Exhibit 1.1
3,125,000 Shares
ODIMO INCORPORATED
Common Stock
UNDERWRITING AGREEMENT
February ___, 2005
CIBC World Markets Corp.
Xxxxxxxxxxx & Co. Inc.
Xxxxxxxx Curhan Ford & Co.
as Representatives of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Odimo Incorporated, a Delaware corporation (the "COMPANY"), proposes,
subject to the terms and conditions contained herein, to sell to you and the
other underwriters named on Schedule I to this Agreement (the "UNDERWRITERS"),
for whom you are acting as Representatives (the "REPRESENTATIVES"), an aggregate
of 3,125,000 shares (the "FIRM SHARES") of the Company's common stock, par value
$0.001 per share (the "COMMON STOCK"). The respective amounts of the Firm Shares
to be purchased by each of the several Underwriters are set forth opposite their
names on Schedule I hereto. In addition, the Company proposes to grant to the
Underwriters an option to purchase on one occasion up to an additional 468,750
shares (the "OPTION SHARES") of Common Stock from the Company for the purpose of
covering over-allotments in connection with the sale of the Firm Shares. The
Firm Shares and the Option Shares are collectively called the "SHARES."
The Company has prepared and filed in conformity with the requirements
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
published rules and regulations thereunder (the "RULES") adopted by the
Securities and Exchange Commission (the "COMMISSION") a Registration Statement
(as hereinafter defined) on Form S-1 (No. 333-117400), including a preliminary
prospectus relating to the Shares, and such amendments thereof
as may have been required to the date of this Agreement. Copies of such
Registration Statement (including all amendments thereof) and of the related
Preliminary Prospectus (as hereinafter defined) have heretofore been delivered
by the Company to you. The term "PRELIMINARY PROSPECTUS" means any preliminary
prospectus included at any time as a part of the Registration Statement or filed
with the Commission by the Company pursuant to Rule 424(a) of the Rules. The
term "REGISTRATION STATEMENT" as used in this Agreement means the initial
registration statement (including all exhibits and financial schedules thereto),
as amended at the time and on the date it becomes effective (the "EFFECTIVE
DATE"), including the information (if any) contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and
deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Rules (the "462(B)
REGISTRATION STATEMENT"), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement.
The term "PROSPECTUS" as used in this Agreement means the prospectus in the form
included in the Registration Statement at the time of effectiveness or, if Rule
430A of the Rules is relied on, the term Prospectus shall also include the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
1. SALE, PURCHASE, DELIVERY AND PAYMENT FOR THE SHARES. On the basis of
the representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____
per share (the "INITIAL PRICE"), the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of Firm
Shares to Be Purchased from the Company" on Schedule I to this
Agreement, subject to adjustment in accordance with Section 9 hereof.
(b) The Company hereby grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of the
Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by
the Representatives to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Underwriter
is purchasing of the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date (as defined below), and thereafter within 30
days after the date of this Agreement, upon written, facsimile or
telegraphic
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notice, or verbal or telephonic notice confirmed by written, facsimile
or telegraphic notice, by the Representatives to the Company, no later
than 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date or at least two business days before the
Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the time
and date (if other than the Firm Shares Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of CIBC
World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement or at such time on such other
date, not later than ten (10) business days after the date of this
Agreement, as shall be agreed upon by the Company and the
Representatives (such time and date of delivery and payment are called
the "FIRM SHARES CLOSING DATE"). In addition, in the event that any or
all of the Option Shares are purchased by the Underwriters, payment of
the purchase price, and delivery of the certificates, for such Option
Shares shall be made at the above-mentioned offices, or at such other
place as shall be agreed upon by the Representatives and the Company,
on the date of delivery as specified in the notice from the
Representatives to the Company (such time and date of delivery and
payment is called the "OPTION SHARES CLOSING DATE"). The Firm Shares
Closing Date and the Option Shares Closing Date, if any, are called,
individually, a "CLOSING DATE" and, together, the "CLOSING DATES."
(d) Payment shall be made to the Company by wire transfer of
immediately available funds to the account specified by the Company
against delivery of the Shares to the Representatives for the
respective accounts of the Underwriters through the facilities of
Depositary Trust Corporation ("DTC"), unless the Representatives
otherwise instruct.
(e) The Shares shall be registered in such names and shall be
in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case
of Option Shares, on the day of notice of exercise of the option as
described in Section 1(b) and shall be delivered by or on behalf of the
Company to the Representatives through the facilities of DTC for the
account of such Underwriter, unless the Representatives otherwise
instruct. The Company will cause the certificates representing the
Shares to be made available for checking and packaging, at such place
as is designated by the Representatives, on the full business day
before the Firm Shares Closing Date (or the Option Shares Closing Date
in the case of the Option Shares).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any
post-effective amendment to the Registration Statement becomes
effective, the date any supplement or amendment to the Prospectus is
filed with the Commission and each Closing Date, the Registration
Statement and the Prospectus (and any amendment thereof or supplement
thereto) will comply, in all material respects,
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with the requirements of the Securities Act and the Rules and the
Exchange Act and the rules and regulations of the Commission
thereunder. The Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and on the Effective
Date and the other dates referred to above neither the Registration
Statement nor the Prospectus, nor any amendment thereof or supplement
thereto, will contain any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When
any related preliminary prospectus was first filed with the Commission
(whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If
applicable, each Preliminary Prospectus and the Prospectus delivered to
the Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the Prospectus
included in the Registration Statement at the time it became effective.
Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(a) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus.
With respect to the preceding sentence, the Company acknowledges that
the only information furnished in writing by the Representatives on
behalf of the several Underwriters for use in the Registration
Statement or the Prospectus is the statements contained in the fourth
and tenth paragraphs and the last sentence of the fifteenth paragraph
under the caption "Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or are, to the
Company's knowledge, threatened under the Securities Act. Any required
filing of the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules has been or will be made in the manner and within
the time period required by such Rule 424(b).
(c) The financial statements of the Company (including all
notes and schedules thereto) included in the Registration Statement and
Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; and such financial
statements and related schedules and notes thereto, and the unaudited
financial information filed with the
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Commission as part of the Registration Statement, have been prepared in
conformity with generally accepted accounting principles, consistently
applied throughout the periods involved. The summary and selected
financial data included in the Prospectus present fairly the
information shown therein as at the respective dates and for the
respective periods specified and have been presented on a basis
consistent with the consolidated financial statements set forth in the
Prospectus and other financial information. The pro forma financial
information included in the Registration Statement and the Prospectus
present fairly the information shown therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(d) Deloitte & Touche LLP, whose audit reports are filed with
the Commission as a part of the Registration Statement, are and, during
the periods covered by their audit reports, were independent public
accountants as required by the Securities Act and the Rules.
(e) The Company and each of its subsidiaries, including each
entity (corporation, partnership, joint venture, association or other
business organization) controlled directly or indirectly by the
Company, is duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of incorporation or
organization. The Company and each of its subsidiaries is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business
conducted by it or location of the assets or properties owned, leased
or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the
aggregate would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and
its subsidiaries considered as a whole (a "MATERIAL ADVERSE EFFECT");
and, to the Company's knowledge, no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
The Company does not own, lease or license any asset or property or
conduct any business outside the United States of America.
(f) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and
from all governmental or regulatory bodies or any other person or
entity (collectively, the "PERMITS"), to own, lease and license its
assets and properties and conduct its business, all of which are valid
and in full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not have a Material Adverse
Effect. The Company and each of its subsidiaries has fulfilled and
performed in all material respects all of its material obligations with
respect to such Permits and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the
Company thereunder. Except as may be required under the Securities Act
and state and foreign Blue Sky laws, no other Permits are required to
enter into, deliver and perform this Agreement and to issue and sell
the Shares.
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(g) The Company and each of its subsidiaries owns or possesses
legally enforceable rights to use all patents, patent rights,
inventions, trademarks, trademark registrations and applications, trade
names, service marks, Internet domain names, copyrights, copyright
registrations and applications, software, licenses, know-how and other
similar rights and proprietary knowledge (collectively, "INTANGIBLES")
necessary for the conduct of its business. Neither the Company nor any
of its subsidiaries has received any notice of, or is aware of, any
infringement of or conflict with asserted rights of others with respect
to any Intangibles.
(h) The Company and each of its subsidiaries has good and
marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, in each case free
and clear of all liens, encumbrances, claims, security interests and
defects, except such as do not materially affect the value of such
property and do not materially interfere with the use made or proposed
to be made of such property by the Company and its subsidiaries. All
property held under lease by the Company and its subsidiaries is held
by them under valid, existing and enforceable leases, free and clear of
all liens, encumbrances, claims, security interests and defects, except
such as are not material and do not materially interfere with the use
made or proposed to be made of such property by the Company and its
subsidiaries.
(i) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) there
has not been any Material Adverse Effect; (ii) neither the Company nor
any of its subsidiaries has sustained any loss or interference with its
assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree which would have a Material
Adverse Effect; and (iii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus, neither the
Company nor its subsidiaries has (A) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course
of business, (B) entered into any transaction not in the ordinary
course of business or (C) declared or paid any dividend or made any
distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its capital stock.
(j) There is no document, contract or other agreement required
to be described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required by the Securities Act or the Rules. Each
description of a contract, document or other agreement in the
Registration Statement and the Prospectus accurately reflects in all
material respects the terms of the underlying contract, document or
other agreement. Each contract, document or other agreement described
in the Registration Statement and Prospectus or listed in the Exhibits
to the Registration Statement is in full force and effect and is valid
and enforceable by and against the Company or its subsidiary, as the
case may be, in accordance with its terms. Neither the Company nor any
of its subsidiaries, if a subsidiary is a party, nor, to the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event
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has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
No default exists, and no event has occurred which with notice or lapse
of time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or its
subsidiary, if a subsidiary is a party thereto, of any other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or its properties or business or a
subsidiary or its properties or business may be bound or affected which
default or event, individually or in the aggregate, would have a
Material Adverse Effect.
(k) The statistical and market related data included in the
Registration Statement are based on or derived from sources that the
Company believes to be reliable and accurate.
(l) Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its certificate of incorporation
or bylaws. Neither the Company nor any of its subsidiaries is in
violation of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such violation,
individually or in the aggregate, would have a Material Adverse Effect.
(m) This Agreement has been duly authorized, executed and
delivered by the Company.
(n) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares): will (i) violate any
provision of the certificate of incorporation or bylaws of the Company
or any of its subsidiaries, or (ii) give rise to a right to terminate
or accelerate the due date of any payment due under, or conflict with
or result in the breach of any term or provision of, or constitute a
default (or an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver under, or
result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which either the Company or its
subsidiaries or any of their properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or any of its subsidiaries, except
for such consents or waivers which have already been obtained and are
in full force and effect.
(o) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable. There are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of
its subsidiaries or any such rights pursuant to
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its certificate of incorporation or bylaws or any agreement or
instrument to or by which the Company or any of its subsidiaries is a
party or bound. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there
is no commitment, plan or arrangement to issue, any share of stock of
the Company or any of its subsidiaries or any security convertible
into, or exercisable or exchangeable for, such stock. The Common Stock
and the Shares conform in all material respects to all statements in
relation thereto contained in the Registration Statement and the
Prospectus. All outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued,
and are fully paid and nonassessable and are owned directly by the
Company or by another wholly-owned subsidiary of the Company free and
clear of any security interests, liens, encumbrances, equities or
claims, other than those described in the Prospectus.
(p) No holder of any security of the Company has any right,
which has not been waived, to have any security owned by such holder
included in the Registration Statement or to demand registration of any
security owned by such holder for a period of 180 days after the date
of this Agreement. Each director and executive officer of the Company
and each stockholder of the Company listed on Schedule II has delivered
to the Representatives his or her written lock-up agreement in the form
attached to this Agreement as Exhibit A hereto ("LOCK-UP AGREEMENT").
(q) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
by the Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(r) There is not pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, to which the Company is a party, or to which
its properties or assets are subject, before or brought by any court,
arbitrator or governmental agency or body, that, if determined
adversely to the Company could reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect or that seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of the Shares to be sold hereunder or the
application of the proceeds therefrom or the other transactions
described in the Registration Statement.
(s) Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the Company's knowledge, is any
such dispute threatened, which dispute could have a Material Adverse
Effect. The Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers or
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contractors which could have a Material Adverse Effect. The Company is
not aware of any threatened or pending litigation between the Company
or its subsidiaries and any of its executive officers which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect and has no reason to believe that such officers will not
remain in the employment of the Company.
(t) No transaction has occurred between or among the Company
and any of its officers or directors, shareholders or any affiliate or
affiliates of any such officer or director or shareholder that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
(u) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock or any security of the Company to
facilitate the sale or resale of any of the Shares.
(v) The Company and each of its subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to be
filed through the date hereof, which returns are true and correct in
all material respects or has received timely extensions thereof, and
has paid all taxes shown on such returns and all assessments received
by it to the extent that the same are material and have become due.
There are no tax audits or investigations pending, which if adversely
determined would have a Material Adverse Effect; nor, to the knowledge
of the Company, are there any material proposed additional tax
assessments against the Company or any of its subsidiaries.
(w) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System, subject to official notice of
issuance. A registration statement on Form 8-A has been filed pursuant
to Section 12 of the Exchange Act, which registration statement
complies in all material respects with the Exchange Act.
(x) The Company has taken no action designed to, or reasonably
likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or the quotation of the Common
Stock on the Nasdaq National Market, nor has the Company received any
notification that the Commission or the Nasdaq National Market is
contemplating terminating such registration or quotation.
(y) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each
of its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific
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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.
(z) The Company is in compliance in all material respects with
all applicable effective provisions of the Xxxxxxxx-Xxxxx Act and is
actively taking steps to ensure that it will be in compliance with
other applicable provisions of the Xxxxxxxx-Xxxxx Act upon the
effectiveness of such provisions. There has been no failure on the part
of the Company or any of the Company's directors or officers, in their
capacities as such, to comply with any provision of the Xxxxxxxx-Xxxxx
Act of 2002 and the rules and regulations promulgated in connection
therewith, including Section 402 related to loans.
(aa) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under
the Exchange Act) which (i) are designed to ensure that material
information relating to the Company is made known to the Company's
principal executive officer and its principal financial officer by
others within the Company, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared,
and (ii) are effective in all material respects to perform the
functions for which they were established.
(bb) The Company is not aware of (i) any significant
deficiency or material weakness in the design or operation of internal
control over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize
and report financial information or (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal control over financial
reporting.
(cc) Except as described in the Prospectus, there are no
material off-balance sheet transactions (as defined in Regulation S-K
Item 303(a)(4)(ii)), arrangements, obligations (including contingent
obligations), or any other relationships with unconsolidated entities
or other persons, that may have a material current or future effect on
the Company's financial condition, changes in financial condition,
results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses.
(dd) The Company's board of directors has validly appointed an
audit committee whose composition satisfies the requirements of Rule
4350(d)(2) of the Rules of the National Association of Securities
Dealers, Inc. (the "NASD RULES") and the board of directors or the
audit committee has adopted a charter that satisfies the requirements
of Rule 4350(d)(1) of the NASD Rules.
(ee) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the
transactions described in the Prospectus; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or the Company's or its subsidiaries' respective
businesses, assets, employees, officers and directors are in full
10
force and effect; the Company and each of its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; and neither the Company nor any subsidiary of the
Company has any reason to believe that 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 is not materially greater than the
current cost. Neither the Company nor any of its subsidiaries has been
denied any insurance coverage which it has sought or for which it has
applied.
(ff) Each approval, consent, order, authorization,
designation, declaration or filing of, by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated required to be
obtained or performed by the Company (except such additional steps as
may be required by the National Association of Securities Dealers, Inc.
(the "NASD") or may be necessary to qualify the Shares for public
offering by the Underwriters under the state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(gg) There are no affiliations with the NASD among the
Company's officers, directors or, to the Company's knowledge, any five
percent or greater stockholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives.
(hh) (i) The Company and each of its subsidiaries are in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("ENVIRONMENTAL
LAW") which are applicable to its business; (ii) neither the Company
nor its subsidiaries has received any notice from any governmental
authority or third party of an asserted claim under Environmental Laws;
(iii) the Company and each of its subsidiaries have received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and are in compliance with
all terms and conditions of any such permit, license or approval; (iv)
to the Company's knowledge, no facts currently exist that will require
the Company or any of its subsidiaries to make future material capital
expenditures to comply with Environmental Laws; and (v) no property
which is or has been owned, leased or occupied by the Company or its
subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation of Liability Act of
1980, as amended (42 U.S.C. Section 9601, et. seq.) ("CERCLA") or
otherwise designated as a contaminated site under applicable state or
local law. Neither the Company nor any of its subsidiaries has been
named as a "potentially responsible party" under the CERCLA.
(ii) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which the Company identifies and evaluates associated costs
and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or approval,
any related constraints on
11
operating activities and any potential liabilities to third parties).
On the basis of such review, the Company has reasonably concluded that
such associated costs and liabilities could not, singly or in the
aggregate, have a Material Adverse Effect.
(jj) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof
as described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "INVESTMENT COMPANY ACT").
(kk) The Company or any other person associated with or acting
on behalf of the Company including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries, has not,
directly or indirectly, while acting on behalf of the Company or its
subsidiaries (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful payment.
(ll) The operations of the Company and its subsidiaries are
and have been conducted at all times in compliance with applicable
financial record keeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines
issued, administered or enforced by any governmental agency
(collectively, the "MONEY LAUNDERING LAWS") and no action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of it subsidiaries
with respect to the Money Laundering Laws is pending, or to the best
knowledge of the Company, threatened.
(mm) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently
subject to any United States sanctions administered by the Office of
Foreign Assets Control of the United States Treasury Department
("OFAC"); and the Company will not directly or indirectly use the
proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities of
any person currently subject to any United States sanctions
administered by OFAC.
(nn) Except as described in the Prospectus, the Company has
not sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the Securities
Act, other than shares issued pursuant to employee benefit plans,
qualified stock options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
12
(oo) The Company has fulfilled its obligations, if any, under
the minimum funding standards of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Employee Retirement Income Security Act of 1974 ("ERISA") and the
regulations and published interpretations thereunder with respect to
each "plan" as defined in Section 3(3) of ERISA and such regulations
and published interpretations in which its employees are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. No "Reportable Event" (as
defined in ERISA) has occurred with respect to any "Pension Plan" (as
defined in ERISA) for which the Company could be reasonably likely to
have any liability.
(pp) Each of the Company, its directors and officers has not
distributed and will not distribute prior to the later of (i) the Firm
Shares Closing Date, or the Option Shares Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Securities Act.
(qq) (i) "PRIVACY STATEMENTS" means, collectively, any and all
of the Company's privacy statements and policies published on
the Company's websites or products or otherwise made available
by the Company regarding the collection, retention, use, and
distribution of the personal information of individuals,
including, without limitation, from visitors or users of any
of the Company's websites or products ("INDIVIDUALS").
(ii) The Company: (x) complies with the Privacy
Statements as applicable to any given set of personal
information collected by the Company from Individuals; (y)
complies in all material respects with all applicable United
States and foreign laws and regulations regarding the
collection, retention, use, transfer, or disclosure of
personal information; and (z) takes reasonable measures to
protect and maintain the confidential nature of the personal
information provided to the Company by Individuals, in
accordance with the terms of the applicable Privacy
Statements.
(iii) To the Company's knowledge, no claims or
controversies have arisen regarding the Privacy Statements or
the implementation thereof.
(rr) The Company's email direct marketing activities have not
violated, in any material respect, the CAN-SPAM Act or any other
federal or state law or regulation applicable to electronic direct
marketing.
(ss) The following is a complete list of all entities in which
the Company owns any stock or limited liability company or other equity
interest: Xxxxxxx.xxx, Inc., a Delaware corporation; Xxxxxxx.xxx, Inc.,
a Delaware corporation; Xxxxxxxxxxxxxx.xxx, Inc., a Delaware
corporation; Millennium International Jewelers, Inc., a Florida
corporation; 1-888-Watches, LLC, a Florida limited liability company;
D.I.A. Marketing, Inc., a Florida corporation; and World of Watches,
LLC, an Iowa
13
limited liability company; and the Company owns 100% of the equity
interests in each of such entities.
3. [Intentionally Omitted]
4. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Commission and the
Representatives. If the Company has elected to rely upon Rule 430A,
Rule 430A information previously omitted from the effective
Registration Statement pursuant to Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within
the prescribed time period and the Company shall have provided evidence
satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the
requirements of Rule 430A. If the Company has elected to rely upon Rule
434, a term sheet shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) within the prescribed time period.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered pursuant
to Section 4(e) shall be true and correct when made and on and as of
each Closing Date as if made on such date. The Company shall have
performed all covenants and agreements and satisfied all the conditions
contained in this Agreement required to be performed or satisfied by it
at or before such Closing Date.
(d) On or prior to the Firm Shares Closing Date, the Board of
Directors and stockholders of the Company shall have approved and
adopted an amended and restated certificate of incorporation and
amended and restated bylaws in the forms filed with the Commission as
exhibits 3.01 and 3.02 to the Registration Statement, respectively, and
such amended and restated certificate of incorporation shall have been
filed with the Secretary of State of the State of Delaware, and become
effective.
(e) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial officer or chief accounting officer of the
14
Company to the effect that: (i) the representations, warranties and
agreements of the Company in this Agreement were true and correct when
made and are true and correct as of such Closing Date; (ii) the Company
has performed all covenants and agreements and satisfied all conditions
contained herein; (iii) they have carefully examined the Registration
Statement and the Prospectus and, to their knowledge, (A) as of the
Effective Date, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and (B) since the Effective Date, no
event has occurred which should have been set forth in a supplement or
otherwise required an amendment to the Registration Statement or the
Prospectus; and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to their knowledge, no
proceedings for that purpose have been instituted or are pending under
the Securities Act.
(f) [Intentionally Omitted]
(g) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
Deloitte & Touche LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) The Representatives shall have received on each Closing
Date from Berman, Rennert, Xxxxx & Xxxxxxx, P.A., counsel for the
Company, an opinion, addressed to the Representatives and dated such
Closing Date, and stating in effect that:
(i) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and its subsidiaries is
duly qualified to transact business and is in good standing as
a foreign corporation in each jurisdiction in which the
character or location of its assets or properties or the
nature of its business makes such qualification necessary,
except where the failure to so qualify or to be in good
standing, individually or in the aggregate, would not have a
Material Adverse Effect.
(ii) Each of the Company and its subsidiaries has all
requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as now
being conducted and as described in the Registration Statement
and the Prospectus and, with respect to the Company, to enter
into and perform its obligations under this Agreement and to
issue and sell the Shares.
(iii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration
Statement and the Prospectus under the caption
"Capitalization" as of the dates stated
15
therein and, since such dates, there has been no change in the
capital stock of the Company except for subsequent issuances,
if any, pursuant to this Agreement or pursuant to
reservations, agreements or employee benefit plans referred to
in the Prospectus or pursuant to the exercise of convertible
securities or options referred to in the Prospectus; all of
the outstanding shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid
and nonassessable and none of them was issued in violation of
any preemptive or other similar right. The Shares to be issued
and sold by the Company pursuant to this Agreement have been
duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued, fully
paid and nonassessable, and no holder of the Shares is or will
be subject to personal liability by reason of being such a
holder. The issuance and sale of the Shares by the Company is
not subject to any preemptive or other similar rights of any
security holder of the Company. To the best of such counsel's
knowledge, except as disclosed in the Registration Statement
and the Prospectus, there are no preemptive or other rights to
subscribe for or to purchase or any restriction upon the
voting or transfer of any securities of the Company pursuant
to the Company's certificate of incorporation or bylaws or
other governing documents or any agreements or other
instruments to which the Company is a party or by which it is
bound. To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus,
there is no outstanding option, warrant or other right calling
for the issuance of, and no commitment, plan or arrangement to
issue, any share of stock of the Company or any security
convertible into, exercisable for, or exchangeable for stock
of the Company. The Common Stock, the Shares and the Preferred
Stock conform in all material respects to the descriptions
thereof contained in the Registration Statement and the
Prospectus. The form of certificate used to evidence the
Common Stock complies in all material respects with all
applicable statutory requirements, with any applicable
requirements of the certificate of incorporation or Bylaws of
the Company and the requirements of the Nasdaq National
Market. To the best of such counsel's knowledge, there are no
persons with registration rights or other similar rights to
have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the
Securities Act.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares. This Agreement has been duly and
validly authorized, executed and delivered by the Company.
(v) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any
of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) nor the execution, delivery or performance of any
other agreement or instrument entered into or to be entered
into by the Company in connection with the transactions
contemplated by the Registration Statement and
16
the Prospectus will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict
with or result in the breach of any term or provision of, or
constitute a default (or any event which with notice or lapse
of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company or
any subsidiary pursuant to the terms of, any indenture,
mortgage, deed trust, note or other agreement or instrument of
which such counsel is aware and to which the Company or any
subsidiary is a party or by which either the Company or any
subsidiary or any of its assets or properties or businesses is
bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, domestic or foreign, of
which such counsel is aware or violate any provision of the
charter or bylaws of the Company or any subsidiary.
(vi) No consent, approval, authorization, license,
registration, qualification or order of any court or
governmental agency or regulatory body is required for the due
authorization, execution, delivery or performance of this
Agreement by the Company or the consummation of the
transactions contemplated hereby or thereby, except such as
have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
several Underwriters.
(vii) To the best of such counsel's knowledge, there
is no action, suit, proceeding or other investigation, before
any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or
businesses of, the Company which is required to be disclosed
in the Registration Statement and the Prospectus and is not so
disclosed or which could reasonably be expected to have a
Material Adverse Effect.
(viii) The statements in the Prospectus under the
captions "Description of Capital Stock" and "Certain
Relationships and Related Transactions," and in the
Registration Statement under Item 15 of Part II, insofar as
such statements constitute a summary of documents referred to
therein or matters of law, are accurate in all material
respects and accurately present the information with respect
to such documents and matters. Accurate copies of all
contracts and other documents required to be filed as exhibits
to, or described in, the Registration Statement have been so
filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
(ix) (A) Each of the Company and its subsidiaries is
in compliance in all material respects with all applicable
Environmental Laws; (B) none of the Company or its
subsidiaries has received any notice from any governmental
authority or third party of an asserted claim under any
Environmental Law; (C) each of the Company and its
subsidiaries has received all permits, licenses or other
approvals required of it under applicable Environmental Laws
to conduct its business and is in compliance with all terms
and conditions of any such permit,
17
license or approval, except where such failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses
or other approvals would not, singly or in the aggregate, have
a Material Adverse Effect; and (D) no property which is or has
been owned, leased or occupied by the Company or its
subsidiaries has been designated as a Superfund site pursuant
to the CERCLA, or otherwise designated as a contaminated site
under applicable state or local law.
(x) The Registration Statement, all Preliminary
Prospectuses and the Prospectus and each amendment or
supplement thereto (except for the financial statements and
schedules and other financial data included therein, as to
which such counsel expresses no opinion) comply as to form in
all material respects with the requirements of the Securities
Act and the Rules.
(xi) The Registration Statement is effective under
the Securities Act, and to such counsel's knowledge no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are threatened, pending or
contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xii) The Shares have been approved for listing on
the Nasdaq National Market.
(xiii) The capital stock of the Company conforms in
all material respects to the description thereof contained in
the Prospectus under the caption "Description of Capital
Stock."
(xiv) The Company is not an "investment company" or
an entity controlled by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, such counsel
may rely as to matters of fact on certificates of responsible officers
of the Company and public officials and on the opinions of other
counsel satisfactory to the Representatives as to matters which are
governed by laws other than the laws of the State of Florida, the
General Corporation Law of the State of Delaware and the Federal laws
of the United States; provided that such counsel shall state that in
their opinion the Underwriters and they are justified in relying on
such other opinions. Copies of such certificates and other opinions
shall be furnished to the Representatives and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the Representatives and representatives
of the independent certified public accountants of the Company, at
which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing
18
upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as specified in the
foregoing opinion), on the basis of the foregoing, no facts have come
to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective or as
of such Closing Date (except with respect to the financial statements
and notes and schedules thereto and other financial data, as to which
such counsel need express no belief) 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, or that the Prospectus as amended or supplemented (except
with respect to the financial statements, notes and schedules thereto
and other financial data, as to which such counsel need make no
statement) as of its date and as of such Closing Date contained any
untrue statement of a material fact or omitted 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.
(i) The Representatives shall have received on each Closing
Date from Akerman, Senterfitt & Xxxxxx, P.A., special counsel for the
Company, an opinion, addressed to the Representatives and dated such
Closing Date, and stating in effect that:
(i) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in
good standing or active status (in the case of Florida) under
the laws of the jurisdiction of its incorporation. Each of the
Company and its subsidiaries is duly qualified to transact
business and is in good standing or active status (in the case
of Florida) as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties or
the nature of its business makes such qualification necessary,
except where the failure to so qualify or to be in good
standing, individually or in the aggregate, would not have a
Material Adverse Effect.
(ii) Each of the Company and its subsidiaries has all
requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as now
being conducted and as described in the Registration Statement
and the Prospectus and, with respect to the Company, to enter
into and perform its obligations under this Agreement and to
issue and sell the Shares.
(iii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration
Statement and the Prospectus under the caption
"Capitalization" as of the dates stated therein and, since
such dates, there has been no change in the capital stock of
the Company except for subsequent issuances, if any, pursuant
to this Agreement or pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or
pursuant to the exercise of convertible securities or options
referred to in the Prospectus; to such counsel's knowledge,
all of the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued and are fully
paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The Shares
to be issued and sold by the Company pursuant to this
Agreement have been duly authorized for issuance and
19
sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth herein, will be
validly issued, fully paid and nonassessable, and no holder of
the Shares is or will be subject to personal liability by
reason of being such a holder. The issuance and sale of the
Shares by the Company is not subject to any preemptive or
other similar rights of any security holder of the Company. To
such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase or
any restriction upon the voting or transfer of any securities
of the Company pursuant to the Company's certificate of
incorporation or bylaws or other governing documents or any
agreements or other instruments to which the Company is a
party or by which it is bound. To such counsel's knowledge,
except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and no commitment, plan or
arrangement to issue, any share of stock of the Company or any
security convertible into, exercisable for, or exchangeable
for stock of the Company. The Common Stock, the Shares and the
Preferred Stock conform in all material respects to the
descriptions thereof contained in the Registration Statement
and the Prospectus. The form of certificate used to evidence
the Common Stock complies in all material respects with all
applicable statutory requirements, with any applicable
requirements of the certificate of incorporation or Bylaws of
the Company and the requirements of the Nasdaq National
Market. To such counsel's knowledge, except as disclosed in
the Registration Statement and the Prospectus, there are no
persons with registration rights or other similar rights to
have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the
Securities Act.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares. This Agreement has been duly and
validly authorized, executed and delivered by the Company.
(v) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any
of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) nor the execution, delivery or performance of any
other agreement or instrument entered into or to be entered
into by the Company in connection with the transactions
contemplated by the Registration Statement and the Prospectus
will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a
default (or any event which with notice or lapse of time, or
both, would constitute a default) under, or require consent or
waiver under, or result in the execution or imposition of any
lien, charge, claim, security interest or encumbrance upon any
properties or assets of the Company or any subsidiary pursuant
to the terms of, any indenture, mortgage, deed trust, note or
other agreement or instrument of which such counsel is aware
and to which the Company or any subsidiary is a party or by
which either the Company or any
20
subsidiary or any of its assets or properties or businesses is
bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, domestic or foreign, of
which such counsel is aware or violate any provision of the
charter or bylaws of the Company or any subsidiary.
(vi) No consent, approval, authorization, license,
registration, qualification or order of any court or
governmental agency or regulatory body is required for the due
authorization, execution, delivery or performance of this
Agreement by the Company or the consummation of the
transactions contemplated hereby or thereby, except such as
have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
several Underwriters.
(vii) To such counsel's knowledge, there is no
action, suit, proceeding or other investigation, before any
court or before or by any public body or board pending or
threatened against, or involving the assets, properties or
businesses of, the Company which is required to be disclosed
in the Registration Statement and the Prospectus and is not so
disclosed or which could reasonably be expected to have a
Material Adverse Effect.
(viii) The statements in the Prospectus under the
captions "Description of Capital Stock" and "Certain
Relationships and Related Transactions" and in the
Registration Statement under Item 15 of Part II, insofar as
such statements constitute a summary of documents referred to
therein or matters of law, are accurate in all material
respects and accurately present the information with respect
to such documents and matters. Accurate copies of all
contracts and other documents required to be filed as exhibits
to, or described in, the Registration Statement have been so
filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
(ix) To such counsel's knowledge, (A) each of the
Company and its subsidiaries is in compliance in all material
respects with all applicable Environmental Laws; (B) none of
the Company or its subsidiaries has received any notice from
any governmental authority or third party of an asserted claim
under any Environmental Law; (C) each of the Company and its
subsidiaries has received all permits, licenses or other
approvals required of it under applicable Environmental Laws
to conduct its business and is in compliance with all terms
and conditions of any such permit, license or approval, except
where such failure to receive required permits, licenses or
other approvals or failure to comply with the terms and
conditions of such permits, licenses or other approvals would
not, singly or in the aggregate, have a Material Adverse
Effect; and (D) no property which is or has been owned, leased
or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the CERCLA, or
otherwise designated as a contaminated site under applicable
state or local law.
21
(x) The Registration Statement, all Preliminary
Prospectuses and the Prospectus and each amendment or
supplement thereto (except for the financial statements and
schedules and other financial data included therein, as to
which such counsel expresses no opinion) comply as to form in
all material respects with the requirements of the Securities
Act and the Rules.
(xi) The Registration Statement is effective under
the Securities Act, and to such counsel's knowledge no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are threatened, pending or
contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xii) The Shares have been approved for listing on
the Nasdaq National Market.
(xiii) The capital stock of the Company conforms in
all material respects to the description thereof contained in
the Prospectus under the caption "Description of Capital
Stock."
(xiv) The Company is not an "investment company" or
an entity controlled by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, such counsel
may rely as to matters of fact on certificates of responsible officers
of the Company and public officials and on the opinions of other
counsel satisfactory to the Representatives as to matters which are
governed by laws other than the laws of the State of Florida, the
General Corporation Law of the State of Delaware and the Federal laws
of the United States; provided that such counsel shall state that in
their opinion the Underwriters and they are justified in relying on
such other opinions. Copies of such certificates and other opinions
shall be furnished to the Representatives and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the Representatives and representatives
of the independent certified public accountants of the Company, at
which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Registration Statement and the Prospectus (except as specified in
the foregoing opinion), on the basis of the foregoing, no facts have
come to the attention of such counsel which lead such counsel to
believe that the Registration Statement at the time it became effective
or as of such Closing Date (except with respect to the financial
statements and notes and schedules thereto and other financial data, as
to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make
22
the statements therein not misleading, or that the Prospectus as
amended or supplemented (except with respect to the financial
statements, notes and schedules thereto and other financial data, as to
which such counsel need make no statement) as of its date and as of
such Closing Date contained any untrue statement of a material fact or
omitted 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.
(j) The Representatives shall have received on each Closing
Date from Oblon, Spivak, McClelland, Xxxxx & Neustadt, PC, special
trademark counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect
that:
(i) The methods by which the Company and its
subsidiaries purchase and sell merchandise do not violate the
Xxxxxx Act (U.S. Trademark Law, 15 U.S.C.ss.1051 et. seq.).
(ii) The statements in the Prospectus under the
caption "Business--Intellectual Property," insofar as such
statements constitute a summary of documents referred to
therein or matters of law, are accurate in all material
respects and accurately present the information with respect
to such documents and matters.
(k) The Representatives shall have received on each Closing
Date from counsel for the Company reasonably acceptable to the
Representatives, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that the Company's possession,
advertising and sale of watches that have had their serial numbers
removed does not violate the laws of the State of California, Florida,
Illinois, New Jersey, New York or Texas.
(l) The Representatives shall have received on each Closing
Date from counsel for the Company reasonably acceptable to the
Representatives, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that the statements in the
Prospectus under the caption "Business--Government Regulation--Decoded
Watches," insofar as such statements constitute a summary of documents
referred to therein or matters of law, are accurate in all material
respects and accurately present the information with respect to such
documents and matters.
(m) The Representatives shall have received on each Closing
Date from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Representatives, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) The Shares have been duly authorized by the
Company and, when delivered to and paid for by the
Underwriters in accordance with the terms of the Underwriting
Agreement, will be validly issued, fully paid and
non-assessable and, to such counsel's knowledge, will be free
and clear of any preemptive rights or any similar rights
arising under the Delaware General Corporate Law, the
Company's certificate of incorporation or bylaws or any
23
Applicable Contract (as defined in such opinion), except such
as have been validly waived.
(ii) This Agreement has been duly authorized,
executed and delivered by the Company.
(iii) The statements in the Prospectus under the
caption "Description of Capital Stock," insofar as such
statements purport to summarize certain provisions of the
documents referred to therein, fairly summarize such
provisions in all material respects.
(iv) The statements in the Prospectus under the
caption "Underwriting," insofar as such statements purport to
summarize certain provisions of this Agreement, fairly
summarize such provisions in all material respects.
(v) Such counsel has been orally advised by the
Commission that the Registration Statement was declared
effective under the Securities Act, and such counsel has been
orally advised by the Commission that no stop order suspending
the effectiveness of the Registration Statement has been
issued. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
To the extent deemed advisable by such counsel, such counsel
may rely as to matters of fact on certificates of responsible officers
of the Company and public officials and on the opinions of other
counsel satisfactory to the Representatives as to matters which are
governed by laws other than the laws of the State of New York, the
General Corporation Law of the State of Delaware and the Federal laws
of the United States; provided that such counsel shall state that in
their opinion the Underwriters and they are justified in relying on
such other opinions. Copies of such certificates and other opinions
shall be furnished to the Representatives.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the independent accountants of the
Company and representatives of the Representatives, at which the
contents of the Registration Statement and the Prospectus and related
matters were discussed. Although such counsel does not pass upon, or
assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement and the
Prospectus and has made no independent check or verification thereof,
on the basis of the foregoing, (i) the Registration Statement, at the
time it became effective, and the Prospectus, as of its date, appeared
on their face to be appropriately responsive in all material respects
to the requirements of the Securities Act and the Rules and Regulations
(except that in each case such counsel does not express any view as to
the financial statements, schedules and other financial information
included therein or excluded therefrom or the exhibits to the
Registration Statement and (ii) no facts have come to such counsel's
attention that have caused such counsel to
24
believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus,
as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading
(except that in each case such counsel does not express any view as to
the financial statements, schedules and other financial information
included or incorporated by reference therein or excluded therefrom or
the exhibits to the Registration Statement).
(n) All proceedings taken in connection with the sale of the
Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives
and their counsel.
(o) The Representatives shall have received copies of the
Lock-Up Agreements executed by each director of the Company, each
officer of the Company and each other entity or person listed on
Schedule II hereto.
(p) The Shares shall have been approved for quotation on the
Nasdaq National Market, subject only to official notice of issuance.
(q) The Company shall have furnished or caused to be furnished
to the Representatives such further certificates, documents or opinions
as the Representatives shall have reasonably requested.
5. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause
the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto, to
become effective as promptly as possible. The Company shall
prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by the Rules.
(ii) The Company shall promptly advise the
Representatives in writing (A) when any post-effective
amendment to the Registration Statement shall have become
effective or any supplement to the Prospectus shall have been
filed, (B) of any request by the Commission for any amendment
of the Registration Statement or the Prospectus or for any
additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the
institution or threatening of any proceeding for that purpose
and (D) of the receipt by the Company of any notification with
25
respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company shall not file
any amendment of the Registration Statement or supplement to
the Prospectus unless the Company has furnished the
Representatives a copy for their review prior to filing and
shall not file any such proposed amendment or supplement to
which the Representatives reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Securities
Act and the Rules, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii)
of this Section 5(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
effect such compliance.
(iv) The Company shall make generally available to
its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90 days
if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the
Company, covering such 12-month period, which shall satisfy
the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(v) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed
copies of the Registration Statement (including all exhibits
thereto and amendments thereof) and to each other Underwriter
a copy of the Registration Statement (without exhibits
thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by
the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may
reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment and
supplement thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T. Copies of the Prospectus,
in such quantities as the Representatives may reasonably
request, shall be furnished to the Representatives in New York
City, without charge, prior to 10:00 a.m., New York City time
on the second business day following the execution and
delivery of this Agreement.
26
(vi) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representatives
may designate and shall maintain such qualifications in effect
so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service
of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction.
(vii) The Company, during the period when the
Prospectus is required to be delivered under the Securities
Act and the Rules or the Exchange Act, will file all reports
and other documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act within
the time periods required by the Exchange Act and the
regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC
World Markets Corp., for a period of 180 days after the date
of this Agreement, neither the Company nor any of its
individual directors or executive officers shall issue, sell
or register with the Commission (other than on Form S-8 or on
any successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable
for equity securities of the Company), except for the issuance
of the Shares pursuant to the Registration Statement and the
issuance of shares pursuant to the Company's existing stock
option plan or bonus plan as described in the Registration
Statement and the Prospectus. In the event that during this
period, (A) any shares are issued pursuant to the Company's
existing stock option plan or bonus plan that are exercisable
during such 180 day period or (B) any registration is effected
on Form S-8 or on any successor form relating to shares that
are exercisable during such 180 period, the Company shall
obtain the written agreement of such grantee or purchaser or
holder of such registered securities that, for a period of 180
days after the date of this Agreement, such person will not,
without the prior written consent of CIBC World Markets Corp.,
offer for sale, sell, distribute, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, or
exercise any registration rights with respect to, any shares
of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common
Stock) owned by such person.
(ix) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including
any required registration under the Exchange Act).
(x) Prior to the Closing Date, the Company will issue
no press release or other communications directly or
indirectly and hold no press conference with respect to the
Company, the condition, financial or otherwise, or the
earnings, business affairs or business prospects of any of
them, or the offering of the Shares without the prior written
consent of the Representatives unless in the
27
judgment of the Company and its counsel, and after
notification to the Representatives, such press release or
communication is required by law.
(xi) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of
the obligations of the Company under this Agreement including those
relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements
to the Registration Statement and the Prospectus, and the printing,
filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the various jurisdictions referred
to in Section 5(a)(vi), including the reasonable fees and disbursements
of counsel for the Underwriters in connection with such registration
and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv) the
furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of each preliminary
prospectus, the Prospectus and all amendments or supplements to the
Prospectus, and of the several documents required by this Section to be
so furnished, as may be reasonably requested for use in connection with
the offering and sale of the Shares by the Underwriters or by dealers
to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriters in
connection with such review; (vi) inclusion of the Shares for quotation
on the Nasdaq National Market; and (vii) all transfer taxes, if any,
with respect to the sale and delivery of the Shares by the Company to
the Underwriters.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or in any
Blue Sky application or other information or other documents executed
by the Company filed in any state or other jurisdiction to qualify any
or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a
"BLUE SKY APPLICATION") or arise out of or are based upon any omission
or alleged
28
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages or liabilities arising from the sale of the
Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus,
or such amendment or supplement thereto, or in any Blue Sky Application
in reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any
Underwriter specifically for use therein. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the
Company who signs the Registration Statement, against any losses,
claims, damages or liabilities (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted) to which such party may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any preliminary prospectus,
the Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative
expressly for use therein; provided, however, that the obligation of
each Underwriter to indemnify the Company (including any controlling
person, director or officer thereof) shall be limited to an amount
equal to the net proceeds received by the Company from such
Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served. No indemnification provided for in Section 6(a) or
6(b) shall be available to any party who shall fail to give notice as
provided in this Section 6(c) if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the omission
so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to
any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement
29
thereof, the indemnifying party shall be entitled to participate in,
and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or
in addition to those available to the indemnifying party (in which case
the indemnifying parties shall not have the right to direct the defense
of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any
action, suit, and proceeding or claim effected without its written
consent, which consent shall not be unreasonably withheld or delayed.
7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 6(a) or 6(b) is due in accordance with its terms but for any reason is
unavailable to or insufficient to hold harmless an indemnified party in respect
to any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares pursuant to this
Agreement or, if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
30
Notwithstanding the provisions of this Section 7, no Underwriter (except as may
be provided in the Agreement Among Underwriters) shall be required to contribute
any amount in excess of the amount by which the total price at which the shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of damages which such underwriter has otherwise been required
to pay by reason of any such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who controls the
Company, within the meaning of the Section 15 of the Securities Act or Section
20 of the Exchange Act, shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve the party or parties from
whom contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 7. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
underwriting commitments and not joint.
8. TERMINATION.
(a) This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by
notifying the Company at any time at or before a Closing Date in the
absolute discretion of the Representatives if: (i) there has occurred
any material adverse change in the securities markets or any event, act
or occurrence that has materially disrupted, or in the opinion of the
Representatives, will in the future materially disrupt, the securities
markets or there shall be such a material adverse change in general
financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States
is such as to make it, in the judgment of the Representatives,
inadvisable or impracticable to market the Shares or enforce contracts
for the sale of the Shares; (ii) there has occurred any outbreak or
material escalation of hostilities or other calamity or crisis the
effect of which on the financial markets of the United States is such
as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares or enforce contracts for the sale of
the Shares; (iii) trading in the Shares or any securities of the
Company has been suspended or materially limited by the Commission or
trading generally on the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. or the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by any of said exchanges or by such
system or by order of the Commission, the National Association of
Securities Dealers, Inc., or any other governmental or regulatory
authority; or (iv) a banking moratorium has been declared by
31
any state or Federal authority; or (v) in the judgment of the
Representatives, there has been, since the time of execution of this
Agreement or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and
its subsidiaries considered as a whole, whether or not arising in the
ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the
Company, except that (y) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure, refusal or
inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including
the reasonable fees and disbursements of their counsel) incurred by
them in connection with the proposed purchase and sale of the Shares or
in contemplation of performing their obligations hereunder and (z) no
Underwriter who shall have failed or refused to purchase the Shares
agreed to be purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the
Company or to the other Underwriters for damages occasioned by its
failure or refusal.
9. SUBSTITUTION OF UNDERWRITERS. If any Underwriter shall default in
its obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representatives shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representatives shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to the Underwriters to purchase such Shares on such terms.
If, after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the Representatives and the Company as
provided above, the aggregate number of Shares which remains unpurchased on such
Closing Date does not exceed one-eleventh of the aggregate number of all the
Shares that all the Underwriters are obligated to purchase on such date, then
the Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default. In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
seven days in order to effect any necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus or any other documents), and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the opinion
of the Company and the Underwriters and their counsel may thereby be made
necessary.
32
If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided above, the aggregate number of such Shares which remains
unpurchased exceeds 10% of the aggregate number of all the Shares to be
purchased at such date, then this Agreement, or, with respect to the Option
Shares Closing Date, the obligations of the Underwriters to purchase and of the
Company to sell the Option Shares to be purchased and sold on such date, shall
terminate, without liability on the part of any non-defaulting Underwriter to
the Company, and without liability on the part of the Company, except as
provided in Sections 5(b), 6, 7 and 8. The provisions of this Section 9 shall
not in any way affect the liability of any defaulting Underwriter to the Company
or the nondefaulting Underwriters arising out of such default. The term
"UNDERWRITER" as used in this Agreement shall include any person substituted
under this Section 9 with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
10. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or the Company or any of their respective officers,
directors or controlling persons referred to in Sections 6 and 7 hereof, and
shall survive delivery of and payment for the Shares. In addition, the
provisions of Sections 5(b), 6, 7 and 8 shall survive the termination or
cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters
and the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "SUCCESSORS AND
ASSIGNS" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed
or delivered or by telephone or telegraph if subsequently confirmed in writing,
(a) if to the Representatives, c/o CIBC World Markets Corp., 000 Xxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxx Xxxx, with a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx and Xxxxxxxx Xxxxxxxx,
and (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement with a copy to (i)
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxx, P.A., 000 Xxxxxxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxx, Xxxxxxx 00000, Attention: Xxxxxxx Xxxxxxx and (ii) Akerman Senterfitt,
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxx, Xxxxxxx 00000-0000, Attention:
Xxxxxxx Xxxxxx.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
33
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
ODIMO INCORPORATED
By: /s/
-------------------------------------
Name:
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
XXXXXXXXXXX & CO. INC.
XXXXXXXX CURHAN FORD & CO.
----------------------------------------
Acting severally on behalf of itself
and as Representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC WORLD MARKETS CORP.
By: /s/
-----------------------------------
Name:
Title:
[Signature Page - Underwriting Agreement]
SCHEDULE I
Number of
Firm Shares to Be
Purchased from
Name the Company
----- ------------------
CIBC World Markets Corp.
Xxxxxxxxxxx & Co. Inc.
Xxxxxxxx Curhan Ford & Co.
-----------------------------------
----------
Total 3,125,000
Sch I - 1
SCHEDULE II
Lock-up Signatories
Xxxx Xxxxxx
Xxxxxx Xxxxxxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxx
Xxxxxxxx Xxxx
Xxxxxxx Xxxxxxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxxx
Lenorth Holdings SA
GSI Commerce Solutions, Inc.
Softbank Capital Partners LP
Softbank Capital LP
Softbank Capital Advisors Fund LP
STI Ventures N.V.
SDG Marketing Inc.
Xxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxx Xxxxxx
Xxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx
Aamba Ma Family Trust
AMC BVBA Beechdrop Inc.
Data Investments LLC
Eliaz Diamonds
ePartners
SBSweden
Hope of Africa
Jewel XS
Lipton Partnership 2
Sch II - 1
Exhibit A
FORM OF LOCK-UP AGREEMENT
_____, 2005
CIBC World Markets Corp.
As Representative of the several Underwriters
c/o CIBC World Markets Corp.
CIBC World Markets Tower
World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: PUBLIC OFFERING OF COMMON STOCK OF ODIMO INCORPORATED
Ladies and Gentlemen:
The undersigned acknowledges that CIBC World Markets Corp., as
representative of the several underwriters (the "UNDERWRITERS"), proposes to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with Odimo
Incorporated, a Delaware corporation (the "COMPANY"), providing for the purchase
by the Underwriters of shares (the "SHARES") of common stock of the Company, par
value $0.001 per share (the "COMMON STOCK"). The undersigned further understands
that the Company filed a Registration Statement on Form S-1 (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "COMMISSION") on
July 16, 2004, for the registration of the Shares of Common Stock (including the
Shares subject to an over-allotment option on the part of the Underwriters) that
the Company intends to sell in an initial public offering (the "OFFERING").
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, the undersigned
irrevocably agrees, for the benefit of the Company and the Underwriters, that,
without the prior written consent of CIBC World Markets Corp., the undersigned
will not (and will not announce or disclose any intention to) for a period of
180 days subsequent to the date of the Underwriting Agreement, directly or
indirectly,
o offer, sell, assign, transfer, pledge, encumber, agree or
contract to sell, grant an option to purchase or enter into
any transaction or device that is designed to, or could
reasonably be expected to, result in the disposition by any
person at any time in the future of, or
o enter into any swap, derivative or transaction or other
arrangement that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of,
A-1
any shares of Common Stock, any option, right or warrant to purchase shares of
Common Stock or any securities convertible into or exchangeable for Common Stock
(collectively, the "RESTRICTED SECURITIES"), that may be deemed to be
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) by the undersigned on the date hereof or
hereafter acquired. These restrictions do not extend to any Shares to be sold to
the Underwriters in the Offering, or pledged as collateral or transferred as a
gift or gifts (provided that any pledgee or donee thereof agrees in writing to
be bound by the terms hereof). In addition, the undersigned agrees that, without
the prior written consent of CIBC World Markets Corp., the undersigned will not,
during the period commencing on the date hereof and ending 180 days after the
execution of the Underwriting Agreement, make any demand for or exercise any
right with respect to, the registration of any Restricted Securities.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of any
Restricted Securities if such transfer would constitute a violation or breach of
this agreement.
The undersigned, whether or not participating in the Offering,
understands that the Company and the Underwriters will proceed with the Offering
in reliance upon the representations set forth in this agreement, and that, upon
request, the undersigned will execute any additional documents necessary in
connection with enforcement hereof. The undersigned hereby represents and
warrants that the undersigned has full power and authority to enter into this
agreement. This agreement shall be binding on the undersigned and the
successors, heirs, personal representatives and assigns of the undersigned.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters. In any event, this agreement shall terminate
if the Offering has not been consummated prior to March 31, 2005.
Very truly yours,
-----------------------------------------
Signature
-----------------------------------------
Print Name and Title (if applicable)
A-2
