EXHIBIT 1.1
16,000,000
The Wet Seal, Inc.
Class A Common Stock, par
value $0.10 per share
UNDERWRITING
AGREEMENT
December 21, 2006
C REDIT S UISSE S ECURITIES (USA) LLC,
As Representative of the Several
Underwriters,
Eleven Madison
Avenue,
New
York, NY 10010-3629
Dear Sirs and Mesdames:
1. Introductory . The
stockholders listed in Schedule A hereto (“ Selling
Stockholders ”) propose severally and not jointly to sell
an aggregate of 16,000,000 outstanding shares (“ Firm
Securities ”, consisting of 6,503,092 outstanding shares
(“ First Tranche Securities ”), 5,594,108
outstanding shares (“ Second Tranche Securities
”) and 3,902,800 outstanding shares (“ Third Tranche
Securities ”)) of the Class A Common Stock, par
value $0.10 per share (“ Securities ”), of The
Wet Seal, Inc., a Delaware corporation (“ Company
”), and the Selling Stockholders also propose to sell to the
Underwriters, at the option of the Underwriters, an aggregate of up
to 2,400,000 additional outstanding shares (“ Optional
Securities ”) of the Securities in the respective amounts
as set forth in Schedule A hereto. The Firm Securities and the
Optional Securities are herein collectively called the “
Offered Securities ”. The Selling Stockholders hereby
agree with the Company and with the several Underwriters named in
Schedule B hereto (“ Underwriters ”) as
follows:
2. Representations and
Warranties of the Company and the Selling Stockholders .
(a) The Company represents and warrants to, and agrees with,
the several Underwriters that:
(i) The Company has filed with the
Commission a registration statement on Form S-3 (No. 333-125012)
covering the registration of the Offered Securities under the Act,
including a related preliminary prospectus. At any particular time,
this registration statement, in the form then on file with the
Commission, including all material then incorporated by reference
therein and then deemed to be a part of the registration statement,
and all 430A Information and all 430C Information, that in any case
has not then been superseded or modified, shall be referred to as
the “ Registration Statement ”.
As of the time of execution and
delivery of this Agreement, the Registration Statement has been
declared effective under the Act and is not proposed to be amended.
The Offered Securities all have been registered under the Act
pursuant to the Registration Statement.
For purposes of this
Agreement:
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“ 430A Information
”, with respect to any registration statement, means
information included in a prospectus and retroactively deemed to be
a part of such registration statement pursuant to Rule
430A(b).
“ 430C Information
”, with respect to any registration statement, means
information included in a prospectus then deemed to be a part of
such registration statement pursuant to Rule 430C.
“ Act ” means the
Securities Act of 1933, as amended.
“ Applicable Time
” means 4:15 p.m. (Eastern time) on the date of this
Agreement.
“ Closing Date ”
has the meaning defined in Section 3 hereof.
“ Commission ”
means the Securities and Exchange Commission.
“ Effective Date
” means the date of the Effective Time of the Registration
Statement.
“ Effective Time
” means the date and time as of which the Registration
Statement was declared effective by the Commission.
“ Exchange Act ”
means the Securities Exchange Act of 1934.
“ Final Prospectus
” means the Statutory Prospectus that discloses the public
offering price, other 430A Information and other final terms of the
Offered Securities and otherwise satisfies Section 10(a) of
the Act.
“ General Use Issuer Free
Writing Prospectus ” means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective
investors, as evidenced by its being so specified in Schedule C
hereto.
“ Issuer Free Writing
Prospectus ” means any “issuer free writing
prospectus,” as defined in Rule 433, relating to the Offered
Securities in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in
the Company’s records pursuant to Rule 433(g).
“ Limited Use Issuer Free
Writing Prospectus ” means any Issuer Free Writing
Prospectus that is not a General Use Issuer Free Writing
Prospectus.
“ Registration
Statement ” without reference to a time means the
Registration Statement as of its Effective Time. For purposes of
the foregoing definitions, 430A Information with respect to a
Registration Statement shall be considered to be included in such
Registration Statement as of the time specified in Rule
430A.
“ Rules and Regulations
” means the rules and regulations of the
Commission.
“ Securities Laws
” means, collectively, the Sarbanes-Oxley Act of 2002
(“ Sarbanes-Oxley ”), the Act, the Exchange Act,
the Rules and Regulations, the auditing principles, rules,
standards and practices applicable to auditors of
“issuers” (as defined in Sarbanes-Oxley) promulgated or
approved by the Public Company Accounting Oversight Board and, as
applicable, the rules of the New York Stock Exchange and the NASDAQ
Stock Market (“ Exchange Rules ”).
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“ Statutory Prospectus
” with reference to a particular time means the base
prospectus dated as of July 29, 2005 included in the
Registration Statement together with, immediately prior to that
time, any document incorporated by reference therein and any 430A
Information or 430C Information with respect to the Registration
Statement. For purposes of the foregoing definition, 430A
Information shall be considered to be included in the Statutory
Prospectus as of the actual time that form of prospectus is filed
with the Commission pursuant to Rule 424(b) or Rule 462(c) and not
retroactively.
Unless otherwise specified, a
reference to a “rule” is to the indicated rule under
the Act.
(ii) (A)(1) On the Effective
Date, (2) on the date of this Agreement and (3) at each
Closing Time and on each Closing Date, the Registration Statement
conformed and will conform in all material respects to the
requirements of the Act and the Rules and Regulations and did not
and will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading,
(B) on its date, at the time of filing of the Final Prospectus
pursuant to Rule 424(b), at each Closing Time and on each Closing
Date, the Final Prospectus will conform in all material respects to
the requirements of the Act and the Rules and Regulations and will
not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The preceding
sentence does not apply to statements in or omissions from any such
document based upon written information furnished to the Company by
any Underwriter through the Representative specifically for use
therein, it being understood and agreed that the only such
information is that described as such in Section 8(c)
hereof.
(iii) (A) At the time of
initial filing of the Registration Statement and (B) at the
date of this Agreement, the Company was not and is not an
“ineligible issuer,” as defined in Rule 405, including
(1) the Company or any other Subsidiary in the preceding three
years not having been convicted of a felony or misdemeanor or
having been made the subject of a judicial or administrative decree
or order as described in Rule 405 and (2) the Company in the
preceding three years not having been the subject of a bankruptcy
petition or insolvency or similar proceeding, not having had a
registration statement be the subject of a proceeding under
Section 8 of the Act and not being the subject of a proceeding
under Section 8A of the Act in connection with the offering of
the Offered Securities, all as described in Rule 405.
(iv) As of the Applicable Time,
neither (A) the General Use Issuer Free Writing
Prospectus(es), if any, issued at or prior to the Applicable Time,
the preliminary prospectus supplement dated December 14, 2006
(which, together with the prospectus included in the Registration
Statement at the time it was declared effective, is the most recent
Statutory Prospectus distributed to investors generally) and the
other information, if any, stated in Schedule C to this Agreement
to be included in the General Disclosure Package, all considered
together (collectively, the “ General Disclosure
Package ”), nor (B) any individual Limited Use
Issuer Free Writing Prospectus, when considered together with the
General Disclosure Package, included any untrue statement of a
material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions
from any Statutory Prospectus or any Issuer Free Writing Prospectus
in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood
and agreed that the only such information furnished by any
Underwriter consists of the information described as such in
Section 8(c) hereof.
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(v) Each Issuer Free Writing
Prospectus, if any, as of its issue date and at all subsequent
times through the completion of the public offer and sale of the
Offered Securities or until any earlier date that the Company
notified or notifies the Representative as described in the next
sentence, did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information
then contained in the Registration Statement. If at any time
following issuance of an Issuer Free Writing Prospectus, if any,
there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would
conflict with the information then contained in the Registration
Statement or as a result of which such Issuer Free Writing
Prospectus, if republished immediately following such event or
development, would include an untrue statement of a material fact
or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
(i) the Company has promptly notified or will promptly notify
the Representative and (ii) the Company has promptly amended
or will promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(vi) The Company has been duly
incorporated and is an existing corporation in good standing under
the laws of the State of Delaware, with all requisite corporate
power and authority to own its properties and conduct its business
as described in the General Disclosure Package; and the Company is
duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease
of property or the conduct of its business requires such
qualification, except where failure to so qualify would not have a
material adverse effect on the condition (financial or otherwise),
business, results of operations, properties or prospects of the
Company and its Subsidiaries taken as a whole, materially and
adversely affect the ability of the Company to perform its
obligations hereunder, or otherwise affect the validity of the
Offered Securities (“ Material Adverse Effect ”
).
(vii) Each subsidiary of the
Company (each, a “ Subsidiary ” and,
collectively, the “ Subsidiaries ”) is listed on
Schedule L hereto; each Subsidiary has been duly incorporated and
is an existing corporation and in good standing under the laws of
the jurisdiction of its incorporation with all requisite corporate
power to own its properties and conduct its business as described
in the General Disclosure Package, except where failure to be so
incorporated and in good standing would not have a Material Adverse
Effect; and each subsidiary of the Company is duly qualified to do
business as a foreign corporation or other business organization in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where such failure to so qualify would not
have a Material Adverse Effect; all of the issued and outstanding
capital stock of each Subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable;
and the capital stock of each Subsidiary owned by the Company,
directly or through Subsidiaries, is owned free from liens,
encumbrances and defects except as described in the General
Disclosure Package.
(viii) The Offered Securities and
all other outstanding shares of capital stock of the Company have
been duly authorized; the authorized equity capitalization of the
Company is as set forth in the General Disclosure Package; all
outstanding shares of capital stock of the Company are, and, when
the Offered Securities have been issued, delivered and paid for in
accordance with the terms of the applicable Convertible Securities
at each Closing Time and on each Closing Date, such Offered
Securities will have been, validly issued, fully paid and
nonassessable, will conform to the information in the General
Disclosure Package and to the description of such Offered
Securities
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contained in the Final Prospectus;
the stockholders of the Company have no preemptive rights with
respect to the Securities; and none of the outstanding shares of
capital stock of the Company have been issued in violation of any
preemptive or similar rights of any security holder. Any unissued
Offered Securities issuable upon conversion of the Convertible
Securities (as hereinafter defined) have been duly authorized by
the Company and validly reserved for issuance, and, at the time of
delivery of such Offered Securities to the Underwriters, such
Offered Securities will be validly issued, fully paid and
non-assessable and will conform to the description thereof in the
Registration Statement, the General Disclosure Package and the
Final Prospectus. With respect to the Offered Securities to be
issued upon the exercise or conversion of Convertible Securities,
the Company has instructed the transfer agent to credit such
Offered Securities to the account of each Selling Stockholder
selling such Offered Securities immediately upon the effectiveness
of the exercise or conversion of such Convertible Securities and
delivery of payment therefor.
(ix) Except as disclosed in the
General Disclosure Package, there are no contracts, agreements or
understandings between the Company and any person that would give
rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder’s fee or other like payment in
connection with this offering.
(x) Except as disclosed in the
General Disclosure Package and except with respect to the
securities that are included in the Registration Statement, there
are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to a Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Act (collectively,
“registration rights”). Other than the Selling
Stockholders, no person has the right to participate in this
offering pursuant to any contract, agreement or
understanding.
(xi) The Offered Securities are
listed on the NASDAQ Global Market, subject to notice of
issuance.
(xii) No consent, approval,
authorization, or order of, or filing or registration with, any
person (including any governmental agency or body or any court) is
required for the consummation of the transactions contemplated by
this Agreement in connection with the offering, issuance and sale
of the Offered Securities by the Selling Stockholders, except such
as have been obtained, or made and such as may be required under
state securities laws.
(xiii) Except as disclosed in
the General Disclosure Package, the Company and its Subsidiaries
have good and marketable title to all material real properties and
all other material properties and assets owned by them, in each
case free from liens, charges, encumbrances and defects that would
materially affect the value thereof or materially interfere with
the use made or to be made thereof by them and, except as disclosed
in the General Disclosure Package, the Company and its Subsidiaries
hold any leased real or personal property under valid and
enforceable leases with no terms or provisions except as would not
interfere with the use made or to be made thereof by them except as
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(xiv) The execution, delivery and
performance of this Agreement, and the issuance and sale of the
Offered Securities will not result in a breach or violation of any
of the terms and provisions of, or constitute a default or a Debt
Repayment Triggering Event (as defined below) under, or result in
the imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of
5
its Subsidiaries pursuant to, the
charter or by-laws of the Company or any of its Subsidiaries, any
statute, rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over
the Company or any of its Subsidiaries or any of their properties,
or any agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the properties of the
Company or any of its Subsidiaries is subject; a “ Debt
Repayment Triggering Event ” means any event or condition
that gives, or with the giving of notice or lapse of time would
give, the holder of any note, debenture, or other evidence of
indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its
Subsidiaries.
(xv) Neither the Company nor
any of its Subsidiaries is in violation of its respective charter
or by-laws or in default (or with the giving of notice or lapse of
time would be in default) under any existing obligation, agreement,
covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which any of
them is a party or by which any of them is bound or to which any of
the properties of any of them is subject, except such defaults that
would not, individually or in the aggregate, result in a Material
Adverse Effect.
(xvi) This Agreement has been
duly authorized, executed and delivered by the Company.
(xvii) The Company and its
Subsidiaries possess, and are in compliance with the terms of, all
adequate certificates, authorizations, franchises, licenses and
permits (“ Licenses ”) necessary or material to
the conduct of the business now conducted except where the failure
to obtain such Licenses or to be in compliance would not have a
Material Adverse Effect; neither of the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any Licenses that, if determined
adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse
Effect.
(xviii) Other than as described
in the General Disclosure Package, no labor dispute with the
employees of the Company or any of its Subsidiaries exists or, to
the knowledge of the Company, is imminent, and the Company does not
have knowledge of any existing or imminent labor disturbance by the
employees of any of its or its Subsidiaries’ principal
suppliers, contractors or customers, that, in any such case, would
reasonably be expected to have a Material Adverse
Effect.
(xix) The Company and its
Subsidiaries own, possess or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and other
intellectual property (collectively, “ intellectual
property rights ”) necessary to conduct the business now
operated by them, or presently employed by them except where the
failure to obtain such intellectual property rights would not have
a Material Adverse Effect; neither the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any
of its Subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
(xx) Except as disclosed in the
General Disclosure Package, neither the Company nor any of its
Subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “ environmental laws
”), owns or operates any real
6
property contaminated with any
substance that is subject to any environmental laws, is liable for
any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material
Adverse Effect; and the Company does not have knowledge of any
pending investigation which would reasonably be expected to lead to
such a claim.
(xxi) The statements in the
General Disclosure Package and the Final Prospectus under the
headings “Material U.S. Federal Income Tax
Consequences”, “Description of Capital Stock”,
“Description of the Notes”, “Description of the
January Warrants” and “Description of Registration
Rights”, insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are, in all
material respects, accurate and fair summaries of such legal
matters, agreements, documents or proceedings and present the
information required to be shown.
(xxii) Any third-party
statistical and market-related data included or incorporated by
reference in the Registration Statement or the General Disclosure
Package are based on or derived from sources that the Company
reasonably and in good faith believes to be reliable and
accurate.
(xxiii) Except as set forth in
the General Disclosure Package, the Company, its Subsidiaries and
the Company’s Board of Directors (the “ Board
”) are, in compliance with Sarbanes-Oxley and all applicable
Exchange Act Rules. The Company maintains a system of internal
controls, including, but not limited to, disclosure controls and
procedures, internal controls over accounting matters and financial
reporting, an internal audit function and legal and regulatory
compliance controls in each case as contemplated under
Rule 13a-15 and 15d-15 of the Exchange Act (collectively,
“ Internal Controls ”) that comply, with the
Securities Laws and are sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with
management’s general or specific authorizations,
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S. General
Accepted Accounting Principles and to maintain accountability for
assets, (C) access to assets is permitted only in accordance
with management’s general or specific authorization,
(D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences and (E) the Company
has adopted and applies corporate governance guidelines. The
Internal Controls are overseen by the Audit Committee (the “
Audit Committee ”) of the Board in accordance with
Exchange Rules. Other than as set forth in the General Disclosure
Package, the Company has not publicly disclosed or reported to the
Audit Committee or the Board, and within the next 90 days the
Company does not reasonably expect to publicly disclose or report
to the Audit Committee or the Board, a significant deficiency,
material weakness, change in Internal Controls or fraud involving
management or other employees who have a significant role in
Internal Controls (each, an “ Internal Control Event
”), any violation of, or failure to comply with, the
Securities Laws, or any matter which, if determined adversely,
would have a Material Adverse Effect.
(xxiv) A member of the Audit
Committee has confirmed to the Chief Executive Officer that, except
as set forth in the General Disclosure Package, the Audit Committee
is not reviewing or investigating, and neither the Company’s
independent auditors nor its internal auditors have recommended
that the Audit Committee review or investigate, (A) adding to,
deleting, changing the application of, or changing the
Company’s disclosure with respect to, any of the
Company’s material accounting policies, (B) any matter
which could result in a restatement of the Company’s
financial statements for any annual or interim period during the
current or prior three fiscal years or (C) any Internal
Control Event.
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(xxv) Except as disclosed in
the General Disclosure Package, there are no pending actions, suits
or proceedings (including any inquiries or investigations by any
court or governmental agency or body, domestic or foreign) against
or affecting the Company, any of its Subsidiaries or any of their
respective properties that, if determined adversely to the Company
or any of its Subsidiaries, would individually or in the aggregate
have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under
this Agreement, or which are otherwise material in the context of
the sale of the Offered Securities; and no such actions, suits or
proceedings (including any inquiries or investigations by any court
or governmental agency or body, domestic or foreign) are, to the
Company’s knowledge, threatened or contemplated.
(xxvi) The restated financial
statements included in the Registration Statement and the General
Disclosure Package present fairly the financial position of the
Company and its consolidated Subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with
the generally accepted accounting principles in the United States
applied on a consistent basis and the schedules included in each
Registration Statement present fairly the information required to
be stated therein.
(xxvii) Except as disclosed in
the General Disclosure Package, since the end of the period covered
by the latest audited financial statements included in the General
Disclosure Package (A) there has been no change, nor any
development or event involving a prospective change, in the
condition (financial or otherwise), results of operations,
business, properties or prospects of the Company and its
Subsidiaries, taken as a whole that is material and adverse,
(B) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock and (C) there has been no material adverse change in the
capital stock, short-term indebtedness, long-term indebtedness, net
current assets or net assets of the Company and its
Subsidiaries.
(xxviii) The Company is not
and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds from the Convertible
Securities as described in the General Disclosure Package, will not
be an “investment company” as defined in the Investment
Company Act of 1940 (the “ Investment Company Act
”).
(xxix) No “nationally
recognized statistical rating organization” as such term is
defined for purposes of Rule 436(g)(2) (i) has imposed (or has
informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company’s retaining any
rating assigned to the Company or any securities of the Company or
(ii) has indicated to the Company that it is considering any
of the actions described in Section 7(c)(ii)
hereof.
(xxx) The Company has not
received any written comments from the Commission staff in
connection with the Company’s reports under the Exchange Act
that remain unresolved.
(b) Each Selling Stockholder
severally and not jointly represents and warrants to, and agrees
with, the several Underwriters that:
(i) Such Selling Stockholder is
validly existing and in good standing under the laws of the
jurisdiction of its organization.
(ii) Such Selling Stockholder
(excluding Prentice Capital Partners, LP, Prentice Capital Partners
QP, LP, Prentice Capital Offshore Ltd. and GPC XLIII, LLC
(collectively, the “ Prentice Entities ”) and
S.A.C. Capital Associates, LLC) has placed in custody under a
Custody Agreement (the
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“ Custody Agreement
”, and, collectively, the “ Custody Agreements
”) for delivery under this Agreement, (A) certificates
in negotiable form (with, if required, signature guaranteed by a
participant in the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Program or the
Stock Exchange Medallion Program) or valid securities entitlements
in book-entry form representing Offered Securities and/or
(B) certificates representing shares of the Company’s
Series C Preferred Stock, which are convertible into Common Stock,
Series B, C or D Warrants, which are exercisable for Common Stock
and/or Notes due January 12, 2012, which are convertible into
Common Stock, each in negotiable and proper deliverable form
(collectively, the “ Convertible Securities ”)
(with, if required, signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program, the New York Stock
Exchange Medallion Signature Program or the Stock Exchange
Medallion Program) and, to the extent required, a duly executed
stock power or powers, in blank, bearing the signature of the such
Selling Stockholder so guaranteed, together with duly completed and
executed irrevocable exercise and conversion notices in respect of
such Convertible Securities (the “ Conversion Notices
”); and the shares of Common Stock represented by such
certificates or securities entitlements, together with the shares
of Common Stock issuable upon the exercise or conversion, as
applicable, of such Convertible Securities, together represent (and
the Conversion Notices cover) no less than the number of Offered
Securities to be sold by such Selling Stockholder
hereunder.
(iii) Such Selling Stockholder
(excluding the Prentice Entities and S.A.C. Capital Associates,
LLC) has duly and irrevocably (subject to the requirement that all
Firm Securities being sold by such Selling Stockholder in each
tranche are no longer beneficially owned by such Selling
Stockholder at the time any conversion or exercise notice of
Convertible Securities is submitted for a subsequent tranche)
executed and delivered a power of attorney (the “ Power of
Attorney ”) appointing Messrs. Mathew Hoffman and Michael
Weiss as attorneys-in-fact (the “ Attorneys-in-Fact
”), with full power of substitution, and with full authority
(exercisable by any one or more of them) to execute and deliver
this Agreement on such Selling Stockholder’s behalf and to
take such other action as may be necessary or desirable to carry
out the provisions hereof on behalf of the Selling
Stockholder.
(iv) Such Selling Stockholder
has full right, power and authority, corporate or otherwise, to
enter into this Agreement, the Custody Agreement and the Power of
Attorney.
(v) This Agreement has been
duly authorized, executed and delivered by or on behalf of such
Selling Stockholder.
(vi) Each of the Custody
Agreement and the Power of Attorney has been duly authorized,
executed and delivered by such Selling Stockholder (excluding the
Prentice Entities and S.A.C. Capital Associates, LLC) and
constitutes a valid and legally binding instrument enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’
rights and to general equity principles.
(vii) The execution and delivery by
such Selling Stockholder, and the performance by such Selling
Stockholder of its obligations under, this Agreement, the Custody
Agreement and the Power of Attorney and the consummation by such
Selling Stockholder of the transactions herein and therein
contemplated will not contravene any provision of applicable law or
the organizational documents of such Selling Stockholder or any
agreement or other instrument binding upon such Selling Stockholder
or any of its assets or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Selling Stockholder or any of its assets, except where
such
9
contravention would not individually
or in the aggregate materially and adversely affect the ability of
such Selling Stockholder to consummate the transactions
contemplated hereby, and no consent, approval, authorization, or
order of, or filing with, any governmental agency or body or any
court is required to be obtained or made by such Selling
Stockholder for the performance by such Selling Stockholder of its
obligations under this Agreement, except (A) such as have been
obtained or made, (B) such as may be required under state
securities laws, (C) such as may be required by the securities
laws of any jurisdiction outside the United States of America and
(D) the filing of any document by such Selling Stockholder
pursuant to Section 13 or Section 16 of the Exchange
Act.
(viii) With respect to any
Offered Securities to be sold by such Selling Stockholder that are
outstanding on the date of this Agreement, such Selling Stockholder
has, and at each Closing Time or on each Optional Closing Date will
have good and valid title to, and full right, power and authority
to sell, assign, transfer and deliver the Offered Securities to be
delivered by such Selling Stockholder at such Closing Time or on
each Optional Closing Date hereunder; with respect to any Offered
Securities to be sold by such Selling Stockholder that are to be
issued upon conversion or exercise of Convertible Securities, such
Selling Stockholder will have at each Closing Time or on each
Optional Closing Date good and valid title to, and full right,
power and authority to sell, assign, transfer and deliver such
Offered Securities; and upon delivery of the certificates or
securities entitlements representing the Offered Securities to be
sold by such Selling Stockholder hereunder (including any Offered
Securities to be issued upon conversion or exercise of the
Convertible Securities) and payment therefor pursuant hereto, the
several Underwriters will acquire valid and unencumbered title to
the Offered Securities to be delivered by such Selling Stockholder
hereunder at such Closing Time or on each Optional Closing
Date.
(ix) (A)(1) On their respective
Effective Dates, (2) on the date of this Agreement and
(3) at each Closing Time and on each Closing Date, the
Registration Statement did not and will not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on its date, at the time of filing
of the Final Prospectus pursuant to Rule 424(b), and at each
Closing Time and on each Closing Date, the Final Prospectus will
not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading. As of the Applicable
Time, neither (i) the General Disclosure Package nor
(ii) any individual Limited Use Issuer Free Writing
Prospectus, when considered together with the General Disclosure
Package, included any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. This Section 2(b)(ix) applies
only to such Selling Stockholder to the extent that any statements
in or omissions from the Registration Statement, the Final
Prospectus, the preliminary prospectus supplement dated
December 14, 2006 or any Limited Use Issuer Free Writing
Prospectus are made in reliance and in conformity with written
information relating to such Selling Stockholder furnished to the
Company by such Selling Stockholder specifically for use therein,
it being understood and agreed that the only such information
furnished by such Selling Stockholder consists of all the
information pertaining to such Selling Stockholder as set forth in
the preliminary prospectus supplement dated December 14, 2006
and the Final Prospectus under the caption “Selling
Stockholders”.
(x) There are no material
agreements or arrangements relating to the Company or its
Subsidiaries to which such Selling Stockholder is a party, which
are required to be described in the Registration Statement, the
Final Prospectus or the General Disclosure Package or to be filed
as exhibits thereto that are not so described or filed.
10
(xi) Except as disclosed in the
General Disclosure Package, there are no contracts, agreements or
understandings between such Selling Stockholder and any person
relating to the transactions contemplated hereby that would give
rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder’s fee or other like
payment.
3. Purchase, Sale and
Delivery of Offered Securities . On the basis of the
representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, each Selling
Stockholder agrees, severally and not jointly, to sell to the
Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase from each Selling Stockholder, at a purchase
price of $5.64 per share, that number of Firm Securities
(rounded up or down, as determined by the Representative in its
discretion, in order to avoid fractions) obtained by multiplying
the number of Firm Securities set forth opposite the name of such
Selling Stockholder in the column entitled “Total Firm
Securities” in Schedule A hereto by a fraction the
numerator of which is the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule B hereto and
the denominator of which is the total number of Firm
Securities.
Certificates in negotiable form or,
if applicable, valid securities entitlements in book entry form,
for the Offered Securities and Convertible Securities have been
placed in custody, for delivery under this Agreement, under Custody
Agreements made with American Stock Transfer & Trust
Company, as custodian (“ Custodian ”), for all
Selling Stockholders other than the Prentice Entities and S.A.C.
Capital Associates, LLC. Each Selling Stockholder (other than the
Prentice Entities and S.A.C. Capital Associates) agrees that the
shares or Convertible Securities represented by the certificates
and securities entitlements held in custody for such Selling
Stockholder under such Custody Agreements are subject to the
interests of the Underwriters hereunder, that the arrangements made
by such Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of such Selling Stockholder
hereunder shall not be terminated by operation of law, whether by
the death of any individual Selling Stockholder or the occurrence
of any other event, or in the case of a trust, by the death of any
trustee or trustees or the termination of such trust.
The Custodian, the Prentice Entities
or S.A.C. Capital Associates, LLC, as applicable, will deliver the
First Tranche Securities, Second Tranche Securities and Third
Tranche Securities to the Representative for the accounts of the
Underwriters, against payment of the purchase price in Federal
(same day) funds by wire transfer to accounts at banks acceptable
to the Representative drawn to the order of each of the Selling
Stockholders, as applicable, at the office of Davis
Polk & Wardwell, Menlo Park, California, at approximately
9:00 A.M., 9:30 A.M. and 10:00 A.M. (each time referred to herein
as a “ Closing Time ”), respectively, New York
time, on December 28, 2006 (it being understood that all Firm
Securities shall have been delivered to the Representative no later
than 10:00 A.M. New York time on such date) or at such other time
not later than seven full business days thereafter as the
Representative and the Custodian determine, such time being herein
referred to as the “ First Closing Date ”. The
Firm Securities so to be delivered will be in book-entry form, in
such denominations and registered in such names as the
Representative requests.
In addition, upon written notice
from the Representative given to the Company and the Selling
Stockholders from time to time not more than 30 days subsequent to
the date of the Final Prospectus, the Underwriters may purchase all
or less than all of the Optional Securities at the purchase price
per Security to be paid for the Firm Securities. The Selling
Stockholders agree, severally and not jointly, to sell to the
Underwriters the respective numbers of Optional Securities obtained
by multiplying the number of Optional Securities specified in such
notice by a fraction the numerator of which is the number of shares
set forth opposite the names of such Selling Stockholders in
Schedule A hereto under the caption “Number of Optional
Securities to be Sold” and the denominator of which is the
total number of Optional Securities (subject to adjustment by the
Representative to eliminate fractions). Such Optional Securities
shall be purchased from each Selling Stockholder for the account of
each Underwriter in the same proportion as the number of Firm
Securities set forth opposite such Underwriter’s name bears
to the total number of Firm Securities (subject to
11
adjustment by the Representative to eliminate
fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the
sale of the Firm Securities. No Optional Securities shall be sold
or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the
Optional Securities or any portion thereof may be exercised from
time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by the
Representative to the Selling Stockholders.
Each time for the delivery of and
payment for the Optional Securities, being herein referred to as an
“ Optional Closing Date ”, which may be the
First Closing Date (the First Closing Date and each Optional
Closing Date, if any, being sometimes referred to as a “
Closing Date ”), shall be determined by the
Representative but shall be not later than five full business days
after written notice of election to purchase Optional Securities is
given. The Custodian, the Prentice Entities or S.A.C. Capital
Associates, LLC, as applicable, will deliver the Optional
Securities being purchased on each Optional Closing Date to the
Representative for the accounts of the several Underwriters,
against payment of the purchase price in Federal (same day) funds
by wire transfer to accounts at banks acceptable to the
Representative drawn to the order of each of the Selling
Stockholders, as applicable, at the office of Davis Polk &
Wardwell, Menlo Park, California at 10:00 A.M. New York time on
such date. The Optional Securities so to be delivered on each
Optional Closing Date will be in book-entry form, in such
denominations and registered in such names as the Representative
requests.
4. Offering by
Underwriters . It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as
set forth in the Final Prospectus.
5. Certain Agreements of
the Company and the Selling Stockholders . (a) The Company
agrees with the several Underwriters and the Selling Stockholders,
severally and not jointly, that:
(i) The Company will file the
Final Prospectus, in a form approved by the Representative, with
the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by the
Representative, subparagraph (4)) of Rule 424(b) not later
than the second business day following the execution and delivery
of this Agreement. The Company will advise the Representative
promptly of any such filing pursuant to Rule 424(b) and provide
satisfactory evidence to the Representative of such timely
filing.
(ii) The Company will promptly
advise the Representative of any proposal to amend or supplement at
any time the Registration Statement or any Statutory Prospectus and
will not effect such amendment or supplementation without the
Representative’s consent; and the Company will also advise
the Representative promptly of: (A) any amendment or
supplementation of a Registration Statement or any Statutory
Prospectus, (B) any request by the Commission or its staff for
any amendment to any Registration Statement, for any supplement to
any Statutory Prospectus or for any additional information,
(C) the institution by the Commission of any stop order
proceedings in respect of a Registration Statement or the
threatening of any proceeding for that purpose, and (D) the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Offered Securities in any
jurisdiction or the institution or threatening of any proceedings
for such purpose. The Company will use its reasonable best efforts
to prevent the issuance of any such stop order or the suspension of
any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) If, at any time when a
prospectus relating to the Offered Securities is (or but for the
exemption in Rule 172 under the Act would be) required to be
delivered under the Act in connection
12
with sales by any Underwriter or
dealer, any event occurs as a result of which the Final Prospectus
as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary
at any time to amend the Registration Statement or supplement the
Final Prospectus to comply with the Act, the Company will promptly
notify the Representative of such event and will promptly prepare
and file with the Commission and furnish, at its own expense, to
the Underwriters and the dealers and any other dealers upon request
of the Representative, an amendment or supplement which will
correct such statement or omission or an amendment which will
effect such compliance. Neither the Representative’s consent
to, nor the Underwriters’ delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set
forth in Section 7 hereof.
(iv) As soon as practicable,
but not later than the Availability Date (as defined below), the
Company will make generally available to its securityholders an
earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Registration Statement
(or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a)
of the Act and Rule 158 under the Act. For the purpose of the
preceding sentence, “ Availability Date ” means
the day after the end of the fourth fiscal quarter following the
fiscal quarter that includes such Effective Date on which the
Company is required to file its Form 10-Q for such fiscal quarter
except that, if such fourth fiscal quarter is the last quarter of
the Company’s fiscal year, “ Availability Date
” means the day after the end of such fourth fiscal quarter
on which the Company is required to file its Form 10-K.
(v) The Company will furnish to
the Representative copies of each Registration Statement (one of
which will be signed and will include all exhibits), each related
Statutory Prospectus, and, so long as a prospectus relating to the
Offered Securities is (or but for the exemption in Rule 172 would
be) required to be delivered under the Act, the Final Prospectus
and all amendments and supplements to such documents, in each case
in such quantities as the Representative requests. The Final
Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the execution and delivery of
this Agreement. All other documents shall be so furnished as soon
as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(vi) The Company will arrange
for the qualification of the Offered Securities for sale under the
laws of such jurisdictions as the Representative designates and
will continue such qualifications in effect so long as required for
the distribution; provided, however, that the Company will not be
required to arrange for qualification of the Offered Securities in
any jurisdiction in which the Company would be required to qualify
to do business as a foreign corporation or to execute a general
consent to service of process in order to effect such qualification
of the Offered Securities.
(vii) The Company will pay all
expenses incident to the performance of its obligations under this
Agreement, including, without limitation, fees and expenses in
connection with the registration of the Offered Securities under
the Exchange Act, and expenses incurred in distributing preliminary
prospectuses and the Final Prospectus (including any amendments and
supplements thereto) to the Underwriters and for expenses incurred
for preparing, printing and distributing any Issuer Free Writing
Prospectuses to investors or prospective investors.
(viii) The Company will not
take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result
in, stabiliz
