or other expenses reasonably incurred by the Company in
connection with defending against any such loss, claim, damage, liability or action.
(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
17
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 failure to notify the
indemnifying party shall not relieve the indemnifying party from any liability that it may have to
any indemnified party except to the extent such indemnifying party has been materially prejudiced
by such failure. 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 in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying party to such
indemnified party of the indemnifying party’s election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such subsection for any
legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof; provided, however, that if (i) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the indemnifying party, (ii) a
conflict or potential conflict exists (based on advice of counsel to the indemnified party) between
the indemnified party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified party), or (iii)
the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after receiving notice of the
commencement of the action, the indemnified party shall have the right to employ a single counsel
to represent it in any claim in respect of which indemnity may be sought under subsection (a) or
(b) of this Section 7, in which event the reasonable and documented fees and expenses of such
separate counsel shall be borne by the indemnifying party or parties and reimbursed to the
indemnified party as incurred.
The indemnifying party under this Section 7 shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is a party or could be named and
indemnity was or would be sought hereunder by such indemnified party, unless such settlement,
compromise or consent (a) includes an unconditional release of such indemnified party from all
liability for claims that are the subject matter of such action, suit or proceeding and (b) 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 7 is unavailable or insufficient to
hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other from the offering and sale 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
18
relative fault of the Company on the one hand and the Underwriter on the other in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter 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 Underwriter, in
each case as set forth in the table on the cover page of the Final Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriter and the parties’ relevant intent,
knowledge, access to information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and equitable if
contributions pursuant to this subsection (e) were to be determined by pro rata allocation or by
any other method of allocation that does not take account of the equitable considerations referred
to in the first sentence of this subsection (e). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first sentence of this
subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any action or claim that is
the subject of this subsection (e). Notwithstanding the provisions of this subsection (e), the
Underwriter shall not be required to contribute any amount in excess of the amount of the
Underwriter’s commissions referenced in Section 4(a) actually received by the Underwriter pursuant
to this Agreement. No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 7 shall be in addition to any liability
that the Company may otherwise have and the benefits of such obligations shall extend, upon the
same terms and conditions, to each person, if any, who controls the Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act; and the obligations of the
Underwriter under this Section 7 shall be in addition to any liability that the Underwriter may
otherwise have and the benefits of such obligations shall extend, upon the same terms and
conditions, to the Company, and officers, directors and each person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
(f) For purposes of this Agreement, the Underwriter confirms, and the Company acknowledges,
that there is no information concerning the Underwriter furnished in writing to the Company by the
Underwriter specifically for preparation of or inclusion in the Registration Statement, the Time of
Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, other than the
statements set forth in the last paragraph on the cover page of the Prospectus and the statements
set forth in the “Underwriting” section of the Prospectus and Time of Sale Disclosure Package, only
insofar as such statements relate to the amount of selling concession and re-allowance or to
over-allotment and related activities that may be undertaken by the Underwriter.
8. Representations and Agreements to Survive Delivery. All representations, warranties, and
agreements of the Company herein or in certificates delivered pursuant hereto,
19
including, but not
limited to, the agreements of the Underwriter and the Company contained in
Section 5(a)(vii) and Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Underwriter or any controlling person
thereof, or the Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Shares to and by the Underwriter hereunder.
9. Termination of this Agreement.
(a) The Underwriter shall have the right to terminate this Agreement by giving notice to the
Company as hereinafter specified at any time at or prior to the Closing Date, if (i) trading in the
Company’s Common Stock shall have been suspended by the Commission or the Nasdaq Global Market or
trading in securities generally on the Nasdaq Global Market, New York Stock Exchange or NYSE Amex
shall have been suspended, (ii) minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the Nasdaq Global Market, New
York Stock Exchange or NYSE Amex, by such exchange or by order of the Commission or any other
governmental authority having jurisdiction, (iii) a banking moratorium shall have been declared by
federal or state authorities, (iv) there shall have occurred any attack on, outbreak or escalation
of hostilities or act of terrorism involving the United States, any declaration by the United
States of a national emergency or war, any change in financial markets, any substantial change or
development involving a prospective substantial change in United States or international political,
financial or economic conditions or any other calamity or crisis, or (v) the Company suffers any
loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by
insurance, the effect of which, in each case described in this subsection (a), in the Underwriter’s
reasonable judgment is material and adverse and makes it impractical or inadvisable to proceed with
the completion of the sale of and payment for the Shares. Any such termination shall be without
liability of any party to any other party except that the provisions of Section 5(a)(vii) and
Section 7 hereof shall at all times be effective and shall survive such termination.
(b) If the Underwriter elects to terminate this Agreement as provided in this Section, the
Company shall be notified promptly by the Underwriter by telephone, confirmed by letter.
10. Notices. Except as otherwise provided herein, all communications hereunder shall be in
writing and, if to Xxxx, shall be mailed, delivered or telecopied to Xxxx Capital Partners, LLC, 00
Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, telecopy number: (000) 000-0000, Attention: Managing
Director; and if to the Company, shall be mailed, delivered or telecopied to it at Flow
International Corporation, 00000 00xx Xxxxxx Xxxxx, Xxxx, XX 00000, telecopy number:
(000) 000-0000, Attention: General Counsel; or in each case to such other address as the person to
be notified may have requested in writing. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new address for such
purpose.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 7. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation any
20
legal or
equitable remedy or claim under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein used shall not include any purchaser,
as such purchaser, of any of the Shares from the Underwriter.
12. Absence of Fiduciary Relationship. The Company acknowledges and agrees that: (a) the
Underwriter has been retained solely to act as underwriter in connection with the sale of the
Shares and that no fiduciary, advisory or agency relationship between the Company and the
Underwriter has been created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Underwriter has advised or is advising the Company on other matters;
(b) the price and other terms of the Shares set forth in this Agreement were established by the
Company following discussions and arms-length negotiations with the Underwriter and the Company is
capable of evaluating and understanding and understands and accepts the terms, risks and conditions
of the transactions contemplated by this Agreement; (c) it has been advised that the Underwriter
and its affiliates are engaged in a broad range of transactions that may involve interests that
differ from those of the Company and that the Underwriter has no obligation to disclose such
interest and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; (d) it has been advised that the Underwriter is acting, in respect of the
transactions contemplated by this Agreement, solely for the benefit of the Underwriter, and not on
behalf of the Company.
13. Amendments and Waivers. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in
the future. No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any
such waiver be deemed or constitute a continuing waiver unless otherwise expressly provided.
14. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph,
clause or provision of this Agreement shall not affect the validity or enforceability of any other
section, paragraph, clause or provision.
15. Entire Agreeement. This Agreement constitutes the entire agreement between the
Underwriter and the Company relating to the subject matter hereof and supersedes all prior
agreements between the Underwriter and the Company relating to the offer and sale of the Shares.
16. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington.
17. Submission to Jurisdiction. Except as set forth below, no proceeding may be commenced,
prosecuted or continued in any court other than the courts of the State of California or a United
States District Court, each located in Orange County, California, which courts shall have
jurisdiction over the adjudication of such matters, and the Company hereby consents to the
jurisdiction of such courts and personal service with respect thereto. The Company hereby consents
to personal jurisdiction, service and venue in any court in which any proceeding arising out of or
in any way relating to this Agreement is brought by any third party against the
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Underwriter. The
Company hereby waives all right to trial by jury in any proceeding (whether
based upon contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final judgment in any such proceeding brought in any such
court shall be conclusive and binding upon the Company and may be enforced in any other courts in
the jurisdiction of which the Company is or may be subject, by suit upon such judgment.
18. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original and
all such counterparts shall together constitute one and the same instrument.
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Please sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company and the Underwriter in accordance
with its terms.
Very truly yours, FLOW INTERNATIONAL CORPORATION |
||||
By: | /s/ Xxxxx X. Xxxxx | |||
Name: | Xxxxx X. Xxxxx | |||
Title: | Chief Financial Officer | |||
Confirmed as of the date first above- mentioned by the Underwriter. XXXX CAPITAL PARTNERS, LLC |
||||
By: | /s/ Xxxxx X. Xxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxx | |||
Title: | Head of Equity Capital Markets | |||
[Signature page to Underwriting Agreement]