Exhibit 1
3,500,000 Shares(1)
Deckers Outdoor Corporation
Common Stock
($.01 Par Value)
EQUITY UNDERWRITING AGREEMENT
May 12, 2004
RBC Capital Markets Corporation
Xxxxx Xxxxxxx & Co.
As the Representatives of the
several underwriters named in Schedule I hereto
c/o RBC Capital Markets
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Deckers Outdoor Corporation, a Delaware corporation (the "Company"), and
certain stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") propose to sell to the several underwriters (the "Underwriters")
named in Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 3,500,000 shares of the Company's Common
Stock, $.01 par value (the "Firm Shares"), of which 1,500,000 shares (the
"Company Shares") will be sold by the Company and 2,000,000 shares will be sold
by the Selling Stockholders. The respective amounts of the Firm Shares to be so
purchased by the several Underwriters are set forth opposite their names in
Schedule I hereto. The Selling Stockholders also propose to sell at the
Underwriters' option an aggregate of up to 525,000 additional shares of the
Company's Common Stock (the "Option Shares") as set forth below.
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1 Plus an option to purchase up to 525,000 additional shares to cover
over-allotments.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and the
Option Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form S-3 (File No. 333-113237) with
respect to the Shares has been prepared by the Company in conformity in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") and has been filed
with the Commission. The Company has complied with the conditions for the use of
Form S-3. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, together with copies of all documents
expressly incorporated therein by reference, have heretofore been delivered by
the Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all documents expressly incorporated therein by reference as of the date of the
Prospectus referred to below and all information omitted therefrom in reliance
upon Rule 430A and contained in the Prospectus referred to below, has become
effective under the Act and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. "Prospectus" means
the form of prospectus first filed with the Commission pursuant to Rule 424(b),
including all documents expressly incorporated therein by reference as of the
date of such form of prospectus. Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective is herein referred
to as a "Preliminary Prospectus."
(b) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements that are required to be stated therein by, and will conform to, the
requirements of the Act and the Rules and Regulations. The Registration
Statement when it became effective did not contain, and any amendment or
supplement thereto will not contain, any untrue statement of a material fact and
do not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein
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not misleading. The Prospectus and any amendments and supplements thereto do not
contain, and will not contain, any untrue statement of material fact and do not
omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to information
contained in or omitted from 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 or on behalf of any Underwriter
through the Representatives, specifically for use in the preparation thereof.
Such contracts and documents as are summarized in the Registration Statement or
the Prospectus are fairly summarized in all material respects. Each document
filed or to be filed pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in the Registration
Statement and the Prospectus complied or will comply when so filed with the
Exchange Act and the Rules and Regulations in all material respects.
(c) 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 limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally, and subject to general
principles of equity. The Company has full power and authority to enter into
this Agreement and to authorize, issue and sell the Company Shares as
contemplated by this Agreement.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries of
the Company, as listed in Exhibit A hereto (collectively, the "Subsidiaries"),
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement. The Subsidiaries are the only
subsidiaries, direct or indirect, of the Company. The Company and each of the
Subsidiaries are duly qualified to transact business and are in good standing in
all jurisdictions in which the conduct of their business requires such
qualification except where the failure to be so qualified or to be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), properties, assets, liabilities, rights, operations, earnings,
business, management or prospects of the Company and its Subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Effect"). The outstanding shares of capital stock
of each of the Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and to the extent shown in Exhibit A hereto are
wholly owned by the Company or another Subsidiary free and clear of all liens,
encumbrances and equities and claims except as otherwise disclosed in the
Prospectus; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding.
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(e) The outstanding shares of Common Stock of the Company, including
all outstanding shares to be sold by the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; other than
the rights to purchase 1/100 of a share of Series B Junior Participating
Preferred Stock, par value $0.01 per share issued pursuant to the Rights
Agreement, dated as of November 12, 1998 (the "Rights Agreement"), and as
otherwise described in the Registration Statement, no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests in
the Company are outstanding; the Company Shares and the Shares to be sold by the
Selling Stockholders following the exercise of stock options by them have been
duly authorized and, when issued and paid for as contemplated herein or in the
applicable stock option agreement, will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with respect to
any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
(f) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct as of the date set forth therein. All of the
Shares conform to the description thereof contained in the Registration
Statement. The form of certificates for the Shares conforms to the corporate law
of the State of Delaware. Immediately after the issuance and sale of the Shares
to the Underwriters, no shares of Preferred Stock of the Company shall be issued
and outstanding and except as provided in the Rights Agreement no holder of any
shares of capital stock, securities convertible into or exchangeable or
exercisable for capital stock or options, warrants or other rights to purchase
capital stock or any other securities of the Company shall have any existing or
future right to acquire any shares of Preferred Stock of the Company.
(g) The Company has not distributed and will not distribute any
prospectus or other offering material (including, without limitation, content on
the Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus or the Prospectus or other materials permitted by the Act
to be distributed by the Company.
(h) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth or
incorporated by reference in the Registration Statement, present fairly the
financial position and the results of operations and cash flows of the Company
and the consolidated Subsidiaries, at the indicated dates and for the indicated
periods. Such financial statements and related notes and schedules comply in all
material respects as to form with the Rules and Regulations with respect thereto
and have been prepared in accordance with U.S. generally accepted accounting
principles, consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair presentation of
results for such periods have been made. No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The summary financial and statistical data included or incorporated by reference
in the Registration Statement presents fairly the information shown therein, and
such data has been compiled on a basis consistent with the financial
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statements presented therein and the books and records of the Company. The pro
forma financial information and related notes thereto included in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in all material respects in accordance with the Act
and the rules of the Commission with respect to pro forma financial information,
have been prepared on a basis consistent with the historical financial
statements of the Company and have been compiled on the pro forma bases
described therein, and (i) the assumptions underlying the pro forma adjustments
are reasonable, (ii) such adjustments are appropriate to give effect to the
transactions or circumstances referred to therein and have been properly applied
to the historical amounts in the compilation of such statements and (iii) such
statements fairly present the pro forma results of operations and information
purported to be shown therein for the respective periods therein specified based
on the assumptions identified therein. The financial information included in the
Prospectus included under the captions "Summary Consolidated Financial Data,"
"Capitalization," "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," (and
any amendment or supplement thereto) present fairly in accordance with GAAP the
information shown therein (except for non-GAAP financial measures and ratios
which have been presented in compliance with Regulation G) and have been
compiled on a basis consistent with that of the audited and unaudited financial
statements from which they were derived.
(i) Except (i) as described in the Registration Statement and the
Prospectus, (ii) as reflected in the Company's audited balance sheet at December
31, 2003 or liabilities described in any notes thereto (or liabilities for which
neither accrual nor footnote disclosure is required pursuant to GAAP) or (iii)
for liabilities incurred in the ordinary course of business since December 31,
2003 consistent with past practice, neither the Company nor any subsidiary has
any material liabilities or obligations of any nature. Except as described in
the Registration Statement and the Prospectus, neither the Company nor any
subsidiary has engaged in or effected any transaction or arrangement that would
constitute an "off-balance sheet arrangement" (as defined in Item 303 of
Regulation S-K of the Commission).
(j) The Company and the Subsidiaries maintain disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Commission) that are
designed to ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission's
rules and forms; the Company and the Subsidiaries maintain internal control over
financial reporting (as defined in Rule 13a-15(f) of the Commission) sufficient
to provide reasonable assurance regarding the (i) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP, (ii) maintenance of records that in reasonable detail
accurately and fairly reflect transactions and dispositions of the assets of the
Company and the Subsidiaries, (iii) recording of transactions as necessary to
permit preparation of financial statements in accordance with GAAP and that
receipts and expenditures of the Company and the Subsidiaries are being made
only in accordance with authorizations of management and directors of the
Company or the applicable Subsidiary, and (iv) prevention or timely detection of
unauthorized acquisition, use or disposition
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of the Company's or the Subsidiaries' assets that could have a material effect
on the financial statements; the Company's management evaluates, with the
participation of the Company's principal executive and principal financial
officers, or persons performing similar functions, (i) the effectiveness of the
Company's and the Subsidiaries' disclosure controls and procedures as of the end
of each fiscal quarter, and (ii) any change in the Company's or the
Subsidiaries' internal control over financial reporting that occurred during
each of the Company's fiscal quarters that has materially affected, or is
reasonably likely to materially affect, the Company's or the Subsidiaries'
internal control over financial reporting.
(k) KPMG LLP, which has certified certain financial statements of
the Company and delivered its opinion with respect to the audited financial
statements and schedules included in the Registration Statement and the
Prospectus, are independent public accountants with respect to the Company as
required by the Act and the Rules and Regulations.
(l) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise, which if
determined adversely to the Company or any of its Subsidiaries might have a
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement and the
Prospectus.
(m) No labor problem or dispute with the employees of the Company or
the Subsidiaries exists or, to the Company's knowledge, is threatened or
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its Subsidiaries' principal
suppliers, contractors or customers, that could have a Material Adverse Effect.
(n) The Company and the Subsidiaries have good and marketable title
to all of the properties and assets reflected in the financial statements
hereinabove described or as described in the Registration Statement, subject to
no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements or as described in the Registration
Statement or which are not material in amount to the Company and the
Subsidiaries taken as a whole. The Company and the Subsidiaries occupy their
leased properties under valid and binding leases conforming in all material
respects to the description thereof set forth in the Registration Statement and
the Prospectus.
(o) Except as described in the Registration Statement and the
Prospectus, the Company and the Subsidiaries have filed all Federal, State,
local and foreign tax returns which have been required to be filed and have paid
all taxes indicated by said returns and all assessments received by them or any
of them, to the extent that such taxes and assessments have become due and are
not being contested in good faith and for which an adequate reserve or accrual
has been established in accordance with U.S. generally accepted accounting
principles. Except as described in the Registration Statement and the
Prospectus, all tax liabilities of the Company and the Subsidiaries have been
adequately provided for in the financial statements of the Company, and the
Company does not know of any actual or proposed additional material tax
assessments. The
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Company has restructured the Internet and catalog division such that the
collection, reporting and payment of state sales taxes is not required with
respect to sales made from such division. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company
of the Shares.
(p) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, as it may be amended or
supplemented, (i) there has not been any material adverse change or any
development involving a prospective change that has had or is reasonably likely
to have a Material Adverse Effect, whether or not occurring in the ordinary
course of business, (ii) there has not been any material transaction entered
into or any material transaction that is probable of being entered into by the
Company or the Subsidiaries, other than transactions in the ordinary course of
business and transactions described in the Registration Statement and the
Prospectus, as it may be amended or supplemented, and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock. The Company and the Subsidiaries have no
material contingent obligations that are not disclosed in the Company's
financial statements in the Registration Statement and the Prospectus.
(q) Neither the Company nor any of the Subsidiaries is, or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under its Certificate of Incorporation ("Charter"). Neither the Company
nor any of the Subsidiaries is, or with the giving of notice or lapse of time or
both, will be, in violation of or in default under its By-Laws or under any
agreement, lease, contract, indenture or other instrument or obligation to which
it is a party or by which it, or any of its properties, is bound and which
violation or default has had or is reasonably likely to have a Material Adverse
Effect. The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any contract, indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of the Subsidiaries is
a party, or of the Charter or By-Laws of the Company or any order, rule or
regulation applicable to the Company or any of the Subsidiaries of any court or
of any regulatory body or administrative agency or other governmental body
having jurisdiction or result in the creation or imposition of any lien, charge
or encumbrance upon any assets or property of the Company or any of the
Subsidiaries, and no consent, approval, authorization or order of, or
qualification or filing with, any governmental body, any lender or any other
person is required for the performance by the Company of its obligations under
this Agreement, except such consents received prior to the date hereof and such
as may be required by the state securities or Blue Sky laws or international
jurisdictions in connection with the offer and sale of the Shares.
(r) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body or any lender or other person necessary in connection with the
execution and delivery by the Company of this Agreement and the consummation of
the transactions herein contemplated (except such additional steps as may be
required by the Commission, the National Association of Securities Dealers, Inc.
(the "NASD")
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or such additional steps as may be necessary to qualify the Shares for public
offering by the Underwriters under state securities or Blue Sky laws), including
without limitation the listing of the Shares on the Nasdaq National Market, has
been obtained or made and is in full force and effect. To the knowledge of the
Company or the Subsidiaries there is no governmental or legal proceeding,
judgment, order, injunction or other restraint issued or filed with respect to
the transactions contemplated by this Agreement, or the performance by the
Company of its respective obligations thereunder other than proceedings
described in the Registration Statement and the Prospectus.
(s) The Company and each of the Subsidiaries has all material
licenses, certifications, permits, franchises, approvals, clearances and other
regulatory authorizations ("Permits") from governmental authorities as are
necessary to conduct its businesses as currently conducted and to own, lease and
operate its properties in the manner described in the Prospectus. There is no
material claim, proceeding or controversy, pending or, to the knowledge of the
Company or any of the Subsidiaries, threatened, involving the status of or
sanctions under any of the Permits. The Company and each of the Subsidiaries has
fulfilled and performed all of its material obligations with respect to the
Permits, and no event has occurred which allows, or after notice or lapse of
time would allow, the revocation, termination, modification or other impairment
of the rights of the Company or any of the Subsidiaries under such Permits.
(t) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater security holders, except as set forth in the
Registration Statement.
(u) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
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
shares of Common Stock to facilitate the sale or resale of the Shares. The
Company acknowledges that the Underwriters may engage in passive market making
transactions in the Shares on the Nasdaq National Market in accordance with
Regulation M under the Exchange Act.
(v) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement and the
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(w) The Company and each of the Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries. All
policies of insurance insuring the Company or any Subsidiary or any of their
respective businesses, assets, employees, officers and directors are in full
force and effect, and the Company and the Subsidiaries are in compliance with
the terms of such policies in all material respects. There are no claims by the
Company or any Subsidiary under any such policy
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or instrument as to which an insurance company is denying liability or defending
under a reservation of rights clause.
(x) The Company is in compliance in all material respects with
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company would
have any liability and that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification. The Company is in compliance in all material respects with all
national and local laws that govern benefits provided to Company employees
located in China and Macau.
(y) Other than as contemplated by this Agreement, the Company has
not incurred any liability for any finder's or broker's fee, or agent's
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(z) Other than the Subsidiaries, the Company does not own, directly
or indirectly, any shares of capital stock and does not have any other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, limited liability company, joint venture or other entity.
(aa) Neither the Company nor any of the Subsidiaries has sent or
received any notice indicating the termination of or intention to terminate any
of the contracts or agreements referred to or described in the Registration
Statement or the Prospectus, or filed as an exhibit to the Registration
Statement, and no such termination has been threatened by the Company, any
Subsidiary or any other party to any such contract or agreement.
(bb) Except as described in the Registration Statement and the
Prospectus, neither the Company nor any Subsidiary is in violation of any
statute, rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the transportation, storage, use,
disposal or release of hazardous materials, hazardous chemicals, toxic
substances or radioactive or biological materials or relating to the protection
or restoration of the environment or human exposure to hazardous materials,
hazardous chemicals, toxic substances or radioactive or biological materials
(collectively, "Environmental Laws"). Neither the Company nor any of the
Subsidiaries owns or operates any real property contaminated with any substance
that is subject to any Environmental Laws, is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which claim would individually or in the
aggregate have a Material
9
Adverse Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.
(cc) Except as described in the Registration Statement and in the
Prospectus, the Company has not, since July 30, 2002, extended or arranged for
the extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer of the Company; and
the Company has not maintained any such credit except such credit that was
outstanding on or before July 30, 2002, and there has been no material
modification of any term of such credit or any renewal of such credit on or
after July 30, 2002.
(dd) No payments or inducements have been made or given, directly or
indirectly, to any federal, state, local or foreign official or candidate for
any federal, state or local office in the United States or foreign offices by
the Company or any Subsidiary, by any of their officers, directors, employees or
agents or, to the knowledge of the Company, by any other person in connection
with any opportunity, contract, permit, certificate, consent, order, approval,
waiver or other authorization relating to the business of the Company or any
Subsidiary, except for such payments or inducements as were lawful under
applicable laws, rules and regulations. Neither the Company nor any Subsidiary,
nor, to the best knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company or
any Subsidiary, (i) has used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
unlawful rebate, payoff, influence payment, kickback or other unlawful payment
in connection with the business of the Company or any Subsidiary.
(ee) Except as described in the Registration Statement and the
Prospectus, the Company and each of the Subsidiaries owns, licenses, or
otherwise has rights in all United States and foreign patents, trademarks,
service marks, tradenames, copyrights, trade secrets and other proprietary
rights necessary for the conduct of its respective business as currently carried
on and as proposed to be carried on as described in the Registration Statement
and the Prospectus (collectively and together with any applications or
registrations for the foregoing, the "Intellectual Property"). Except as
described in the Registration Statement and the Prospectus, (i) no third parties
have obtained rights to any such Intellectual Property from the Company, other
than licenses granted in the ordinary course that would not have a Material
Adverse Effect; (ii) to the Company's knowledge, there is no infringement or
misappropriation by third parties of any such Intellectual Property; (iii) there
is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's or any Subsidiary's
rights in or to any such Intellectual Property, and the Company is unaware of
any facts which would form a basis for any such claim; (iv) there is no pending
or, to the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the validity, enforceability, or scope of any such
Intellectual Property, and the Company is unaware of any facts which would form
a basis for any such claim; (v) there is no prior, pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others alleging that
the Company or any of the
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Subsidiaries, or any of the Company's or the Subsidiaries' products, or
services, infringes, misappropriates or otherwise violates, or would infringe
upon, misappropriate or otherwise violate the development or commercialization
of a third party's products, product candidates or services or any patent,
trademark, copyright, trade secret or other proprietary right of others, and the
Company is unaware of any facts which would form a basis for any such claim;
(vi) to the Company's knowledge there is no third-party patent or patent
application that contains claims that cover or may cover any Intellectual
Property described in the Prospectus as being owned by or licensed to the
Company or any of the Subsidiaries or that is necessary for the conduct of their
businesses as currently or contemplated to be conducted or that interferes with
the issued or pending claims of any such Intellectual Property; (vii) there is
no prior art or public or commercial activity of which the Company is aware that
may render any patent held by the Company or any of the Subsidiaries invalid or
any patent application held by the Company or any of the Subsidiaries
unpatentable which has not been disclosed to the U.S. Patent and Trademark
Office; and (viii) neither the Company nor any of the Subsidiaries has committed
any act or omitted to undertake any act that would render the Intellectual
Property invalid or unenforceable in whole or in part. None of the technology
employed by the Company has been obtained or, to the Company's knowledge, is
being used by the Company in violation of the rights of any person or third
party. Except as described in the Registration Statement and the Prospectus, the
Company knows of no infringement or misappropriation by others of the
Intellectual Property. Schedule III lists all of the issued patents in which the
Company or any of the Subsidiaries has rights.
(ff) Except as described in the Registration Statement and the
Prospectus, the conduct of business by the Company and each of the Subsidiaries
complies, and at all times has complied, in all material respects with federal,
state, local and foreign laws, statutes, ordinances, rules, regulations,
decrees, orders, Permits and other similar items ("Laws") applicable to its
business, including, without limitation, the Occupational Safety and Health Act,
the Environmental Protection Act, the Toxic Substance Control Act and similar
federal, state, local and foreign Laws applicable to hazardous or regulated
substances and radioactive or biologic materials and licensing and certification
Laws covering any aspect of the business of the Company or any of the
Subsidiaries. Except as described in the Registration Statement and the
Prospectus, neither the Company nor any of the Subsidiaries has received any
notification asserting, or has knowledge of, any present or past failure to
comply with or violation of any such Laws.
(gg) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Act and the Exchange Act, were made by the Company on a
reasonable basis and reflect the Company's good faith belief and/or estimate of
the matters described therein at the time such statements were made.
(hh) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Shares
11
contemplated hereby shall be deemed a representation and warranty by the Company
to each Underwriter and shall be deemed to be a part of this Section 1 and
incorporated herein by this reference.
2. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders severally and not jointly
represents and warrants to each of the Underwriters as follows:
(a) Such Selling Stockholder now has, or upon the exercise of
options for the purchase of such Shares will have, and at the Closing Date (as
defined in paragraph (c) of Section 3 below) and the Option Closing Date (as
defined in paragraph (d) of Section 3 below), if any, will have, good and
marketable title to the Firm Shares and the Option Shares to be sold by such
Selling Stockholder hereunder, free and clear of any liens, encumbrances,
equities or claims, and full right, power and authority to effect the sale and
delivery of such Firm Shares and Option Shares; and upon the delivery of,
against payment for, such Firm Shares and Option Shares pursuant to this
Agreement, the Underwriters will acquire good and marketable title thereto, free
and clear of any liens, encumbrances, equities or claims.
(b) Such Selling Stockholder has full right, power and authority to
execute and deliver this Agreement, the Power of Attorney, and the Custody
Agreement referred to below and to perform its obligations under such
Agreements. The execution and delivery of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation by such Selling Stockholder of
the transactions herein and therein contemplated and the fulfillment by such
Selling Stockholder of the terms hereof will not require any consent, approval,
authorization, or other order of any court, regulatory body, administrative
agency or other governmental body (except as may be required under the Act and
state securities laws or Blue Sky laws) or any lender or other person and will
not result in a breach of any of the terms and provisions of, or constitute a
default under, the organizational documents of such Selling Stockholder, if not
an individual, or any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Stockholder is a party, or by which such
Selling Stockholder is bound, or to which any of the property or assets of such
Selling Stockholder is subject, or of any statute or of any order, rule or
regulation applicable to such Selling Stockholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction. To the knowledge of such Selling Stockholder, there is no
governmental or legal proceeding, judgment, order, injunction or other restraint
issued or filed with respect to the transactions contemplated by this Agreement,
or the performance by such Selling Stockholder of its respective obligations
thereunder other than proceedings described in the Registration Statement and
the Prospectus.
(c) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company and, other than as
permitted by the Act, the Selling Stockholder will not distribute any prospectus
or other offering material in connection with the offering of the Shares.
12
(d) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement, such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 are not
true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Registration Statement which has adversely affected or may adversely affect the
business of the Company or any of the Subsidiaries; and the sale of the Firm
Shares and the Option Shares by such Selling Stockholder pursuant hereto is not
prompted by any information concerning the Company or any of the Subsidiaries
which is not set forth in the Registration Statement or the documents
incorporated by reference therein. The information pertaining to such Selling
Stockholder under the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
(e) To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement thereto
are made in reliance upon and in conformity with written information furnished
to the Company by such Selling Stockholder expressly for use therein, such
Registration Statement and Prospectus did not, and any further amendments or
supplements to the Registration Statement and the Prospectus, when they become
effective or are filed with the Commission, as the case may be, will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
3. Purchase, Sale and Delivery of the Firm Shares.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
and the Selling Stockholders agree to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a price of $23.45
per share, the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 11 hereof. The number of Firm Shares to be purchased by each Underwriter
from each seller shall be as nearly as practicable in the same proportion to the
total number of Firm Shares being sold by each seller as the number of Firm
Shares being purchased by each Underwriter bears to the total number of Firm
Shares to be sold hereunder. The obligations of the Company and of each of the
Selling Stockholders shall be several and not joint.
(b) Certificates in negotiable form and notices of exercise of stock
options to be exercised for the total number of the Shares to be sold hereunder
by the Selling Stockholders have been placed in custody with Mellon Investor
Services, LLC as custodian (the "Custodian") pursuant to the Custody Agreement
executed by each Selling Stockholder for delivery of all Firm Shares and any
Option Shares to be sold hereunder by the Selling Stockholders. Each of the
Selling Stockholders specifically agrees that the Firm Shares and any Option
Shares represented by the certificates or the notices of exercise held in
custody for the Selling Stockholders under the Custody Agreement are subject to
the interests of the Underwriters hereunder, that the arrangements made
13
by the Selling Stockholders for such custody are to that extent irrevocable, and
that the obligations of the Selling Stockholders hereunder shall not be
terminable by any act or deed of the Selling Stockholders (or by any other
person, firm or corporation including the Company, the Custodian or the
Underwriters) or by operation of law (including the death of an individual
Selling Stockholder or the dissolution of a corporate Selling Stockholder) or by
the occurrence of any other event or events, except as set forth in the Custody
Agreement. If any such event should occur prior to the delivery to the
Underwriters of the Firm Shares or the Option Shares hereunder, the Firm Shares
or the Options Shares, as the case may be, shall be delivered by the Custodian
in accordance with the terms and conditions of this Agreement as if such event
has not occurred. The Custodian is authorized to receive and acknowledge receipt
of the proceeds of sale of the Shares held by it against delivery of such
Shares.
(c) Payment for the Firm Shares to be sold hereunder against
delivery of such Firm Shares therefor is to be made in Federal (same day) funds
to an account designated by the Company for the shares to be sold by it and to
an account designated by the Custodian for the shares to be sold by the Selling
Stockholders. Such payment and delivery are to be made through the facilities of
the Depository Trust Company at 10:00 a.m., New York time, on the third business
day after the date of this Agreement or at such other time and date not later
than five business days thereafter as you and the Company shall agree upon, such
time and date being herein referred to as the "Closing Date." (As used herein,
"business day" means a day on which the New York Stock Exchange is open for
trading and on which banks in New York are open for business and not permitted
by law or executive order to be closed.)
(d) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Selling Stockholders hereby grant an option to the several Underwriters to
purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section. The option granted hereby may be exercised in whole
or in part from time to time by giving written notice (i) at any time before the
Closing Date and (ii) thereafter within 30 days after the date of this
Agreement, by you, as the Representatives of the several Underwriters, to the
Company, the Attorney-in-Fact, and the Custodian setting forth the number of
Option Shares as to which the several Underwriters are exercising the option,
the names and denominations in which the Option Shares are to be registered and
the time and date at which such shares are to be delivered. If the option
granted hereby is exercised in part, the respective number of Option Shares to
be sold by each of the Selling Stockholders shall be in the same proportion to
the total number of Option Shares being sold as the number of Option Shares
indicated as being sold by each of the Selling Stockholders in the third column
of Schedule II hereof bears to the total number of Option Shares set forth in
the third column of Schedule II, adjusted by you in such manner as to avoid
fractional shares. The time and date at which Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than two nor
later than ten full business days after the exercise of such option, nor in any
event prior to the Closing Date (each such time and date being herein referred
to as the "Option Closing Date"). If the date of exercise of the option is two
or more days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date. The number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the total
number of Option Shares
14
being purchased as the number of Firm Shares being purchased by such Underwriter
bears to the total number of Firm Shares, adjusted by you in such manner as to
avoid fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. You, as the Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the
Attorney-in-Fact. To the extent, if any, that the option is exercised, payment
for the Option Shares shall be made on the Option Closing Date in Federal (same
day) funds drawn to the order of "Mellon Investor Services, LLC, as Custodian"
for the Option Shares to be sold by the Selling Stockholders against delivery of
the Option Shares therefor through the facilities of the Depository Trust
Company, New York, New York.
(e) The Firm Shares and the Option Shares, if any, shall be
registered in such names and in such denominations as you shall request in
writing not later than one full business day prior to the Closing Date or the
applicable Option Closing Date, as the case may be. The Firm Shares and the
Option Shares shall be delivered to you on the Closing Date or an Option Closing
Date, as the case may be, for the respective accounts of the several
Underwriters, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriters duly paid, against payment of the purchase price
therefor.
(f) If on the Closing Date or an Option Closing Date, if any, any
Selling Stockholder fails to have delivered the Firm Shares or the Option Shares
that such Selling Stockholder has agreed to sell on such date as set forth in
Schedule II hereto, the Company agrees that it will sell or arrange for the sale
of that number of shares of Common Stock to the Underwriters which represents
the Firm Shares or the Option Shares that such Selling Stockholder has failed to
deliver, as set forth in Schedule II hereto, or such lesser number as may be
requested by the Representatives.
4. Offering by the Underwriters.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so.
The Firm Shares are to be initially offered to the public at the public offering
price set forth in the Prospectus. The Representatives may from time to time
thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 3
hereof, the Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
5. Covenants of the Company.
The Company covenants and agrees with the several Underwriters that:
15
(a) The Company will (i) if the procedure in Rule 430A of the Rules
and Regulations is followed, use its best efforts, to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A of the Rules and Regulations; (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall have reasonably objected in writing or
which is not in compliance with the Rules and Regulations; and (iii) file on a
timely basis all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission subsequent to the date
of the Prospectus and prior to the termination of the offering of the Shares by
the Underwriters.
(b) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(c) The Company will advise the Representatives promptly (i) when
the Registration Statement or any post-effective amendment thereto shall have
become effective; (ii) of receipt of any comments from the Commission; (iii) of
any request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information; and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(d) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(e) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives, at or
before the Closing Date, four signed copies of the Registration Statement and
all amendments thereto including all exhibits filed therewith and all documents
incorporated by referenced therein (excluding exhibits), and will deliver to the
16
Representatives such number of copies of the Registration Statement (including
such number of copies of the exhibits filed therewith and the documents
incorporated by reference therein (excluding exhibits) that may reasonably be
requested) and of all amendments thereto, as the Representatives may reasonably
request.
(f) The Company will comply with the Act, the Exchange Act and the
Rules and Regulations so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Representatives, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(g) The Company will timely file such reports under the Exchange Act
as are necessary to make generally available to holders of its securities as
soon as may be practicable, but in no event later than 15 months after the
effective date of the Registration Statement, an earning statement (which need
not be audited but shall be in reasonable detail) covering a period of 12 months
commencing after the effective date of the Registration Statement, which will
satisfy the provisions of Section 11(a) of the Act (including Rule 158 of the
Rules and Regulations).
(h) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any quarterly period subsequent to the period covered by the most recent
financial statements appearing in the Registration Statement and the Prospectus.
(i) No offer, sale, contract for the sale, short sale, pledge or
other disposition of any shares of Common Stock of the Company, securities
convertible into or exchangeable or exercisable for shares of Common Stock or
derivatives with respect to shares of Common Stock (or agreement for such) will
be made, directly or indirectly, by the Company for a period of 90 days after
the date of this Agreement otherwise than hereunder or with the prior written
consent of RBC Capital Markets Corporation; provided, that this provision will
not restrict the Company from issuing shares of Common Stock upon the exercise
of any option outstanding on the date hereof or from granting awards of or
options to purchase shares of Common Stock pursuant to employee benefit plans as
described in the Prospectus and consistent with past practice.
(j) The Company has caused each officer and director of the Company
and each Selling Stockholder to furnish to you, on or prior to the date of this
agreement, a letter or letters, in form and substance satisfactory to the
Underwriters, pursuant to which each such person shall agree
17
not to (i) offer, sell, contract to sell, sell short, pledge or otherwise
dispose of, whether directly or indirectly, any shares of Common Stock of the
Company, securities convertible into or exchangeable or exercisable for shares
of Common Stock or derivatives with respect to shares of Common Stock
beneficially owned by such person, (ii) enter into any transactions that would
have the same effect, (iii) enter into any swap, hedge or other arrangement that
transfers, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any of these transactions are to be settled by delivery of
Common Stock or other securities, in cash or otherwise, (iv) publicly disclose
the intention to make any offer, sale, contract to sell, short sale, pledge or
other disposition or to enter into any such other transaction, swap, hedge or
other arrangement, (v) or request the registration of any of the foregoing under
the Act for a period of 90 days after the date of this Agreement, directly or
indirectly, except with the prior written consent of RBC Capital Markets
Corporation (the "Lockup Agreements").
(k) The Company shall apply the net proceeds of its sale of the
Shares as described under the heading "Use of Proceeds" in the Prospectus.
(l) The Company shall not invest or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
6. Covenants of the Selling Stockholders.
Each of the Selling Stockholders covenants and agrees with the
several Underwriters that:
(a) For a period of 90 days after the date of this Agreement, such
Selling Stockholder will not make or cause to be made any (i) offer, sale,
contract for the sale, short sale, pledge or other disposition, whether direct
or indirect, of any shares of Common Stock of the Company, securities
convertible into or exchangeable or exercisable for shares of Common Stock or
derivatives with respect to shares of Common Stock beneficially owned by the
Selling Stockholder, (ii) transactions that would have the same effect, (iii)
swap, hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of Common Stock, whether any of these
transactions are to be settled by delivery of Common Stock or other securities,
in cash or otherwise, (iv) public disclosure of the intention to make any offer,
sale, contract to sell, short sale, pledge or other disposition or to enter into
any such other transaction, swap, hedge or other arrangement, or (v) request the
Company to register any of the foregoing under the Act, without the prior
written consent of RBC Capital Markets Corporation or unless otherwise permitted
hereunder.
(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and
18
Dividend Tax Compliance Act of 1983 with respect to the transactions herein
contemplated, each of the Selling Stockholders agrees to deliver to you prior to
or at the Closing Date a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
(c) Such Selling Stockholder will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
7. Costs and Expenses.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company and the Selling Stockholders under
this Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of counsel
for the Company and the Selling Stockholders; the cost of printing and
delivering to, or as reasonably requested by, the Underwriters copies of the
Registration Statement, Preliminary Prospectuses, the Prospectus, the
Underwriters' Selling Memorandum and the Underwriters' Invitation Letter, if
any, any Nasdaq National Market listing application or notice, the Blue Sky
Survey and any supplements or amendments thereto; the filing fees of the
Commission; the filing fees and expenses (including legal fees and disbursements
of counsel to the Underwriters) incident to securing any required review by the
NASD of the terms of the sale of the Shares; the listing fee of the Nasdaq
National Market; the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered with the prior approval of the Company in
connection with the road show; and the expenses, including the fees and
disbursements of counsel to the Underwriters up to a maximum amount of $3,000,
incurred in connection with the qualification of the Shares under state
securities or Blue Sky laws. To the extent, if at all, that any of the Selling
Stockholders engage special legal counsel to represent them in connection with
this offering, the fees and expenses of such counsel shall be borne by such
Selling Stockholder. Any transfer taxes imposed on the sale of the Shares to the
several Underwriters will be paid by the Company and the Selling Stockholders
pro rata.
The Company and the Selling Stockholders shall not, however, be
required to pay for any of the Underwriters' expenses (other than those related
to qualification under NASD rules and state securities or Blue Sky laws) except
that, if this Agreement shall not be consummated because the conditions in
Section 8 hereof are not satisfied, or because this Agreement is terminated by
the Representatives pursuant to Section 13 hereof, or by reason of any failure,
refusal or inability on the part of the Company or the Selling Stockholders to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on its part to be performed, unless such failure to
satisfy said condition or to comply with said terms be due to the default or
19
omission of any Underwriter or (as to Sections 8(d) and 8(e)) of counsel to the
Underwriters, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including all fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder; but the Company shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares. It is understood, however, that
except as provided in this Section 7 and Section 10, the Underwriters shall pay
all costs and expenses incident to the performance of their obligations under
this Agreement, including, without limitation, the fees and disbursements of
counsel to the Underwriters.
8. Conditions of Obligations of the Underwriters.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date and the Option Closing
Date, if any, of the representations and warranties of the Company and the
Selling Stockholders contained herein, and to the performance by the Company and
the Selling Stockholders of their covenants and obligations hereunder and to the
following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or the Selling Stockholders, shall be
contemplated by the Commission and no injunction, restraining order, or order of
any nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, the opinion of Xxxxxxxx Xxxxxx Xxxxxxx &
Xxxxxxx LLP, counsel for the Company and the Selling Stockholders, dated the
Closing Date or the Option Closing Date, if any, addressed to the Underwriters
(and stating that it may be relied upon by Xxxxxx & Bird LLP, counsel for the
Underwriters) to the effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
all corporate power and corporate authority necessary to own its properties and
to conduct its business as described in the Registration Statement. Each of the
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation (to the extent
good standing is a concept recognized in such jurisdiction), and has all
corporate power and corporate authority necessary to own its properties and to
conduct its business as described in the Registration
20
Statement. The Company and each of the Subsidiaries is qualified to do business
as a foreign corporation in each state where it owns or leases any material
property or conducts any material business, except where failure to so qualify
would not have a Material Adverse Effect. Except as set forth in the Prospectus,
all issued and outstanding shares of capital stock of each of the Subsidiaries
are duly authorized and validly issued and are fully paid and nonassessable and
are directly owned by the Company, and except as set forth in the Prospectus, to
such counsel's knowledge, the outstanding shares of capital stock of each of the
Subsidiaries are owned free and clear of all liens, encumbrances, equities and
claims, and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into any
shares of capital stock of or of ownership interests in the Subsidiaries are
outstanding.
(ii) The Company has authorized capital stock as set forth
under the caption "Capitalization" in the Prospectus; the outstanding shares of
the Company's Common Stock, including all outstanding Shares to be sold by the
Selling Stockholders, have been duly authorized and validly issued and are fully
paid and non-assessable; the Shares to be sold by the Company and the Shares to
be sold by the Selling Stockholders following the exercise of stock options by
them, when issued and paid for as contemplated herein or in the applicable stock
option agreement, will be duly authorized, validly issued, fully paid and
non-assessable; all of the Shares conform to the description thereof contained
in the Prospectus; the certificates for the Shares, assuming they are in the
form filed with the Commission, comply with the requirements of Delaware law and
the Nasdaq Stock Market; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue or sale thereof.
(iii) To such counsel's knowledge, except as described in the
Prospectus, there are no preemptive rights, or presently outstanding options,
warrants, conversion or exchange privileges or rights to purchase from the
Company any of the authorized but unissued stock of the Company, and except as
described in or contemplated by the Prospectus, to such counsel's knowledge, no
holder of any securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively waived, to
cause the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Shares or the right to have any Common Stock
or other securities of the Company included in the Registration Statement or the
right, as a result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or other securities of
the Company.
(iv) The Registration Statement has become effective under the
Act, the required filings of the Prospectus, including any supplements thereto,
pursuant to Rule 424(b) have been made in the manner and within the time periods
required by Rule 424(b) and, to such counsel's knowledge, no stop order
proceedings suspending the effectiveness of the Registration Statement have been
instituted or are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus, each amendment
or supplement thereto and each document enumerated as being incorporated by
reference therein comply as to form in all material respects with the
requirements of the Act and the applicable Rules and Regulations (except that
such counsel need express no opinion as to the financial statements
21
and related schedules therein). The conditions for the use of Form S-3, set
forth in the General Instructions thereto, have been satisfied.
(vi) The statements under the captions "Description of Capital
Stock," "Risk Factors -- We may be subject to certain federal regulatory
fines.", and the second paragraph of "Business -- Legal Proceedings" in the
Prospectus and in Item 15 of the Registration Statement, insofar as such
statements constitute a summary of documents referred to therein or matters of
law, fairly summarize in all material respects the information called for with
respect to such documents and matters.
(vii) To such counsel's knowledge, there are no contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus that are not so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(viii) To such counsel's knowledge and except as set forth in
the Prospectus, there is no material legal or governmental action, suit,
proceeding or investigation pending or threatened against the Company or any of
the Subsidiaries.
(ix) The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions herein
contemplated do not and will not result in a material violation or breach of any
of the terms or provisions of, or constitute a default under, (a) the Charter or
By-Laws of the Company or (b) any material contract, indenture, mortgage, deed
of trust or other agreement or instrument known to such counsel to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries may be bound, or (c) any order, rule or regulation known to
such counsel of any court or regulatory body, administrative agency or other
governmental body having jurisdiction that is applicable to the Company or any
of the Subsidiaries; and, to such counsel's knowledge, will not result in the
creation or imposition of any lien, charge or encumbrance upon any material
assets or property of the Company or any of the Subsidiaries.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any United States federal, Delaware corporate
or California regulatory, administrative or other governmental body or to such
counsel's knowledge any lender or other person is necessary in connection with
the execution and delivery of this Agreement by the Company or by or on behalf
of the Selling Stockholders and the consummation of the transactions therein
contemplated (other than as may be required by the NASD or as required by state
securities or Blue Sky laws, as to which such counsel may express no opinion)
except such as have been obtained or made, specifying the same; such counsel
knows of no governmental or legal proceeding, judgment, order, injunction or
other restraint issued or filed with respect to the
22
transactions contemplated by this Agreement or the performance by the Company or
the Selling Stockholders of their respective obligations thereunder other than
proceedings described in the Registration Statement and in the Prospectus.
(xii) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement, and the
application of the net proceeds therefrom as described in the Prospectus, an
investment company as defined in the Investment Company Act of 1940.
(xiii) This Agreement, the Custody Agreement and the Power of
Attorney have been duly authorized, executed and delivered by or on behalf of
the Selling Stockholders and constitute the valid and binding obligations of the
Selling Stockholders in accordance with their terms.
(xiv) The performance by each Selling Stockholder of the
provisions of this Agreement, the Custody Agreement and the Power of Attorney
and the consummation of the transactions contemplated herein and therein will
not result in a breach or violation of any of the terms or provisions of, or
constitute a default under, the organizational documents of such Selling
Stockholder that is not a natural person, or any material contract, indenture,
mortgage, deed of trust or other agreement or instrument known to such counsel
to which such Selling Stockholder is a party or by which such Selling
Stockholder may be bound or, to the knowledge of such counsel, any order, rule
or regulation applicable to such Selling Stockholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction, and, to the knowledge of such counsel, will not result in the
creation or imposition of any lien, charge or encumbrance upon any assets or
property of such Selling Stockholder.
(xv) To such counsel's knowledge, each Selling Stockholder has
full legal right, power and authority, and any approval required by law (other
than as required by state securities or Blue Sky laws as to which we express no
opinion) to sell, assign, transfer and deliver the portion of the Shares to be
sold by such Selling Stockholder.
(xvi) Upon payment by the Underwriters for the Shares to be
sold by the Selling Stockholders, delivery to the Custodian of certificates
representing such Shares (assuming that the Custodian, in taking delivery of
such certificates, is acting on behalf of The Depository Trust Company ("DTC")),
each such certificate being endorsed by an effective endorsement to Cede & Co.
("Cede"), as nominee of DTC, registration of such Shares in the name of Cede and
crediting of such Shares by DTC to securities accounts of the Underwriters, and
assuming that neither DTC nor any of the Underwriters has notice of any "adverse
claim" (as defined in Section 8-102 of the Uniform Commercial Code ("UCC")) to
such Shares, (i) DTC will be a "protected purchaser" of such Shares, within the
meaning of Section 8-303 of the UCC; and (ii) under Section 8-501 of the UCC,
the Underwriters will acquire securities entitlements to such Shares credited to
their respective accounts, and under Section 8-502 of the UCC, no action based
on any "adverse claim" (as defined in Section 8-102 of the UCC) to such Shares,
whether framed in conversion,
23
replevin, constructive trust, equitable lien or other theory, may be asserted
against any of the Underwriters with respect to such security entitlements.
In rendering such opinion, Xxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxx LLP may
rely as to matters governed by the laws of states other than California or
Delaware or Federal laws, on local counsel in such jurisdictions, provided that
in each case Xxxxxxxx Xxxxxx Xxxxxxx & Hampton LLP shall state that they believe
that they and the Underwriters are justified in relying on such other counsel.
In addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, at the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date and the Option Closing Date, if any, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date and the Option Closing Date, if
any, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements and related schedules
and statistical information therein). With respect to such statement, Xxxxxxxx
Xxxxxx Xxxxxxx & Xxxxxxx LLP may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(c) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, opinions of Xxxxx, Xxxxx & Xxxxx, LLP, special
counsel for the Company with respect to patent and proprietary rights, dated the
Closing Date and the Option Closing Date, if any, addressed to the Underwriters
(and stating that it may be relied upon by Xxxxxx & Bird LLP, counsel for the
Underwriters) to the effect that:
(i) To such counsel's knowledge, except as described in the
Registration Statement and Prospectus, (A) the Company and its Subsidiaries have
valid license rights or clear title to the Intellectual Property, and there are
no rights of third parties to any such Intellectual Property, other than
licenses, consent agreements and security interests granted in the ordinary
course that would not have a Material Adverse Effect; (B) there is no
infringement, misappropriation, or other violation by third parties of any of
the Intellectual Property that is not described in the Registration Statement;
(C) there is no infringement, misappropriation, or other violation by the
Company and its Subsidiaries of any intellectual property of others, and such
counsel is unaware of any facts that would form a reasonable basis for a
material claim, that is not described in the Registration Statement; (D) there
is no pending or threatened action, suit, proceeding or claim by governmental
authorities or others that the Company and its Subsidiaries infringe or
otherwise violate any intellectual property of others that is not described in
the Registration Statement; and (E) there is no pending or threatened action,
suit, proceeding or claim by governmental authorities or others challenging the
rights of the Company and its Subsidiaries in or to, or challenging the scope
of, any Intellectual Property, and such counsel is
24
unaware of any facts which would form a reasonable basis for any such claim,
that is not described in the Registration Statement.
(ii) To such counsel's knowledge, the patent applications of
the Company and its Subsidiaries presently on file disclose patentable subject
matter, and such counsel is not aware of any inventorship challenges, any
interference which has been declared or provoked, or any other material fact
with respect to the patent applications of the Company and its Subsidiaries
presently on file which has not been disclosed to the U.S. Patent and Trademark
Office that (A) would preclude the issuance of patents with respect to such
applications or (B) would lead such counsel to conclude that such patents, when
issued, would not be valid and enforceable in accordance with applicable
regulations.
(iii) Such counsel has reviewed the "Risk Factors" and
"Business" portions of the Registration Statement and the Prospectus referencing
the Intellectual Property, including, but not limited to, the statements under
the captions "Risk Factors -- Establishing and protecting our trademarks,
patents and other intellectual property is costly and may be difficult outside
the U.S. If our efforts to do so are unsuccessful, the value of our brands could
suffer.", "Risk Factors -- We may lose pending litigation and the rights to
certain of our intellectual property.", "Risk Factors -- Counterfeiting of our
brands can divert sales and damage our brand image,", "Risk Factors -- As our
patents expire, our competitors will be able to copy our technology or
incorporate it in their products without paying royalties.", "Business --
Patents and Trademarks" and the first paragraph of "Business -- Legal
Proceedings" in the Prospectus (collectively, the "Intellectual Property
Sections"). On the basis of such counsel's representation of the Company, such
counsel has no reason to believe that the information in the Intellectual
Property Sections contains any untrue statement or material fact or omits to
state a material fact necessary to make the statements therein not misleading
and insofar as such Intellectual Property Sections constitute statements or
summaries of matters of U.S. federal intellectual property law, to such
counsel's knowledge, such legal statements of summaries are, in all material
respects, accurate and complete statements or summaries, as the case may be, of
the matters referred to therein.
(d) The Representatives shall have received from Xxxxxx & Bird LLP,
counsel to the Underwriters, an opinion dated the Closing Date and the Option
Closing Date, if any, with respect to the formation of the Company, the validity
of the Shares and other related matters as the Representatives reasonably may
request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(e) The Representatives shall have received at or prior to the
Closing Date from Xxxxxx & Bird LLP a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the state
securities or Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(f) You shall have received, on each of the date hereof, the Closing
Date and the Option Closing Date, if any, a letter dated the date hereof, the
Closing Date or the Option
25
Closing Date, if any, in form and substance satisfactory to you, of KPMG LLP
confirming that they are independent public accountants within the meaning of
the Act and the applicable Rules and Regulations and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations; and
containing such other statements and information as is ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and the Prospectus.
(g) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, a certificate or certificates of the Company's
Chief Executive Officer and Chief Financial Officer to the effect that, as of
the Closing Date or the Option Closing Date, if any, each of them severally
represents as follows:
(i) The Registration Statement has become effective under the
Act, and no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for such purpose have been taken or
are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, if any;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct as to each material fact stated therein and such
Registration Statement and Prospectus did not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, and since the effective date of the Registration Statement, no event
has occurred which should have been set forth in a supplement to or an amendment
of the Prospectus which has not been so set forth in such supplement or
amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective change, which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not arising in the ordinary course of business.
(h) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
26
(i) The Firm Shares and Option Shares, if any, have been approved
for designation upon notice of issuance on the Nasdaq National Market.
(j) The Lockup Agreements described in Section 5(j) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Representatives and to Xxxxxx &
Bird LLP, counsel for the Underwriters.
If any of the conditions contained in this Section shall not have
been fulfilled when and as required by this Agreement, the obligations of the
Underwriters hereunder may be terminated by the Representatives by notifying the
Company and the Selling Stockholders of such termination in writing on or prior
to the Closing Date or the Option Closing Date, if any. In such event, the
Company, the Selling Stockholders and the Underwriters shall not be under any
obligation to each other except to the extent provided in Sections 7 and 10
hereof.
9. Conditions of the Obligations of the Company and the Selling
Stockholders.
The obligations of the Company and the Selling Stockholders to sell
and deliver the portion of the Shares required to be delivered as and when
specified in this Agreement are subject to the conditions that at the Closing
Date or the Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in effect
or proceedings therefor initiated or threatened.
10. Indemnification.
(a) The Company and Selling Stockholders Xxxxxxx X. Xxxx and M.
Xxxxx Xxx, jointly and severally, agree:
(i) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any alleged act or failure to act by
any Underwriter in connection with the Shares or the offering contemplated
hereby and which arises out of or is based upon matters covered by clause (i) or
(ii) above; provided, however, that the Company and Messrs. Xxxx and Ash shall
not be liable under this clause (iii) to the extent that it is determined in a
final
27
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from such Underwriter's failure to conduct
a reasonable investigation, as such term is used in Section 11 of the Act, or
from acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct; provided
further, that the aggregate liability of Messrs. Xxxx and Ash pursuant to this
Section 10(a) will be limited to an amount equal to the aggregate proceeds, net
of underwriting commissions and discounts, to such respective Selling
Stockholders from the sale of Shares sold by them to the Underwriters; provided
further, that the Company and Messrs. Xxxx and Ash will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through the Representatives specifically for use in the preparation thereof;
provided further, that the Company and Messrs. Xxxx and Ash will not be liable
to any Underwriter, or any person controlling such Underwriter within the
meaning of the Act, with respect to any loss, claim, damage or liability arising
out of or based on any untrue statement or alleged untrue statement of or
omission or alleged omission to state a material fact in any Preliminary
Prospectus which is corrected in the Prospectus if the person asserting any such
loss, claim, damage or liability purchased Shares from such Underwriter but was
not sent or given a copy of the Prospectus at or prior to the written
confirmation of the sale of such Shares to such person, and if copies of the
Prospectus were timely delivered to such Underwriter pursuant to Section 5
hereof.
(ii) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding, or in obtaining payment pursuant to this
Section 10. In the event that it is finally judicially determined that the
Underwriters were not entitled to receive payments for legal and other expenses
pursuant to this subparagraph, the Underwriters will promptly return all sums
that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders and each person, if
any, who controls the Company or the Selling Stockholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling Stockholder or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other out-of-pocket expenses reasonably
28
incurred by the Company or any such director, officer, Selling Stockholder or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding, or in obtaining payment pursuant
to this Section 10; provided, however, that each Underwriter will be liable in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof.
(c) Each of the Selling Stockholders other than Xxxxxxx X. Xxxx and
M. Xxxxx Xxx, severally and not jointly, agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages or liability to
which such Underwriter or any such controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any alleged act or failure to
act by any Underwriter in connection with the Shares or the offering
contemplated hereby and which arises out of or is based upon matters covered by
clause (i) or (ii) above; provided, however, that such Selling Stockholders
shall not be liable under this clause (iii) to the extent that it is determined
in a final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from such Underwriter's failure to
conduct a reasonable investigation, as such term is used in Section 11 of the
Act, or from acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct; provided
further, that the aggregate liability of each such Selling Stockholder pursuant
to this Section 10(c) will be limited to an amount equal to the aggregate
proceeds, net of underwriting commissions and discounts, to such Selling
Stockholder from the sale of Shares sold by such Selling Stockholder to the
Underwriters; provided further, that each such Selling Stockholder, in his
capacity as Selling Stockholder, will be liable to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
such Selling Stockholder specifically for use in the preparation thereof;
provided further, that such Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof; provided
further that no such Selling Stockholder will be liable to any underwriter, or
any person controlling such Underwriter within the meaning of the Act, with
respect to any loss, claim, damage or liability arising out of or based on any
untrue statement or alleged untrue statement of or omission or alleged omission
to state a material fact in any Preliminary Prospectus which is
29
corrected in the Prospectus if the person asserting any such loss, claim, damage
or liability purchased Shares from such Underwriter but was not sent or given a
copy of the Prospectus at or prior to the written confirmation of the sale of
such Shares to such person, and if copies of the Prospectus were timely
delivered to such Underwriter pursuant to Section 5 hereof.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section, such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing. No indemnification provided for in
Section 10(a), (b) or (c) shall be available to any party who shall fail to give
notice as provided in this Subsection if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related and to the
extent and only the extent to which such party was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of the provisions of Section 10(a), (b) or (c). In case any such 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 therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action.
It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm
for all such indemnified parties unless the representation of all such
indemnified parties by same counsel would be inappropriate due to actual or
potential differing interests between or among them. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 10(a) or Section 10(c) and by the Company and the Selling Stockholders
in the case of parties indemnified pursuant to Section 10(b). The indemnifying
party 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 from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding with respect to which
30
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(e) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 10(a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Stockholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Subsection were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Subsection. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to above in this Subsection shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim or in
connection with obtaining payment pursuant to this Section 10. Notwithstanding
the provisions of this Subsection, (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent
31
misrepresentation. The Underwriters' obligations in this Subsection to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section shall be paid by the indemnifying party to the indemnified party as such
losses, claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section and the representations and
warranties of the Company set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, the
Company, its directors or officers or any persons controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or a successor to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section.
11. Default by Underwriters.
If on the Closing Date or the Option Closing Date, if any, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company or a Selling Stockholder),
you, as the Representatives of the Underwriters, shall use your reasonable
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company and the Selling
Stockholders such amounts as may be agreed upon, and upon the terms set forth
herein, of the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
32
Selling Stockholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Stockholders
except to the extent provided in Section 10 hereof. In the event of a default by
any Underwriter or Underwriters as set forth in this Section, the Closing Date
or Option Closing Date, if any, may be postponed for such period, not exceeding
seven days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting Underwriter. Any action taken under this
Section shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
12. Notices.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, or faxed and confirmed as
follows:
if to the Underwriters, to RBC Capital Markets Corporation
c/o RBC Capital Markets
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Syndicate Director
Fax: (000) 000-0000
if to the Company or
the Selling Stockholders, to Deckers Outdoor Corporation
000-X Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: M. Xxxxx Xxx
Chief Financial Officer
Fax: (000) 000-0000
13. Termination.
(a) This Agreement may be terminated by you by notice to the Company
and the Selling Stockholders at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change, which
has had or is reasonably likely to have a Material Adverse Effect, (ii) any
outbreak or escalation of hostilities or declaration of war or national
emergency or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets of
the United States would, in your reasonable judgment, make it impracticable or
inadvisable to
33
market the Shares or to enforce contracts for the sale of the Shares, (iii)
suspension of trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq National Market, limitation on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such Exchange or such Market or material disruption in securities
settlement, payment or clearance services in the United States, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by United States or New York State authorities, (vi) any downgrading, or
placement on any watch list for possible downgrading, in the rating of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Exchange Act);
(vii) the suspension of trading of the Company's common stock by The Nasdaq
Stock Market, the Commission, or any other governmental authority or, (viii) the
taking of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States; or
(b) as provided in Sections 8 and 11 of this Agreement.
14. Successors.
This Agreement has been and is made solely for the benefit of the
Company, the Selling Stockholders and Underwriters and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
15. Information Provided by Underwriters.
The Company, the Selling Stockholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished by
any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information contained under the headings
"Underwriting Discounts and Offering Expenses" (except for the information
furnished in the last paragraph thereof) and "Underwriters' Market Activities"
under the caption "Underwriting" in the Prospectus.
16. Miscellaneous.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, by or on behalf of the Company or its
directors or officers or by or on behalf of any of the Selling Stockholders and
(c) delivery of and payment for the Shares under this Agreement.
34
This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof.
This Agreement may only be amended or modified in writing, signed by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.
The invalidity or unenforceability of any section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other section, paragraph or provision of this Agreement. If any section,
paragraph or provision of this Agreement is for any reason determined to be
invalid or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and enforceable.
[remainder of page intentionally blank]
35
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
Deckers Outdoor Corporation
By /s/ Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx X. Xxxx
Chief Executive Officer
Selling Stockholders listed on Schedule II
By /s/ Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx X. Xxxx
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
RBC CAPITAL MARKETS CORPORATION
XXXXX XXXXXXX & CO.
For themselves and as the Representatives of
the several Underwriters listed on Schedule I
By: RBC Capital Markets Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Director
SCHEDULE I
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM
UNDERWRITER SHARES TO BE PURCHASED
----------- ----------------------
RBC Capital Markets Corporation 1,400,001
Xxxxx Xxxxxxx & Co. 875,000
XX Xxxxx Securities Corporation 525,000
X.X. Xxxxxxxx & Co. 233,333
First Albany Capital Inc. 233,333
Wedbush Xxxxxx Securities Inc. 233,333
TOTAL 3,500,000
SCHEDULE II
Schedule of Selling Stockholders
NUMBER OF FIRM NUMBER OF OPTION
SELLING STOCKHOLDER SHARES TO BE SOLD SHARES TO BE SOLD
------------------- ----------------- -----------------
Xxxxxxx X. Xxxx 1,197,928 298,208
Xxx X. Xxxxxxxxx 45,540 50,000
Xxxx X. Xxxxxxxx 53,990 13,421
M. Xxxxx Xxx 70,000 17,400
Xxxxxxx X. Xxxxxxx 68,951 17,139
Xxxxxxxxx X. Xxxxxxxx 52,500 13,050
Xxxxxx X. Xxxxxx 29,215 7,262
Xxxxxx X. Xxxxxxx 32,900 2,100
Xxxx X. Xxxxxxx 10,370 2,577
Xxxx X. Xxxxxxxx 25,375 1,125
Xxxxxx X. Xxxxxxxxx 6,271 1,559
Xxxx Xxxxxxxx 272,560 67,751
Xxxxx Xxxxxxx Xxxx Trust and Xxxxxxx X. Xxxx 134,400 33,408
Children's Trust
TOTAL 2,000,000 525,000
SCHEDULE III
LIST OF ALL ISSUED PATENTS OWNED
IN WHOLE OR IN PART BY DECKERS OUTDOOR CORPORATION OR ANY OF ITS SUBSIDIARIES
US PATENTS
Title Appl. No. Appl. Date Patent No. Liens & Ownership
----- --------- ---------- ---------- -----------------
Sandal 512,625 11-Apr-90 5,056,241 Peninsula Fund
Shoe Sole Bottom and Periphery 55,939 17-Jun-96 D398,143 Peninsula Fund & Comerica
Bank
Sole Bottom and Periphery for Footwear 56,119 24-Jun-96 D390,348 Peninsula Fund & Comerica
Bank
Fleece Sock 09/001252 30-Dec-97 5,867,837 Peninsula Fund & Comerica
Bank
Portion of an Article of Footwear 29/203,666 15-Apr-04
Portion of an Article of Footwear 29/203,667 15-Apr-04
Footwear 29/099,562 22-Jan-99 D429,873 Peninsula Fund & Comerica
Bank
Footwear 29/102,977 6-Apr-99 D441,175 Peninsula Fund & Comerica
Bank
Footwear 29/114,352 22-Nov-99 D458,009 Peninsula Fund & Comerica
Bank
Footwear 29/123,313 15-May-00 D460,245 Peninsula Fund & Comerica
Bank
Footwear 29/123,315 15-May-00 D460,246 Peninsula Fund & Comerica
Bank
Footwear 29/123,305 15-May-00 D459,863 Peninsula Fund & Comerica
Bank
Footwear 29/123,301 15-May-00 D459,862 Peninsula Fund & Comerica
Bank
Title Appl. No. Appl. Date Patent No. Liens & Ownership
----- --------- ---------- ---------- -----------------
Footwear Securement System 10/130457 20-Aug-02
Footwear Sole and Arch Strapping System 09/786,239 3-Sep-99 6,606,803 Peninsula Fund & Comerica
Bank
Footwear Sole with Integrally Molded Shank 09/148,306 4-Sep-98 6,061,929 Peninsula Fund & Comerica
Bank
Self Adjusting Frame for Footwear 09/239,473 28-Jan-99 6,128,835 Peninsula Fund & Comerica
Bank
Sport Sandal Construction 560,569 12-Dec-83 4,584,782 Peninsula Fund & Comerica
Bank
Sport Sandal For Active Wear 07/096914 15-Sep-87 4,793,075 Peninsula Fund & Comerica
Bank
Surface of a Footwear Sole 29/114,038 17-Nov-99 D461,627 Peninsula Fund & Comerica
Bank
Tread Surface 29/123,252 15-May-00 D459,864 Peninsula Fund & Comerica
Bank
INTERNATIONAL PATENTS
Title Appln No. Appln Date Patent No. Country
----- --------- ---------- ---------- -------
Footwear Securement System 17741/01 17-Nov-00 Australia
Footwear Sole and Arch Strapping System 58084/99 3-Sep-99 763736 Australia
Sport Sandal 21853/88 5-Sep-88 599880 Australia
Fleece Sock 2,227,352 16-Jan-98 2227352 Canada
Footwear 99312209.4 20-Jul-99 99312209.4 China
Footwear Sole and Arch Strapping System 99810533.3 00-Xxx-00 Xxxxx
Footwear Sole and Arch Strapping System 99945494.5 27-Nov-02 1109467 EU
99945494.5 27-Nov-02 1109467 Belgium
99945494.5 27-Nov-02 0000000 Xxxxxx
99945494.5 27-Nov-02 1109467 Germany
99945494.5 27-Nov-02 1109467 Ireland
2
Title Appln No. Appln Date Patent No. Country
----- --------- ---------- ---------- -------
99945494.5 00-Xxx-00 0000000 Xxxxx
99945494.5 27-Nov-02 1109467 Luxembourg
99945494.5 27-Nov-02 1109467 Netherlands
99945494.5 27-Nov-02 1109467 Switzerland/
Xxxxxxxxxxxx
99945494.5 27-Nov-02 1109467 United Kingdom
Footwear 994635 22-Jul-99 000000 Xxxxxx
Footwear 49906922.6 21-Jul-99 49906922.6 Germany
Footwear 11-19656 00-Xxx-00 0000000 Xxxxx
Sport Sandal For Active Wear 11738/88 00-Xxx-00 00000 Xxxxx
Footwear Sole and Arch Strapping System PA/a/2001/002347 0-Xxx-00 Xxxxxx
Sport Sandal For Active Wear 226061 6-Sep-88 226061 New Zealand
Footwear 2085164 22-Jul-99 2085164 UK
3
EXHIBIT A
LIST OF SUBSIDIARIES
Except as described below, all issued and outstanding shares of the Subsidiaries
are held by the Company.
SUBSIDIARY ISSUED AND OUTSTANDING SHARES
---------- -----------------------------
Xxxxxxxx Limited* 76
Phillipsburg Limited* 2
UGG Holdings, Inc. 100,875
Deckers Europe B.V. 400
Deckers Consumer Direct Corporation **
*One share each of Xxxxxxxx Limited and Phillipsburg Limited is held by Tapman
(Nominees) Limited pursuant to a Declaration of Trust for the sole benefit of
and to the order of the Company. 66.65% of the shares of Xxxxxxxx Limited and
Phillipsburg Limited are pledged to Comerica Bank-California in connection with
the Company's credit facility.
**The Articles of Incorporation of Deckers Consumer Direct Corporation were
filed with the Arizona Secretary of State on March 19, 2004, but shares have not
been issued.
