EXHIBIT 1.1
CUTTER & BUCK INC.
1,700,000 Shares of Common Stock
Underwriting Agreement
, 1999
X.X. Xxxxxx Securities Inc.
Xxxxxxxxx & Xxxxx LLC
Xxxxxxx & Company, Inc.
As Representatives of the several underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Cutter & Buck Inc., a Washington corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES"), an aggregate of 1,700,000 shares (the "UNDERWRITTEN
SHARES") of common stock, no par value, of the Company (the "COMMON STOCK").
In addition, at the option of the Underwriters and for the sole purpose of
covering over-allotments in connection with the sale of the Underwritten
Shares, the Company proposes to issue and sell to the Underwriters up to an
additional 255,000 shares (the "OPTION SHARES") of Common Stock. The
Underwritten Shares and the Company Option Shares are herein referred to as
the "SHARES." Pursuant to a Rights Agreement (the "RIGHTS AGREEMENT") dated
as of November 20, 1998 between the Company and ChaseMellon Shareholders
Services L.L.C., as rights agent, each share of Common Stock, including, when
issued, the Shares, has or will have attached thereto a right (a "RIGHT" and,
collectively, the "RIGHTS") to purchase from the Company .6667/100th of a
share of Class A Junior Preferred Stock (the "CLASS A JUNIOR PREFERRED STOCK").
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective including
infor-
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mation (if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act, is referred to
in this Agreement as the "REGISTRATION STATEMENT", and the prospectus in the
form first used to confirm sales of Shares is referred to in this Agreement as
the "PROSPECTUS." If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.
Any reference in this Agreement to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the effective date of the Registration
Statement or the date of such preliminary prospectus or the Prospectus, as the
case may be, and any reference to "amend", "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include any documents filed after
such date under the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission thereunder (collectively, the "EXCHANGE
ACT") that are deemed to be incorporated by reference therein.
1. The Company agrees to sell the Underwritten Shares to the several
Underwriters as hereinafter provided, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name on Schedule I hereto at a purchase price per share of
$ (the "PURCHASE PRICE").
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as to
which the option is being exercised and the date and time when the Option Shares
are to be delivered and paid for which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing
Date nor later than the tenth full Business Day (as hereinafter defined) after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9
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hereof). Any such notice shall be given at least two Business Days prior to
the date and time of delivery specified therein.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives
in the case of the Underwritten Shares, on , 1999, or at such other
time on the same or such other date, not later than the fifth Business Day
thereafter, as the Company and the Representatives may agree upon in writing or,
in the case of the Option Shares, on the date and time specified by the
Representatives in the written notice of the Underwriters' election to purchase
such Option Shares. The time and date of such payment for the Underwritten
Shares is referred to herein as the "CLOSING DATE" and the time and date for
such payment for the Company Option Shares, if other than the Closing Date, are
herein referred to as the "ADDITIONAL CLOSING DATE." As used herein, the term
"BUSINESS DAY" means any day other than a day on which banks are permitted or
required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of X.X. Xxxxxx Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. (A) The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were
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made, not misleading; provided that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as amended
or supplemented, if applicable, at the Closing Date or Additional Closing
Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use therein;
(c) the documents incorporated by reference in the Prospectus, when
they become effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable and none of such
documents contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act,
and will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(d) the financial statements, and the related notes thereto,
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated and
the results of their operations and changes in their consolidated cash
flows for the periods specified; said financial statements have been pre-
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pared in conformity with generally accepted accounting principles applied
on a consistent basis, and the supporting schedules included or
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein;
(e) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries taken as a whole, or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management, financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE CHANGE"),
otherwise than as set forth or contemplated in the Prospectus; and except
as set forth or contemplated in the Prospectus neither the Company nor
any of its subsidiaries has entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the
Company and its subsidiaries taken as a whole;
(f) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a material
adverse effect on the general affairs, business, prospects, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE
EFFECT");
(g) each of the Company's subsidiaries has been duly incorporated
and is validly existing as a corporation under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a Material
Adverse Effect; and all the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued,
are fully-paid and non-assessable, and (except, in the case of foreign
subsidiaries, for directors' qualifying shares and except as described in
the Prospectus) are owned by the Company, directly or indirectly, free
and clear of all liens, encumbrances, security interests and claims;
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Cutter & Buck (U.K.) Ltd., a corporation organized under the laws of
the United Kingdom, Cutter & Buck (Europe) B.V., a corporation organized
under the laws of the Netherlands and Cutter & Buck GmbH, a corporation
organized under the laws of Germany, are the Company's only subsidiaries;
Cutter & Buck GmbH was formed by the Company on January 29, 1999; the
Company intends to dissolve Cutter & Buck (U.K.) Ltd. within sixty days
following the date of this Agreement; none of the Company's subsidiaries
accounted for greater than 7% of the Company's net sales, gross profit
or operating income during the fiscal year ended April 30, 1999.
(h) this Agreement has been duly authorized, executed and delivered
by the Company;
(i) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock conforms as to legal matters
to the description thereof set forth in the Prospectus, and all of the
outstanding shares of capital stock of the Company (including the Shares)
have been duly authorized and validly issued, are fully-paid and
non-assessable and are not subject to any pre-emptive or similar rights;
and, except as described in or expressly contemplated by the Prospectus,
there are no outstanding rights (including, without limitation, pre-emptive
rights), warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
the Company or any of its subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company or any such subsidiary, any
such convertible or exchangeable securities or any such rights, warrants or
options;
(j) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and, when issued and delivered to and paid for by
the Underwriters in accordance with the terms of this Agreement, will be
duly issued and will be fully paid and non-assessable and will conform to
the descriptions thereof in the Prospectus; and the issuance of the
Shares is not subject to any preemptive or similar rights;
(k) the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized and
validly issued by the Company, and the Class A Junior Preferred Stock has
been duly authorized by the Company and validly reserved for issuance
upon the exercise in accordance with the terms of the Rights Agreement,
and will be validly issued, fully paid and non-assessable;
(l) neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, its articles of incorporation (the "ARTICLES OF
INCORPORATION") or by-laws (the "BY-LAWS") or any
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indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them or any of their respective properties is
bound, except for violations and defaults which individually and in the
aggregate are not material to the Company and its subsidiaries taken as a
whole; the issue and sale of the Shares to be sold by the Company
hereunder and the performance by the Company of its obligations under
this Agreement and the consummation of the transactions contemplated
herein 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, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will any
such action result in any violation of the provisions of the Articles of
Incorporation or the By-Laws of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, its subsidiaries or
any of their respective properties; and no consent, approval,
authorization, order, license, registration or qualification of or with
any such court or governmental agency or body is required for the issue
and sale of the Shares to be sold by the Company hereunder or the
consummation by the Company of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been obtained under the
Securities Act and as may be required under state securities or Blue Sky
Laws in connection with the purchase and distribution of the Shares by
the Underwriters;
(m) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries or any of their
respective properties or to which the Company or any of its subsidiaries
is or may be a party or to which any property of the Company or any of
its subsidiaries is or may be the subject which, if determined adversely
to the Company or any of its subsidiaries, could individually or in the
aggregate have, or reasonably be expected to have, a Material Adverse
Effect, and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened
by others; and there are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(n) the Company and its subsidiaries have good and marketable title
in fee simple to all items of real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects
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except such as are described or referred to in the Prospectus or such as
do not materially affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company
and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
existing and enforceable leases with such exceptions as are not material
and do not interfere with the use made or proposed to be made of such
property and buildings by the Company or its subsidiaries;
(o) no relationship, direct or indirect, exists between or among the
Company or any or its subsidiaries on the one hand, and the directors,
officers, shareholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which is required by the Securities Act to
be described in the Registration Statement and the Prospectus which is not
so described;
(p) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Shares hereunder;
(q) 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 (the "Investment Company Act");
(r) the Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing
business with the Government of Cuba or with any person or affiliate
located in Cuba;
(s) Ernst & Young LLP ("ERNST & YOUNG") who have certified certain
financial statements of the Company and its subsidiaries are independent
public accountants as required by the Securities Act;
(t) the Company and its subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and
have paid all taxes shown thereon and all assessments received by them or
any of them to the extent that such taxes have become due and are not
being contested in good faith; and, except as disclosed in the
Registration Statement and the Prospectus, there is no tax deficiency
which has been determined or threatened against the Company or any
subsidiary;
(u) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Common Stock;
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(v) each of the Company and its subsidiaries owns, possesses or has
obtained all licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, other than where the
failure to possess such licenses, permits, certifications, consents,
orders, approvals or other authorizations would not have a Material Adverse
Effect, and neither the Company nor any such subsidiary has received any
actual notice of any proceeding relating to revocation or modification of
any such license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and the
Prospectus; and each of the Company and its subsidiaries is in compliance
with all laws and regulations relating to the conduct of its business as
conducted as of the date hereof;
(w) there are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
subsidiaries which are likely to have a Material Adverse Effect;
(x) the Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly
or in the aggregate, have a Material Adverse Effect;
(y) each employee benefit plan, within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA") that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of the
Company and its affiliates has been maintained in compliance with its
terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal Revenue
Code of 1986, as amended ("Code"). No prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code has occurred
with respect to any such plan excluding transactions effected pursuant to
a statutory or administrative exemption. For each such plan which is
subject to the funding rules of Section 412 of
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the Code or Section 302 of ERISA no "accumulated funding deficiency" as
defined in Section 412 of the Code has been incurred, whether or not
waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeded
the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions;
(z) each of the Company and its subsidiaries owns, is licensed to
use or otherwise possesses adequate rights to use the patents, patent
rights, licenses, inventions, trademarks, service marks, trade names,
copyrights and know-how, including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures (collectively, the "INTELLECTUAL PROPERTY") necessary to carry
on the business conducted by it, except to the extent that the failure to
own, be licensed to use or otherwise possess adequate rights to use such
Intellectual Property would not have a Material Adverse Effect; except as
set forth in the Prospectus, the Company has not received any notice of
infringement of or conflict with (and the Company has no knowledge of any
infringement of or conflict with ) asserted rights of others with respect
to its Intellectual Property; the discoveries, inventions, products or
processes of the Company and its subsidiaries, taken as a whole, referred
to in the Registration Statement and the Prospectus do not, to the
knowledge of the Company, infringe or conflict with any right or patent
of any third party, or any discovery, patent product or process which is
the subject of a patent application filed by any third party, known to
the Company which could have a Material Adverse Effect;
(aa) the statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources which are believed by the Company to be reliable;
(bb) 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 businesses in similar industries;
(cc) except for compensation to be received by the Underwriters
under this Agreement, the Company does not know of any outstanding claims
for services, either in the nature of a finder's fee or origination fee,
with respect to any of the transactions contemplated hereby;
(dd) The Company has reviewed its operations, the operations of its
subsidiaries and the operations of any third parties with which the Company
has a material relationship to evaluate the extent to which the business or
operations of the Company will be affected by the Year 2000 Problem. As a
result of such review, the Company has no reason to believe that the Year
2000 Problem will have a Material Adverse Ef-
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fect or result in any material loss or interference with the Company's or
any subsidiary's business or operations. The "YEAR 2000 PROBLEM" as used
herein means any significant risk that computer hardware or software used
in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000; and
(ee) the Company has delivered to the Representatives written
agreements, in form and substance satisfactory to you (each, a "LOCK-UP
AGREEMENT"), of each of its directors and executive officers and certain
stockholders previously identified by the Representatives.
5. (A) The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file
the final Prospectus with the Commission within the time periods
specified by Rule 424(b) and Rule 430A under the Securities Act and to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of
the Shares; and to furnish copies of the Prospectus to the Underwriters
in New York City prior to 10:00 a.m., New York City time, on the Business
Day next succeeding the date of this Agreement in such quantities as the
Representatives may reasonably request; (b) to deliver, at the expense of
the Company, to the Representatives four signed copies of the
Registration Statement (as originally filed) and each amendment thereto,
in each case including exhibits and documents incorporate by reference
therein, and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment thereto,
in each case without exhibits but including the documents incorporated by
reference therein and, during the period mentioned in paragraph (e)
below, to each of the Underwriters as many copies of the Prospectus
(including all amendments and supplements thereto) and documents
incorporated by reference therein as the Representatives may reasonably
request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment
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or supplement for review and not to file any such proposed amendment or
supplement to which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm such
advice in writing (i) when the Registration Statement has become
effective, (ii) when any amendment to the Registration Statement has been
filed or becomes effective, (iii) when any supplement to the Prospectus
or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (v) 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 Prospectus or the initiation or threatening of any proceeding for
that purpose, (vi) of the occurrence of any event, within the period
referenced in paragraph (e) below, as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, and (vii) of the
receipt by the Company of any notification with respect to any suspension
of the qualification of the Shares for offer and sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; and
to use its best efforts to prevent the issuance of any such stop order,
or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any order suspending any such
qualification of the shares, or notification of any such order thereof
and, if issued, to obtain as soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addresses
the Representatives will furnish to the Company) to which Shares may have
been sold by the Representatives on behalf of the Underwriters and to any
other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law;
-13-
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives
shall reasonably request and to continue such qualification in effect so
long as reasonably required for distribution of the Shares; PROVIDED that
the Company shall not be required to file a general consent to service of
process in any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a
period of at least twelve months beginning with the first fiscal quarter
of the Company occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
(i) for a period of 90 days after the date of the initial public
offering of the Shares not to (i) offer, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise
without the prior written consent of the Representatives, other than any
shares of Common Stock of the Company issued upon the exercise of options
granted under any existing employee or director stock option plans;
(j) to use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National
Market (the "NASDAQ NATIONAL MARKET");
(k) to use the net proceeds received by the Company from the sale
of the Shares by the Company pursuant to this Agreement in the manner
specified in the Prospectus under caption "Use of Proceeds"; and
(l) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the
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preparation, reregistration, transfer, execution and delivery of the
Shares, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any
preliminary prospectus (including in each case all exhibits, amendments
and supplements thereto), (iii) incurred in connection with the
registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including fees of
counsel for the Underwriters and its disbursements), (iv) in connection
with the listing of the Shares on the Nasdaq National Market, (v) related
to the filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc., (vi) in connection with the
printing and delivery of this Agreement, the Preliminary and Supplemental
Blue Sky Memoranda and the furnishing to the Underwriters and dealers of
copies of the Registration Statement and the Prospectus, including
mailing and shipping, as herein provided, (vii) any expenses incurred by
the Company in connection with a "road show" presentation to potential
investors, (viii) the cost of preparing stock certificates and (ix) the
cost and charges of any transfer agent and any registrar.
6. The several obligations of the Underwriters hereunder to purchase
the Shares on the Closing Date or the Additional Closing Date, as the case may
be, are subject to the performance by the Company of their respective
obligations hereunder and to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than
5:00 P.M., New York City time, on the date hereof; and no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment shall be in effect, and no proceedings for such
purpose shall be pending before or threatened by the Commission; the
Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act and in accordance with
Section 5(a) hereof; and all requests for additional information shall have
been complied with to the satisfaction of the Representatives;
(b) the respective representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date or the
Additional Closing Date, as the case may be, as if made on and as of the
Closing Date or the Additional Closing Date, as the case may be, and the
Company shall have complied with all agreements and all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date
or the Additional Closing Date, as the case may be;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Additional Closing Date, as the case may
be, there shall not
-15-
have occurred any downgrading, nor shall any notice have been given of
(i) any downgrading, (ii) any intended or potential downgrading or (iii)
any review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is given in
the Prospectus there shall not have been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries or any
Material Adverse Change, or any development involving a prospective
Material Adverse Change, otherwise than as set forth or contemplated in
the Prospectus, the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the
manner contemplated in the Prospectus; and neither the Company nor any of
its subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus;
(e) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of the Company, with specific
knowledge about the Company's financial matters, satisfactory to the
Representatives to the effect set forth in subsections (a) through (d)
of this Section and to the further effect that there has not occurred
any Material Adverse Change, or any development involving a prospective
Material Adverse Change, from that set forth or contemplated in the
Registration Statement;
(f) Xxxx Xxxxxx Xxxxxx Lubersky LLP, counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in form
and substance satisfactory to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as
described in the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each
-16-
other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than where
the failure to be so qualified or in good standing would not have a
Material Adverse Effect;
(iii) each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws
of its jurisdiction of incorporation with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus; and all of the outstanding shares of
capital stock of each subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable, and
(except, in the case of foreign subsidiaries, for directors'
qualifying shares and except as otherwise set forth in the
Prospectus) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims;
(iv) other than as set forth or contemplated in the
Prospectus, to the best of such counsel's knowledge, there are no
legal or governmental investigations, actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
subsidiaries or any of their respective properties or to which the
Company or any of its subsidiaries is or may be a party or to which
any property of the Company or its subsidiaries is or may be the
subject which, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a Material Adverse Effect; to the
best of such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
and such counsel does not know of any statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed as
required;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(vii) the outstanding shares of capital stock of the Company
have been duly authorized and are validly issued, fully paid and
non-assessable;
(viii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
validly issued,
-17-
fully paid and non-assessable and, to the best of such counsel's
knowledge, the issuance of such Shares is not subject to any
preemptive or similar rights;
(ix) the statements in the Prospectus under "Shares Eligible For
Future Sale" and "Description of Capital Stock", in the Prospectus
incorporated by reference from Item 3 of Part 1 of the Company's
Annual Report on Form 10-K for the year ended April 30, 1999 and in
the Registration Statement in Items 14 and 15, insofar as such
statements constitute a summary of the terms of the Common Stock,
legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such terms, legal
matters, documents or proceedings;
(x) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements
thereto (other than the financial statements, schedules and related
financial information included therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and believes that (other
than the financial statements, schedules and related financial
information included therein, as to which such counsel need express
no belief) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective did
not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading, and that the Prospectus, as
amended or supplemented, if applicable, does not contain any untrue
statement of a material fact or omit 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;
(xi) neither the Company nor, to the best of such counsel's
knowledge, any of its subsidiaries is, or with the giving of notice
or lapse of time or both would be, in violation of or in default
under, its Articles of Incorporation or By-Laws or any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which it or any of them or any of
their respective properties is bound, except for violations and
defaults which individually and in the aggregate are not material to
the Company and its subsidiaries taken as a whole; and the
performance by the Company of its obligations under this Agreement
and the consummation of the transactions contemplated herein 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, loan agreement or other agreement or
instrument known to such counsel to which
-18-
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation or the By-Laws of the
Company or any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or, to the
best of such counsel's knowledge, any subsidiary or its respective
properties;
(xii) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental
agency or regulatory body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except
such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the
Securities Act and as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(xiii) the Company is not and, after giving effect to the
offering and sale of the shares, will not be an "investment company"
or entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act;
(xiv) the documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by
the Company prior to the Closing Date or the Additional Closing
Date, as the case may be, (other than the financial statements,
schedules and related financial information included therein, as to
which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder; and they have no
reason to believe that any of such documents, when such documents
became effective or were so filed, as the case may be, contained, in
the case of a registration statement which became effective under
the Securities Act, 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, or in the
case of other documents which were filed under the Exchange with the
Commission, an 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 when such documents were so filed, not misleading;
-19-
(xv) the Rights Agreement has been duly authorized, executed
and delivered by the Company; the Rights have been duly authorized
by the Company and, when issued upon issuance of the Shares, will be
validly issued, and the Class A Junior Preferred Stock has been duly
authorized by the Company and validly reserved for issuance upon the
exercise of the Rights and, when issued upon such exercise in
accordance with the terms of the Rights Agreement, will be validly
issued, fully paid and non-assessable;
(xvi) to the best of such counsel's knowledge, each of the
Company and its subsidiaries owns, possesses or has obtained all
licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory
organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as conducted as
of the date hereof, and neither the Company nor any such subsidiary
has received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as described
in the Registration Statement and the Prospectus; and each of the
Company and its subsidiaries is in compliance with all laws and
regulations relating to the conduct of its business as conducted as
of the date of the Prospectus;
(xvii) to the best of such counsel's knowledge, the Company
owns, possesses or has the right to use the Intellectual Property
necessary to carry on the business conducted by it as of the date
hereof; and
(xviii) the Registration Statement has been declared effective
under the Securities Act and, to such counsel's knowledge, no stop
order proceedings with respect thereto are pending before or
threatened by the Commission under the Securities Act.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the State of Washington, to the extent such counsel deems proper and to
the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the Underwriters'
counsel, familiar with the applicable laws; (B) as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. The opinion of such
counsel for the Company shall state that the opinion
-20-
of any such other counsel upon which they relied is in form satisfactory
to such counsel. With respect to the matters to be covered in
subparagraphs (vi), (ix) and (x) above counsel may state their opinion
and belief is based upon their participation in the preparation of the
Registration Statement and the Prospectus and any amendment or supplement
thereto (other than the documents incorporated by reference herein) and
review and discussion of the contents thereof (including the documents
incorporated by reference therein) but is without independent check or
verification except as specified.
The opinion of Xxxx Xxxxxx Spears Lubersky LLP described above shall
be rendered to the Underwriters at the request of the Company and shall so
state therein;
(g) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing
Date, as the case may be, Ernst & Young shall have furnished to you
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, containing statements and information of
the type customarily 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 and as of the Closing
Date or Additional Closing Date, as the case may be, an opinion of Xxxxxx
Xxxxxx & Xxxxxxx, counsel to the Underwriters, with respect to the due
authorization and valid issuance of the Shares, the Registration
Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(i) the Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for listing on
the Nasdaq National Market, subject to official notice of issuance;
(j) on or prior to the Closing Date or Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives
such further certificates and documents as the Representatives shall
reasonably request; and
(k) the Lock-Up Agreements shall be in full force and effect on the
Closing Date or Additional Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of
-21-
the Shares and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any
person in respect of which indemnity may be sought pursuant to the preceding
paragraphs of this Section 7, such person (the "INDEMNIFIED PERSON") shall
promptly notify the person or persons against whom such indemnity may be
sought (each an "INDEMNIFYING PERSON") in writing, and such Indemnifying
Persons, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Persons may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person and not the Indemnifying
Persons unless (i) the Indemnifying Persons and the Indemnified Person shall
have mutually agreed to the contrary, (ii) the Indemnifying Persons has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both an Indemnifying Person and the
Indemnified Person and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them in the conduct of the defense in such proceeding. It is understood that
no Indemnifying Person shall, in connection with any proceed-
-22-
ing or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Indemnified Persons, and that all such fees and expenses shall be
reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Shares, and such control persons of Underwriters shall be
designated in writing by X.X. Xxxxxx Securities Inc. and any such separate
firm for the Company, its directors, its officers who sign the Registration
Statement and such control persons of the Company shall be designated in
writing by the Company. No Indemnifying Person shall 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,
each Indemnifying Person agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment in
accordance with the terms hereof. Notwithstanding the foregoing sentence, if
at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
provided in the second and third sentences of this paragraph, such
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of
the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first three paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
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
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company and the total underwriting
discounts and the commissions received by the Underwriters, in each case as set
forth in the
-23-
table on the cover of the Prospectus, bear to the aggregate public offering
price of the Shares. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and by the Underwriters and the parties'
relative intent, 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 contribution pursuant to this Section 7 were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
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 termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the
-24-
Option Shares, prior to the Additional Closing Date) (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange or the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities, or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered
at the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives, the Company
for the purchase of such Shares are not made within 36 hours after such default,
this Agreement (or the obligations of the several Underwriters to purchase the
Company Option Shares, as the case may be) shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date (or,
in the
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case of the Option Shares, the Additional Closing Date), but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason any of the Company shall be unable to perform its obligations under
this Agreement or any condition of the Underwriters' obligations cannot be
fulfilled, the Company agrees to reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and expenses of its counsel)
reasonably incurred by the Underwriter in connection with this Agreement or the
offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon
the Company and the Underwriters, each affiliate of any Underwriter which
assists such underwriter in the distribution of the Shares, any controlling
persons referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Shares from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by X.X. Xxxxxx Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
X.X. Xxxxxx Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (telefax: (000) 000-0000); Attention: Syndicate Department. Notices
to the Company shall be given to it at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX
00000, (telefax: (000) 000-0000); Attention: President.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
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If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
CUTTER & BUCK INC.
By:
-------------------------------
Name:
Title:
-27-
Accepted as of the date first
written above:
X.X. XXXXXX SECURITIES INC.
XXXXXXXXX & XXXXX LLC
XXXXXXX & COMPANY, INC.
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: X.X. XXXXXX SECURITIES INC.
By:
---------------------------------
Name:
Title:
EXHIBIT A
SCHEDULE I
Number of Under-
written Shares
Underwriter To Be Purchased
----------- ----------------
X.X. Xxxxxx Securities Inc..................................
Xxxxxxxxx & Xxxxx LLC.......................................
Xxxxxxx & Co................................................
---------
Total 1,700,000
---------
---------
