EXHIBIT 1.1
1,000,000 SHARES
OF
COMMON STOCK
YAMHILL VALLEY VINEYARDS, INC.
UNDERWRITING AGREEMENT
_________________________, 2003
Xxxxxxx Investment Company, Inc.
000 XX Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Gentlemen:
Yamhill Valley Vineyards, Inc., an Oregon corporation (the "Company")
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representative (the
"Representative"), an aggregate of 1,000,000 shares of the Company's Common
Stock (the "Firm Shares"). The Company also proposes to grant to the
Representative an option to purchase in the aggregate up to 150,000 additional
shares of Common Stock (the "Option Shares"), as set forth below. The Firm
Shares and the Option Shares (to the extent the aforementioned option is
exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Underwriter as follows:
(a) A registration statement on Form SB-2 (File No. 333-___________) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means (i) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (ii) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Shares, together with the term sheet or abbreviated
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Underwriting Agreement - 11/4/02
term sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act.
Each preliminary prospectus included in the Registration Statement prior to the
time it becomes effective is herein referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of Oregon, with
corporate power and corporate authority to own or lease its properties and
conduct its business as described in the Registration Statement. The Company
does not own and never has owned a controlling interest in any other corporation
or other business entity, except as disclosed in the Registration Statement. The
Company is duly qualified to transact business and is in good standing in all
jurisdictions in which the conduct of its business requires such qualification.
(c) The outstanding shares of each class or series of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable and, except as disclosed in the Registration Statement, have been
issued and sold by the Company in compliance in all material respects with
applicable securities laws; the issuance and sale of the Shares will be validly
issued, fully paid and non-assessable; and no preemptive rights of shareholders
exist with respect to any security of the Company or the issue and sale thereof.
Except as set forth in the Registration Statement, neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement give rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock
or other securities of the Company. The Company does not own or have the right
to acquire capital stock or other equity securities of any other person
representing more than five percent of the equity of that person, or otherwise
control any other person.
(d) The information set forth under the caption "Capitalization" in the
Prospectus is true and correct. The Common Stock conforms and the
Representative's Warrants (as defined in Paragraph (d) of Section 2 hereof) will
conform to the description thereof contained in the Registration Statement. The
forms of certificates for the securities comprising the Shares conform to the
requirements of the corporate law of Oregon. Except as described in the
Registration Statement, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock.
(e) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements which are required to be stated therein by, and will conform to, the
requirements of the Act and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
2
of a material fact and do not omit, and will not omit, to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus and any amendments and supplements thereto do not
contain, and will not contain, any untrue statement of material fact; and do not
omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to information
contained in or omitted from the Registration Statement or the Prospectus, or
any such amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of the
Underwriters, specifically for use in the preparation thereof.
(f) The financial statements of the Company, together with related notes
and schedules as set forth in the Registration Statement, present fairly the
financial position, results of operations, cash flows and shareholders equity of
the Company at the indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout the periods
involved, except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data of the Company included in the Registration Statement
present fairly the information shown therein and such data has been compiled on
a basis consistent with the financial statements presented therein and the books
and records of the Company.
(g) BDO Xxxxxxx, LLP , who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the applicable
published Rules and Regulations.
(h) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which if determined adversely to the Company
might result in any material adverse change in the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company or prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement.
(i) The Company has good and marketable title to all properties and
assets, tangible and intangible, reflected in the financial statements (or as
described in the Registration Statement) hereinabove described, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those reflected
in such financial statements (or as described in the Registration Statement) or
which are not material. The Company's ownership rights in its patents, patent
licenses and other material technology is consistent with (i) the description
thereof in the Registration Statement, and (ii) the business needs of the
Company. All of the leases and subleases under which the Company holds
properties, tangible or intangible, are in full force and effect conforming in
all respects to the description thereof set forth in the Registration Statement.
The
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3
Company has not received notice of any claim that is materially adverse to the
rights of the Company under any of such leases or subleases.
(j) The Company has filed all federal, state, local and foreign income tax
returns which have been required to be filed and has paid all taxes indicated by
said returns and all assessments received by it to the extent that such taxes
have become due and are not being contested in good faith. All tax liabilities
have been adequately provided for in the financial statements of the Company,
and the Company does not know of any actual or proposed additional material tax
assessments relating to any of its historical periods.
(k) Since the respective dates as of which information is given in the
Registration Statement, as it may have been amended or supplemented, there has
not been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise), or
prospects of the Company, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be amended or
supplemented. The Company has no material contingent obligations which are not
disclosed in the Company's financial statements or elsewhere in the Prospectus
which is included in the Registration Statement.
(l) The Company is not, nor, with the giving of notice or lapse of time or
both, will it be, in violation of or in default under its Amended and Restated
Articles of Incorporation or Bylaws or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which default is of material
significance in respect of the condition, financial or otherwise, of the Company
or the business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company. The execution and delivery
of this Agreement and the consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, material contract or other agreement or
instrument to which the Company is a party or by which its assets may be bound,
or of the Amended and Restated Articles of Incorporation or Bylaws of the
Company or any order, rule or regulation applicable to the Company of any court
or of any regulatory body or administrative agency or other governmental body
having jurisdiction.
(m) Each approval, consent, order, authorization, designation, declaration
or filing 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 (except
such additional steps as may be required by the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or such additional steps as
may be necessary to qualify the Shares for public offering by the
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Underwriting Agreement - 11/4/02
4
Underwriters under state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
(n) The Company owns or possesses adequate rights to use or can acquire on
reasonable terms, all patents, patent rights, trademarks, service marks, trade
names, copyrights, trade secrets and licenses of any of the foregoing
(collectively, "Intellectual Property Rights") that are described in the
Prospectus or which are necessary to the conduct of its business; except as
disclosed in the Registration Statement, there is no claim pending or, to the
best knowledge of the Company, threatened against the Company, or any of its
officers, directors, employees or consultants, in their capacities as such,
alleging any infringement of Intellectual Property Rights, or any violation of
the terms of any license relating to Intellectual Property Rights, nor does the
Company know of any basis for any such claim. The Company knows of no
infringement by others of Intellectual Property Rights owned by or licensed to
the Company. Except as disclosed in the Registration Statement, the expiration
of any Intellectual Property Rights would not have a material adverse effect on
the condition, or on the earnings, business or operations of the Company, taken
as a whole. The Company has obtained, is in compliance in all material respect
with and maintains in full force and effect all material licenses, certificates,
permits, orders or other, similar authorizations granted or issued by any
governmental agency (collectively "Government Permits") required to conduct its
business as it is presently conducted. No proceeding to revoke, limit or
otherwise materially change any Government Permit has been commenced or, to the
knowledge of the Company, is threatened against the Company, and the Company has
no reason to anticipate that any such proceeding will be commenced against the
Company. Except as disclosed or contemplated in the Prospectus, the Company has
no reason to believe that any pending application for a patent or Government
Permit will be denied or limited in a manner inconsistent with the Company's
business plan as described in the Prospectus.
(o) The Company is in all material respects in compliance with all
applicable Environmental Laws (as defined below). The Company has no knowledge
of any past, present or, as anticipated by the Company, future events,
conditions, activities, investigation, studies, plans or proposals that (i)
would interfere with or prevent compliance with any Environmental Law by the
Company or (ii) could reasonably be expected to give rise to any common law or
other liability, or otherwise form the basis of a claim, action, suit,
proceeding, hearing or investigation, involving the Company and related to
Hazardous Substances (as defined below) or Environmental Laws. No Hazardous
Substance is or has been used, treated, stored, generated, manufactured or
otherwise handled on or at any Facility (as defined below) in quantities that
violate applicable Environmental Laws or impose on the Company any reporting
obligation under such laws, and to the knowledge of the Company, no Hazardous
Substance has otherwise come to be located in, on or under any Facility. No
Hazardous Substances are stored at any Facility except in quantities necessary
to satisfy the reasonably anticipated use or consumption by the Company. No
litigation, claim, proceeding or governmental investigation is pending regarding
any environmental matter for which the Company has been served or otherwise
notified or, to the knowledge of the Company, threatened or asserted against the
Company or the officers or directors of the Company, in their capacities as
such, or any Facility or the
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Company's business. There are no orders, judgments or decrees of any court or of
any governmental agency or instrumentality under any Environmental Law which
specifically apply to the Company, any Facility or any of the Company's
operations. The Company has not received from a governmental authority or other
person (i) any notice that it is a potentially responsible person for any
Contaminated site (as defined below) or (ii) any request for information about a
site alleged to be Contaminated or regarding the disposal of Hazardous
Substances. There is no litigation or proceeding against any other person by the
Company regarding any environmental matter. The Company has disclosed in the
Prospectus or made available to the Underwriters and their counsel true,
complete and correct copies of any reports, studies, investigations, audits,
analyses, tests or monitoring, in the possession of or initiated by the Company,
pertaining to any environmental matter relating to the Company and its past or
present operations or any Facility.
For the purposes of the foregoing paragraph, "Environmental Laws" means any
applicable federal, state or local statute, regulation, code, rule, ordinance,
order, judgment, decree, injunction or common law pertaining in any way to the
protection of human health or the environment, including without limitation, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Toxic Substances Control Act, the
Clean Air Act, the Federal Water Pollution Control Act and any similar or
comparable state or local law; "Hazardous Substance" means any hazardous, toxic,
radioactive or infectious substance, material or waste as defined, listed or
regulated under any Environmental Law; "Contaminated" means the actual existence
on or under any real property of Hazardous Substances, if the existence of such
Hazardous Substances triggers a requirement to perform any investigatory,
remedial, removal or other response action under any Environmental Laws or if
such response action legally could be required by any governmental authority;
"Facility" means any property owned, leased or occupied by the Company.
(p) Neither the Company, nor to the knowledge of the Company, any of its
affiliates, has taken or intends to take, directly or indirectly, any action
which is designed to cause or result in, or which constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(q) The Company is not an "investment company" within the meaning of such
term under the Investment Company Act of 1940 and the rules and regulations of
the Commission thereunder.
(r) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is
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Underwriting Agreement - 11/4/02
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compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(s) The Company carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of its properties and as is customary for companies engaged in similar
industries.
(t) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(u) The Company is in material compliance with all laws, rules,
regulations, orders of any court or administrative agency, operating licenses or
other requirements imposed by any governmental body applicable to it and
otherwise as is applicable to its business; and the conduct of the business of
the Company, as described in the Prospectus, will not cause the Company to be in
violation of any such requirements.
(v) The Representative's Warrants (as defined in Paragraph (d) of Section
2 hereof) have been authorized for issuance to the Representative or its
designees, as the case may be, and will, when issued, entitle the holders
thereof to the rights, privileges, and characteristics as represented in the
most recent form of Representative's Warrants filed as an exhibit to the
Registration Statement; the shares of Common Stock to be issued upon exercise of
the Representative's Warrants, when issued and delivered against payment
therefor in accordance with the terms thereof, will be duly and validly issued,
fully paid, nonassessable and free of preemptive rights, and all corporate
action required to be taken for the authorization and issuance of the
Representative's Warrants, and the securities to be issued upon their exercise,
have been validly and sufficiently taken.
(w) Except as disclosed in the Prospectus, neither the Company nor any of
its officers, directors or affiliates have caused any person, other than the
Representative, to be entitled to reimbursement of any kind, including, without
limitation, any compensation that would be includable as underwriter
compensation under the NASD's Corporate Financing Rule with respect to the
offering of the Shares, based on any activity of such person as a finder, agent,
broker, investment adviser or other financial service provider, and there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
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valid claim against the Company or the Underwriters for a brokerage commission,
finder's fee or other like payment in connection with this offering.
(x) The Company does not directly or indirectly control or have a material
interest in any other business entity.
(y) No labor dispute with the employees of the Company exists or, to the
knowledge of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its principal
suppliers, customers or vendors, which, in any case, may reasonably be expected
to result in a material adverse effect on the Company.
(z) There are no contracts or other documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as required.
(aa) There are no affiliations or associations, direct or indirect,
between any member of the NASD and any of the Company's officers, directors or
5% or greater shareholder and no beneficial owner (as that term is defined under
Rule 2720(b)(2) of the NASD Conduct Rules) of the Company's unregistered
securities, regardless of time acquired or the source from which derived, has
any direct or indirect affiliation or association with any NASD member.
(bb) Other than as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right (other than rights which have been waived or satisfied) to
require the Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the Act.
(cc) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of the Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba, and the Company further
agrees that if it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date of the Registration
Statement becomes or has become effective with the Commission or with the
Florida Department of Banking and Financing (the "Department"), whichever date
is later, of if the information reported or incorporated by reference in the
Prospectus, if any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changed in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
2. PURCHASE, SALE AND DELIVERY OF THE UNITS.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters and the
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Underwriters agree to purchase, at a price of $____ per Share (which price
reflects an underwriters' discount of 10%), 1,000,000 Firm Shares.
(b) Payment for the Firm Shares to be sold hereunder is to be made in New
York Clearing House funds and, at the option of the Representative by bank wire
to an account specified by the Company, or certified or bank cashier's checks
drawn to the order of the Company, against either uncertificated delivery of
Firm Shares or of certificates therefor (which delivery, if certificated, shall
take place in such location in New York, New York as may be specified by the
Representative) to the Underwriters for their account. Such payment is to be
made at the offices of the Representative at the address set forth on the first
page of this Agreement, at 7:00 a.m., Pacific time, on the third business day
after the date of this Agreement or at such other time and date not later than
five business days thereafter as you and the Company shall agree upon, such time
and date being herein referred to as the "Closing Date." (As used herein,
"business day" means a day on which the New York Stock Exchange is open for
trading and on which banks in New York are open for business and not permitted
by law or executive order to be closed.) Except to the extent uncertificated
Firm Shares are delivered at closing, certificates for the Firm Shares will be
delivered in such denominations and in such registrations as the Representative
requests in writing not later than the second full business day prior to the
Closing Date, and will be made available for inspection by the Representative at
least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Representative to purchase the Option Shares at
the price per Share as set forth in the first paragraph of this Section 2. The
option granted hereby may be exercised in whole or in part by giving written
notice (i) at any time before the Closing Date and (ii) thereafter within 45
days after the date of this Agreement, by the Representative to the Company
setting forth the number of Option Shares as to which the Representative is
exercising the option, the names and denominations in which the Option Shares
are to be registered and the time and date at which certificates representing
such Shares are to be delivered. The time and date at which certificates for
Option Shares are to be delivered shall be determined by the Representative but
shall not be earlier than three nor later than ten full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the notice
of exercise shall set the Closing Date as the Option Closing Date. The option
with respect to the Option Shares granted hereunder may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters. The
Representative may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in New York Clearing House funds and, at the option
of the Representative, by bank wire to an account specified by the Company, or
certified or bank cashier's check drawn to the order of the Company for the
Option Shares to be sold by the Company in consideration either of
uncertificated delivery of Option Shares or delivery of
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Underwriting Agreement - 11/4/02
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certificates therefor (which delivery, if certificated, shall take place in such
location in New York, New York as may be specified by the Representative) to the
Representative. Except to the extent uncertificated Option Shares are delivered
at closing, the certificates for the Option Shares will be delivered in such
denominations and in such registrations as the Representative requests in
writing not later than the second full business day prior to the Option Closing
Date, and will be made available for inspection by the Representative at least
one business day prior to the Option Closing Date.
(d) In addition to the sums payable to the Underwriters as provided
elsewhere herein, the Representative shall be entitled to receive at the
closing, as compensation for its services, purchase warrants (the
"Representative's Warrants") for the purchase of up to 100,000 Shares at a price
of $____ per Share, upon the terms and subject to adjustment and conversion as
described in the form of Representative's Warrants filed as an exhibit to the
Registration Statement.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the Underwriters are to make a public offering of the Firm
Shares as soon as the Representative deems it advisable to do so. The Firm
Shares are to be initially offered to the public at the initial public offering
price set forth in the Prospectus. The Underwriters may from time to time
thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Representative will offer them to the public on the foregoing terms.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules and
Regulations is followed, to prepare and timely file with the Commission under
Rule 424(b) of the Rules and Regulations a Prospectus in a form approved by the
Representative containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations, (B) not file any amendment to the Registration Statement
or supplement to the Prospectus of which the Representative shall not previously
have been advised and furnished with a copy or to which the Representative shall
have reasonably objected in writing or which is not in compliance with the Rules
and Regulations, and (C) file on a timely basis all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the termination
of the offering of the Shares by the Underwriters.
(b) The Company will advise the Representative promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have become
effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information,
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Underwriting Agreement - 11/4/02
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(D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose, and (E) of the issuance of
any order suspending trading of the Common Stock. The Company will use its best
efforts to prevent the issuance of any such stop order preventing or suspending
the use of the Prospectus or suspending trading and to obtain as soon as
possible the lifting thereof, if issued.
(c) The Company will cooperate with the Underwriters in endeavoring to
qualify the Shares for sale under the securities laws of such jurisdictions as
the Representative may reasonably have designated in writing and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representative may
reasonably request for distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the Representative,
from time to time, as many copies of any Preliminary Prospectus as the
Underwriters may reasonably request. The Company will deliver to, or upon the
order of, the Representative during the period when delivery of a Prospectus is
required under the Act, as many copies of the Prospectus in final form, or as
thereafter amended or supplemented, as the Representative may reasonably
request. The Company will deliver to the Representative at or before the Closing
Date, two signed copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the Representative
such number of copies of the Registration Statement (including such number of
copies of the exhibits filed therewith that may reasonably be requested), and of
all amendments thereto, as the Representative may reasonably request.
(e) The Company will comply with the Act and the Rules and Regulations,
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and the Prospectus, and make all required filings thereunder to maintain
compliance with such act with respect to the trading and issuance of the Common
Stock. If during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion of the
Representative, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances existing at the time the Prospectus is so delivered,
be misleading, or so that the Prospectus will comply with the law.
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
11
(f) The Company will make generally available to its security holders, as
soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the requirements of Section
11(a) of the Act and Rule 158 of the Rules and Regulations and will advise the
Underwriter in writing when such statement has been so made available.
(g) The Company will, for a period of five years from the Closing Date,
deliver to the Representative copies of annual reports and copies of all other
documents, reports and information furnished by the Company to its shareholders
or filed with any securities exchange (including for this purpose, The Nasdaq
Stock Market) pursuant to the requirements of such exchange or with the
Commission pursuant to the Act or the Exchange Act. The Company will deliver to
the Representative similar reports with respect to significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not consolidated in
the Company's financial statements. The Company will, for a period of five years
from the Closing Date, deliver to the Representative notice of all meetings of
its Board of Directors and any executive or similar committee thereof.
(h) No offering, sale, short sale or other disposition of any shares of
Common Stock of the Company or other securities convertible into or exchangeable
or exercisable for shares of Common Stock or derivatives of Common Stock (or
agreement therefor) will be made for a period of one year after the date of this
Agreement, directly or indirectly, by the Company otherwise than hereunder, or
pursuant to contractual obligations existing on the date hereof or pursuant to
employee benefit plans in effect on the date hereof, or with the prior written
consent of the Representative, which consent will not be unreasonably withheld.
(i) The Company will use its best efforts to qualify, subject to notice of
issuance, the Shares for listing on the Nasdaq SmallCap Market.
(j) The Company has caused its officers, directors and other holders of
shares of Common Stock to furnish to you, on or prior to the date of this
agreement, a letter or letters, in form and substance satisfactory to the
Representative ("Lock-up Agreements"), pursuant to which each such person shall
agree (A) not to offer, sell, contract to sell or grant any option to purchase
or otherwise dispose of any shares of Common Stock or other capital stock of the
Company, or any options or other securities convertible, exchangeable or
exercisable for Common Stock or derivatives of Common Stock owned by such person
or request the registration for the offer or sale of any of the foregoing (or as
to which such person has the right to direct the disposition) for a period of
one year after the date of this Agreement, directly or indirectly, except with
the prior written consent of the Representative; and (B) to give prior written
notice to the Underwriter, for a period of five years from the effective date of
the Registration Statement, with respect to any sales of Common Stock of the
Company pursuant to Rule 144 under the Securities Act or any similar rule.
[check LOI]
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
12
(k) The Company shall apply the net proceeds of its sale of the Shares as
set forth in the Prospectus and shall properly disclose such information with
respect to the sale of the Shares and the application of the proceeds therefrom
as may be required in accordance with Rule 463 under the Act.
(l) The Company shall not invest, or otherwise use the proceeds received
by the Company from its sale of the Shares, in such a manner as would require
the Company to register as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act").
(m) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common Stock.
(n) The Company will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be expected
to constitute, the stabilization or manipulation of the price of any securities
of the Company.
(o) The Company will furnish to the Representative, as soon as they have
been prepared by or are available to the Company, a copy of any unaudited
interim financial statements of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the
Registration Statement and the Prospectus.
(p) The Company agrees to use its best efforts to cause (i) each of its
directors, officers and shareholders and (ii) each person who acquires Common
Stock of the Company pursuant to the exercise of any option, warrant or right
granted under the Company's 2002 Stock Option Plan [conform name once drafted]
to sign an agreement that restricts such person from selling, making any short
sale of, grant any option for the purchase of, or otherwise transfer or dispose
of, any of such Common Stock, or any such securities convertible into or
exercisable or exchangeable for Common Stock, for a period of one year after the
date of the Prospectus without the prior written consent of the Representative.
(q) The Company will (i) enforce the terms of each Lock-up Agreement, and
(ii) issue stop-transfer instructions to the transfer agent for the Common Stock
with respect to any transaction or contemplated transaction that would
constitute a breach of or default under the applicable Lock-up Agreement. In
addition, except with the prior written consent of the Representative, the
Company agrees (i) not to amend or terminate, or waive any right under, any
Lock-up Agreement, or take any other action that would directly or indirectly
have the same effect as an amendment or termination, or waiver of any right
under any Lock-up Agreement, that would permit any holder of Common Stock, or
any securities convertible into, or exercisable or exchangeable for, Common
Stock, to make any short sale of, grant any option for the purchase of, or
otherwise transfer or dispose of, such Common Stock or other securities, prior
to the expiration of one year after the date of the Prospectus and (ii) not to
consent to any sale, short sale, grant of an option for the purchase of, or
other disposition or transfer of shares of Common
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
13
Stock, or securities convertible into or exercisable or exchangeable for Common
Stock, subject to a Lock-up Agreement.
(r) The Company will, between the date hereof and the date twenty-five
days after the Closing Date, provide the Representative and its legal counsel,
prior to their release, copies of all press releases, proposed communications
with shareholders or other interested parties and other public announcements and
will permit the Representative and its legal counsel to comment thereon prior to
release.
5. COSTS AND EXPENSES.
(a) The Representative shall be entitled to reimbursement from the Company
to a non-accountable expense allowance equal to 3% of the aggregate initial
public offering price of the Firm Shares and any Option Shares purchased by the
Underwriters. The Representative shall be entitled to withhold this allowance on
the Closing Date related to the purchase of the Firm Shares or the Option
Shares, as the case may be. In the event the offering is not consummated, any
portion of the $________ advanced to the Representative [check on advance] that
is unaccounted for will be returned to the Company.
(b) In addition to the payment described in Paragraph (a) of this Section
5, the Company will pay all costs, expenses and fees incident to the performance
of the obligations of the Company under this Agreement, including, without
limiting the generality of the foregoing, the following: accounting fees of the
Company; the fees and disbursements of counsel for the Company; the cost of
printing and delivering to, or as requested by, the Underwriters' copies of the
Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Nasdaq SmallCap Market listing application, the costs of the due
diligence investigation of the principals of the Company, the Blue Sky Survey
and any supplements or amendments thereto; the filing fees of the Commission;
the filing fees and expenses (including any fees and disbursements) incident to
securing the required review by the NASD of the terms and conditions of the
underwriting arrangements; the listing fee of the Nasdaq SmallCap Market; and
the expenses, including the fees and disbursements of counsel for the
Underwriter, incurred in connection with the qualification of the Shares under
state securities or Blue Sky laws. Any transfer taxes imposed on the sale of the
Shares to the Underwriters will be paid by the Company. The Company shall not,
however, be required to pay for any of the Underwriters' expenses (other than
those related to qualification under NASD regulations and state securities or
Blue Sky laws) except that, if this Agreement shall not be consummated, then the
Company shall reimburse the Representative for actual out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Shares or in
contemplation of performing its obligations hereunder; but the Company shall not
in any event be liable to any of the Underwriters for damages on account of loss
of anticipated profits from the sale by it of the Shares.
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
14
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the Underwriters to purchase the Firm Shares on the Closing
Date and the Option Shares, if any, on the Option Closing Date are subject to
the accuracy, as of the Closing Date or the Option Closing Date, as the case may
be, of the representations and warranties of the Company contained herein, to
the performance by the Company of its covenants and obligations hereunder and to
the following additional conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any request of
the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representative and
complied with to its reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Shares.
(b) The Underwriters shall have received on the Closing Date or the Option
Closing Date, as the case may be, the opinion of Xxxxx Xxxxxx Xxxxxxxx LLP,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters (and stating that it may be
relied upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Oregon, with
corporate power and corporate authority to own or lease its properties and to
conduct its business as described in the Registration Statement; the Company is
duly qualified to transact business and is in good standing in all jurisdictions
in which the conduct of its business requires such qualification, or in which
the failure to qualify would have a material adverse effect upon the business of
the Company.
(ii) The Company has authorized any outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus; the outstanding
shares of Common Stock have been duly authorized and validly issued, are
non-assessable and, to such counsel's knowledge, fully paid, and have been
issued and sold by the Company in compliance in all material respects with
applicable securities laws; all of the securities of the Company conform to the
description thereof contained in the Prospectus; the certificates for the Common
Stock are in due and proper form; the shares of Common Stock to be sold by the
Company pursuant to this Agreement have been duly authorized and, upon issuance
and delivery thereof as contemplated in this Agreement and the Registration
Statement, will be validly issued, fully paid and non-assessable; no preemptive
rights of shareholders exist with respect to any of the Common Stock
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
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or the issuance or sale thereof pursuant to any applicable statute or the
provisions of the Company's Amended and Restated Articles of Incorporation or
Bylaws or, to the knowledge of such counsel, pursuant to any contractual
obligation. The Representative's Warrants have been authorized for issuance to
the Representative and will, when issued, possess rights, privileges, and
characteristics as represented in the most recent form of Representative's
Warrants filed as an exhibit to the Registration Statement; the securities to be
issued upon exercise of the Representative's Warrants, when issued and delivered
against payment therefor in accordance with the terms of the Representative's
Warrants will be duly and validly issued, fully paid, nonassessable and free of
preemptive rights, and all corporate action required to be taken for the
authorization and issuance of the Representative's Warrants, and the securities
to be issued upon their exercise, has been validly and sufficiently taken.
(iii) Except as described in or contemplated by the Prospectus, to
the knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the Act
and, to the best of the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened under the
Act.
(v) The conditions for the use of Form SB-2 set forth in the general
instructions thereto have been satisfied, and the Registration Statement, the
Prospectus and each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the applicable rules and
regulations thereunder (except that such counsel need express no opinion as to
the financial statements and related schedules therein).
(vi) The statements under the captions "Risk Factors --
__________________," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business -- __________________,"
"Management -- Stock option plan," "Certain Transactions," "Description of
Securities," and "Shares Eligible for Future Sale" [subject to change when we
have a more settled draft] in the Prospectus, and Item 24 of Part II of the
Registration Statement, insofar as such statements constitute a summary of
documents
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
16
referred to therein or matters of law, fairly summarize in all material respects
the information called for with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.
(viii) Except as described in or contemplated by the Prospectus,
such counsel knows of no legal or governmental proceedings pending or threatened
against the Company.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Amended and Restated Articles of Incorporation
or Bylaws of the Company, or any agreement or instrument known to such counsel
to which the Company is a party or by which the Company may be bound.
(x) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company enforceable
in accordance with its terms.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xii) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement, and application
of the net proceeds therefrom as described in the Prospectus, required to
register as an investment company under the 1940 Act.
In rendering such opinion, such counsel may rely as to matters governed by the
laws of states other than Oregon or Federal laws on local counsel in such
jurisdictions, provided that in each case such counsel shall state that they
believe that they and the Underwriters are justified in relying on such other
counsel. In addition to the matters set forth above, the opinion of Xxxxx Xxxxxx
Xxxxxxxx LLP shall also include a statement to the effect that nothing has come
to the attention of such counsel that has caused them to believe that (i) the
Registration Statement, at the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
17
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as to
financial statements, schedules and statistical information therein).
(c) The Underwriters shall have received from Xxxxxx X. Xxxxxxxxxx, P.C.,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (i), (iv) and (v) of Paragraph (b) of this Section 6. In rendering
such opinion Xxxxxx X. Xxxxxxxxxx, P.C. may rely as to all matters governed
other than by Federal laws on the opinion of counsel referred to in Paragraph
(b) of this Section 6. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel that has caused them to believe that (i) the
Registration Statement, or any amendment thereto, as of the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to such
statement, Xxxxxx X. Xxxxxxxxxx, P.C. may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(d) The Underwriters shall have received at or prior to the Closing Date
from Xxxxxx X. Xxxxxxxxxx, P.C. a memorandum or summary, in form and substance
satisfactory to the Representative, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
or Blue Sky laws of such jurisdictions as the Representative may reasonably have
designated to the Company.
(e) The Underwriters shall have received, on each of the dates hereof, the
Closing Date and the Option Closing Date, as the case may be, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to the Representative, of BDO Xxxxxxx LLP
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations and containing such other statements and
information as is ordinarily included in accountants'
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
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"comfort letters" to underwriters with respect to the financial statements and
certain financial and statistical information contained in the Registration
Statement and Prospectus.
(f) The Underwriters shall have received on the Closing Date or the Option
Closing Date, as the case may be, a certificate or certificates of the Chief
Executive Officer and the Chief Financial Officer of the Company to the effect
that, as of the Closing Date or the Option Closing Date, as the case may be,
each of them severally represents as follows:
(i) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for such purpose have been taken or are, to his
knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules 424
or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration Statement and
the Prospectus and, in his or her opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the Company or
the earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company, whether or not
arising in the ordinary course of business.
(g) The Company shall have furnished to the Underwriters such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the Underwriter
may reasonably have requested.
(h) The Common Stock has been approved for quotation upon notice of
issuance on the Nasdaq SmallCap Market.
(i) The Lock-Up Agreements described in Section 4(j) are in full force and
effect.
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
19
The opinions and certificates mentioned in this Agreement shall be deemed to be
in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representative and to Xxxxxx X. Xxxxxxxxxx, P.C.,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, the
obligations of the Underwriters hereunder may be terminated by the
Representative by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the Shares
required to be delivered as and when specified in this Agreement are subject to
the conditions that at the Closing Date or the Option Closing Date, as the case
may be, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and in effect or proceedings therefor initiated or
threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Underwriters and
each person, if any, who controls the Underwriters within the meaning of the
Act, against any losses, claims, damages or liabilities to which the
Underwriters or any such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto; or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse the Underwriters and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by the Underwriters or such controlling person in connection
with investigating or defending against any such loss, claim, damage or
liability, action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Units, whether or not the Underwriters or
controlling person is a party to any action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Underwriters
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
20
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) The Underwriters will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement
and each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities to which the Company or any
such director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending against any such loss, claim, damage,
liability, action or proceeding; provided, however, that the Underwriters will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Underwriters specifically
for use in the preparation thereof. This indemnity agreement will be in addition
to any liability which the Underwriters may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and,
the indemnifying party shall pay as incurred the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
21
mutually agreed to the retention of such counsel, (ii) the named parties to any
such proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them or (iii) the indemnifying party shall have failed to assume the
defense and employ counsel acceptable to the indemnified party within a
reasonable period of time after notice of commencement of the action. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one additional separate firm for all
such indemnified parties. Such firm shall be designated in writing by the
Underwriters in the case of parties indemnified pursuant to Section 8(a) and by
the Company in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding in respect of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Units. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bears to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent,
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
22
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above in this Section 8(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Units purchased by the Underwriters, and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES FOR WHICH AN INDEMNIFIED
PARTY IS ENTITLED TO INDEMNIFICATION OR CONTRIBUTION UNDER THIS SECTION 8 SHALL
BE PAID BY THE INDEMNIFYING PARTY TO THE INDEMNIFIED PARTY AS SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR EXPENSES ARE INCURRED. THE INDEMNITY AND
CONTRIBUTION AGREEMENTS CONTAINED IN THIS SECTION 8 AND THE REPRESENTATIONS AND
WARRANTIES OF THE COMPANY SET FORTH IN THIS AGREEMENT SHALL REMAIN OPERATIVE AND
IN FULL FORCE AND EFFECT, REGARDLESS OF (I) ANY INVESTIGATION MADE BY OR ON
BEHALF OF THE UNDERWRITERS OR ANY PERSON CONTROLLING THE UNDERWRITERS, THE
COMPANY, ITS DIRECTORS OR OFFICERS OR ANY PERSONS CONTROLLING THE COMPANY, (II)
ACCEPTANCE OF ANY UNITS AND PAYMENT THEREFOR HEREUNDER, AND (III) ANY
TERMINATION OF THIS AGREEMENT. A SUCCESSOR TO ANY OF THE UNDERWRITERS, OR TO THE
COMPANY, ITS DIRECTORS OR OFFICERS, OR ANY PERSON CONTROLLING THE COMPANY, SHALL
BE ENTITLED TO THE BENEFITS OF THE INDEMNITY, CONTRIBUTION AND REIMBURSEMENT
AGREEMENTS CONTAINED IN THIS SECTION 8.
9. NOTICES.
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered or telecopied and confirmed as
follows: if to the Underwriter, , Xxxxxxx Investment Company, Inc., 000 X.X.
Xxxxx Xxxxxxx, Xxxxxxxx, Xxxxxx 00000, Attention:
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
23
Xxxxxxx X.X. Xxxxxxx; with a copy to Xxxxxx X. Xxxxxxxxxx, P.C., 000 Xxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxx Xxxx, XX 00000, Attention: Xxxxxx X. Xxxxxxxxxx, Esq.;
if to the Company, to Yamhill Valley Vineyards, Inc., 00000 X.X. Xxxxxxxxx Xxxx,
XxXxxxxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxxx; with a copy to Xxxxx Xxxxxx
Xxxxxxxx LLP, 0000 X.X. Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxx 00000,
Attention: Xxxxxxx XxXxxxxx-Xxxxxxxx, Esq.
10. TERMINATION.
This Agreement may be terminated by the Underwriters by notice to the Company as
follows:
(a) at any time prior to the earlier of (i) the time the Firm Shares are
released to the Underwriters for sale by notice to the Underwriters, or (ii)
11:30 a.m. on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company, the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company, whether or not arising in the ordinary
course of business, (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
on the financial markets of the United States of such outbreak, escalation,
declaration, emergency, calamity, crisis or change would, in the
Representative's reasonable judgment, make it impracticable to market the Shares
or to enforce contracts for the sale of the Shares, (iii) the Dow Xxxxx
Industrial Average shall have fallen by 15 percent or more from its closing
price on the day immediately preceding the date that the Registration Statement
is declared effective by the Commission, (iv) suspension of trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange, (v) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in the opinion of the
Representative materially and adversely affects or may materially and adversely
affect the business or operations of the Company, (vi) declaration of a banking
moratorium by United States or New York State authorities, (vii) any downgrading
in the rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Exchange Act); (viii) the suspension or halt of trading of the Common Stock
on The Nasdaq Stock Market or (ix) the taking of any action by any governmental
body or agency in respect of its monetary or fiscal affairs which in the
Underwriter's reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(c) as provided in Section 6 of this Agreement.
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
24
11. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the Underwriters,
the Company and their respective successors, executors, administrators, heirs
and assigns, and the officers, directors and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. No
purchaser of any of the Shares from the Underwriters shall be deemed a successor
or assign merely because of such purchase.
12. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Representative acknowledge and agree that the only
information furnished or to be furnished by the Underwriters to the Company for
inclusion in the Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page of the
Prospectus (insofar as such information relates to the Underwriters), the
legends required by Item 502(d) of Regulation S-B under the Act and the
information under the caption "Underwriting" in the Prospectus.
13. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in this
Agreement and the representations, warranties and covenants in this Agreement
shall remain in full force and effect regardless of (a) any termination of this
Agreement, (b) any investigation made by or on behalf of the Underwriters or
controlling person thereof, or by or on behalf of the Company or its directors
or officers and (c) delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Oregon. All disputes relating to this Underwriting Agreement
shall be adjudicated before a court located in Multnomah County, Oregon to the
exclusion of all other courts that might have jurisdiction.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the
Underwriters in accordance with its terms.
Very truly yours,
Yamhill Valley Vineyards, Inc.
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
25
By:_________________________________
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
Xxxxxxx Investment Company, Inc.
By: ___________________________________
Authorized Officer
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
26
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------
Xxxxxxx Investment Company, Inc.
---------
Total 1,000,000
=========
Yamhill Valley Vineyards, Inc.
Underwriting Agreement - 11/4/02
