Exhibit 1.1
Cray Inc.
$65,000,000
3.0% Convertible Senior Subordinated Notes due 2024
PURCHASE AGREEMENT
December 1, 2004
Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Cray Inc., a Washington corporation (the "Company"), hereby confirms its
agreement with you (the "Initial Purchaser"), as set forth below.
1. The Transactions. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Initial Purchaser $65,000,000
aggregate principal amount of its 3.0% Convertible Senior Subordinated Notes due
2024 (the "Firm Notes"). In addition, the Company has granted to the Initial
Purchaser an option to purchase up to an additional $15,000,000 aggregate
principal amount of its 3.0% Convertible Senior Subordinated Notes due 2024 (the
"Optional Notes" and, together with the Firm Notes, the "Notes"). The Notes
shall be convertible into shares (the "Conversion Shares") of common stock, par
value $0.01 per share, of the Company (the "Common Stock"), subject to and in
accordance with the terms of the Notes. The Notes will (i) have the terms and
provisions which are described in the Offering Memorandum (as defined below)
under the heading "Description of Notes" and such other terms as are customary
and (ii) be issued pursuant to the provisions of the Indenture (the
"Indenture"), to be dated December 6, 2004, between the Company and The Bank of
New York Trust Company, N.A., a national banking association, as trustee (the
"Trustee"). The Notes and the Conversion Shares are hereinafter referred to
collectively as the "Securities."
The sale of the Notes to the Initial Purchaser (the "Offering") will be
made without registration of the Securities under the Securities Act of 1933, as
amended (together with the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated thereunder, the "Securities Act"), in
reliance upon the exemption therefrom provided by Section 4(2) of the Securities
Act.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated November 29, 2004 (the "Preliminary
Offering Memorandum") and an offering memorandum dated the date hereof (the
"Offering Memorandum"), each setting forth information regarding the Company,
the Securities and the terms of the Offering and the transactions contemplated
by the Offering Documents (as defined below). The Preliminary Offering
Memorandum and the Offering Memorandum incorporate by reference the Company's
(i) Annual Report on Form 10-K
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for the year ended December 31, 2003, (ii) Quarterly Report on Form 10-Q for the
quarters ended March 31, 2004, June 30, 2004 and September 30, 2004, (iii) Proxy
Statement for the annual meeting of stockholders of the Company held on May 12,
2004 and (iv) Current Reports on Form 8-K filed with the Commission on February
26, April 2, April 30, May 14, July 27, September 24, October 13, October 22,
October 26, November 5 and November 30, 2004, together with Form 8-K/A filed
with the Commission on May 10, October 28 and November 29, 2004 (other than
information in the documents that is deemed not to be filed with the Securities
and Exchange Commission ("Commission")) (all such documents listed in clauses
(i) through (iv) referred to herein as the "Incorporated Documents"). Any
references herein to the Preliminary Offering Memorandum or the Offering
Memorandum shall be deemed to include, in each case, all amendments and
supplements thereto and the Incorporated Documents and any amendments thereto.
The Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum and the Offering Memorandum in connection with the offering
and resale of the Notes by the Initial Purchaser.
The Company understands that the Initial Purchaser proposes to make an
offering of the Notes only on the terms and in the manner set forth in the
Offering Memorandum and Sections 3, 4 and 10 hereof as soon as the Initial
Purchaser deems advisable after this Agreement has been executed and delivered,
to persons in the United States whom the Initial Purchaser reasonably believes
to be qualified institutional buyers ("QIBs") as defined in Rule 144A under the
Securities Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A.
The Initial Purchaser and its direct and indirect transferees of the Notes
will be entitled to the benefits of the Registration Rights Agreement to be
dated as of December 6, 2004 among the parties hereto (the "Registration Rights
Agreement") pursuant to which the Company will agree, among other things, to
file (i) a registration statement (the "Registration Statement") on the
appropriate form with the Commission registering the resale of the Securities
under the Securities Act and (ii) to use its reasonable efforts to cause any
such Registration Statement to be declared effective.
This Agreement, the Securities, the Registration Rights Agreement and the
Indenture are herein referred to as the "Offering Documents."
2. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with the Initial Purchaser that:
(a) The Preliminary Offering Memorandum as of its date does not, and
the Offering Memorandum, as of its date, as of the Closing Date and as of
the Additional Closing Date, if any (each as defined in Section 3 hereof),
does not and will not, and any supplement or amendment to them will not,
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading, except that the representations and warranties set forth in
this Section 2(a) do not apply to statements or omissions that are made in
reliance upon and in conformity with
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information relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or
supplement thereto.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
with respect to the Notes have been or will be prepared by the Company for
use by the Initial Purchaser in connection with the Offering. No order or
decree preventing the use of the Preliminary Offering Memorandum or the
Offering Memorandum or any amendment or supplement thereto, or any order
asserting that the transactions contemplated by this Agreement are subject
to the registration requirements of the Securities Act has been issued and
no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company, is contemplated.
(c) Subsequent to the respective dates as of which information is
given in the Offering Memorandum (or, if the Offering Memorandum is not in
existence, the Preliminary Offering Memorandum), except as disclosed in
the Offering Memorandum (or, if the Offering Memorandum is not in
existence, the Preliminary Offering Memorandum), the Company has not
declared, paid or made any dividends or other distributions of any kind on
or in respect of its capital stock and there has been no material adverse
change or any development involving a prospective material adverse change,
whether or not arising from transactions in the ordinary course of
business, in or affecting (i) the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or
prospects of the Company and each subsidiary of the Company listed on
Exhibit A hereto (collectively, the "Subsidiaries"; individually, a
"Subsidiary"), taken as a whole; (ii) the long-term debt or capital stock
of the Company or any of its Subsidiaries; or (iii) the ability of the
Company to consummate the Offering or any of the other transactions
contemplated by the Offering Documents. Since the date of the latest
balance sheet included or incorporated by reference in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum), neither the Company nor any Subsidiary
has incurred or undertaken any liabilities or obligations, whether direct
or indirect, liquidated or contingent, matured or unmatured, or entered
into any transactions, including any acquisition or disposition of any
business or asset, which are material to the Company and the Subsidiaries,
taken as a whole, except for liabilities, obligations and transactions
which are disclosed in the Offering Memorandum (or, if the Offering
Memorandum is not in existence, the Preliminary Offering Memorandum).
(d) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Offering Memorandum (or, if the Offering
Memorandum is not in existence, the Preliminary Offering Memorandum) under
the caption "Capitalization" and, after giving effect to the Offering,
will be as set forth in the column headed "As Adjusted" under the caption
"Capitalization." All of the issued and outstanding shares of capital
stock of the Company are fully
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paid and non-assessable and have been duly and validly authorized and
issued, in compliance with all applicable state, federal and foreign
securities laws and not in violation of or subject to any preemptive or
similar right that does or will entitle any person, upon the issuance or
sale of any security, to acquire from the Company or any Subsidiary any
Common Stock or other security of the Company or any Subsidiary or any
security convertible into, or exercisable or exchangeable for, Common
Stock or any other such security (any "Relevant Security").
(e) The Company has authorized and has reserved, and covenants to
continue to reserve, free of any preemptive or similar rights, a
sufficient number of authorized but unissued shares of Common Stock, to
satisfy the conversion rights of the Notes and issue the Conversion
Shares. The Conversion Shares have been duly authorized for issuance upon
conversion of the Notes, and upon conversion of the Notes in accordance
with their terms and the Indenture will be issued free of statutory and
contractual preemptive rights and are sufficient in number to meet the
current conversion requirements of the Notes, and the Conversion Shares,
if and when so issued, will be duly and validly issued and fully paid and
non-assessable. The Company covenants that the Notes, and upon conversion
of the Notes, the Conversion Shares (i) will be issued in compliance with
all applicable state, federal and foreign securities laws, (ii) will not
be issued in violation of or subject to any preemptive or similar right
that does or will entitle any person to acquire any Relevant Security from
the Company or any Subsidiary upon issuance or sale of the Notes or the
Conversion Shares, and (iii) will not be subject to any restriction upon
the voting or transfer thereof pursuant to applicable law or the Company's
articles of incorporation, bylaws or governing documents or any agreement
to which the Company or any of its Subsidiaries is a party or by which any
of them may be bound.
(f) The Common Stock (including the Conversion Shares) conforms to
the descriptions thereof contained in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering
Memorandum). Except as disclosed in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering
Memorandum), neither the Company nor any Subsidiary has outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments to issue or sell, sale or rights related to or entitling any
person to purchase or otherwise to acquire any shares of, or any security
convertible into or exchangeable or exercisable for, the capital stock of,
or other ownership interest in, the Company or the Subsidiaries. All
corporate action required to be taken by the Company for the issuance and
delivery of the Conversion Shares has been duly and validly taken.
(g) The Subsidiaries are the only subsidiaries of the Company within
the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint
venture or other business entity, except for interests in Computational
Engineering International,
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Inc. and BioNumerik Pharmaceuticals, Inc. Except as disclosed in the
Incorporated Documents, no disclosure related to the Company's interest in
these entities is required under the Securities Exchange Act of 1934, as
amended. All of the issued shares of capital stock of or other ownership
interests in each Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company free and clear of any lien, charge, mortgage,
pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever
(any "Lien").
(h) Each of the Company and the Subsidiaries has been duly organized
and validly exists as a corporation, partnership or limited liability
company in good standing under the laws of its jurisdiction of
organization. Each of the Company and each Subsidiary has all requisite
power and authority to carry on its business as it is currently being
conducted and as described in the Offering Memorandum (or, if the Offering
Memorandum is not in existence, the Preliminary Offering Memorandum), and
to own, lease and operate its respective properties. Each of the Company
and each Subsidiary is duly qualified to do business and is in good
standing as a foreign corporation, partnership or limited liability
company in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing which (individually and in the
aggregate) could not reasonably be expected to have a material adverse
effect on (i) the business, condition (financial or otherwise), results of
operations, stockholders' equity, properties or prospects of the Company
and the Subsidiaries, taken as a whole; (ii) the long-term debt or capital
stock of the Company or any Subsidiary; or (iii) the Offering or
consummation of any of the other transactions contemplated by the Offering
Documents (any such effect being a "Material Adverse Effect").
(i) The Company has the required corporate power and authority to
execute, deliver and perform its obligations under the Notes. The Notes
have been duly and validly authorized by the Company for issuance and,
when executed by the Company and authenticated by the Trustee in
accordance with the provisions of the Indenture and when delivered to and
paid for by the Initial Purchaser in accordance with the terms hereof,
will have been duly executed, issued and delivered and will constitute
valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms except that the enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding at
law or in equity) ((i) and (ii) collectively, the "Enforceability
Exceptions"). At the Closing Date, the Notes are in the form contemplated
by the Indenture.
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(j) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Indenture. The
Indenture has been duly and validly authorized by the Company and meets
the requirements for qualification under the Trust Indenture Act of 1939,
as amended (the "TIA"), and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Trustee),
will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms except that
the enforcement thereof may be limited by the Enforceability Exceptions.
(k) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Company and when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Initial
Purchaser), will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms
except that the enforcement thereof may be limited by the Enforceability
Exceptions.
(l) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized executed and delivered by
the Company. The Securities, the Indenture and the Registration Rights
Agreement conform in all material respects to the descriptions thereof in
the Offering Memorandum (or, if the Offering Memorandum is not in
existence, the Preliminary Offering Memorandum).
(m) There exists as of the date hereof (after giving effect to the
transactions contemplated by each of the Offering Documents) no event or
condition that constitutes or would constitute a default or an event of
default (in each case as defined in each of the Offering Documents) under
any of the Offering Documents that would result in a Material Adverse
Effect or materially adversely affect the ability of the Company to
consummate the Offering and the other transactions contemplated by the
Offering Documents.
(n) The execution, delivery, and performance of this Agreement and
consummation of the transactions contemplated by the Offering Documents do
not and will not (i) conflict with, require consent under or result in a
breach of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any Lien upon
any property or assets of the Company or any Subsidiary pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or their
respective properties, operations or assets may otherwise be bound, except
for the consent which the Company has obtained from Xxxxx Fargo Bank, N.A.
with respect to the Credit Agreement, dated as of April 10, 2003, as
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amended, between the Company and Xxxxx Fargo Bank, N.A., (ii) violate or
conflict with any provision of the certificate or articles of
incorporation, bylaws, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents of the
Company or any Subsidiary, or (iii) violate or conflict with any law,
rule, regulation, ordinance, directive, judgment, decree or order of any
judicial, regulatory or other legal or governmental agency or body,
domestic or foreign, except (in the case of clauses (i) and (iii) above)
as could not reasonably be expected to have a Material Adverse Effect.
(o) Each of the Company and each Subsidiary has all necessary
consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all
judicial, regulatory and other legal or governmental agencies and bodies
and all third parties, foreign and domestic (collectively, the
"Consents"), to own, lease and operate its properties and conduct its
business as it is now being conducted and as disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum), and each such Consent is valid and in
full force and effect, and neither the Company nor any Subsidiary has
received notice of any investigation or proceedings which has resulted in
or, if decided adversely to the Company or any Subsidiary, could
reasonably be expected to result in, the revocation of, or imposition of a
materially burdensome restriction on, any Consent. Each of the Company and
each Subsidiary is in compliance with all applicable laws, rules,
regulations, ordinances, directives, judgments, decrees and orders,
foreign and domestic (including, without limitation, the Xxxxxxxx-Xxxxx
Act of 2002 and the rules promulgated by the Commission thereunder),
except where failure to be in compliance could not reasonably be expected
to have a Material Adverse Effect. No Consent contains a materially
burdensome restriction not adequately disclosed in the Offering Memorandum
(or, if the Offering Memorandum is not in existence, the most recent
Preliminary Offering Memorandum).
(p) No Consent of, with or from any judicial, regulatory or other
legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance of this
Agreement by the Company or consummation of the Offering and the other
transactions contemplated by the Offering Documents, including the
issuance, sale and delivery of the Notes (and the issuance of the
Conversion Shares upon conversion of the Notes), except such Consents as
may be required under state securities or blue sky laws and that the
Commission must declare the Registration Statement effective pursuant to
the Registration Rights Agreement.
(q) There is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or
foreign, pending to which the Company or any Subsidiary is a party or of
which any property, operations or assets of the Company or any Subsidiary
is the subject which, individually or in the aggregate, if determined
adversely to the Company
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or any Subsidiary, could reasonably be expected to have a Material Adverse
Effect; to the best of the Company's knowledge, no such proceeding,
litigation or arbitration is threatened or contemplated; and the defense
of all such proceedings, litigation and arbitration against or involving
the Company or any Subsidiary could not reasonably be expected to have a
Material Adverse Effect.
(r) The financial statements and pro forma data, including the notes
thereto, and the supporting schedules included or incorporated by
reference in the Offering Memorandum (or, if the Offering Memorandum is
not in existence, the Preliminary Offering Memorandum) present fairly the
financial position as of the dates indicated and the cash flows and
results of operations for the periods specified of the Company and its
consolidated subsidiaries for which financial statements are included or
incorporated by reference in the Offering Memorandum (or, if the Offering
Memorandum is not in existence, the Preliminary Offering Memorandum); said
financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and the supporting schedules included or
incorporated by reference in the Offering Memorandum (or, if the Offering
Memorandum is not in existence, the Preliminary Offering Memorandum)
present fairly the information required to be stated therein. No other
financial statements or supporting schedules would be required to be
included in a registration statement filed pursuant to the Securities Act
on the date hereof and relating to the Securities. The other financial and
statistical information included or incorporated by reference in the
Offering Memorandum (or, if the Offering Memorandum is not in existence,
the Preliminary Offering Memorandum) presents fairly the information
included therein and has been prepared on a basis consistent with that of
the financial statements that are included in the Offering Memorandum (or,
if the Offering Memorandum is not in existence, the Preliminary Offering
Memorandum) and the books and records of the respective entities presented
therein and, to the extent such information is a range, projection or
estimate, is based on the good faith belief and estimates of the
management of the Company. The financial information included in the
Incorporated Documents, including the information under Item 1
("Business"), Item 7 ("Management's Discussion and Analysis of Financial
Condition and Results of Operations") and Item 7A ("Quantitative and
Qualitative Disclosures About Market Risk") in the Form 10-K for the year
ended December 31, 2003 has been derived from the Company's consolidated
financial statements included in the Incorporated Documents or from the
Company's accounting books and records generally.
(s) Deloitte & Touche LLP, which has examined certain of such
financial statements as set forth in its reports incorporated by reference
in the Offering Memorandum (or, if the Offering Memorandum is not in
existence, the Preliminary Offering Memorandum), is an independent public
accounting firm as required by the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
of the Commission promulgated thereunder, the "Exchange Act").
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(t) The Offering Memorandum (or, if the Offering Memorandum is not
in existence, the Preliminary Offering Memorandum) contains or
incorporates by reference, if any, all pro forma and as adjusted financial
information and statements which would be required to be included or
incorporated by reference in a registration statement filed pursuant to
the Securities Act on the date hereof and relating to the Securities. The
pro forma and as adjusted financial information and statements have been
properly compiled and prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act and includes all
adjustments necessary to present fairly in accordance with United States
generally accepted accounting principles the pro forma and as adjusted
financial position of the respective entity or entities presented therein
at the respective dates indicated and their cash flows and the results of
operations for the respective periods specified.
(u) The Company is subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act and files reports with the Commission on
the XXXXX System. The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act and the outstanding shares of Common Stock are listed
for quotation on the Nasdaq National Market, and the Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the
Common Stock from the Nasdaq National Market, nor has the Company received
any notification that the Commission or the Nasdaq National Market is
contemplating terminating such registration or listing. The Company meets
the eligibility requirements for the use of Form S-3 under the Securities
Act.
(v) The Company has filed in a timely manner each document or report
required to be filed by it pursuant to the Exchange Act including, without
limitation, the Incorporated Documents; each such document or report
(including any financial statements) and any amendment thereto at the time
it was filed conformed to the requirements of the Exchange Act; and none
of such documents or reports contained (or, when read together with the
other information in the Offering Memorandum, do contain) an untrue
statement of any material fact or omitted (or, when read together with the
other information in the Offering Memorandum, do omit) to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading as the case may be, at all times up to
and including the Closing Date (and, if any Optional Notes are purchased,
each document or report (including any financial statements) required to
be filed by the Company pursuant to the Exchange Act prior to the
Additional Closing Date will not contain (or, when read together with the
other information in the Offering Memorandum, will not contain) an untrue
statement of a material fact or omit (or, when read together with the
other information in the Offering Memorandum, omit) to state a material
fact required to be stated therein or necessary in order to make the
statements therein in the light of the circumstances under which they were
made not misleading).
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(w) The Company maintains a system of internal accounting and other
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States
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
accounting for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(x) Neither the Company nor any of its affiliates (within the
meaning of Rule 144 under the Securities Act) has taken, directly or
indirectly, any action that constitutes or is designed to cause or result
in, or which could reasonably be expected to constitute, cause or result
in, the stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Securities.
(y) None of the Company or any of the Subsidiaries or any of their
respective affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act) has, directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any
"security" (as defined in the Securities Act) which is or could be
integrated with the sale of the Securities in a manner that would require
the registration under the Securities Act of the Notes or (ii) engaged in
any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) in connection with the
offering of the Notes or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act. Assuming the accuracy
of the Initial Purchaser's representations and warranties set forth in
Section 10 hereof, the offer and sale of the Notes to the Initial
Purchaser in the manner contemplated by this Agreement and the Offering
Memorandum does not require registration under the Securities Act and does
not require the Indenture to be qualified under the TIA.
(z) Except as described in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering
Memorandum), no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or
otherwise in connection with the Offering and any of the other
transactions contemplated by the Offering Documents, and any such rights
so disclosed have been effectively waived by the holders thereof, and any
such waivers remain in full force and effect.
(aa) Each of the Company and the Subsidiaries is not now and, after
sale of the Notes, as contemplated hereunder and application of the net
proceeds of such sale as described in the Offering Memorandum under the
caption "Use of Proceeds," will not be an "investment company" or be
controlled by an
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"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(bb) No relationship, direct or indirect, exists between or among
the Company or any affiliate of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the
Exchange Act to be described in the Company's annual and/or quarterly
reports on Form 10-K and 10-Q, as applicable, which is not so described as
required in such reports. There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company to or for the benefit of any
of the officers or directors of the Company or any of their respective
family members. The Company has not, in violation of the Xxxxxxxx-Xxxxx
Act, directly or indirectly, including through a Subsidiary, extended or
maintained credit, arranged for the extension of credit, or renewed or
amended an extension of credit, in the form of a personal loan to or for
any director or executive officer of the Company.
(cc) Each of the Company and each Subsidiary owns or leases all such
properties as are necessary to the conduct of its business as presently
operated and as proposed to be operated as described in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum). The Company and the Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free
and clear of all Liens except such as are described in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum) or such as do not (individually or in the
aggregate) materially affect the value of such property or interfere with
the use made or proposed to be made of such property by the Company and
the Subsidiaries; and any real property and buildings held under lease or
sublease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
to, and do not interfere with, the use made or proposed to be made of such
property and buildings by the Company and the Subsidiaries. Neither the
Company nor any Subsidiary has received any notice of any claim adverse to
its ownership of any real or personal property or of any claim against the
continued possession of any real property, whether owned or held under
lease or sublease by the Company or any Subsidiary.
(dd) Each of the Company and each Subsidiary (i) owns or has the
right to use, pursuant to a valid, binding and enforceable license
agreement, all patents, patent applications, trademarks, service marks,
trade names, business names, product names, trade dress, copyrights, mask
works, computer programs, electronic data and databases, trade secrets,
know-how and other confidential or proprietary information, systems and
processes (whether or not patentable or reduced to practice) and other
intellectual property (including applications and registrations for any of
the foregoing ) (collectively, "Intellectual Property") that
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is necessary or used in the conduct of their respective businesses as
being conducted and as described in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering
Memorandum). With respect to the Intellectual Property that is owned by
the Company or any of its Subsidiaries, (i) the Company or the applicable
Subsidiary is the sole owner of all right, title and interest in and to
such Intellectual Property free and clear of any claim, lien, pledge,
lease, option, charge, easement, security interest, deed of trust,
mortgage, conditional sales agreement, encumbrance or other right of any
third party, except for the security interest in favor of Xxxxx Fargo
Bank, N.A.; (ii) such Intellectual Property rights, to the knowledge of
the Company, are valid and enforceable; (iii) all patents and
registrations for copyrights and trademarks and all applications therefor
are in full force and effect; (iv) no claims are pending, or to the
knowledge of Company, threatened, that challenged the validity,
enforceability, registration, ownership or use of such Intellectual
Property and, to the Company is unaware of any facts that would form a
reasonable basis for any such claim. With respect to the Intellectual
Property that is used by the Company or its Subsidiaries pursuant to a
valid and enforceable license agreement, (i) neither the Company nor any
of its Subsidiaries is in default (or with the giving of notice or the
lapse of time, or both, would be in default) of any such license
agreement, (ii) the consummation of the transaction contemplated hereby
will not result in any loss, cancellation, acceleration or other
impairment of any such Intellectual Property, nor give any third party the
right to do any of the foregoing and (iii) there are no other license
agreements material to the conduct of the respective businesses of the
Company and its Subsidiaries other than those described in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum). No claims are pending or, to the
knowledge of the Company, threatened, alleging that the Company or any of
its Subsidiaries infringes, misappropriates, misuses, interferes with or
otherwise violates any Intellectual Property of any other person and, and
the Company is unaware of any facts which would form a reasonable basis
for any such claim. To the knowledge of the Company, the conduct of the
respective businesses of each of Company and its Subsidiaries as currently
conducted does not and will not infringe, misappropriate, misuse,
interfere with or otherwise violate any Intellectual Property of any other
person. Other than as disclosed in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering
Memorandum), since December 31, 2003, the Company has not received any
notice of violation of or conflict with the Intellectual Property rights
of any third person that would reasonably be expected to have a Material
Adverse Effect. To the knowledge of the Company, no third person is
infringing, misappropriating, misusing, interfering with or otherwise
violating any Intellectual Property of the Company or any of its
Subsidiaries. All Intellectual Property owned by the Company or its
applicable Subsidiary that derives independent economic value, actual or
potential, from not being generally known to the public or to other
persons who can obtain economic value from its disclosure or use has been
maintained in confidence in accordance with protection procedures that are
adequate for protection, and in accordance with procedures
12
customarily used in the industry to protect rights of like importance.
Neither the Company nor any Subsidiary has granted or assigned to any
other person or entity any right to manufacture, have manufactured,
assemble or sell the current products and services of the Company and the
Subsidiaries or those products and services described in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum), except for arrangements relating to the
manufacture, assembly, sale and resale of the products of the Company and
its Subsidiaries in the ordinary course of business.
(ee) The Company and the Subsidiaries maintain insurance in such
amounts and covering such risks as the Company reasonably considers
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, all of which insurance is in full force and effect, except
where the failure to maintain such insurance could not reasonably be
expected to have a Material Adverse Effect. There are no material claims
by the Company or any Subsidiary under any such policy or instrument as to
which any insurance company is denying liability, has indicated that it
intends to deny or is defending under a reservation of rights clause. The
Company reasonably believes that it will be able to renew its existing
insurance as and when such coverage expires or will be able to obtain
replacement insurance adequate for the conduct of the business and the
value of its properties at a cost that could not reasonably be expected to
have a Material Adverse Effect.
(ff) The Company has in effect insurance covering the Company, its
directors and officers for liabilities or losses arising in connection
with this Offering, including, without limitation, liabilities or losses
arising under the Securities Act, the Exchange Act, and applicable foreign
securities laws.
(gg) Each of the Company and each Subsidiary has prepared and timely
filed all material federal, state, foreign and other tax returns that are
required to be filed by it and has paid or made provision for the payment
of all material taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which
the Company or any Subsidiary is obligated to withhold from amounts owing
to employees, creditors and third parties, with respect to the periods
covered by such tax returns (whether or not such amounts are shown as due
on any tax return). No deficiency assessment with respect to a proposed
adjustment of the Company's or any Subsidiary' federal, state, local or
foreign taxes is pending or, to the best of the Company's knowledge,
threatened. The accruals and reserves on the books and records of the
Company and the Subsidiaries in respect of tax liabilities for any taxable
period not finally determined are adequate to meet any assessments and
related liabilities for any such period and, since December 31, 2003, each
of the Company and each Subsidiary has not incurred any liability for
taxes other than in the ordinary course of its business. There is no tax
Lien, whether imposed by any federal, state, foreign or other taxing
authority, outstanding against the assets, properties or business of the
Company or any Subsidiary.
13
(hh) No labor disturbance by the employees of the Company or any
Subsidiary exists or, to the best of the Company's knowledge, is imminent,
and the Company is not aware (based solely on the actual knowledge of its
Chief Executive Officer and General Counsel without any independent
investigation), of any existing or imminent labor disturbances by the
employees of any of its or any Subsidiary's principal suppliers,
manufacturers', customers or contractors, which, in either case
(individually or in the aggregate), could reasonably be expected to have a
Material Adverse Effect.
(ii) No "prohibited transaction" (as defined in either Section 406
of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time (the "Code")), "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or other event of the kind described in
Section 4043(b) of ERISA (other than events with respect to which the
30-day notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan for which the Company
or any Subsidiary would have any liability; each employee benefit plan for
which the Company or any Subsidiary would have any liability is in
compliance in all material respects with applicable law, including
(without limitation) ERISA and the Code; the Company has not incurred and
does not expect to incur liability under Title IV of ERISA with respect to
the termination of, or withdrawal from any "pension plan"; and each 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 and nothing has
occurred, whether by action or by failure to act, which could cause the
loss of such qualification.
(jj) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any
kind of toxic or other wastes or other hazardous substances by, due to, or
caused by the Company or any Subsidiary (or, to the Company's knowledge,
any other entity for whose acts or omissions the Company or any Subsidiary
is or may be liable) upon any other property now or previously owned or
leased by the Company or any Subsidiary, or upon any other property, which
would be a material violation of or give rise to any material liability
under any applicable law, rule, regulation, order, judgment, decree or
permit relating to pollution or protection of human health and the
environment ("Environmental Law") and neither the Company nor any
Subsidiary (nor, to the Company's knowledge, any other entity for whose
acts or omissions the Company or any Subsidiary is or may be liable) has
engaged in any other conduct which has violated or could be expected to
give rise to any material liability under any applicable Environmental
Law. There has been no disposal discharge, emission or other release of
any kind onto or affecting such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances in material violation of any Environmental Law with respect to
which the Company or any Subsidiary has knowledge. Neither the Company nor
any Subsidiary has agreed to assume, undertake or
14
provide indemnification for any liability of any other person under any
Environmental Law, including any obligation for cleanup or remedial
action. There is no pending or, to the best of the Company's knowledge,
threatened administrative, regulatory, arbitral or judicial action, claim
or notice of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against or affecting the Company or any
Subsidiary.
(kk) Neither the Company, or any Subsidiary nor, to the Company's
knowledge, any employee or agent of the Company or any Subsidiary has at
any time during the last five years (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal
or state governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(ll) Neither the Company nor any Subsidiary (i) is in violation of
its certificate or articles of incorporation, bylaws, certificate of
formation, limited liability company agreement, partnership agreement or
other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute a
default under or result in the creation or imposition of any Lien upon any
of its property or assets pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject or (iii) is in violation in any respect of any law, rule,
regulation, ordinance, directive, judgment, decree or order of any
judicial, regulatory or other legal or governmental agency or body,
foreign or domestic, except (in the case of clauses (ii) and (iii) above)
violations or defaults that could not (individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect and except (in
the case of clause (ii) alone) for any Lien disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not in existence, the
Preliminary Offering Memorandum).
(mm) Except as described in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering
Memorandum), none of the Company or any of the Subsidiaries is in default
under any of the contracts described in the Offering Memorandum (or, if
the Offering Memorandum is not in existence, the Preliminary Offering
Memorandum), has received a notice or claim of any such default or has
knowledge of any breach of such contracts by the other party or parties
thereto, except such defaults or breaches as would not, individually or in
the aggregate, have a Material Adverse Effect.
(nn) Neither the Company nor any of its Subsidiaries has taken or
will take any action that would cause this Agreement or the issuance or
sale of the Securities to violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or as
the same may hereafter be
15
in effect, on the Closing Date (and, if any Optional Notes are purchased,
as of the Additional Closing Date).
(oo) (i) Immediately after the consummation of the Offering, the
fair value and present fair saleable value of the assets of the Company
and the Subsidiaries will exceed the sum of their stated liabilities and
identified contingent liabilities; and (ii) the Company and the
Subsidiaries are not, nor will they be, after giving effect to the
execution, delivery and performance of the Offering Documents and the
consummation of the transactions contemplated thereby, (a) left with
unreasonably small capital with which to carry on their businesses as is
proposed to be conducted, (b) unable to pay their debts (contingent or
otherwise) as they mature or (c) insolvent.
(pp) No securities of the Company or any of the Subsidiaries are (i)
of the same class (within the meaning of Rule 144A under the Securities
Act) as the Notes and (ii) listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system.
(qq) The statistical, industry-related and market-related data
included in the Offering Memorandum (or, if the Offering Memorandum is not
in existence, the Preliminary Offering Memorandum) are based on or derived
from sources which the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from which
they are derived.
(rr) The Company has not distributed and, prior to the later to
occur of the (i) Closing Date (and, if any Optional Notes are purchased,
the Additional Closing Date) and (ii) completion of the distribution of
the Notes, will not distribute any offering material in connection with
the offering and sale of the Notes other than the Preliminary Offering
Memorandum and the Offering Memorandum.
(ss) The certificates for the shares of Common Stock (including the
Conversion Shares) conform to the requirements of the Nasdaq National
Market and the Washington Business Corporation Act.
(tt) The Company is in compliance with applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 that are effective and is actively taking steps
to comply with other applicable provisions of the Xxxxxxxx-Xxxxx Act of
2002 upon the effectiveness of such provisions.
(uu) The Company has implemented the "disclosure controls and
procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the Exchange
Act) required in order for the Chief Executive Officer and Chief Financial
Officer of the Company to engage in the review and evaluation process
mandated by the Exchange Act. The Company's "disclosure controls and
procedures" are reasonably designed to ensure that all information (both
financial and non-
16
financial) required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and reported within the specified time periods, and that all such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the Chief Executive Officer and Chief Financial
Officer of the Company required under the Exchange Act with respect to
such reports.
(vv) The section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Incorporated
Documents complies in all material respects with the requirements
applicable to that section under the Exchange Act, the rules and
regulations thereunder and the guidance published by the Commission with
respect to "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(ww) The Company's senior management and audit committee have
reviewed and agreed with the selection, application and disclosure of
critical accounting policies and have consulted with the Company's
independent accountants with regard to such disclosure.
(xx) Since the date of the filing of the Company's Annual Report on
Form 10-K for the year ended December 31, 2003, the Company's auditors and
the audit committee of the board of directors of the Company (or persons
fulfilling the equivalent function) have not been advised of (i) any
significant deficiencies in the design or operation of internal controls
which adversely affect the Company's ability to record, process, summarize
and report financial data nor any material weaknesses in internal
controls; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls.
(yy) Since the date of the filing of the Company's Annual Report on
Form 10-K for the year ended December 31, 2003, the Company has reported
in its Form 10-Q quarterly reports any changes in internal controls that
were required to be disclosed in such reports. The Company has designed
its internal controls over financial reporting to provide, and the Company
believes that its internal controls over financial reporting are effective
in providing, reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
(zz) Except as disclosed in the Offering Memorandum (or, if the
Offering Memorandum is not in existence, the Preliminary Offering Memorandum),
there are no off-balance sheet arrangements, outstanding guarantees or other
contingent obligations of the Company or any Subsidiary that could reasonably be
expected to have a Material Adverse Effect.
17
(aaa) No event or circumstance has occurred or arisen that could
reasonably be expected to give rise to a requirement that the Company make
additional disclosure on Form 8-K and has not been so disclosed.
Any certificate signed by or on behalf of the Company and delivered
to the Initial Purchaser or to counsel for the Initial Purchaser shall be deemed
to be a representation and warranty by the Company to the Initial Purchaser as
to the matters covered thereby.
3. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to the Initial Purchaser,
and the Initial Purchaser agrees to purchase from the Company, at 96.25%
of their principal amount, the Firm Notes.
(b) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions
herein set forth, the Company hereby grants an option to the Initial
Purchaser, to purchase up to $15,000,000 in aggregate principal amount of
Optional Notes from the Company at the same price as the purchase price to
be paid by the Initial Purchaser for the Firm Notes, plus accrued
interest, if any, from the Closing Date to the Additional Closing Date (as
hereinafter defined). The option granted hereunder may be exercised at any
time, on or before the thirtieth day following the date of the Offering
Memorandum upon notice by the Initial Purchaser to the Company, which
notice may be given from time to time on one or more occasions. Such
notice shall set forth (i) the amount (which shall be an integral multiple
of $1,000 in aggregate principal amount at issuance) of Optional Notes as
to which the Initial Purchaser is exercising the option and (ii) the time,
date and place at which such Optional Notes will be delivered (which time
and date may be simultaneous with, but not earlier than, the Closing Date
(as defined in Section 3(c) below) and in such case, the term "Closing
Date" shall refer to the time and date of delivery of the Firm Notes and
the Optional Notes). Such time and date of delivery, if subsequent to the
Closing Date, is called the "Additional Closing Date." The Additional
Closing Date must be not later than eight full business days after the
date the Initial Purchaser exercises the option, with the actual date
determined by the Initial Purchaser. The Initial Purchaser may cancel the
option at any time prior to its expiration by giving written notice of
such cancellation to the Company.
(c) One or more certificates in definitive form for the Firm Notes
that the Initial Purchaser has agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchaser requests upon notice to the Company at least 48 hours
prior to the Closing Date, shall be delivered by or on behalf of the
Company, against payment by or on behalf of the Initial Purchaser of the
purchase price therefor by
18
wire transfer of immediately available funds to the account of the Company
previously designated by it in writing. Such delivery of and payment for
the Firm Notes shall be made at 10:00 a.m., New York time, on December 6,
2004, or at such date as the Initial Purchaser and the Company may agree
upon, such time and date of delivery against payment being herein referred
to as the "Closing Date." The Company will make such certificate or
certificates for the Notes available for inspection by the Initial
Purchaser at the offices in Menlo Park, California of Xxxxxx & Xxxxxxx LLP
at least 24 hours prior to the Closing Date.
(d) Delivery to the Initial Purchaser of and payment for the
Optional Notes shall be made on the Closing Date, if the Optional Notes
are delivered simultaneously with the Firm Notes, or otherwise on the
Additional Closing Date in the same manner and in the same office and at
the same time of days as payment for the Firm Notes.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes to
make an offering of the Notes at the price and upon the terms set forth in the
Offering Memorandum as soon as practicable after this Agreement is entered into
and as in the judgment of the Initial Purchaser is advisable.
5. Certain Covenants. For purposes of this Section 5, "Closing Date" shall
refer to the Closing Date for the Firm Notes and any Additional Closing Date for
the Optional Notes. The Company covenants and agrees with the Initial Purchaser
that:
(a) The Company will not amend or supplement the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or
supplement thereto of which the Initial Purchaser shall not previously
have been advised and furnished a copy for a reasonable period of time
prior to the proposed amendment or supplement and as to which the Initial
Purchaser shall not have given its consent (which consent shall not be
unreasonably withheld). The Company will promptly, upon the reasonable
request of the Initial Purchaser or counsel to the Initial Purchaser, make
any amendments or supplements to the Offering Memorandum that may be
reasonably necessary or advisable in connection with the resale of the
Notes by the Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification or exemption of the Notes for offering and
sale under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchaser may designate and will continue such qualifications and
exemptions in effect for as long as may be necessary to complete the
distribution of the Notes by the Initial Purchaser; provided, however,
that in connection therewith the Company shall not be required to qualify
as a foreign corporation or to execute a general consent to service of
process in any jurisdiction or to take any other action that would subject
it to general service of process or to taxation in respect of doing
business in any jurisdiction in which it is not otherwise subject.
19
(c) If, at any time prior to the completion of the resale by the
Initial Purchaser of the Notes, any event shall occur as a result of which
it is necessary, in the opinion of counsel for the Initial Purchaser, to
amend or supplement the Offering Memorandum in order to make such Offering
Memorandum not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if for any other reason it
shall be necessary to amend or supplement the Offering Memorandum in order
to comply with applicable laws, rules or regulations, the Company shall
(subject to Section 5(a)) forthwith amend or supplement such Offering
Memorandum at its own expense so that, as so amended or supplemented, such
Offering Memorandum will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading and will comply with all applicable
laws, rules or regulations.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as many copies of each
of the Preliminary Offering Memorandum and Offering Memorandum or any
amendment or supplement thereto as the Initial Purchaser or its counsel
may reasonably request.
(e) During the period of five years from the Closing Date, the
Company will furnish to the Initial Purchaser (a) as soon as available, a
copy of each report and other communication (financial or otherwise) of
the Company mailed to the Trustee or the holders of the Notes,
stockholders or any national securities exchange on which any class of
securities of the Company may be listed other than materials filed with
the Commission and (b) from time to time such other information concerning
the Company and the Subsidiaries as the Initial Purchaser may reasonably
request.
(f) If this Agreement shall terminate or shall be terminated after
execution because of any failure or refusal on the part of the Company to
comply with the terms or fulfill any of the conditions of this Agreement,
the Company agrees to reimburse the Initial Purchaser for all reasonable
out-of-pocket expenses (including fees and expenses of counsel for the
Initial Purchaser) incurred by you in connection herewith.
(g) The Company will apply the net proceeds from the sale of the
Notes materially as set forth under "Use of Proceeds" in the Offering
Memorandum.
(h) None of the Company or any of its respective Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) which could
be integrated with the sale of the Notes in a manner which would require
the registration under the Securities Act of the Notes.
20
(i) For so long as any of the Notes remain outstanding and
constitute "restricted" securities within the meaning of Rule 144(a)(3)
under the Securities Act, the Company will not, and will not permit any of
the Subsidiaries to, solicit any offer to buy or offer to sell the Notes
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.
(j) For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and not able to be sold in their entirety under Rule 144
under the Securities Act (or any successor provision), the Company will
make available, upon request, to any seller of such Notes the information
specified in Rule 144A(d)(4) under the Securities Act, unless the Company
is then subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company will not, and will not permit any of its
Subsidiaries to resell any of the Notes that have been reacquired by any
of them.
(l) The Company will not take any action prohibited by Regulation M
under the Exchange Act, in connection with the distribution of the
Securities contemplated hereby.
(m) The Company will (i) permit the Notes to be included for
quotation on the PORTAL Market and (ii) permit the Notes to be eligible
for clearance and settlement through The Depository Trust Company.
(n) The Company will use its best efforts to list the Conversion
Shares for quotation on the Nasdaq National Market as promptly as
practicable but in no event later than the time that the Registration
Statement is declared effective in accordance with the Registration Rights
Agreement.
(o) The Company will, at all times, reserve and keep available, free
of preemptive rights, enough shares of Common Stock for the purpose of
enabling the Company to satisfy its obligations to issue the Conversion
Shares upon conversion of the Notes in full.
(p) During the period of ninety (90) days from the date of the
Offering Memorandum, without the prior written consent of the Initial
Purchaser, the Company (i) will not, directly or indirectly, issue, offer,
sell, agree to issue, offer or sell, solicit offers to purchase, grant any
call option, warrant or other right to purchase, purchase any put option
or other right to sell, pledge, borrow or otherwise dispose of any
Relevant Security, or make any announcement of any of the foregoing, (ii)
will not establish or increase any "put equivalent position" or liquidate
or decrease any "call equivalent position" (in each case within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder) with respect to any Relevant Security, and (iii)
will not
21
otherwise enter into any swap, derivative or other transaction or
arrangement that transfers to another, in whole or in part, any economic
consequence of ownership of a Relevant Security, whether or not such
transaction is to be settled by delivery of Relevant Securities, other
securities, cash or other consideration, other than the sale of Notes as
contemplated by this Agreement, the issuance of the Conversion Shares, and
the Company's issuance of (i) up to 656,933 shares of Common Stock upon
the exchange of those certain exchangeable securities issued in connection
with the acquisition of OctigaBay Systems Corporation and outstanding on
the date hereof; (ii) shares of Common Stock upon the exercise of
currently outstanding options; (iii) up to 5,439,850 shares of Common
Stock upon the exercise of currently outstanding warrants; (iv) the grant
of any additional options and the issuance of shares of Common Stock upon
the exercise of any such options under, or the issuance and sale of shares
pursuant to, stock option plans in effect on the date hereof, (v) the
issuance of any shares of Common Stock pursuant to the Company's employee
stock purchase plan, and (vi) the issuance of any shares of Common Stock
as matching contributions under the Company's 401(K) savings plan, each as
described in the Offering Memorandum. The Company will not file a
registration statement under the Securities Act in connection with any
transaction by the Company or any person that is prohibited pursuant to
the foregoing, except for (i) the Company's filing of registration
statements pursuant to the Registration Rights Agreement, (ii)
registration statements on Form S-8 relating to employee benefit plans or
on Form S-4 relating to corporate reorganizations or other transactions
under Rule 145, and (iii) the Company's filing of any prospectuses,
prospectus supplements or post-effective amendments relating to the resale
of securities pursuant to those certain resale Registration Statements on
Form S-3 filed by the Company prior to the date of this Agreement and
available on XXXXX.
(q) The Company will do and perform all things required to be done
and performed by it under this Agreement and the other Offering Documents
prior to or after the Closing Date and will use its best efforts to
satisfy all conditions precedent on its part to the obligations of the
Initial Purchaser to purchase and accept delivery of the Notes.
6. Expenses. Whether or not the Offering is consummated or this
Agreement is terminated (pursuant to Section 12 or otherwise), the Company
agrees to pay the following costs and expenses and all other costs and expenses
incident to the performance by the Company of its obligations hereunder: (i) the
negotiation, preparation, printing, typing, reproduction, execution and delivery
of this Agreement and of the other Offering Documents, any amendment or
supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto or in connection herewith or
therewith; (ii) the preparation, printing or reproduction of each Preliminary
Offering Memorandum, the Offering Memorandum and each amendment or supplement to
any of them; (iii) the delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of each Preliminary Offering
Memorandum, the Offering Memorandum and all amendments or supplements to any of
them as may be reasonably requested for use in connection with the offering
22
and sale of the Notes; (iv) the preparation, printing, authentication, issuance
and delivery of certificates for the Notes and the Conversion Shares, including
any stamp taxes in connection with the original issuance and sale of the
Securities and trustees' fees; (v) the reproduction and delivery of this
Agreement and the other Offering Documents, the preliminary and supplemental
"Blue Sky" memoranda and all other agreements or documents reproduced and
delivered in connection with the offering of the Securities; (vi) the exemption
from, or registration or qualification of the Securities for offer and sale
under the securities or Blue Sky laws of the several states (including filing
fees and the reasonable fees, expenses and disbursements of counsel to the
Initial Purchaser relating to such registration and qualification); (vii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to and related communications
with prospective purchasers of the Notes; (viii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel, if any) for the Company; (ix) fees and expenses of the Trustee
including fees and expenses of its counsel; (x) all expenses and listing fees
incurred in connection with the application for quotation of the Notes on the
PORTAL Market; (xi) all expenses and listing fees incurred in connection with
the application for listing for quotation of the Conversion Shares on the Nasdaq
National Market; (xii) all expenses incurred in connection with the performance
of the Company's obligations under the Registration Rights Agreement; and (xiii)
any fees charged by investment rating agencies for the rating of the Notes.
7. Conditions of the Initial Purchaser's Obligations. For purposes
of this Section 7, "Closing Date" shall refer to the Closing Date for the Firm
Notes and any Additional Closing Date for the Optional Notes. The obligations of
the Initial Purchaser to purchase and pay for the Notes are subject to the
absence from any certificates, opinions, written statements or letters furnished
to the Initial Purchaser pursuant to this Section 7 of any misstatement or
omissions and to the following additional conditions unless waived in writing by
the Initial Purchaser:
(i) The Initial Purchaser shall have received an opinion of
counsel in form and substance satisfactory to the Initial Purchaser and
Xxxxxx & Xxxxxxx LLP, counsel to the Initial Purchaser, dated the
Closing Date, of Stoel Rives LLP, counsel to the Company, substantially
in the form of Exhibit B hereto.
(ii) The Initial Purchaser shall have received an opinion of
counsel in form and substance satisfactory to the Initial Purchaser and
Xxxxxx & Xxxxxxx LLP, counsel to the Initial Purchaser, dated the
Closing Date of the General Counsel to the Company, substantially in
the form of Exhibit C hereto.
(iii) The Initial Purchaser shall have received an opinion,
dated the Closing Date, of Xxxxxx & Xxxxxxx LLP, counsel to the Initial
Purchaser, with respect to the sufficiency of certain legal matters
relating to this Agreement and such other related matters as the
Initial Purchaser may require.
23
(iv) The Initial Purchaser shall have received from Deloitte &
Touche LLP, independent public accountants for the Company, a "comfort"
letter dated the date hereof and the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser and Xxxxxx &
Xxxxxxx LLP, counsel to the Initial Purchaser, in the form of the draft
previously provided to the Initial Purchaser.
(v) The Initial Purchaser shall have received from each of the
officers and directors listed on Schedule 1 hereto an executed Lock-Up
Agreement in substantially in the form of Exhibit D hereto.
(vi) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the
Closing Date; the Company shall have complied with or performed in all
material respects all agreements and satisfied all conditions on its
part to be complied with, performed or satisfied hereunder at or prior
to the Closing Date.
(vii) None of the issuance and sale of the Securities pursuant
to this Agreement or any of the transactions contemplated by any of the
other Offering Documents shall be enjoined (temporarily or permanently)
and no restraining order or other injunctive order shall have been
issued; and there shall not have been any legal action, statute, order,
decree or other administrative proceeding enacted, instituted or
threatened against the Company or against the Initial Purchaser
relating to the issuance of the Securities or the Initial Purchaser's
activities in connection therewith or any other transactions
contemplated by this Agreement or the Offering Memorandum, or the other
Offering Documents.
(viii) Subsequent to the date of this Agreement and since the
date of the most recent financial statements in the Offering Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), there shall not have occurred (i) any change, or any
development involving a prospective change, in or affecting the general
affairs, management, business, condition (financial or other),
properties, prospects or results of operations of the Company or any of
the Subsidiaries, not contemplated by the Offering Memorandum that is,
in the judgment of the Initial Purchaser, so material and adverse as to
make it impracticable or inadvisable to proceed with the offering of
the Securities on the terms and in the manner contemplated by the
Offering Documents, or (ii) any event or development relating to or
involving the Company or any of the Subsidiaries, or any of their
respective officers or directors that makes any statement made in the
Offering Memorandum untrue in any material respect or that, in the
opinion of the Company and its counsel or the Initial Purchaser and its
counsel, require the making of any addition to or change in the
Offering Memorandum in order to state a material fact required by any
applicable law, rule or regulation to be stated therein or necessary in
order to make the statements made therein not misleading.
24
(ix) The Initial Purchaser shall have received certificates,
dated the Closing Date and signed by the chief executive officer and
the chief financial officer of the Company (in their capacities as
such), to the effect that:
a. All of the representations and warranties of the
Company set forth in this Agreement are true and correct as if made
on and as of the Closing Date and, as of the Closing Date all
agreements, conditions and obligations of the Company to be
performed, satisfied or complied with hereunder on or prior to the
Closing Date have been duly performed, satisfied or complied with.
b. The issuance and sale of the Notes pursuant to this
Agreement or the Offering Memorandum and the consummation of the
transactions contemplated by the Offering Documents have not been
enjoined (temporarily or permanently) and no restraining order or
other injunctive order has been issued and there has not been any
legal action, order, decree or other administrative proceeding
instituted or, to such officers' knowledge, threatened against the
Company relating to the issuance of the Securities or the Initial
Purchaser's activities in connection therewith or in connection with
any other transactions contemplated by this Agreement or the
Offering Memorandum or the other Offering Documents.
c. Subsequent to the date of this Agreement and since
the date of the most recent financial statements in the Offering
Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), there has not occurred (i) any change, or any
development involving a prospective change, in or affecting the
general affairs, management, business, condition (financial or
other), properties, prospects or results of operations of the
Company or any of the Subsidiaries, not contemplated by the Offering
Memorandum, or (ii) any event or development relating to or
involving the Company or any of the Subsidiaries, or any of their
respective officers or directors that makes any statement made in
the Offering Memorandum untrue or that requires the making of any
addition to or change in the Offering Memorandum in order to state a
material fact required by any applicable law, rule or regulation to
be stated therein or necessary in order to make the statements made
therein not misleading.
d. At the Closing Date and after giving effect to the
consummation of the transactions contemplated by the Offering
Documents, there exists no Default or Event of Default (as each such
term is defined in the Indenture).
(x) Each of the Offering Documents and each other agreement or
instrument executed in connection with the transactions
25
contemplated thereby shall be reasonably satisfactory in form and
substance to the Initial Purchaser and shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect, and there shall have been no material amendments,
alterations, modifications or waivers of any provision thereof since
the date of this Agreement.
(xi) All proceedings taken in connection with the issuance of
the Notes and the transactions contemplated by this Agreement, the
other Offering Documents and all documents and papers relating thereto
shall be reasonably satisfactory to the Initial Purchaser and counsel
to the Initial Purchaser. The Initial Purchaser and counsel to the
Initial Purchaser shall have received copies of such papers and
documents as they may reasonably request in connection therewith, all
in form and substance reasonably satisfactory to them.
(xii) The Notes shall have been approved for trading on The
PORTAL Market.
(xiii) Since the date of this Agreement, there shall not have
been any announcement by any "nationally recognized statistical rating
organization," as defined for purposes of Rule 436(g) under the
Securities Act, that (A) it is downgrading its rating assigned to any
debt securities of the Company, or (B) it is reviewing its rating
assigned to any debt securities of the Company with a view to possible
downgrading, or with negative implications, or direction not
determined.
(xiv) On or before the Closing Date, the Initial Purchaser
shall have received the Registration Rights Agreement executed by the
Company and such agreement shall be in full force and effect.
(xv) The Company shall have furnished or caused to be
furnished to the Initial Purchaser such further certificates and
documents as the Initial Purchaser shall have reasonably requested.
(xvi) At the Closing Date, the Company and the Trustee shall
have entered into the Indenture and the Initial Purchaser shall have
received counterparts, conformed as executed, thereof and the Notes
shall have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(xvii) The Company shall have delivered to the Initial
Purchaser a copy of the consent obtained by the Company from Xxxxx
Fargo Bank, N.A., with respect to the issuance and sale by the Company
of the Notes, in form and substance reasonably satisfactory to the
Initial Purchaser.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and
26
counsel to the Initial Purchaser. The Company shall furnish to the Initial
Purchaser such conformed copies of such opinions, certificates, letters,
schedules, documents and instruments in such quantities as the Initial Purchaser
shall reasonably request.
8. Indemnification.
(a) The Company shall to indemnify and hold harmless (i) the Initial
Purchaser, (ii) each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of the Initial Purchaser or any
controlling person, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in (A) the Preliminary Offering
Memorandum or the Offering Memorandum, or in any supplement thereto or
amendment thereof, or (B) any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the Securities, including any road show or investor
presentations made to investors by the Company (whether in person or
electronically) ("Marketing Materials"), or (ii) the omission or alleged
omission to state in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any supplement thereto or amendment thereof, or in any
Marketing Materials, a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the
extent, but only to the extent, that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue statement
or alleged untrue statement or omission or alleged omission made therein
in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Initial Purchaser expressly for use
therein. The parties acknowledge and agree that such information provided
by or on behalf of the Initial Purchaser consists solely of the material
identified in Section 16 hereof. This indemnity agreement will be in
addition to any liability that the Company may otherwise have, including
under this Agreement.
(b) The Initial Purchaser shall indemnify and hold harmless (i) the
Company, (ii) each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and (iii) the officers, directors, partners, employees,
representatives and agents of the Company, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against
27
any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any
such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the
Initial Purchaser expressly for use therein; provided, however, that in no
case shall the Initial Purchaser be liable or responsible for any amount
in excess of the discounts and commissions received by the Initial
Purchaser. The parties acknowledge and agree that such information
provided by or on behalf of the Initial Purchaser consists solely of the
material identified in Section 16 hereof. This indemnity will be in
addition to any liability that the Initial Purchaser may otherwise have,
including under this Agreement.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b), above, of notice of any claim or the
commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability which it
may have under this subsection. If any such claim or action shall be
brought against an indemnified party, and it notifies the indemnifying
party thereof, the indemnifying party shall be entitled to participate, at
its own expense in the defense of such action, and to the extent that it
may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from the indemnified party, to assume
the defense thereof with counsel satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 5
for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable costs
of investigation; provided, however, that the indemnified party shall have
the right to employ counsel to represent jointly the indemnified party and
its respective directors, employees, officers and controlling persons who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the indemnified party against the indemnifying
party under this subsection if (1) employment of such counsel has been
authorized in writing by the indemnifying party, or (2) such indemnifying
party shall not have employed counsel to have charge of the defense of
such
28
proceeding within 30 days of the receipt of notice thereof, or (3) the
indemnifying party does not diligently defend such claim or action after
assumption of the defense or (4) such indemnified party shall have
reasonably concluded that the representation of such indemnified party and
those directors, employees, officers and controlling persons by the same
counsel representing the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them or where there may be one or more
defenses available to them that are different from, additional to or in
conflict with those available to the indemnifying party, and in any such
event ((1), (2), (3) or (4)) the fees and expenses of such separate
counsel shall be paid by the indemnifying party as incurred. It is
understood that the indemnifying party shall not be liable for the fees
and expenses of more than one separate firm (in addition to local counsel
in each jurisdiction) for all indemnified parties in connection with any
proceeding or related proceedings. No indemnifying party shall, without
the prior written consent of the indemnified parties, effect any
settlement or compromise of, or consent to the entry of judgment with
respect to, any pending or threatened claim, investigation, action or
proceeding in respect of which indemnity or contribution may be or could
have been sought by an indemnified party under this Section 8 or Section 9
hereof (whether or not the indemnified party or parties are actual or
potential parties thereto) unless (x) such settlement, compromise or
judgment (i) includes an unconditional release of such indemnified party
from all liability arising out of such claim, action, suit or proceeding
and (ii) does not include a statement as to or an admission of fault,
culpability or failure to act by or on behalf of any indemnified party,
and (y) the indemnifying party confirms in writing its indemnification
obligations hereunder with respect to such settlement, compromise or
judgment.
9. Contribution. If the indemnification provided for in Section 8 is
for any reason held to be unavailable or insufficient to hold harmless an
indemnified party under Section 8 above, then the Company, on the one hand, and
the Initial Purchaser, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, liabilities, claims, damages and expenses suffered by the
Company, any contribution received by the Company from persons, other than the
Initial Purchaser, who may also be liable for contribution, including persons
who control the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) to which the Company and the Initial
Purchaser may be subject, in (i) such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and the Initial
Purchaser, on the other hand, from the offering of the Notes, or (ii) if the
allocation provided by the foregoing clause (i) 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 Initial Purchaser, on the other hand, in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
29
Company, on the one hand, and the Initial Purchaser, on the other hand, shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Notes (net of discounts but before deducting expenses) received by the
Company bear to the discounts and commissions received by the Initial Purchaser,
respectively. The relative fault of the Company, on the one hand, and the
Initial Purchaser, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Initial Purchaser agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
9 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 9,
(i) in no case shall the Initial Purchaser be required to contribute any amount
in excess of the amount by which the discounts and commissions applicable to the
Notes purchased by the Initial Purchaser pursuant to this Agreement exceeds the
amount of any damages which the Initial Purchaser has otherwise been required to
pay by reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, (A) each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchaser and (B) the respective officers,
directors, partners, employees, representatives and agents of the Initial
Purchaser or any controlling person shall have the same rights to contribution
as the Initial Purchaser and (1) each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company and (2)
the officers, directors, employees, representatives and agents of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 9. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent, provided that such written consent was not unreasonably
withheld. The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
10. Offering of Securities; Restrictions on Transfer. The Initial
Purchaser represents and warrants as to itself only that it is a QIB. The
Initial Purchaser agrees with the Company as to itself only that (i) it has not
and will not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner
30
involving a public offering within the meaning of Section 4(2) of the Securities
Act; and (ii) it has and will solicit offers for the Securities only from, and
will offer the Securities only to, persons within the United States whom the
Initial Purchaser reasonably believes to be QIBs or, if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the Initial
Purchaser that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A and, in each case,
in transactions under Rule 144A.
11. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Initial Purchaser set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Initial Purchaser or any
controlling person referred to in Sections 8 and 9 hereof and (ii) delivery of
and payment for the Notes, and shall be binding upon and shall inure to the
benefit of, any successors, assigns, heirs, personal representatives of the
Company, the Initial Purchaser and indemnified parties referred to in Section 8
hereof. The respective agreements, covenants, indemnities and other statements
set forth in Sections 6, 8, 9, 11 and 12 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
12. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchaser by notice to the Company given in the event
that the Company has failed, refused or been unable to satisfy all conditions on
its part to be performed or satisfied hereunder on or prior to the Closing Date
or if, at or prior to the Closing Date or at or prior to the Additional Closing
Date, as the case may be:
(i) any domestic or international event or act or occurrence
has materially disrupted, or in the opinion of the Initial Purchaser
will in the immediate future materially disrupt, the market for the
Company's securities or securities in general;
(ii) trading on the New York Stock Exchange or the Nasdaq
National Market, shall have been suspended or made subject to material
limitations, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been
required, on the New York Stock Exchange or the Nasdaq National Market,
or by order of the Commission or other regulatory body or governmental
authority having jurisdiction;
(iii) a banking moratorium has been declared by any state or
federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred;
(iv) (A) there shall have occurred any outbreak or escalation
of hostilities or acts of terrorism involving the United States or
31
there is a declaration of a national emergency or war by the United
States, or (B) there shall have been any other calamity or crisis or
any change in political, financial or economic conditions if the effect
of any such event in (A) or (B), in the judgment of the Initial
Purchaser, makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Notes or the Optional Notes, as the
case may be, on the terms and in the manner contemplated by the
Offering Memorandum; or
(v) any debt securities of the Company shall have been
downgraded or placed on any "watch list" for possible downgrading by
any "nationally recognized statistical rating organization" as defined
for purposes of Rule 436(g) under the Securities Act.
(b) Subject to paragraph (c) below, termination of this Agreement
pursuant to this Section 12 shall be without liability of any party to any
other party except as provided in Section 11 hereof.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof, or if the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial
Purchaser set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement
herein or comply with any provision hereof, the Company will, subject to
demand by the Initial Purchaser, reimburse the Initial Purchaser for all
out-of-pocket expenses (including the fees and expenses of its counsel),
incurred by the Initial Purchaser in connection herewith.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Initial Purchaser, shall be hand delivered, mailed by first-class
mail, couriered by next-day air courier or telecopied and confirmed in writing
to Bear Xxxxxxx & Co. Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx Parish, Equity Capital Markets, and with a copy to Xxxxxx &
Xxxxxxx LLP, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-0000,
Attention: Xxxx X. Xxxxxxxxx and Xxxxxxx Xxxxxxxx. If sent to the Company, shall
be delivered, mailed, couriered or telecopied and confirmed in writing, to Cray
Inc., 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000-0000,
Attention: Xxxxxxx X. Xxxxxxx, Senior Vice President and General Counsel, and
with a copy to Stoel Rives LLP, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxx 00000, Attention: L. Xxxx Xxxxxxxxx, Jr.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 8 of this Agreement shall also be for
32
the benefit of any person or persons who control the Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and (ii) the indemnities of the Initial Purchaser contained in Section 8 of
this Agreement shall also be for the benefit of the directors of the Company,
its officers, employees and agents and any person or persons who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act. No purchaser of Notes from the Initial Purchaser will be
deemed a successor because of such purchase.
15. No Waiver; Modifications in Writing. No failure or delay on the
part of the Company or the Initial Purchaser in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or the Initial Purchaser at law or
in equity or otherwise. No waiver of or consent to any departure by the Company
or the Initial Purchaser from any provision of this Agreement shall be effective
unless signed in writing by the party entitled to the benefit thereof; provided
that notice of any such waiver shall be given to each party hereto as set forth
above. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of the Company and the Initial Purchaser. Any
amendment, supplement or modification of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
by the Company or the Initial Purchaser from the terms of any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances.
16. Information Supplied by the Initial Purchaser. The statements set
forth in the third paragraph, fourth sentence of the tenth paragraph and
eleventh paragraph under the heading "Plan of Distribution" constitute the only
information furnished by the Initial Purchaser to the Company for purposes of
Sections 2(a), 8(a) and 8(b) hereof.
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
[Remainder of this Page Intentionally Left Blank]
33
18. Counterparts. 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.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company and
the Initial Purchaser.
Very truly yours,
Cray Inc.
a Washington corporation
/s/ Xxxxxxx X. Xxxxxxx
By:_______________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President, General
Counsel, Chief Financial Officer
and Corporate Secretary
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BEAR, XXXXXXX & CO. INC.
/s/ Xxxx X. Xxxxxx
By: ________________________________
Name: Xxxx X. Xxxxxx
Title: Senior Managing Director
34
Exhibit 1.1
Schedule 1
Name Title
---- -----
Xxxxx X. Xxxxxxxx Chief Executive Officer, President and
Chairman of the Board of Directors
Xxxxxx X. Xxxxx Chief Scientist and Director
Xxxxxx X. Xxxxx Director
Xxxxxxx X. Xxxxxxx, Xx. Director
Xxxxxxx X. Xxxxx Director
Xxxxx X. Xxxxxxxx Director
Xxxxx X. Xxxxxxxx Director
Xxxxxx X. Xxxxx Director
Xxxxxxx X. Xxxxxxxx Director
Xxxxxxxxxxx Xxxx Vice President
Xxxxxxx X. Xxxxxxx Senior Vice President, General Counsel, Chief
Financial Officer and Corporate Secretary
Xxxxx X. Xxxxxx Senior Vice President
Ly-Xxxxx X. Xxxx Senior Vice President
Xxxxx X. Xxxxxx Senior Vice President
* Note: List shall also include those spouses, family members, trusts,
partnerships, etc. through which the above individuals hold securities.
35
Exhibit 1.1
Exhibit A
CRAY INC.
PARENT & SUBSIDIARIES LIST
PARENT/SUBSIDIARY NAME DATE FORMED COUNTRY/STATE
---------------------- ----------- -------------
Cray Inc. 12/07/87 U.S./Washington State
Cray Federal Inc. 11/03/00 U.S./Washington
New Technology Endeavors, Inc. 05/02/03 U.S./Washington
Cray Australia Pty Ltd. 03/23/00 Australia
Cray Brazil, Inc. 00/00/00 X.X./Xxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxxxx do Brasil Ltda. 11/17/00 Brazil
Cray Canada Inc. 07/17/02 Canada
Cray Canada (Washington), Inc. 00/00/00 X.X./Xxxxxxxxxx Xxxxx
Xxxx Xxxxxx Corp./Societe Cray Canada 03/20/00 Canada, Nova Scotia
Cray China Limited 08/07/00 China
Cray Computer Finland Oy 06/20/00 Finland
Cray Computer SAS 04/03/00 France
Cray Computer Deutschland GmbH 03/31/00 Germany
Cray Supercomputers (Israel) Ltd. 09/16/01 Xxxxxx
Xxxx Italy S.r.l 07/12/00 Italy
Cray Japan, Inc. 03/17/00 U.S./Washington State
Cray Japan, Inc. (Branch) Japan
Cray Korea, Inc. 03/17/00 U.S./Washington State
Cray Korea, Inc. (Branch) South Korea
Cray Xxxxxxxxxxx X.X. 00/00/00 Xxxxxxxxxxx
Cray Computer South Africa (Proprietary) Limited 02/23/00 South Africa
Cray Computer Spain, S.L. 03/30/00 Spain
Cray-Tera Sweden AB 03/03/99 Sweden
Cray Computer GmbH 04/05/00 Switzerland
Cray Taiwan, Inc. 04/05/01 U.S./Washington State
Cray U.K. Limited 03/07/00 United Kingdom
3084316 Nova Scotia Limited 00/00/00 Xxxxxx, Xxxx Xxxxxx
0000000 Xxxx Xxxxxx Limited 02/10/04 Canada, Nova Scotia
36
Exhibit 1.1
Exhibit B
Form of Opinion of Stoel Rives LLP
1. Each of the Company and Cray Federal Inc. (the "Subsidiary") is a
corporation duly organized and validly existing under Washington law, with the
necessary corporate power and corporate authority to own its properties and
conduct its business as described in the Offering Memorandum.
2. The Company has an authorized capitalization as set forth in the
Offering Memorandum.
3. The Company has the necessary corporate power and corporate
authority to execute and deliver the Purchase Agreement and the Registration
Rights Agreement and to perform its obligations thereunder; each of the Purchase
Agreement and the Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company; the Registration Rights
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except that the enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, (ii) general principles of equity (regardless of
whether such enforcement is considered in a proceeding at law or in equity); and
(iii) any rights to indemnity or contribution hereunder may be limited by
federal or state securities laws and public policy considerations ((i); (ii) and
(iii) collectively, the "Enforceability Exceptions").
4. The Notes have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
terms of the Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of the Purchase Agreement, will be legal, valid and
binding obligations of the Company, enforceable in accordance with their terms,
except that the enforcement thereof may be limited by the Enforceability
Exceptions, and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement, in each case subject to the conditions and
qualifications expressed therein.
5. The Conversion Shares reserved for issuance upon conversion of the
Notes have been duly authorized and reserved and, when issued upon conversion of
the Notes in accordance with the terms of the Notes, will be validly issued,
fully paid and non-assessable, and the issuance of the Conversion Shares will
not be subject to any preemptive or similar rights under (i) the Company's
articles of incorporation or bylaws, as currently in force, or (ii) the
Washington Business Corporation Act, as currently enacted.
6. The Company has the necessary corporate power and corporate
authority to execute and deliver the Indenture and perform its obligations
thereunder; the execution and delivery of the Indenture has been duly and
validly authorized, executed and delivered by the Company and (assuming the due
authorization, execution and delivery
37
by the Trustee) constitutes a valid and binding instrument of the Company
enforceable in accordance with its terms, except that the enforcement thereof
may be limited by the Enforceability Exceptions.
7. Each of the Indenture, the Registration Rights Agreement and the
Securities conform in all material respects to the description thereof contained
in the Offering Memorandum.
8. No consent, approval, authorization or qualification of or with any
federal or state court, governmental agency or body is required for the issuance
and sale of the Notes and the issuance of the Conversion Shares as provided in
the Indenture, the execution and delivery by the Company of the Purchase
Agreement, the Registration Rights Agreement or the Indenture, the consummation
by the Company of the transactions contemplated thereby or the performance by
the Company of its obligations thereunder, except for (i) such as shall be
obtained under the Securities Act with respect to the Company's obligations
under the Registration Rights Agreement, (ii) such as may be required under
state securities or blue sky laws in connection with the purchase and
distribution of the Securities (as to which such counsel expresses no opinion),
and (iii) such as are required by the rules and regulations of the NASD.
9. To such counsel's knowledge, there are no judicial, regulatory or
other legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject that are required to be described in the
Offering Memorandum and are not so described and, to such counsel's knowledge,
no such proceedings are threatened by governmental authorities or others.
10. Assuming (i) the representations of the Initial Purchaser and the
Company contained in the Purchase Agreement are true and correct, (ii)
compliance by the Initial Purchaser and the Company with its respective
covenants set forth in the Purchase Agreement and (iii) the accuracy of the
representations and warranties made in accordance with the Purchase Agreement
and the Offering Memorandum by purchasers to whom the Initial Purchaser
initially resells the Notes, it is not necessary, solely in connection with the
offer, sale and delivery of the Notes to the Initial Purchaser pursuant to the
Purchase Agreement or the initial resale of the Notes by the Initial Purchaser
to "qualified institutional buyers" (as such term is defined in Rule 144A under
the Securities Act), in the manner contemplated by the Purchase Agreement and
described in the Offering Memorandum, to register the Securities under the
Securities Act of 1933, as amended, or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.
11. The Company is not and, immediately after giving effect to the
offering and sale of the Notes and the application of the proceeds thereof as
described in the Offering Memorandum will not be, required to register as an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
12. When the Notes are issued and delivered by the Company pursuant to
the Purchase Agreement, none of the Notes will be of the same class (within the
meaning of
38
Rule 144A under the Securities Act) as securities of the Company that are listed
on a national securities exchange registered under Section 6 of the Exchange Act
or that are quoted in a United States automated inter-dealer quotation system.
13. The statements in the Offering Memorandum under the captions
"Description of the Notes," "Description of Capital Stock," and "Transfer
Restrictions," insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, and the "Plan of
Distribution" insofar as such statements summarize the lockup agreement, fairly
present the information called for with respect to such legal matters, documents
or proceedings in all material respects.
14. The statements in the Offering Memorandum under the caption
"Certain U.S. Federal Income Tax Considerations," and "Certain ERISA
Consideration," (i) insofar as such statements constitute descriptions of
provisions of law are correct in all material respects, and (ii) insofar as such
statements reflect legal conclusions, are reasonably based on law and legal
precedent.
15. Each document incorporated by reference in the Offering Memorandum
(except for the financial statements and related schedules included therein as
to which such counsel need express no opinion) complied as to form when filed
with the Commission in all material respects with the applicable provisions of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
In addition, such opinion shall also contain a statement that based on
such counsel's participation in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Initial Purchaser at
which the contents of the Offering Memorandum and related matters were
discussed, but without independent check or verification of the accuracy,
completeness or fairness of the Offering Memorandum (except for the matters
described in paragraphs 13 and 14 above), no facts have come to the attention of
such counsel that have caused such counsel to believe that the Offering
Memorandum (including the documents incorporated by reference therein), as of
its date (or any amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement) and as of the
Closing Date, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules and other
financial data included or incorporated by reference therein).
Such counsel may assume that New York law is the same as Washington law
for the purposes of this opinion. For the opinion in paragraph 13 above, such
counsel may rely on an opinion of Canadian counsel as to the portion of the
"Description of Capital Stock" set forth under the caption "Exchangeable Stock"
in the Offering Memorandum.
39
Exhibit C
Form of Opinion of the General Counsel of Cray Inc.
1. Each of the Company and Cray Federal Inc. (the "Subsidiary") is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which will not in the
aggregate have a Material Adverse Effect.
2. All of shares of Common Stock outstanding on the date of the
Offering Memorandum have been duly and validly authorized and issued, are fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights under (i) the Company's articles of incorporation or bylaws, (ii)
the Washington Business Corporation Act or, (iii) to such counsel's knowledge,
the terms or provisions of any material document, agreement or other instrument
to which the Company is a party.
3. To such counsel's knowledge, except as described in the Offering
Memorandum, there are (i) no outstanding securities of the Company convertible
into or evidencing the right to purchase or subscribe for any shares of capital
stock of the Company, (ii) no outstanding or authorized options, warrants,
calls, subscriptions, rights, commitments or any other instruments or agreements
of any character obligating the Company to issue any shares of its capital stock
or any securities convertible into or evidencing the right to purchase or
subscribe for any shares of such stock, and (iii) no agreements or
understandings with respect to the voting, sale or transfer of any shares of
capital stock of the Company to which the Company is a party.
4. All of the outstanding shares of capital stock or other equity
securities of the Subsidiary are owned of record and beneficially, directly or
indirectly, by the Company, free and clear of all liens and limitations on
voting rights, except for the security interest in favor of Xxxxx Fargo Bank,
N.A., and are duly authorized, validly issued, fully paid and non-assessable,
and have not been issued in violation of any preemptive or similar rights under
(i) the articles of incorporation and bylaws of the Subsidiary, (ii) the
Washington Business Corporation Act, or (iii) to such counsel's knowledge, the
terms or provisions of any material document, agreement or other instrument to
which the Subsidiary is a party.
5. To such counsel's knowledge, there are (i) no outstanding or
authorized options, warrants, calls, subscriptions, rights, commitments or other
instruments or agreements of any character obligating the Company or the
Subsidiary to issue any shares of capital stock of the Subsidiary or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and (ii) no agreements or understandings with respect
to the voting, sale or transfer of any shares of capital stock of the
Subsidiary. To such counsel's knowledge, there are no outstanding contractual
obligations of the Company or the Subsidiary to repurchase, redeem or otherwise
acquire
40
any outstanding shares of capital stock or other ownership interests of the
Subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in the Subsidiary or any other entity.
6. To such counsel's knowledge, the issuance of the Conversion Shares
will not be subject to any preemptive or similar rights under the terms or
provisions of any material document, agreement or other instrument to which the
Company is a party.
7. To such counsel's knowledge, there are no judicial, regulatory or
other legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject that are required to be described in the
Offering Memorandum and are not so described and, to such counsel's knowledge,
no such proceedings are threatened by governmental authorities or others.
8. The execution and delivery by the Company of the Purchase Agreement,
the Indenture, the Registration Rights Agreement and the Notes and the
performance by the Company of its obligations thereunder do not and will not (i)
to such counsel's knowledge, result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement or any other agreement, instrument, franchise,
license or permit to which the Company or any of its subsidiaries is a party or
by which any of the Company or any of its subsidiaries or their respective
properties or assets may be bound, other than under agreements with Xxxxx Fargo
Bank, N.A., as to which all necessary consent has been obtained by the Company,
(ii) violate any provision of the articles of incorporation or by-laws of the
Company or the Subsidiary, or (iii) to such counsel's knowledge, violate any
judgment, decree, order, statute, rule or regulation of any court or any
judicial, regulatory or other legal or governmental agency or body applicable to
the Company or any of its subsidiaries or any of their respective businesses,
properties or assets, except (in the case of clauses (i) and (iii) above) as
could not reasonably be expected to have a Material Adverse Effect.
In addition, such opinion shall also contain a statement that based on such
counsel's participation in conferences with officers and other representatives
of the Company, representatives of the independent public accountants for the
Company and representatives of the Initial Purchaser at which the contents of
the Offering Memorandum and related matters were discussed, but without
independent check or verification of the accuracy, completeness or fairness of
the Offering Memorandum, no facts have come to the attention of such counsel
that have caused such counsel to believe that the Offering Memorandum (including
the documents incorporated by reference therein), as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that
41
such counsel need express no belief or opinion with respect to the financial
statements and schedules and other financial data included or incorporated by
reference therein).
42
Exhibit D
Form of Lock-Up Agreement
[Date]
Bear, Xxxxxxx & Co. Inc.
as Representative of the several Initial Purchasers referred to below
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
Cray Inc. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed
offering (the "Offering") by Cray Inc., a Washington corporation (the
"Company"), of convertible notes (the "Notes") in an aggregate principal amount
of up to $100 million (including the Initial Purchasers over-allotment option).
In order to induce you and the other Initial Purchasers for which you
act as representative (the "Initial Purchasers") to purchase Notes in the
Offering, the undersigned hereby agrees that, without the prior written consent
of Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx"), during the period from the date
hereof until ninety (90) days from the date of the final offering memorandum for
the Offering (the "Lock-Up Period"), the undersigned (a) will not, directly or
indirectly, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, pledge, borrow
or otherwise dispose of any Relevant Security (as defined below), and (b) will
not establish or increase any "put equivalent position" or liquidate or decrease
any "call equivalent position" with respect to any Relevant Security (in each
case within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder), or otherwise
enter into any swap, derivative or other transaction or arrangement that
transfers to another, in whole or in part, any economic consequence of ownership
of a Relevant Security, whether or not such transaction is to be settled by
delivery of Relevant Securities, other securities, cash or other consideration.
As used herein "Relevant Security" means the common stock, par value $0.01 per
share (the "Common Stock"), of the Company and any other equity security of the
Company or any of its subsidiaries and any security convertible into, or
exercisable or exchangeable for, any Common Stock or other such equity security.
Notwithstanding the foregoing, the undersigned is entitled to exercise or
convert any stock option or warrant held by the undersigned, provided that any
shares of Common Stock obtained by any such exercise or conversion shall be
subject to all of the provisions of this Agreement.
43
The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities. The undersigned hereby further agrees
that, without the prior written consent of Bear Xxxxxxx, during the Lock-up
Period the undersigned (x) will not file or participate in the filing with the
Securities and Exchange Commission of any registration statement, or circulate
or participate in the circulation of any preliminary or final prospectus or
other disclosure document with respect to any proposed offering or sale of a
Relevant Security and (y) will not exercise any rights the undersigned may have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
Notwithstanding the foregoing, the undersigned may transfer any
Relevant Security (i) to any member of the undersigned's "immediate family" or
to any trust for the direct or indirect benefit of the undersigned or any member
of the undersigned's "immediate family" (such term hereby defined as any
relationship by blood, marriage or adoption, not more remote than first cousin),
(ii) by will or intestate succession, or (iii) as a bona fide gift or gifts;
provided, however, that in the case of any transfer pursuant to subsections (i),
(ii) or (iii), it shall be a condition to the transfer that the transferee
execute and deliver to Bear Xxxxxxx an agreement reasonably satisfactory to Bear
Xxxxxxx that the transferee is receiving and holding such Relevant Security
subject to the provisions of this Agreement, and there shall be no further
transfer of such Relevant Security except pursuant to this Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
In the event that (i) the Company, prior to the Company and the Initial
Purchasers entering into a binding agreement for the sale of the Notes (a
"Purchase Agreement"), notifies Bear Xxxxxxx in writing that the Company does
not intend to proceed with the Offering, or (ii) the Purchase Agreement shall be
terminated for any reason prior to the closing of the sale of the Notes by the
Company under the Purchase Agreement, this Agreement shall terminate and the
undersigned shall be released from its obligations hereunder.
44
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By:______________________________________
Print Name:______________________________
45
