EXHIBIT 1.1
4,000,000 Shares
COLOR KINETICS INCORPORATED
Common Stock
UNDERWRITING AGREEMENT
_________ __, 2004
CIBC World Markets Corp.
Xxxxxxx & Company, Inc.
Friedman, Billings, Xxxxxx & Co., Inc.
ThinkEquity Partners LLC
as Representatives of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Color Kinetics Incorporated, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 4,000,000 shares (the "Firm Shares") of the
Company's common stock, $0.001 par value per share (the "Common Stock"). The
respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I hereto. In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 600,000 shares (the "Option Shares") of Common
Stock from the Company for the purpose of covering over-allotments in connection
with the sale of the Firm Shares. The Firm Shares and the Option Shares are
collectively called the "Shares."
As part of the offering contemplated by this Agreement, the Company
and the Underwriters agree that up to 120,000 shares (the "Directed Shares") of
the Shares to be purchased by the Underwriters shall be reserved for sale by the
Underwriters to a limited number of persons and entities associated with the
Company (each, individually a "Participant" and collectively, the
"Participants"), as part of the distribution of the Shares by the Underwriters,
under the terms of the friends and family directed sales program (the "Directed
Share Program"), and subject to the terms of this Agreement, the applicable
rules, regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and
regulations. Shares to be sold pursuant to the Directed Share Program shall be
sold pursuant to this Agreement at the public offering price. To the extent that
any Participant fails to confirm, orally or by electronic mail, such
Participant's purchase of the Directed Shares to be allocated to such
Participant by the end of the day of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated hereby.
The Company has prepared and filed in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a Registration Statement
(as hereinafter defined) on Form S-1 (No. 333-114386), including a preliminary
prospectus relating to the Shares, and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration Statement
(including all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to you. The
term "Preliminary Prospectus" means any preliminary prospectus included at any
time as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules. The term "Registration Statement"
as used in this Agreement means the initial registration statement (including
all exhibits and financial schedules thereto), as amended at the time and on the
date it becomes effective (the "Effective Date"), including the information (if
any) contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and deemed to be part thereof at the time
of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules.
The Company understands that the Underwriters propose to make a
public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each Preliminary Prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares. On the basis
of the representations, warranties and agreements contained in, and subject to
the terms and conditions of, this Agreement:
(a) The Company agrees to issue and 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 of $_____ per
share (the "Initial Price"), the number of Firm Shares set forth opposite
the name of such Underwriter under the column "Number of Firm Shares to be
Purchased from the Company" on Schedule I to this Agreement, subject to
adjustment in accordance with Section 8 hereof.
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(b) The Company hereby grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00 noon,
New York City time, on the business day before the Firm Shares Closing
Date (as defined below), and from time to time thereafter within 30 days
after the date of this Agreement, in each case upon written, facsimile or
telegraphic notice, or oral or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Representatives to the Company no
later than 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date or (if later) at least two business days before
the Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the time and
date (if other than the Firm Shares Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of Xxxxxxx XxXxxxxxx
LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, at 10:00 a.m., New
York City time, on the third business day following the date of this
Agreement or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by
the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date"). In addition, in the
event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price, and delivery of the
certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representatives and the Company, on each date of delivery as specified in
the notice from the Representatives to the Company (such time and date of
delivery and payment are called the "Option Shares Closing Date"). The
Firm Shares Closing Date and any Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Company by wire transfer of
immediately available funds or by certified or official bank check or
checks payable in New York Clearing House (same day) funds drawn to the
order of the Company, against delivery of the respective certificates to
the Representatives for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing
Date or, in the case of Option Shares, on the day of notice of exercise of
the option as described in Section 1(b) and shall be delivered by or on
behalf of the Company to the Representatives through the facilities of the
Depository Trust Company ("DTC") for the account of such Underwriter. The
Company will cause the certificates representing the Shares to be made
available for checking and packaging, at such place as is designated by
the Representatives, on the full
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business day before the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
(a) On the Effective Date, the Registration Statement complied, and
on the date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the applicable provisions of the Securities Act and the Rules. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and on the Effective Date and the other dates
referred to above, neither the Registration Statement nor the Prospectus,
nor any amendment thereof or supplement thereto, did or will contain any
untrue statement of a material fact or did or will omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of
the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement thereto
was first filed with the Commission, such preliminary prospectus as
amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. If applicable, each Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different," as such term is used in Rule 434,
from the Prospectus included in the Registration Statement at the time it
became effective. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply to
statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon, and in conformity with, information
herein or otherwise furnished in writing by the Representatives on behalf
of the several Underwriters for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company
acknowledges that the only information furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus is the statements contained in
the third, fourth and fifth sentences of the fourth paragraph; the twelfth
paragraph (relating to discretionary sales); and the fourteenth paragraph
(relating to stabilizing transactions, over-allotments and penalty bids)
under the caption "Underwriting" in the Prospectus.
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(b) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and no proceedings for that
purpose have been instituted or are threatened under the Securities Act.
Any required filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b).
(c) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus
present fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; and such financial statements and
related schedules and notes thereto, and the unaudited financial
information filed with the Commission as part of the Registration
Statement, have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods
involved. The summary and selected financial data included in the
Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements
from which they have been derived, as described in the Prospectus.
(d) The Company is not required pursuant to the Rules to present
separate financial statements in the Registration Statement and Prospectus
with respect to Color Kinetics Japan Incorporated ("Color Kinetics
Japan").
(e) Deloitte & Touche LLP, whose report is filed with the Commission
as a part of the Registration Statement, are and, during the periods
covered by their reports, were independent public accountants as required
by the Securities Act and the Rules.
(f) The Company and each of its subsidiaries, including each entity
(corporation, partnership, joint venture, association or other business
organization) controlled directly or indirectly by the Company, is duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization. The Company and
each of its subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification, except for
such jurisdictions where the failure to so qualify individually or in the
aggregate would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and its
subsidiaries considered as a whole (a "Material Adverse Effect"); and to
the Company's knowledge, no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(g) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders,
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licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity (collectively, the
"Permits"), to own, lease and license its assets and properties and
conduct its business, all of which are valid and in full force and effect,
except where the lack of such Permits, individually or in the aggregate,
would not have a Material Adverse Effect. The Company and each of its
subsidiaries has fulfilled and performed in all material respects all of
its material obligations with respect to such Permits and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required under the Securities Act and state and foreign Blue Sky laws, no
other Permits are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
(h) To the Company's knowledge, Color Kinetics Japan is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate or other power and
authority to own its property and to conduct its business as described in
the Prospectus. To the Company's knowledge, all outstanding shares of
Color Kinetics Japan's stock are duly authorized, validly issued, fully
paid and non-assessable, and are of record and beneficially owned,
directly or indirectly, by the Company and ALS Incorporated. To the
Company's knowledge, there is no action, suit or proceeding pending or
overtly threatened in writing against Color Kinetics Japan before any
court or arbitrator or any governmental body, agency or official located
in any relevant jurisdiction, which if determined adversely to Color
Kinetics Japan, would be reasonably likely to have a Material Adverse
Effect.
(i) To the best of the Company's knowledge, (a) neither the Company
nor any of its subsidiaries is currently infringing or has infringed any
patent, trademark or copyright rights of others, which infringement would
have a Material Adverse Effect, (b) all trade secrets, know how, technical
processes and procedures developed and belonging to the Company and it
subsidiaries, which are material to the business of the Company and its
subsidiaries as presently conducted and which have not been patented, have
been kept confidential, and (c) except as otherwise set forth in the
Prospectus, the Company and each of its subsidiaries owns, free and clear
of claims or rights of others (except such as do not materially interfere
with their use by the Company and its subsidiaries), or has licenses
under, all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights,
licenses, trade secrets, customer lists, processes, and owned computer
software ("Intellectual Property Rights") required for the conduct of
their respective businesses as presently conducted, or believes that it
can acquire the same on reasonable terms. Except as otherwise set forth in
the Prospectus, neither the Company nor any of its subsidiaries has
received any notice of any claim of conflict or infringement by it, with,
or of, any such Intellectual Property Rights of others. Where the Company
(i) has received notice of a claim of conflict or infringement by the
Company with, or of, the Intellectual Property Rights of others, or (ii)
has otherwise become aware of any Intellectual Property Rights of others
as to which it has concluded (in the case of this clause (ii)) that there
might be a reasonable possibility of conflict or infringement by the
Company which conflict or infringement (in the case of this clause (ii))
could have a Material Adverse Effect, the Company has brought such matters
to the attention of its intellectual property counsel and has sought
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the advice of such counsel. To the best of the Company's knowledge,
neither the Company nor any of its subsidiaries is using or has used any
confidential information, trade secrets, or computer software (not
licensed to the Company) of any former employer of any of its past or
present employees.
(j) The Company and each of its subsidiaries has good and marketable
title in fee simple to all real property, and good and marketable title to
all other property owned by it, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, except such as (A)
are disclosed in the Registration Statement or (B) do not materially
affect the value of such property and do not materially interfere with the
use made or proposed to be made of such property by the Company and its
subsidiaries. All property held under lease by the Company and its
subsidiaries is held by them under valid, existing and enforceable leases,
free and clear of all liens, encumbrances, claims, security interests and
defects, except such as are not material and do not materially interfere
with the use made or proposed to be made of such property by the Company
and its subsidiaries. Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there has been no event or occurrence that would reasonably be expected to
result in a Material Adverse Effect and there has been no Material Adverse
Effect; (ii) neither the Company nor any of its subsidiaries has sustained
any loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree
which would have a Material Adverse Effect; and (iii) since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus, except as otherwise disclosed therein, neither the Company nor
its subsidiaries has (A) issued any securities, other than upon exercise
of outstanding options or warrants disclosed therein, (B) incurred any
liability or obligation, direct or contingent, for borrowed money, other
than pursuant to any credit facility described therein, and except such
liabilities or obligations incurred in the ordinary course of business,
(C) entered into any material transaction not in the ordinary course of
business, or (D) paid any dividend or made any distribution on any shares
of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.
(k) There is no document, contract or other agreement required by
the Securities Act or the Rules to be described in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement which is not so described or filed. Each description of a
contract, document or other agreement in the Registration Statement and
the Prospectus fairly summarizes the terms of the contract, document or
other agreement purported to be described therein. Each contract, document
or other agreement described in the Registration Statement and Prospectus
or filed as an Exhibit to the Registration Statement is in full force and
effect and is valid and enforceable against, and to the best of the
Company's knowledge, by, the Company or its subsidiary, as the case may
be, in accordance with its terms. Neither the Company nor any of its
subsidiaries, if a subsidiary is a party, nor to the Company's knowledge,
any other party is in default in the observance or performance of any term
or obligation to be performed by it under any such agreement, and no event
has occurred which with notice or lapse of time or both would constitute
such a default, in any such case which default or event, individually or
in the aggregate, would have a Material Adverse Effect. No default exists,
and no event has occurred which with notice or lapse of
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time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or its
subsidiary, if a subsidiary is a party thereto, of any other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which Company or its properties or business or a subsidiary or its
properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
(l) The estimates of statistical and market-related data included in
the Registration Statement are based on or derived from sources that the
Company believes to be reliable and accurate and upon which it is
reasonable to rely for such purpose.
(m) Neither the Company nor any of its subsidiaries is in violation
of any term or provision of its charter or by-laws or of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
where the consequences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.
(n) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or its subsidiaries pursuant to the
terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which either the Company or its subsidiaries or any of their properties
or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or
any of its subsidiaries or violate any provision of the charter or by-laws
of the Company or any of its subsidiaries, except for such consents or
waivers which have already been obtained and are in full force and effect.
(o) The Company's authorized and outstanding capital stock are as
described under the caption "Description of Capital Stock" in the
Prospectus. The certificates evidencing the Shares are in due and proper
legal form and have been duly authorized for issuance by the Company. All
of the issued and outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable. There are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of
its subsidiaries or any such rights pursuant to its Certificate of
Incorporation or by-laws or any agreement or instrument to or by which the
Company or any of its subsidiaries is a party or bound. The Shares, when
issued and sold pursuant to this Agreement, will be duly and validly
issued, fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed in
the Registration Statement and the Prospectus
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and except for options to purchase Common Stock granted, consistent with
the past practice of the Company, to new employees of the Company
subsequent to the date(s) as of which such information is provided in the
Registration Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of stock of the
Company or any of its subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each of the Company's subsidiaries
have been duly authorized and validly issued, and are fully paid and
nonassessable and are owned directly by the Company or by another
wholly-owned subsidiary of the Company free and clear of any security
interests, liens, encumbrances, equities or claims, other than those
described in the Prospectus.
(p) No holder of any security of the Company has any right, which
has not been waived, to have any security owned by such holder included in
the Registration Statement or to demand registration of any security owned
by such holder for a period of 180 days after the date of this Agreement.
Each director and executive officer of the Company and each stockholder of
the Company listed on Schedule II has delivered to the Representatives his
enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit A hereto ("Lock-Up Agreement"), and each stockholder
of the Company not listed on Schedule II is contractually obligated not to
sell or otherwise dispose of any securities of the Company held by such
stockholder during the period of 180 days after the date of this
Agreement.
(q) All necessary corporate action has been duly and validly taken
by the Company and to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the Company.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(r) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would have a Material Adverse Effect.
The Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers or contractors which would
have a Material Adverse Effect. The Company is not aware of any threatened
or pending litigation between the Company or its subsidiaries and any of
the Company's executive officers which, if adversely determined, could
have a Material Adverse Effect and no such officer has notified the
Company of his or her present intention to leave the employment of the
Company.
(s) No transaction has occurred between or among the Company and any
of its officers, directors, or shareholders or any affiliate or affiliates
of any such officer,
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director or shareholder that is required by the Securities Act or the
Rules to be described in and is not described in the Registration
Statement and the Prospectus.
(t) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of the Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares.
(u) The Company and each of its subsidiaries has filed, or has filed
on a timely basis applications for extension of the time to file, all
federal, state, local and foreign tax returns which are required to be
filed through the date hereof, which filed returns are true and correct in
all material respects, and has paid all taxes shown on such filed returns
and all assessments received by it to the extent that the same are
material and have become due except where the failure to so file or to pay
would not have a Material Adverse Effect. The Company has received no
notice of any tax audits or investigations pending that, if adversely
determined, would have a Material Adverse Effect; nor has the Company
received notice of any material proposed additional tax assessments
against the Company or any of its subsidiaries in respect of any tax year
for which the Company or such subsidiary has filed a tax return.
(v) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to official Notice of Issuance. A
registration statement has been filed on Form 8-A pursuant to Section 12
of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), which registration statement complies in all material respects with
the Exchange Act.
(w) The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq National
Market, nor has the Company received any notification that the Commission
or the Nasdaq National Market is contemplating terminating such
registration or quotation.
(x) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each of
its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences; the Company maintains
"disclosure controls and procedures" (as defined in Rule 13a-14(c) under
the Exchange Act); the Company is in compliance in all material
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respects with all effective provisions of the Xxxxxxxx-Xxxxx Act of 2002
(the "Xxxxxxxx-Xxxxx Act") applicable to the Company and any related rules
and regulations promulgated by the Commission, and is diligently making
preparations to comply on a timely basis with all other provisions of the
Xxxxxxxx-Xxxxx Act as they become effective and applicable to the Company.
(y) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in
the Prospectus; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its subsidiaries or the Company's or its
subsidiaries' respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of its
subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and neither the Company nor any
subsidiary of the Company has any reason to believe that, other than by
reason of factors affecting the insurance industry generally, or the
market for coverages of the type maintained by the Company generally, the
Company 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 is
not materially greater than the current cost. Neither the Company nor any
of its subsidiaries has been denied any insurance coverage which it has
sought or for which it has applied.
(z) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made and
is in full force and effect.
(aa) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any
five percent or greater stockholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives.
(bb) (i) Each of the Company and each of its subsidiaries is in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances
and protection of health or the environment ("Environmental Law") which
are applicable to its business; (ii) neither the Company nor its
subsidiaries has received any notice from any governmental authority or
third party of an asserted claim under Environmental Laws; (iii) each of
the Company and each of its subsidiaries has received all permits,
licenses or other approvals required of it under applicable Environmental
Laws to conduct its business and is in compliance with all terms and
conditions of any such permit, license or approval; (iv) to the Company's
knowledge, no facts currently exist that will require the Company or any
of its subsidiaries to make future material capital expenditures to comply
with Environmental
11
Laws; and (v) no property which is or has been owned, leased or occupied
by the Company or its subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.)
("CERCLA") or otherwise designated as a contaminated site under applicable
state or local law. Neither the Company nor any of its subsidiaries has
been named as a "potentially responsible party" under CERCLA.
(cc) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which the Company identifies and evaluates associated costs and
liabilities (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). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(dd) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in
the Prospectus, will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(ee) Neither the Company nor any other 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 (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.
(ff) The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
"Money Laundering Laws"), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator
involving the Company or any of it subsidiaries with respect to the Money
Laundering Laws is pending, or to the best knowledge of the Company,
threatened.
(gg) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee 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
12
will not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of
financing the activities of any person that is currently, or at the time
of the proposed use of such proceeds, subject to any U.S. sanctions
administered by OFAC.
(hh) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company has offered or caused
the Underwriters to offer any of the Shares to any person pursuant to the
Directed Share Program with the specific intent to unlawfully influence
(i) a customer or supplier of the Company to alter the customer's or
supplier's level or type of business with the Company or (ii) a trade
journalist or publication to write or publish favorable information about
the Company or its products.
(ii) Except as described in the Registration Statement, the Company
has not sold or issued any shares of Common 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 Securities Act, other
than shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(jj) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in
Section 3(3) of ERISA and such regulations and published interpretations
in which its employees are eligible to participate and each such plan is
in compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. No
"Reportable Event" (as defined in ERISA) has occurred with respect to any
"Pension Plan" (as defined in ERISA) for which the Company could have any
liability.
(kk) Neither the Company nor any of its directors and officers has
distributed or will distribute prior to the later of (i) the Firm Shares
Closing Date, or the Option Shares Closing Date, and (ii) completion of
the distribution of the Shares, any offering material in connection with
the offering and sale of the Shares other than any Preliminary Prospectus,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
(ll) No subsidiary of the Company is a "significant subsidiary", as
such term is defined under Rule 405 of the Rules.
3. Conditions of the Underwriters' Obligations. The obligations of
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
13
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 4(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
stop order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Commission and the
Representatives. If the Company has elected to rely upon Rule 430A, Rule
430A information previously omitted from the effective Registration
Statement pursuant to Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed time
period and the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A. If the Company
has elected to rely upon Rule 434, a term sheet shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within
the prescribed time period.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 3(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing
Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that: (i)
the representations, warranties and agreements of the Company in this
Agreement were true and correct when made and are true and correct as of
such Closing Date; (ii) the Company has performed all covenants and
agreements and satisfied all conditions contained herein and that are to
be performed or satisfied by it at or before such Closing Date; (iii) they
have carefully examined the Registration Statement and the Prospectus and,
in their opinion (A) as of the Effective Date, the Registration Statement
and Prospectus did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or otherwise required an amendment to the Registration
Statement or the Prospectus; and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and, to their
knowledge, no proceedings for that purpose have been instituted or are
pending under the Securities Act.
14
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
Deloitte & Touche LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f) The Representatives shall have received on each Closing Date
from Xxxxx Xxxx LLP, counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, in the form attached hereto
as Exhibit B.
(g) The Representatives shall have received on each Closing Date
from Xxxxx Xxxx LLP, trademark counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, in the form
attached hereto as Exhibit C.
(h) The Representatives shall have received on each Closing Date
from Xxxxxx Xxxxx Xxxxxxxx LLP, intellectual property counsel for the
Company, an opinion, addressed to the Representatives and dated such
Closing Date, in the form attached hereto as Exhibit D.
(i) The Representatives shall have received on each Closing Date
from Xxxxxxx XxXxxxxxx LLP, counsel for the Representatives, an opinion,
addressed to the Representatives and dated such Closing Date, in a form
reasonably satisfactory to the Representatives.
(j) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Shares, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in form and substance to the Underwriters, and
the Company shall have furnished to counsel to the Underwriters all
documents and information that it may reasonably request for the purpose
of enabling it to pass upon the foregoing matters.
(k) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person listed on Schedule II hereto.
(l) The Shares shall have been approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
(m) The Company shall have furnished or caused to be furnished to
the Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
15
4. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus
pursuant to Rule 424(b) under the Securities 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 the Rules.
(ii) The Company shall promptly advise the Representatives in
writing (A) when any post-effective amendment to the Registration
Statement shall have become effective or any supplement to the
Prospectus shall have been filed, (B) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the institution or threatening
of any proceeding for that purpose and (D) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement
or supplement to the Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not
file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules,
any event occurs as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or
the Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of this
Section 4(a), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such
compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable,
but not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during
which the Effective Date occurs (or 90 days if
16
such 12-month period coincides with the Company's fiscal year), an
earnings statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions of
Section 11(a) of the Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and
amendments thereof) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and all amendments
thereof and, so long as delivery of a prospectus by an Underwriter
or dealer may be required by the Securities Act or the Rules, as
many copies of any preliminary prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representatives
may reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment and
supplement thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and
sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company
shall not be required in connection therewith, as a condition
thereof, to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself
to taxation as doing business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act and the Rules or
the Exchange Act, will file all reports and other documents required
to be filed with the Commission pursuant to Section 13, 14 or 15 of
the Exchange Act within the time periods required by the Exchange
Act and the regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC World Markets
Corp., for a period of 180 days after the date of this Agreement,
the Company and each of its individual directors and executive
officers shall not issue, sell or register with the Commission
(other than on Form S-8 or on any successor form), or otherwise
dispose of, directly or indirectly, any equity securities of the
Company (or any securities convertible into, exercisable for or
exchangeable for equity securities of the Company), except for the
issuance of the Shares pursuant to the Registration Statement and
the issuance of shares pursuant to the Company's existing stock
option plans, employee stock purchase plan or bonus plan as
described in the Registration Statement and the Prospectus. In the
event that during this period, (A) any options are issued pursuant
to the Company's existing stock option plans, employee stock
purchase plans or bonus plan that are exercisable during such
180-day period or (B) any registration is effected on Form
17
S-8 or on any successor form relating to options that are
exercisable during such 180-day period, the Company shall obtain the
written agreement of the grantee, purchaser or holder of such option
or registered securities that, for a period of 180 days after the
date of this Agreement, such person will not, without the prior
written consent of CIBC World Markets Corp., offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by such person.
(ix) On or before completion of the offering of the Shares,
the Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including any
required registration under the Exchange Act).
(x) Prior to the Closing Date, the Company will not hold a
press conference or issue any press release or other communications
directly or indirectly containing any information with respect to
the Company, its condition, financial or otherwise, or its earnings,
business affairs or business prospects, or the offering of the
Shares without the prior written consent of the Representatives,
unless in the judgment of the Company and its counsel, and after
prior notification to the Representatives, such press conference,
press release, or other communication is required by law.
(xi) The Company will apply the net proceeds from the offering
of the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(xii) During the 180-day period after the date of this
Agreement, the Company will not waive, amend or modify the terms of
Section 13(g) of the Company's Fourth Amended and Restated
Registration Rights Agreement, dated as of January 29, 2004, as
amended, supplemented and modified from time to time.
(xiii) The Company will comply with all securities laws and
other laws, rules and regulations applicable to the Directed Share
Program in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
(xiv) The Company will ensure that the Directed Shares will be
restricted, to the extent required by the NASD or the NASD rules,
from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of
the Registration Statement. The Representatives will notify the
Company as to which Participants will need to be so restricted. The
Company shall direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
18
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or
Blue Sky laws of the various jurisdictions referred to in Section
4(a)(vi), including the reasonable fees and disbursements of counsel for
the Underwriters in connection with such registration and qualification
and the preparation, printing, distribution and shipment of preliminary
and supplementary Blue Sky memoranda; (iv) the furnishing (including costs
of shipping and mailing) to the Representatives and to the Underwriters of
copies of each preliminary prospectus, the Prospectus and all amendments
or supplements to the Prospectus, and of the several documents required by
this Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or
by dealers to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriters in
connection with such review; (vi) inclusion of the Shares for quotation on
the Nasdaq National Market; (vii) all transfer taxes, if any, with respect
to the sale and delivery of the Shares by the Company to the Underwriters;
and (viii) payments to counsel for costs incurred by the Underwriters in
connection with the Directed Share Program and payment of any stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program. Subject to the
provisions of Section 7, the Underwriters agree to pay, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation,
the fees and disbursements of counsel for the Underwriters.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they,
or any of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or in any Blue Sky application or other information or
other documents executed by the Company
19
filed in any state or other jurisdiction to qualify any or all of the
Shares under the securities laws thereof (any such application, document
or information being hereinafter referred to as a "Blue Sky Application"),
or (ii) any omission or alleged omission to state in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or in any Blue Sky Application, a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that such indemnity shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or liabilities
arising from the sale of the Shares to any person by such Underwriter if
such untrue statement or omission or alleged untrue statement or omission
was made in such preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement thereto, or in any Blue Sky
Application in reliance upon and in conformity with information furnished
in writing to the Company by the Representatives on behalf of any
Underwriter specifically for use therein. The indemnity agreement provided
in this Section 5(a) with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter who failed to timely deliver a
Prospectus, as then amended or supplemented, to the person asserting any
losses, claims, damages or liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in such preliminary
prospectus, or caused by any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such material misstatement or
omission or alleged material misstatement or omission was cured in the
Prospectus, as then amended or supplemented, and a sufficient number of
copies of the Prospectus as so cured was promptly provided to the
Underwriters on a timely basis for delivery thereof.
The Company agrees to indemnify and hold harmless the
Representatives and each person, if any, who controls any Representative
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages, expenses and
liabilities (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted) (i) arising out
of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any written communications (including
electronic email) prepared by or approved in writing by the Company for
distribution by any Underwriter to Participants in connection with the
Directed Share Program or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
arising out of or based upon the failure of any Participant to pay for and
accept delivery of Directed Shares otherwise reserved for such Participant
pursuant to the Directed Share Program, the purchase of which Directed
Shares was confirmed orally or by electronic email by such Participant no
later than the date of this Agreement, and (iii) related to, arising out
of, or in connection with the Directed Share Program, other than losses,
claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of the Representatives.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company and each person, if any, who controls the Company within the
meaning of Section 15 of
20
the Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration
Statement, against any losses, claims, damages or liabilities to which
such party may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus, or
any amendment thereof or supplement thereto, or (ii) the omission or
alleged omission to state in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement
thereto, 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 any preliminary
prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein; provided, however, that the
obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the
net proceeds received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section 5 will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all
papers served. No indemnification provided for in Section 5(a) or 5(b)
shall be available to any party who shall fail to give notice as provided
in this Section 5(c) if the party to whom notice was not given was unaware
of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice but the omission so to
notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability that it may have to any
indemnified party for contribution or otherwise than under this Section.
In case any such action, suit or proceeding 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
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in
writing by the indemnifying parties, (ii) the indemnified party shall have
been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available
to the indemnifying party (in which case the indemnifying parties shall
not have the right to direct the defense of such action on behalf
21
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which cases the
fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of
any action, suit, and proceeding or claim effected without its written
consent, which consent shall not be unreasonably withheld or delayed.
6. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 5(a) or 5(b) is due in accordance with its terms but for any reason is
unavailable to or is insufficient to hold harmless an indemnified party in
respect to any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, 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 hand from the offering of the Shares pursuant to this
Agreement or, if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in connection with the statements or omissions,
or in connection with any violation of the nature referred to in Section 5(a)
hereof with respect to Directed Shares, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 6 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. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 6,
no Underwriter (except as may be provided in the Agreement Among Underwriters)
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 damages which such underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each 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, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
22
20 of the Exchange Act, shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 6, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve the party or parties from
whom contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 6. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 6 are several in proportion to their respective
underwriting commitments and not joint.
7. Termination.
(a) This Agreement may be terminated with respect to the Shares to
be purchased on a Closing Date by the Representatives by notifying the
Company at any time at or before a Closing Date in the absolute discretion
of the Representatives if: (i) there has occurred any material adverse
change in the securities markets or any event, act or occurrence that has
materially disrupted, or in the opinion of the Representatives, will in
the future materially disrupt, the securities markets or there shall be
such a material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of the
Representatives, inadvisable or impracticable to market the Shares or
enforce contracts for the sale of the Shares; (ii) there has occurred any
outbreak or material escalation of hostilities or other calamity or crisis
the effect of which on the financial markets of the United States is such
as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares or enforce contracts for the sale of
the Shares; (iii) trading in the Shares or any securities of the Company
has been suspended or materially limited by the Commission or trading
generally on the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. or the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum ranges for prices for securities
shall have been fixed, or maximum ranges for prices for securities have
been required, by any of said exchanges or by such system or by order of
the Commission, the National Association of Securities Dealers, Inc., or
any other governmental or regulatory authority; or (iv) a banking
moratorium has been declared by any state or Federal authority; or (v) in
the judgment of the Representatives, there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
assets, properties, condition, financial or otherwise, or in the results
of operations, business affairs or business prospects of the Company and
its subsidiaries considered as a whole, whether or not arising in the
ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the
Company, except that (y) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure, refusal or
inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this
23
Agreement, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including the reasonable fees and disbursements of
their counsel) incurred by them in connection with the proposed purchase
and sale of the Shares or in contemplation of performing their obligations
hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement,
without some reason sufficient hereunder to justify termination of its
obligations under this Agreement, shall be relieved of liability to the
Company, or to the other Underwriters for damages occasioned by its
failure or refusal.
8. Substitution of Underwriters. If any Underwriter shall default in
its obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representatives shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representatives shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to the Underwriters to purchase such Shares on such terms.
If, after giving effect to any arrangements by the Representatives and the
Company for the purchase of the Shares of a defaulting Underwriter or
Underwriters as provided above, the aggregate number of Shares which remains
unpurchased on such Closing Date does not exceed 10% of the aggregate number of
all the Shares that all the Underwriters are obligated to purchase on such date,
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 date 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. In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
seven days in order to effect any necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus or any other documents), and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the opinion
of the Company and the Underwriters and their counsel may thereby be made
necessary.
If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters as provided above, the
aggregate number of such Shares which remains unpurchased exceeds 10% of the
aggregate number of all the Shares to be purchased at such date, then this
Agreement, or, with respect to a Closing Date which occurs after the First
Closing Date, the obligations of the Underwriters to purchase and of the Company
to sell the Option Shares to be purchased and sold on such date, shall
terminate, without liability on the part of any non-defaulting Underwriter to
the Company, and without liability on the part of the Company, except as
provided in Sections 4(b), 5, 6 and 7. The provisions of this Section 8 shall
not in any way affect the liability of any defaulting Underwriter to the Company
or the nondefaulting Underwriters arising out of such default. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section 8 with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
24
9. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them
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 the Company or the or any of their respective
officers, directors or controlling persons referred to in Sections 5 and 6
hereof, and shall survive delivery of and payment for the Shares. In addition,
the provisions of Sections 4(b), 5, 6 and 7 shall survive the termination or
cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., 000 0xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxxx Xxxxxxx, Esq.,
with a copy to Xxxxxxx XxXxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, Attention: Xxxx X. Xxxxxxxxxxxx, Esq., and (b) if to the Company, to its
agent for service as such agent's address appears on the cover page of the
Registration Statement with a copy to Xxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxxxxx,
Xxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxx, Xx., Esq. and Xxxxxx
X. Xxxxx, Xx., Esq.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
COLOR KINETICS INCORPORATED
By _________________________________
Name:
Title:
25
Confirmed:
CIBC WORLD MARKETS CORP.
XXXXXXX & CO., INC.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
THINKEQUITY PARTNERS LLC
By: CIBC WORLD MARKETS CORP.
Acting severally on behalf of itself and as representative of the several
Underwriters named in Schedule I annexed hereto.
By _________________________________
Name:
Title:
26
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- ------------
CIBC World Markets Corp.
Xxxxxxx & Co., Inc.
Friedman, Billings, Xxxxxx & Co., Inc.
ThinkEquity Partners LLC
------------
Total
Sch I - 1
SCHEDULE II
Lock-up Signatories
Sch II - 1
Exhibit A
FORM OF LOCK-UP AGREEMENT
April __, 2004
CIBC World Markets Corp.
Xxxxxxx & Company, Inc.
Friedman, Billings, Xxxxxx & Co., Inc.
ThinkEquity Partners LLC
As Representative of the Several Underwriters
c/o CIBC World Markets Corp.
CIBC World Markets Tower
World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Common Stock of Color Kinetics Incorporated
Ladies and Gentlemen:
The undersigned, a holder of securities of Color Kinetics
Incorporated (the "Company"), understands that the Company has filed a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") on or about April 9, 2004
covering certain shares of common stock ("Common Stock"), par value $0.001 per
share, of the Company (including shares subject to an over-allotment option on
the part of the Underwriters) (the "Offering"). The undersigned further
understands that you are contemplating entering into an Underwriting Agreement
with the Company in connection with the Offering (the "Underwriting Agreement").
In order to induce the Company, you and the other Underwriters to
enter into the Underwriting Agreement and to proceed with the Offering, the
undersigned agrees, for the benefit of the Company, you and the other
Underwriters, that should the Offering be effected, the undersigned will not,
without the prior written consent of CIBC World Markets Corp., directly or
indirectly, offer, sell, assign, transfer, encumber, contract to sell, grant an
option to purchase or otherwise dispose of any shares of Common Stock
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) by the undersigned on the date hereof or
hereafter acquired for a period of 180 days subsequent to the date of the
Underwriting Agreement, other than shares of Common Stock transferred as a gift
or gifts (provided that any donee thereof agrees in writing to be bound by the
terms hereof) and other than shares of Common Stock acquired by the undersigned
on the open market in a broker transaction following the effectiveness of the
Registration Statement.
Notwithstanding the foregoing, if the undersigned is an individual,
he or she may transfer any shares of Common Stock or securities convertible into
or exchangeable for the Company's Common Stock either during his or her lifetime
or on death by will or intestacy to his or her immediate family or to a trust
the beneficiaries of which are exclusively the undersigned and/or a member or
members of his or her immediate family; provided, however, that prior to any
such transfer each transferee shall execute an agreement, satisfactory to CIBC
World Markets Corp., pursuant to which each transferee shall agree to receive
and hold such shares of Common Stock, or securities convertible into or
exchangeable for the Company's Common Stock, subject to the provisions hereof,
and there shall be no further transfer except in accordance with the provisions
hereof. For the purposes of this paragraph, "immediate family" shall mean
spouse, lineal descendent, father, mother, brother or sister of the transferor.
The undersigned confirms that he, she or it understands that the
Underwriters and the Company will rely upon the representations and covenants
set forth in this agreement in proceeding with the Offering. This agreement
shall be binding on the undersigned and his, her or its respective successors,
heirs, personal representatives and assigns. The undersigned agrees and consents
to the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with this agreement.
This agreement shall expire and be of no further force and effect if
the Underwriting Agreement shall not have been executed and delivered by 11:59
p.m., Boston, Massachusetts time, on December 31, 2004.
Very truly yours,
Dated: April ____, 2004
Signature
Printed Name and Title (if applicable)
