Exhibit 1.1
_______________ SHARES
WSB FINANCIAL GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
______________, 2006
_______________, 2006
X. X. Xxxxxxxx & Co.
0 Xxxxx Xxxxxx Xxxxx
The Davidson Building
Great Falls, Montana 59401
Ladies and Gentlemen:
WSB Financial Group, Inc., a Washington corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") 2,300,000 shares of its common stock, $1.00 par
value per share (the "FIRM Shares"). The Company also proposes to issue and sell
to the several Underwriters not more than an additional 345,000 shares of its
common stock, $1.00 par value per share (the "ADDITIONAL SHARES") if and to the
extent that you, as Manager of the offering, shall have determined to exercise,
on behalf of the Underwriters, the right to purchase such shares of common stock
granted to the Underwriters in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "SHARES." The
shares of common stock, $1.00 par value per share of the Company to be
outstanding after giving effect to the sales contemplated hereby, are
hereinafter referred to as the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES Act"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares (or in the form first made available to the
Underwriters by the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act) is hereinafter referred to as the "Prospectus." If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term
"REGISTRATION STATEMENT" shall be deemed to include such Rule 462 Registration
Statement.
For purposes of this Agreement, "FREE WRITING PROSPECTUS" has the meaning
set forth in Rule 405 under the Securities Act, "TIME OF SALE PROSPECTUS" means
the preliminary prospectus together with the free writing prospectuses, if any,
each identified in Schedule II hereto, and "BROADLY AVAILABLE ROAD show" means a
"bona fide electronic road show" as defined in Rule
433(h)(5) under the Securities Act that has been made available without
restriction to any person. As used herein, the terms "Registration Statement,"
"preliminary prospectus," "Time of Sale Prospectus" and Prospectus shall include
the documents, if any, incorporated by reference therein. The terms
"SUPPLEMENT," "AMENDMENT," and "AMEND" as used herein with respect to the Time
of Sale Prospectus or any free writing prospectus shall include all documents
subsequently filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), that are incorporated by
reference therein.
X. X. Xxxxxxxx & Co. ("D.A. DAVIDSON") has agreed to reserve a portion of
the Shares to be purchased by it under this Agreement for sale to the Company's
directors, employees, business associates and other parties related to the
Company (collectively, "PARTICIPANTS"), as set forth in the Prospectus under the
heading "Underwriters" (the "DIRECTED SHARE PROGRAM"). The Shares to be sold by
D. A. Davidson and its affiliates pursuant to the Directed Share Program are
referred to hereinafter as the "DIRECTED SHARES." Any Directed Shares not orally
confirmed for purchase by any Participant by the end of the business day on
which this Agreement is executed will be offered to the public by the
Underwriters as set forth in the Prospectus.
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each
sale of the Shares in connection with the offering when the Prospectus is not
yet available to prospective purchasers and at the Closing Date (as defined in
Section 4), the Time of Sale Prospectus, as then amended or supplemented by the
Company, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(iv) each
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broadly available road show, if any, when considered together with the Time of
Sale Prospectus, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading and (v)
the Prospectus does not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement, the Time of Sale
Prospectus or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(c) The market-related, customer-related and industry-related data and
forward-looking statements included under the captions "Summary," "Risk
Factors," Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" in the Time of Sale Prospectus and the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate in all material respects and represents its good faith
estimates that are made on the basis of data derived from such sources.
(d) The Company is not an "ineligible issuer" in connection with the
offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free
writing prospectus that the Company is required to file pursuant to Rule 433(d)
under the Securities Act has been, or will be, filed with the Commission in
accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule II hereto, and electronic road shows, if any, furnished
to you before first use, the Company has not prepared, used or referred to, and
will not, without your prior consent, prepare, use or refer to, any free writing
prospectus.
(e) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good
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standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole ("MATERIAL ADVERSE EFFECT").
(f) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation or has been duly chartered and is validly existing as
a state-chartered bank, in each case in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Time of Sale
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect; all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(g) The Company is duly registered as a holding company under the Bank
Holding Company Act of 1956, as amended, and the activities of the subsidiaries
of the Company are permitted to subsidiaries of a bank holding company under
applicable law and the rules and regulations of the Federal Reserve Board (the
"FRB"). Westsound Bank (the "BANK") is a member in good standing of the Federal
Home Loan Bank System and the deposits held by the Bank are insured by the
Federal Deposit Insurance Corporation ("FDIC") up to legally applicable limits,
and no proceedings for the termination or revocation of such insurance are
pending or, to the knowledge of the Company, threatened.
(h) This Agreement has been duly authorized, executed and delivered by the
Company.
(i) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in each of the Time of Sale
Prospectus and the Prospectus.
(j) The shares of Common Stock outstanding prior to the issuance of the
Shares have been duly authorized and are validly issued, fully paid and
non-assessable.
(k) The Shares have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will be validly issued, fully paid
and non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights.
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(l) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the articles of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
(m) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus.
(n) None of the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in the Time of Sale
Prospectus and the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, other than as set forth or contemplated in the Time of Sale
Prospectus and the Prospectus; and, since such date, there has not been any
change in the shareholders' equity or other ownership interests or long-term
debt of the Company or any of its subsidiaries or any material adverse change,
or any development that could reasonably be expected to have a Material Adverse
Effect, other than the repurchase by the Company of 9,306 shares of common stock
from an employee and as set forth or contemplated in the Time of Sale Prospectus
and the Prospectus.
(o) The financial statements, together with related schedules and notes
forming part of the Time of Sale Prospectus and the Prospectus, present fairly
in all material respects the financial condition, results of operations and cash
flows of the Company and its subsidiaries on the basis stated in the Time of
Sale Prospectus and the Prospectus at the respective dates or for the respective
periods to which they apply; such financial statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
set forth in the Time of Sale Prospectus and the Prospectus are, in all material
respects, accurately
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presented and, except as otherwise disclosed in the Time of Sale Prospectus and
the Prospectus, prepared on a basis consistent with such financial statements
and the books and records of the Company.
(p) Xxxx Xxxxx LLP, who have audited the financial statements of the
Company as of and for the fiscal years ended December 31, 2004 and 2005, [and
Ball and Xxxxxx LLP, who have audited the financial statements of the Company as
of and for the fiscal year ended December 31, 2003,] whose [respective] reports
appear in the Time of Sale Prospectus and the Prospectus and who have delivered
the initial letter[s] referred to in Section[s] 5(d) [and 5(e)] hereof, are
independent registered public accountants as required by the Securities Act and
the applicable rules and regulations thereunder adopted by the Commission and
the Public Company Accounting Oversight Board during the periods covered by the
financial statements on which they reported contained in the Time of Sale
Prospectus and the Prospectus.
(q) There are no legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is a party or to which any of
the properties of the Company or any of its subsidiaries is subject (i) other
than proceedings accurately described in all material respects in the Time of
Sale Prospectus and proceedings that would not have a Material Adverse Effect,
or on the power or ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by the Time of Sale
Prospectus or (ii) that are required to be described in the Registration
Statement or the Prospectus and are not so described; and there are no statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(r) The Company and its subsidiaries are in compliance with all federal,
state, local or foreign laws, rules, regulations, orders, decrees and judgments,
including those relating to transactions with affiliates, applicable to the
Company and the subsidiaries (including, without limitation, all regulations and
orders of, or agreements with, the FRB, the FDIC, the Washington Department of
Financial Institutions, the Equal Credit Opportunity Act, the Fair Housing Act,
the Community Reinvestment Act and any applicable state law precluding the
denial of credit due to the neighborhood in which a property is situated, the
Home Mortgage Disclosure Act, and all other applicable fair lending laws or
other laws relating to discrimination and the Bank Secrecy Act and Title III of
the U.S.A. Patriot Act), except as otherwise disclosed in the Time of Sale
Prospectus and the Prospectus or where any such non-compliance, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received any
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written communication from any governmental agency or body initiating any
investigation into the business or operations of the Company or its subsidiaries
or asserting that the Company or any of its subsidiaries is not in compliance
with any such laws, rules, regulations, orders, decrees and judgments, which
assertion has not been rescinded, or which non-compliance has not been cured or
resolved, except where such non-compliance, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
(s) Except where the failure to make such required filings or payments
could not, singularly or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company and each of its subsidiaries have filed all
United States federal, state and local income and franchise tax returns required
to be filed through the date hereof and have paid all taxes, penalties and
interest, assessments, fees and other charges due thereon, other than (i) those
that are being contested in good faith and for which reserves have been provided
in accordance with generally accepted accounting principles in the United States
or (ii) those currently payable without penalty or interest, and no tax
deficiency has been determined adversely to the Company or any of its
subsidiaries that has had (nor does the Company or any of its subsidiaries have
knowledge of any tax deficiency that, if determined adversely to the Company or
any of its subsidiaries, might have) a Material Adverse Effect.
(t) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(u) The Company is not, and after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(v) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the
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terms and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a Material Adverse Effect.
(w) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(x) Except as disclosed in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the Registration
Statement.
(y) Subsequent to the respective dates as of which information is given in
each of the Registration Statement, the Time of Sale Prospectus and the
Prospectus, (i) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction; (ii) the Company has not purchased any of its outstanding capital
stock (other than the repurchase by the Company of 9,306 shares of common stock
from an employee), nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock other than ordinary and customary
dividends; and (iii) there has not been any material change in the capital
stock, short-term debt or long-term debt of the Company and its subsidiaries,
except in each case as described in each of the Registration Statement, the Time
of Sale Prospectus and the Prospectus, respectively.
(z) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Time of Sale Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries, in each case except as described in the Time of
Sale Prospectus.
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(aa) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.
(bb) No material labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in the Time of Sale Prospectus, or,
to the knowledge of the Company, is imminent; and the Company is not aware of
any existing, threatened or imminent labor disturbance by the employees of any
of its principal suppliers, manufacturers or contractors that could have a
Material Adverse Effect.
(cc) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
(dd) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect,
except as described in the Time of Sale Prospectus.
(ee) Neither the Company nor any of its subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation
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of an provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ff) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Time of Sale Prospectus,
since the end of the Company's most recent audited fiscal year, there has been
(i) no material weakness in the Company's internal control over financial
reporting (whether or not remediated) and (ii) no change in the Company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
(gg) The minute books and records of the Company and its subsidiaries
relating to proceedings of their respective shareholders, boards of directors,
and committees of their respective boards of directors made available to Stoel
Rives LLP are their original minute books and records or are true, correct and
complete copies thereof, with respect to all proceedings of said shareholders,
boards of directors and committees since [DATE] through the date hereof. In the
event that definitive minutes have not been prepared with respect to any
proceedings of such shareholders, boards of directors or committees, the Company
has provided Stoel Rives LLP with originals or true, correct and complete copies
of draft minutes or written agendas relating thereto, which drafts and agendas,
if any, reflect all material events that occurred in connection with such
proceedings.
(hh) Except as described in the Time of Sale Prospectus and the
Prospectus, no subsidiary of the Company (except WSB Financial Group Trust I, a
Delaware trust) is prohibited or restricted, directly or indirectly, from paying
dividends to the Company, or from making any other distribution with respect to
such subsidiary's capital stock or from repaying to the Company or any other
subsidiary any amounts which may from time to time become due under any loans or
advances to such subsidiary from the Company or such other subsidiary, or from
transferring any such subsidiary's property or assets to the Company or to any
other subsidiary, except as disclosed in the Time of Sale Prospectus and the
Prospectus, and for collateral securing loan and other advances made by the Bank
and securities obtained in connection with the Bank's realization on collateral.
Except as disclosed in the Time of Sale Prospectus and the Prospectus, the
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Company does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association.
(ii) Except as described in the Time of Sale Prospectus, the Company has
not sold, issued or distributed any shares of Common Stock during the six-month
period preceding the date hereof, including any sales pursuant to Rule 144A
under, or Regulation D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(jj) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered.
(kk) The Company has not offered, or caused D. A. Davidson to offer,
Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the Company,
or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $______ a share (the "PURCHASE PRICE"); provided, that
Directed Shares sold by the Underwriters to Participants shall be purchased from
the Company at a purchase price equal to the Public Offering Price (as defined
in Section 3 below).
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 345,000 Additional Shares at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice not later than 30
days after the date of this Agreement. Any exercise notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on
which such shares are to be purchased. Each purchase date must be at least one
business
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day after the written notice is given and may not be earlier than the closing
date for the Firm Shares nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 4 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. On each day, if any, that Additional Shares are to
be purchased (an "OPTION CLOSING DATE"), each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased on such
Option Closing Date as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made to the
Company in Federal or other funds immediately available in Seattle, Washington,
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 7:00 a.m., Pacific time, on ____________, 2006, or at such other
time on the same or such other date, not later than _________, 2006, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in Seattle, Washington, against delivery of
such Additional Shares for the respective accounts of the several Underwriters
at 7:00 a.m., Pacific time, on the date specified in the corresponding notice
described in Section 2 or at such other time on the same or on such other date,
in any event not later than _______, 2006, as shall be designated in writing by
you.
The Firm Shares and Additional Shares 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 Additional Shares shall be
delivered to you
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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.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [_____] (Pacific time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the securities of the
Company or any of its subsidiaries by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Time of Sale Prospectus.
The Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the Company, to the
effect set forth in Section 5(a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date. The officer
signing and delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
13
(b) The Underwriters shall have received on the Closing Date an opinion
of Xxxxxx Xxxxxxxx LLP, counsel for the Company, dated the Closing Date, to the
effect that:
(i) the Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Time of Sale Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
Material Adverse Effect;
(ii) each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the Time
of Sale Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in each of the Time of
Sale Prospectus and the Prospectus;
(iv) the shares of Common Stock outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully paid
and non-assessable;
(v) all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(vi) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights;
14
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not constitute a breach of or default under any provision of applicable
law or the articles of incorporation or bylaws of the Company or, to such
counsel's knowledge, any agreement or other instrument binding upon the
Company or its subsidiaries filed as an exhibit to the Registration
Statement or, to such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, which breach or default would not have a
Material Adverse Effect on the Company, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required under the Securities
Act and the Exchange Act or such as may be required by the securities or
Blue Sky laws of the various states or by the bylaws and rules and
regulations of the National Association of Securities Dealers, Inc., in
connection with the offer and sale of the Shares;
(ix) the statements relating to legal matters, documents or
proceedings included in (A) the Time of Sale Prospectus and the Prospectus
under the captions "Prospectus Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Recent FDIC Findings . . . and Assessment of Penalties," "Business,"
"Supervision and Regulation," "Management - Employment Contracts and
Change of Control Agreements," "Management - 1999 Incentive Stock Option
Plan," "Management - 401(k) Plan," and "Description of Capital Stock," and
(B) the Registration Statement in Items 14 and 15, in each case fairly
summarize in all material respects such matters, documents or proceedings;
(x) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any
of its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required;
15
(xi) the Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended; and
(xii) (A) in the opinion of such counsel, the Registration Statement
and the Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to
which such counsel need not express any opinion) appear on their face to
be appropriately responsive in all material respects to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder, and (B) nothing has come to the attention of such
counsel that causes such counsel to believe that (1) the Registration
Statement or the prospectus included therein (except for the financial
statements and financial schedules and other financial and statistical
data included therein, as to which such counsel need not express any
belief) at the time the Registration Statement became effective contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (2) the Time of Sale Prospectus (except for the
financial statements and financial schedules and other financial and
statistical data included therein, as to which such counsel need not
express any belief) as of the date of this Agreement or as amended or
supplemented, if applicable, as of the Closing Date contained or contains
any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
(3) the Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to
which such counsel need not express any belief) as of its date or as
amended or supplemented, if applicable, as of the Closing Date contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(c) The Underwriters shall have received on the Closing Date an opinion of
Stoel Rives LLP, counsel for the Underwriters, dated the Closing Date, dated the
time of purchase or the additional time of purchase, as the case may be, in form
and substance reasonably satisfactory to D. A. Davidson.
16
(d) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from Xxxx
Xxxxx LLP, independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement, the Time of Sale Prospectus
and the Prospectus; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(e) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from Ball &
Xxxxxx LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information as of and for the fiscal year ended December 31, 2003 contained in
the Registration Statement, the Time of Sale Prospectus and the Prospectus;
provided that the letter delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
(f) The "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the
Company relating to sales and certain other dispositions of shares of Common
Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date; provided, that
D.A. Davidson acknowledges that the lock-up agreement with Xxxxxx X. Xxxx
contains certain provisions that are materially different from the form of
lock-up agreement executed by the other parties thereto.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
6. Covenants of the Company. The Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, two signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits
17
thereto) and to furnish to you in Seattle, Washington, without charge, prior to
10:00 a.m. Pacific time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 6(e) or 6(f) below, as many
copies of the Time of Sale Prospectus, the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(b) Before amending or supplementing the Registration Statement, the Time
of Sale Prospectus or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) To furnish to you a copy of each proposed free writing prospectus to
be prepared by or on behalf of, used by, or referred to by the Company and not
to use or refer to any proposed free writing prospectus to which you reasonably
object.
(d) Not to take any action that would result in an Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy
the Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Time of Sale Prospectus in order to make
the statements therein, in the light of the circumstances, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement then on file, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements
in the Time of Sale Prospectus as so amended or supplemented will not, in the
light of the circumstances when delivered to a prospective purchaser, be
misleading or so that the Time of Sale Prospectus, as amended or supplemented,
will no longer conflict with the Registration Statement, or so that the Time of
Sale Prospectus, as amended or supplemented, will comply with applicable law.
18
(f) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus (or
in lieu thereof the notice referred to in Rule 173(a) under the Securities Act)
is required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities Act) is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or in lieu thereof the notice referred to in
Rule 173(a) under the Securities Act) is delivered to a purchaser, be misleading
or so that the Prospectus, as amended or supplemented, will comply with law.
(g) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided, however, that the Company shall not be required to qualify as
a foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified
or where it would not be subject to taxation as a foreign corporation.
(h) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering a period of at least
twelve months beginning with the first fiscal quarter of the Company occurring
after the date of this Agreement which shall satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(i) To comply with all applicable securities and other laws, rules and
regulations in each jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the registration and delivery
19
of the Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free
writing prospectus prepared by or on behalf of, used by, or referred to by the
Company and amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or Legal
Investment memorandum in connection with the offer and sale of the Shares under
state securities laws and all expenses in connection with the qualification of
the Shares for offer and sale under state securities laws as provided in Section
6(g) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all filing
fees and the reasonable fees and disbursements of counsel to the Underwriters
incurred in connection with the review and qualification of the offering of the
Shares by the National Association of Securities Dealers, Inc., (v) all fees and
expenses in connection with the preparation and filing of the registration
statement on Form 8-A relating to the Common Stock and all costs and expenses
incident to listing the Shares on the Nasdaq Global Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) 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 preparation or dissemination of any
electronic roadshow, 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 in connection with the road
show, (ix) all reasonable fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program, and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8 entitled "Indemnity
and Contribution", Section 9 entitled "Directed Share Program Indemnification,"
and the last paragraph of Section 11 below, the Underwriters will pay all of
their costs and expenses, including fees and disbursements of their
20
counsel, stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make.
The Company also covenants with each Underwriter that, without the prior
written consent of D. A. Davidson on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise or (3) file any registration statement
with the Commission relating to the offering of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding paragraph shall not apply to
(a) the Shares to be sold hereunder; (b) the issuance by the Company of options
or warrants to purchase shares of Common Stock under the Company's 1999
Incentive Stock Option Plan, provided, however, that any shares issued pursuant
to such plan shall be subject to the restrictions contained in the preceding
paragraph; and (c) the issuance by the Company of shares of Common Stock upon
the exercise of an option or warrant or the conversion of a security outstanding
on the date hereof of which the Underwriters have been advised in writing.
Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day
restricted period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the 180-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
180-day period, the restrictions imposed by this agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event. The
Company shall promptly notify D. A. Davidson of any earnings release, news or
event that may give rise to an extension of the initial 180-day restricted
period.
7. Covenants of the Underwriters. Each Underwriter severally covenants
with the Company not to take any action that would result in the Company being
required to file with the Commission under Rule 433(d) a free writing prospectus
prepared by or on behalf of such Underwriter that otherwise would not be
required to be filed by the Company thereunder, but for the action of the
Underwriter
21
8. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus, the Time of Sale
Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under
the Securities Act, any Company information that the Company has filed, or is
required to file, pursuant to Rule 433(d) of the Securities Act, or the
Prospectus or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus,
any issuer free writing prospectus or the Prospectus or any amendment or
supplement thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay 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, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the
22
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (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. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by D. A. Davidson,
in the case of parties indemnified pursuant to Section 8(a), and by the Company,
in the case of parties indemnified pursuant to Section 8(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. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative
23
benefits referred to in clause 8(d)(i) above but also the relative fault of the
Company on the one hand and of the Underwriters on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Company
on the one hand and the Underwriters on the other hand 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 by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 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 that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the
24
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter, any person controlling
any Underwriter or any affiliate of any Underwriter or by or on behalf of the
Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Shares.
9. Directed Share Program Indemnification. (a) The Company agrees to
indemnify and hold harmless D. A. Davidson, each person, if any, who controls D.
A. Davidson within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and each affiliate of D. A. Davidson within the
meaning of Rule 405 of the Securities Act ("D. A. DAVIDSON ENTITIES") from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (i) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant agreed to purchase; or (iii) related to,
arising out of, or in connection with the Directed Share Program, other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of D. A. Davidson Entities.
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any D. A. Davidson Entity in respect of which
indemnity may be sought pursuant to Section 9(a), the D. A. Davidson Entity
seeking indemnity, shall promptly notify the Company in writing and the Company,
upon request of the D. A. Davidson Entity, shall retain counsel reasonably
satisfactory to the D. A. Davidson Entity to represent the D. A. Davidson Entity
and any others the Company may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any D. A. Davidson Entity shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such D. A. Davidson Entity unless (i) the Company shall have agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the D. A.
Davidson Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not, in respect of the legal expenses of the D. A. Davidson
Entities in connection with any proceeding or related proceedings in the same
25
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all D. A. Davidson Entities. Any such
separate firm for the D. A. Davidson Entities shall be designated in writing by
D. A. Davidson. The Company 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 Company agrees to
indemnify the D. A. Davidson Entities from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time a D. A. Davidson Entity shall have requested the Company to
reimburse it for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the Company agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by the Company
of the aforesaid request and (ii) the Company shall not have reimbursed the D.
A. Davidson Entity in accordance with such request prior to the date of such
settlement. The Company shall not, without the prior written consent of D. A.
Davidson, effect any settlement of any pending or threatened proceeding in
respect of which any D. A. Davidson Entity is or could have been a party and
indemnity could have been sought hereunder by such D. A. Davidson Entity, unless
such settlement includes an unconditional release of the D. A. Davidson Entities
from all liability on claims that are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section 9(a) is
unavailable to a D. A. Davidson Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company in lieu of
indemnifying the D. A. Davidson Entity thereunder, shall contribute to the
amount paid or payable by the D. A. Davidson Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the D.
A. Davidson Entities on the other hand from the offering of the Directed Shares
or (ii) if the allocation provided by clause 9(c)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(c)(i) above but also the relative
fault of the Company on the one hand and of the D. A. Davidson Entities on the
other hand in connection with any statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the D. A. Davidson Entities on the other hand in connection with the
offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the D. A. Davidson Entities for the Directed Shares, bear to the
aggregate Public Offering
26
Price of the Directed Shares. If the loss, claim, damage or liability is caused
by an untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, the relative fault of the Company on
the one hand and the D. A. Davidson Entities on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement or the omission or alleged omission relates to information
supplied by the Company or by the D. A. Davidson Entities and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(d) The Company and the D. A. Davidson Entities agree that it would not
be just or equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the D. A. Davidson Entities were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 9(c). The amount
paid or payable by the D. A. Davidson Entities as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by the D. A. Davidson
Entities in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no D. A. Davidson Entity shall
be required to contribute any amount in excess of the amount by which the total
price at which the Directed Shares distributed to the public were offered to the
public exceeds the amount of any damages that such D. A. Davidson Entity has
otherwise been required to pay. The remedies provided for in this Section 9 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(e) The indemnity and contribution provisions contained in this Section 9
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any D. A. Davidson Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Directed Shares.
10. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, or the Nasdaq Global Market,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
27
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Time of Sale Prospectus or the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you and
the Company for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in
any other documents or arrangements may be effected. If, on an Option Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased on such Option Closing Date, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be
28
sold on such Option Closing Date or (ii) purchase not less than the number of
Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Company Acknowledgments. The Company acknowledges that:
(a) in connection with the offering of the Shares: (i) the Underwriters
have acted at arms length, are not agents of, and owe no fiduciary duties to,
the Company or its controlling persons, officers and directors, (ii) the
Underwriters owe the Company only those duties and obligations set forth in this
Agreement and prior written agreements (to the extent not superseded by this
Agreement), if any, and (iii) the Underwriters may have interests that differ
from those of the Company. The Company waives, to the fullest extent permitted
by applicable law, any claims it may have against the Underwriters arising from
an alleged breach of agency or fiduciary duty in connection with the offering of
the Shares; and
(b) the only information that the Underwriters have furnished to the
Company expressly for use in the Registration Statement, the Time of Sale
Prospectus, and the Prospectus are the statements set forth therein under the
caption "Underwriting"; and the Underwriter confirms that such statements are
correct.
13. Applicable Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State
of New York, without giving effect to any provisions relating to
conflicts of laws.
14. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns and the controlling persons, officers and directors referred to in
Section 8. Nothing in this Agreement is intended or shall be construed to give
to any other
29
person any legal or equitable remedy or claim under or in respect of this
Agreement or any provision herein contained. The term "successors and assigns"
as herein used shall not include any purchaser, as such purchaser, of any of the
Shares from the Underwriters.
15. Severability. 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 hereof. 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 changes as
are necessary to make it valid and enforceable.
16. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall not be deemed a part of this Agreement.
17. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing and effective only
upon receipt:
If to the Underwriters:
X.X. Xxxxxxxx & Co.
0 Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Syndicate Department
with a copy to:
Stoel Rives LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxx
If to the Company:
WSB Financial Group, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
30
Xxxxxx Xxxxxxxx LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.
18. Entire Agreement; Amendments and Waivers. 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 conduct of the offering and the purchase and
sale of the Shares. This Agreement may not be amended or modified unless in
writing 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.
19. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
31
Very truly yours,
WSB FINANCIAL GROUP, INC.
By:
--------------------------------------
Name:
Title:
Accepted as of the date hereof
X. X. Xxxxxxxx & Co.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto.
By: X. X. Xxxxxxxx & Co.
By:
-----------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
32
SCHEDULE I
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
X. X. Xxxxxxxx & Co
---------------
Total:
===============
SCHEDULE II
TIME OF SALE PROSPECTUS
1. Preliminary Prospectus issued __________, 2006
2. [identify all free writing prospectuses filed by the Company under Rule
433(d) of the Securities Act]
3. [free writing prospectus containing a description of terms that does not
reflect final terms, if the Time of Sale Prospectus does not include a
final term sheet]
4. [orally communicated pricing information to be included on Schedule II if
a final term sheet is not used] [to be discussed]
II-1
EXHIBIT A
FORM OF LOCK-UP LETTER
A-1
