Exhibit 1.1
______________ Shares
CITI TRENDS, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
________, 2005
CIBC World Markets Corp.
Wachovia Capital Markets, LLC
XX Xxxxx & Co., LLC
Xxxxx Xxxxxxx & Co.
as Representatives of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Citi Trends, Inc., a Delaware corporation (the "Company") and the
persons listed on Schedule II hereto (each, a "Selling Stockholder," and
together, the "Selling Stockholders"), propose, subject to the terms and
conditions contained herein, to sell to you and the other underwriters named on
Schedule I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives (the "Representatives"), an aggregate of ________ shares (the
"Firm Shares") of the Company's common stock, $0.01 par value per share (the
"Common Stock"). Of the _____ Firm Shares, _____ are to be issued and sold by
the Company and _____ are to be sold by the Selling Stockholders. The respective
amounts of the Firm Shares to be purchased by each of the several Underwriters
are set forth opposite their names on Schedule I hereto. In addition, [the
Company proposes to grant to the Underwriters an option to purchase up to an
additional ___________ shares (the "Company Option Shares") of Common Stock from
the Company] [the Selling Stockholders propose to grant to the Underwriters an
option to purchase up to an additional _________ shares (the "Selling
Stockholder Option Shares," and together with the Company Option Shares, the
"Option Shares") of Common Stock from the Selling Stockholders] for the purpose
of covering over-allotments, if any, in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are collectively called the
"Shares."
[As part of the offering contemplated by this Agreement, the
Company, the Selling Stockholders and the Underwriters agree that up to ________
shares (the "Directed Shares") of the Shares to be purchased by the Underwriters
shall be reserved for sale by the
Underwriters to certain of the Company's directors, officers, employees and
other parties associated with the Company (each, individually a "Participant"
and collectively, the "Participants"), as part of the distribution of the Shares
by the Underwriters, under the terms of the friends and family directed sales
program (the "Friends and Family Program"), and subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. and all other applicable laws, rules and
regulations. Shares to be sold pursuant to the Friends and Family Program shall
be sold pursuant to this Agreement at the public offering price. To the extent
that any such Directed Shares are not orally confirmed for purchase by a
Participant by the end of the first business day after the date of this
Agreement, such Directed Shares may be offered to the public as part of the
public offering contemplated hereby.]
The Company has prepared and filed in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a Registration Statement
(as hereinafter defined) on Form S-1 (No. 333-_____), including a preliminary
prospectus relating to the Shares, and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration Statement
(including all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to you. The
term "Preliminary Prospectus" means any preliminary prospectus included at any
time as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules. The term "Registration Statement"
as used in this Agreement means the initial registration statement (including
all exhibits, financial schedules), as amended at the time and on the date it
becomes effective (the "Effective Date"), including the information (if any)
contained in the form of final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and deemed to be part thereof at the time of
effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules. The term "Prospectus" shall
also include any related preliminary prospectus as first filed with the
Commission (whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and any amendment thereof or
supplement thereto.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Prospectus, as soon after the Effective Date and the date of
this Agreement as the Representatives deem advisable. The Company and the
Selling Stockholders hereby confirm that the Underwriters and dealers have been
authorized to distribute or cause to be distributed each Preliminary Prospectus
and are authorized to distribute the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to the
Underwriters).
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1. Sale, Purchase, Delivery and Payment for the Shares. On the
basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____ per
share (the "Initial Price"), the number of Firm Shares set forth opposite
the name of such Underwriter under the column "Number of Firm Shares to be
Purchased from the Company" on Schedule I to this Agreement, subject to
adjustment in accordance with Section 9 hereof. The Selling Stockholders
agree to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Selling
Stockholders, at the Initial Price, the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of Firm
Shares to be Purchased from the Selling Stockholders" on Schedule I to
this Agreement, subject to adjustment in accordance with Section 9 hereof.
(b) [The Company] [The Selling Stockholders] [The Company and the
Selling Stockholders] hereby grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00 noon,
New York City time, on the business day before the Firm Shares Closing
Date (as defined below), and from time to time thereafter within 30 days
after the date of this Agreement, in each case upon written, facsimile or
telegraphic notice, or verbal or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Representatives to the Company no
later than 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date or at least two business days before the Option
Shares Closing Date (as defined below), as the case may be, setting forth
the number of Option Shares to be purchased and the time and date (if
other than the Firm Shares Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of DLA
Xxxxx Xxxxxxx Xxxx Xxxx US LLP, 0000 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, at
10:00 a.m., local time, on the third business day following the date of
this Agreement or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by
the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date"). In addition, in the
event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price, and delivery of the
certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representatives and the Company, on each date of delivery as specified in
the notice from the Representatives to the Company (such time and date of
delivery and payment are called the "Option Shares Closing
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Date"). The Firm Shares Closing Date and any Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing
Dates."
(d) Payment shall be made to the Company and the Selling
Stockholders by wire transfer of immediately available funds or by
certified or official bank check or checks payable in New York Clearing
House (same day) funds drawn to the order of the Company and to the
Selling Stockholders for the shares purchased from the Selling
Stockholders, against delivery of the respective certificates to the
Representatives for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing
Date or, in the case of Option Shares, on the day of notice of exercise of
the option as described in Section 1(b) and shall be delivered by or on
behalf of the Company to the Representatives through the facilities of the
Depository Trust Company ("DTC") for the account of such Underwriter. The
Company will cause the certificates representing the Shares to be made
available for checking and packaging, at such place as is designated by
the Representatives, on the full business day before the Firm Shares
Closing Date (or the Option Shares Closing Date in the case of the Option
Shares).
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
(a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective amendment
to the Registration Statement becomes effective, the date any supplement
or amendment to the Prospectus is filed with the Commission and each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the requirements of the Securities Act and the Rules and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the published rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and on the Effective Date and the other dates
referred to above neither the Registration Statement nor the Prospectus,
nor any amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. When any related preliminary prospectus was first
filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the
Rules) and when any amendment thereof or supplement thereto was first
filed with the Commission, such preliminary prospectus as amended or
supplemented complied in all material respects with the applicable
provisions of the Securities Act and the Rules and did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein
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or necessary in order to make the statements therein not misleading. If
applicable, each Preliminary Prospectus and the Prospectus delivered to
the Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T. If
Rule 434 is used, the Company will comply with the requirements of Rule
434 and the Prospectus shall not be "materially different," as such term
is used in Rule 434, from the Prospectus included in the Registration
Statement at the time it became effective. Notwithstanding the foregoing,
none of the representations and warranties in this Section 2(a) shall
apply to statements in, or omissions from, the Registration Statement or
the Prospectus made in reliance upon, and in conformity with, information
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus. With
respect to the preceding sentence, the Company acknowledges that the only
information furnished in writing by the Representatives on behalf of the
several Underwriters for use in the Registration Statement or the
Prospectus is the statements contained in the [third, fourth, fifth and
sixth sentences of the fifth paragraph, the tenth paragraph and thirteenth
and fourteenth paragraphs under the caption "Underwriting" in the
Prospectus.][Verify once the prospectus is finalized].
(b) The Registration Statement is effective under the Securities
Act and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and no proceedings for that
purpose have been instituted or are threatened under the Securities Act.
Any required filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b).
(c) The financial statements of the Company (including all notes
and schedules thereto) included in the Registration Statement and
Prospectus present fairly the financial position of the Company at the
dates indicated and the statement of operations, stockholders' equity and
cash flows of the Company for the periods specified; and such financial
statements and related schedules and notes thereto, and the unaudited
financial information included as part of the Registration Statement, have
been prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved. The summary and
selected financial data included in the Registration Statement and the
Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements
set forth in the Registration Statement and the Prospectus and other
financial information.
(d) (i) KPMG LLP, whose reports are filed with the Commission as a
part of the Registration Statement, are and, during the periods covered by
their reports, are an independent registered public accounting firm as
required by the Securities Act and the Rules.
(ii) The Company has not had any disagreements with its
current or former independent auditors on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure and none of the events listed in Item 304(a)(1)(v)(A)
through (D) of Regulation S-K promulgated under the Securities Act have
occurred during the immediately preceding five fiscal years.
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(e) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has no
subsidiary or subsidiaries and does not control, directly or indirectly,
any corporation, partnership, joint venture, association or other business
organization. The Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification, except for
such jurisdictions where the failure to so qualify individually or in the
aggregate would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company (a
"Material Adverse Effect"); and to the Company's knowledge, no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. The Company does not own, lease or license any
asset or property or conduct any business outside the United States of
America.
(f) The Company has all requisite corporate power and authority,
and all necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory bodies
or any other person or entity (collectively, the "Permits"), to own, lease
and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack of
such Permits, individually or in the aggregate, could not have a Material
Adverse Effect. The Company has fulfilled and performed in all material
respects all of its obligations with respect to such Permits and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required under the Securities Act and state and foreign blue sky laws, no
other Permits are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
(g) (i) To the best of the Company's knowledge, the Company owns
or possesses legally enforceable rights to use all patents, patent rights,
inventions, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other
similar rights and proprietary knowledge (collectively, "Intangibles")
currently used in or necessary for the conduct of its business, and (ii)
to the best of the Company's knowledge, the Company has not knowingly
infringed upon or misappropriated the intellectual property rights of any
third-parties, and (iii) no claims in connection with any of the items in
clause (ii) are pending or, to the Company's knowledge, threatened, and to
the Company's knowledge there are no bases for such claims. To the best of
Company's knowledge, none of the Intangibles currently used in connection
with its business is currently being infringed by a third-party and the
Company has not made any claims that a third-party has violated or
infringed any of the Company's rights in such Intangibles.
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(h) The Company has good and marketable title in fee simple to all
real property, and good and marketable title to all other property owned
by it, in each case free and clear of all liens, encumbrances, claims,
security interests and defects, except such as do not materially affect
the value of such property and do not materially interfere with the use
made or proposed to be made of such property by the Company. All property
held under lease by the Company is held by it under valid, existing and
enforceable leases, free and clear of all liens, encumbrances, claims,
security interests and defects, except such as are not material and do not
materially interfere with the use made or proposed to be made of such
property by the Company. Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there has not been any Material Adverse Effect; (ii) the Company has not
sustained any loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other governmental action,
order or decree which could have a Material Adverse Effect; and (iii)
since the date of the latest balance sheet included in the Registration
Statement and the Prospectus, the Company has not (A) issued any
securities or incurred any liability or obligation, direct or contingent,
for borrowed money, except such liabilities or obligations incurred in the
ordinary course of business, (B) entered into any transaction not in the
ordinary course of business or (C) declared or paid any dividend or made
any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any
shares of its capital stock.
(i) There is no document, contract or other agreement required to
be described in the Registration Statement or Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed,
as applicable, as required by the Securities Act or Rules. Each
description of a contract, document, agreement or instrument in the
Registration Statement and the Prospectus accurately reflects in all
respects the terms of the underlying contract, document, agreement or
instrument. Each contract, document or other agreement described in the
Registration Statement and Prospectus or listed in the Exhibits to the
Registration Statement is in full force and effect and is valid and
enforceable by and against the Company, as the case may be, in accordance
with its terms. Neither the Company nor, to the Company's knowledge, any
other party is in default in the observance or performance of any term or
obligation to be performed by it under any such contract, document,
agreement or instrument, and no event has occurred which with notice or
lapse of time or both would constitute such a default. No default exists,
and no event has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any term,
covenant or condition, by the Company of any other contract, document,
agreement or instrument to which the Company is a party or by which
Company or its properties or business may be bound or affected which
default or event, individually or in the aggregate, could have a Material
Adverse Effect.
(j) The statistical and market related data included in the
Registration Statement are based on or derived from sources that the
Company believes to be reliable and accurate.
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(k) The Company is not in violation of any term or provision of
its certificate of incorporation or by-laws, each as amended through the
date hereof and each Closing Date (respectively, the "Charter" and
"Bylaws"), or of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such violation,
individually or in the aggregate, could have a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company pursuant to the terms of, any
indenture, mortgage, deed of trust or other contract, document, agreement
or instrument to which the Company is a party or by which the Company or
any of its properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation applicable to
the Company or violate any provision of the Charter or Bylaws, except for
such consents or waivers which have already been obtained and are in full
force and effect.
(m) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued
and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no preemptive or other
similar rights to subscribe for or to purchase or acquire any shares of
Common Stock or any such rights pursuant to the Charter or Bylaws or any
contract, document, agreement or instrument to or by which the Company is
a party or bound. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and nonassessable
and none of them will be issued in violation of any preemptive or other
similar right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right calling
for the issuance of, and there is no commitment, plan or arrangement to
issue, any share of capital stock of the Company or any security
convertible into, or exercisable or exchangeable for, such capital stock.
The Common Stock and the Shares conform in all material respects to all
statements in relation thereto contained in the Registration Statement and
the Prospectus.
(n) No holder of any security of the Company has any right, which
has not been waived in writing, to have any security owned by such holder
included in the Registration Statement or to demand registration of any
security owned by such holder for a period of 180 days after the date of
this Agreement. Each director and executive officer of the Company and
each stockholder of the Company listed on Schedule III has delivered to
the Representatives his enforceable written lock-up agreement in the form
attached to this Agreement as Exhibit A hereto ("Lock-Up Agreement").
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(o) All necessary corporate action has been duly and validly taken
by the Company and to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the Company.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitute and will constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(p) There is not pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, to which the Company is a party, or to its
which properties or assets are subject, before or brought by any court,
arbitrator or governmental agency or body.
(q) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
could have a Material Adverse Effect. The Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
principal suppliers or contractors which could have a Material Adverse
Effect. The Company is not aware of any threatened or pending litigation
between the Company and any of its officers, directors, employees or
stockholders which, if adversely determined, could have a Material Adverse
Effect and has no reason to believe that such officers will not remain in
the employment of the Company.
(r) No transaction has occurred between or among the Company and
any of its officers, directors, employees or shareholders or any affiliate
or affiliates of any such officer or director or shareholder that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of the Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares.
(t) The Company has filed all federal, state, local and foreign
tax returns which are required to be filed through the date hereof, which
returns are true and correct in all material respects or has received
timely extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are
material and have become due. There are no tax audits or investigations
pending, which if adversely determined could have a Material Adverse
Effect; nor are there any material proposed additional tax assessments
against the Company.
(u) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation National
Market System ("Nasdaq"). The Company has taken all necessary actions to
ensure that it will be in
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compliance with all applicable corporate governance requirements set forth
in the NASDAQ Marketplace Rules that are in effect with respect to it and
is actively taking steps to ensure that it will be in compliance with
other applicable corporate governance requirements set forth in the NASDAQ
Marketplace Rules which will in the future become applicable to it. A
registration statement has been filed on Form 8-A pursuant to Section 12
of the Exchange Act, which registration statement complies in all material
respects with the Exchange Act.
(v) 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 the quotation of the Common Stock on the Nasdaq National
Market, nor has the Company received any notification that the Commission
or the Nasdaq National Market is contemplating terminating such
registration or quotation.
(w) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences; the chief executive
officer and the chief financial officer of the Company have made all
certifications required by the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act") and any related rules and regulations promulgated by
the Commission, and the statements contained in any such certification are
complete and correct; the Company maintains "disclosure controls and
procedures" (as defined in Rule 13a-14(c) under the Exchange Act); the
Company is otherwise in compliance in all material respects with all
applicable effective provisions of the Xxxxxxxx-Xxxxx Act and is actively
taking steps to ensure that it will be in compliance with other applicable
provisions of the Xxxxxxxx-Xxxxx Act upon the effectiveness of such
provisions.
(x) Based on the evaluation of its internal control over financial
reporting, the Company is not aware of (i) any significant deficiency or
material weakness in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal control over financial reporting.
(y) There are no material off-balance sheet arrangements (as
defined in Regulation S-K Item 303(a)(4)(ii) promulgated under the
Securities Act) that may have a material current or future effect on the
assets, properties, condition, financial or otherwise, or in the results
of operations, business affairs or business prospects of the Company.
(z) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged or propose to engage
after giving effect to the
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transactions described in the Prospectus; all policies of insurance and
fidelity or surety bonds insuring the Company or the Company's businesses,
assets, employees, officers and directors are in full force and effect;
the Company is in compliance with the terms of such policies and
instruments in all material respects; and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that is not materially greater than the current cost. The Company has not
been denied any insurance coverage which it has sought or for which it has
applied.
(aa) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or blue sky laws) has been obtained or made and
is in full force and effect.
(bb) There are no affiliations with the NASD among the Company's
officers, directors or, to the knowledge of the Company, any stockholder
of the Company, except as set forth in the Registration Statement.
(cc) (i) The Company is in compliance in all material respects with
all rules, laws and regulation relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business; (ii) the
Company has not received any notice from any governmental authority or
third party of an asserted claim under Environmental Laws; (iii) the
Company has received all permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct its business and is in
compliance with all terms and conditions of any such permit, license or
approval; (iv) to the Company's knowledge, no facts currently exist that
will require the Company to make future material capital expenditures to
comply with Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601,
et. seq.) or otherwise designated as a contaminated site under applicable
state or local law. The Company has not been named as a "potentially
responsible party" under the CER, CLA 1980.
(dd) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or
11
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis
of such review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.
(ee) The Company is not and, after giving effect to the offering
and sale of the Shares and before or after the application of proceeds
thereof as described in the Prospectus, will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(ff) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company, has, directly or
indirectly, while acting on behalf of the Company (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
(gg) The operations of the Company are and have been conducted at
all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency (collectively, the "Money Laundering Laws") and
no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company with
respect to the Money Laundering Laws is pending, or to the best knowledge
of the Company, threatened.
(hh) Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Company will not directly or indirectly use the proceeds of the offering,
or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(ii) [Neither the Company, the Selling Stockholders nor any other
person associated with or acting on behalf of the Company or the Selling
Stockholders, including, without limitation, any director, officer, agent
or employee of the Company or the Selling Stockholders has offered or
caused the Underwriters to offer any of the Shares to any person pursuant
to the Friends and Family Program with the specific intent to unlawfully
influence (i) a customer or supplier of the Company to alter the
customer's or supplier's level or type of business with the Company or
(ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.]
(jj) Except as described in the Prospectus, the Company has not
offered, sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales pursuant
to Rule 144A under, or Regulations D or S
12
of, the Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(kk) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in
Section 3(3) of ERISA and such regulations and published interpretations
in which its employees are eligible to participate and each such plan is
in compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. No
"Reportable Event" (as defined in 12 ERISA) has occurred with respect to
any "Pension Plan" (as defined in ERISA) for which the Company could have
any liability.
(ll) Each of the Company, its directors and officers has not
distributed and will not distribute prior to the later of (i) the Firm
Shares Closing Date, or the Option Shares Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
(mm) No forward looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained
in the Prospectus has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
3. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders hereby represents and warrants to each
Underwriter as of the date hereof, as of the Firm Shares Closing Date [and, if
the Selling Stockholders is selling Option Shares, as of each such Option Shares
Closing Date (if any),] as follows:
(a) Each Selling Stockholder has caused certificates for the
number of Shares to be sold by such Selling Stockholder hereunder to be
delivered to Citi Trends, Inc. (the "Custodian"), endorsed in blank or
with blank stock powers duly executed, with a signature appropriately
guaranteed, such certificates to be held in custody by the Custodian for
delivery, pursuant to the provisions of this Agreement and an agreement
dated ____________ among the Custodian and the Selling Stockholders
substantially in the form attached hereto as Exhibit B (the "Custody
Agreement").
(b) Each Selling Stockholder has granted an irrevocable power of
attorney substantially in the form attached hereto as Exhibit C (the
"Power of Attorney") to the person named therein, on behalf of each such
Selling Stockholder, to execute and deliver this Agreement and any other
document necessary or desirable in connection with the transactions
contemplated hereby and to deliver the shares to be sold by each the
Selling Stockholder pursuant hereto.
13
(c) This Agreement, the Custody Agreement, the Power of Attorney
and the Lock-Up Agreement have each been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder and, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes the valid and legally binding agreement of each Selling
Stockholder, enforceable against each such Selling Stockholder in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(d) The execution and delivery by each Selling Stockholder of this
Agreement and the performance by each Selling Stockholder of its
obligations under this Agreement, including the sale and delivery of the
Shares to be sold by each such Selling Stockholder and the consummation of
the transactions contemplated herein and compliance by each Selling
Stockholder with its obligations hereunder, do not and will not, whether
with our without the giving of notice or the passage of time or both, (i)
violate or contravene any provision of the charter or bylaws or other
organizational instrument of any Selling Stockholder, if applicable, or
any applicable law, statute, regulation, or filing or any agreement or
other instrument binding upon any Selling Stockholder or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over any Selling Stockholder, (ii) conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the shares to be
sold by any Selling Stockholder or any property or assets of any Selling
Stockholder pursuant to the terms of any agreement or instrument to which
any Selling Stockholder is a party or by which any Selling Stockholder may
be bound or to which any of the property or assets of any Selling
Stockholder is subject or (iii) require any consent, approval,
authorization or order of or registration or filing with any court or
governmental agency or body having jurisdiction over it, except such as
may be required by the blue sky laws of the various states in connection
with the offer and sale of the Shares which have been or will be effected
in accordance with this Agreement.
(e) Each Selling Stockholder has, and on the Firm Shares Closing
Date and the Option Share Closing Date, if applicable, will have, valid
and marketable title to the Shares to be sold by such Selling Stockholder
free and clear of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer, except as
otherwise described in the Registration Statement and Prospectus.
(f) Each Selling Stockholder has, and on the Firm Shares Closing
Date and the Option Share Closing Date, if applicable, will have, full
legal right, power and authority, and any approval required by law, to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder in the manner provided by this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by each
Selling Stockholder pursuant to this Agreement, assuming each Underwriter
has no notice of any adverse claim, the several Underwriters will receive
valid and marketable title to such Shares free and clear of any lien,
claim, mortgage, pledge, security interest or other encumbrance.
14
(h) All information relating to each Selling Stockholder furnished
in writing by such Selling Stockholder expressly for use in the
Registration Statement and Prospectus is, and on each Closing Date will
be, true, correct, and complete, and does not, and on each Closing Date
will not, contain any untrue statement of a material fact or omit to state
any material fact necessary to make such information not misleading.
(i) Each Selling Stockholder has reviewed the Registration
Statement and Prospectus and, although such Selling Stockholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of such Selling
Stockholder that would lead such Selling Stockholder to believe that (i)
on the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
made therein not misleading and (ii) on the Effective Date the Prospectus,
any amendment thereof or supplement thereto contained and, on each Closing
Date contains, any untrue statement of a material fact or omitted or omits
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.
(j) The sale of Shares by each Selling Stockholder pursuant to
this Agreement is not prompted by such Selling Stockholder's knowledge of
any material information concerning the Company which is not set forth in
the Prospectus.
(k) No Selling Stockholder has taken, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(l) No Selling Stockholder has knowledge that any representation
or warranty of the Company set forth in Section 2 above is untrue or
inaccurate in any material respect.
(m) The representations and warranties of each Selling Stockholder
in the Custody Agreement are, and on each Closing Date will be, true and
correct.
4. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares are subject to
each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 5(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
the
15
satisfaction of the Commission and the Representatives. If the Company has
elected to rely upon Rule 430A, Rule 430A information previously omitted
from the effective Registration Statement pursuant to Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided
evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A. If the Company has elected to rely upon Rule 434, a term
sheet shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) within the prescribed time period.
(c) The representations and warranties of the Company and the
Selling Stockholders contained in this Agreement and in the certificates
delivered pursuant to Section 4(d) shall be true and correct when made and
on and as of each Closing Date as if made on such date. The Company and
the Selling Stockholders shall have performed all covenants and agreements
and satisfied all the conditions contained in this Agreement required to
be performed or satisfied by them at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that: (i)
the representations, warranties and agreements of the Company in this
Agreement were true and correct when made and are true and correct as of
such Closing Date; (ii) the Company has performed all covenants and
agreements and satisfied all conditions contained herein; (iii) they have
carefully examined the Registration Statement and the Prospectus and, in
their opinion (A) as of the Effective Date, the Registration Statement and
Prospectus did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or otherwise required an amendment to the Registration
Statement or the Prospectus; and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and, to their
knowledge, no proceedings for that purpose have been instituted or are
pending under the Securities Act.
(e) The Representatives shall have received on each Closing Date a
certificate addressed to the Representatives and dated such Closing Date,
of each Selling Stockholder, to the effect that:(i) the representations,
warranties and agreements of each Selling Stockholder in this Agreement
were true and correct when made and are true and correct as of such
Closing Date; (ii) each Selling Stockholder has performed all covenants
and agreements and satisfied all conditions contained herein; and (iii)
each Selling Stockholder has carefully examined the Registration Statement
and the Prospectus and, in the opinion of such Selling Stockholder, (A)
with respect to the information relating to such Selling Stockholder, as
of the Effective Date, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
16
make the statements therein, in light of the circumstances under which
they were made, not misleading, and (B) since the Effective Date no event
has occurred with respect to such Selling Stockholder which should have
been set forth in a supplement or otherwise required an amendment to the
Registration Statement or the Prospectus.
(f) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from KPMG
LLP addressed to the Representatives and dated, respectively, the date of
this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus.
(g) The Representatives shall have received on each Closing Date
from Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date, and
stating in effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware. The Company is duly qualified to transact
business and is in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or
properties or the nature of its business makes such qualification
necessary, except where the failure to so qualify or to be in good
standing, individually or in the aggregate, would not have a
Material Adverse Effect.
(ii) The Company has all requisite corporate power and
authority to own, lease and operate its properties and to conduct
its business as now being conducted and as described in the
Registration Statement and the Prospectus and to enter into and
perform its obligations under this Agreement and to issue and sell
the Shares.
(iii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization" as of the dates stated
therein and, since such dates, there has been no change in the
capital stock of the Company except for subsequent issuances, if
any, pursuant to this Agreement or pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options
referred to in the Prospectus; all of the outstanding shares of
capital stock of the Company have been duly and validly authorized
and issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. The
Shares to be issued and sold by the Company pursuant to this
Agreement have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued, fully
paid and nonassessable, and no holder of the Shares is or will be
subject to personal liability by reason of being such a holder. The
issuance and
17
sale of the Shares by the Company is not subject to any preemptive
or other similar rights of any securityholder of the Company. To
such counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there are no preemptive or other
rights to subscribe for or to purchase or any restriction upon the
voting or transfer of any securities of the Company pursuant to the
Charter or Bylaws or any agreements or other instruments to which
the Company is a party or by which it is bound. The sale of the
shares by the Selling Stockholders is not subject to any preemptive
or other similar rights of any security holders of the company. To
such counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of stock of the
Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock and the
Shares conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. The form
of certificate used to evidence the Common Stock complies in all
material respects with all applicable statutory requirements, with
any applicable requirements of the Charter or Bylaws and the
requirements of the Nasdaq National Market. To such counsel's
knowledge, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the Securities Act.
(iv) All necessary corporate action has been duly and validly
taken by the Company and to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company and this Agreement constitutes
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) nor the execution,
delivery or performance of any other agreement or instrument entered
into or to be entered into by the Company in connection with the
transactions contemplated by the Registration Statement and the
Prospectus will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a default (or any
event which with notice or lapse of time, or both, would constitute
a default) under, or require consent or waiver under, or result in
the execution or imposition of any lien, charge, claim, security
interest or encumbrance upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed trust, note
or other agreement or instrument of which such counsel is aware and
to which the Company is a party or by which it or any of its assets
or properties or businesses is bound, or any
18
franchise, license, permit, judgment, decree, order, statute, rule
or regulation, domestic or foreign, of which such counsel is aware
or violate any provision of the Charter or Bylaws.
(vi) No consent, approval, authorization, license,
registration, qualification or order of any court or governmental
agency or regulatory body is required for the due authorization,
execution, delivery or performance of this Agreement by the Company
or the consummation of the transactions contemplated hereby or
thereby, except such as have been obtained under the Securities Act
and such as may be required under state securities or blue sky laws
in connection with the purchase and distribution of the Shares by
the several Underwriters.
(vii) To the best of such counsel's knowledge, there is no any
action, suit, proceeding or other investigation, before any court or
before or by any public body or board pending or threatened against,
or involving the assets, properties or businesses of, the Company
which is required to be disclosed in the Registration Statement and
the Prospectus and is not so disclosed or which could reasonably be
expected to have a Material Adverse Effect.
(viii) The statements in the Prospectus under the captions
"Description of Capital Stock," "Business -- Litigation," and
"Certain Transactions," and in the Registration Statement under Item
15 of Part II, insofar as such statements constitute a summary of
documents referred to therein or matters of law, are accurate in all
material respects and accurately present the information with
respect to such documents and matters. Accurate copies of all
contracts and other documents required to be filed as exhibits to,
or described in, the Registration Statement have been so filed with
the Commission or are fairly described in the Registration
Statement, as the case may be.
(ix) (A) The Company is in compliance in all material
respects with all applicable Environmental Laws; (B) the Company has
not received any notice from any governmental authority or third
party of an asserted claim under any Environmental Law; (C) the
Company has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any
such permit, license or approval, except where such failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
other approvals would not, singly or in the aggregate, have a
Material Adverse Effect; and (D) no property which is or has been
owned, leased or occupied by the Company has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section
9601, et seq.), or otherwise designated as a contaminated site under
applicable state or local law.
(x) The Registration Statement, all Preliminary Prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the
19
financial statements and schedules and other financial data included
therein, as to which such counsel expresses no opinion) comply as to
form in all material respects with the requirements of the
Securities Act and the Rules, all Preliminary Prospectuses and the
Prospectuses and any further amendment or supplement to any such
incorporated document made by the Company (except for the financial
statements and schedules and other financial data included therein,
as to which such counsel expresses no opinion) when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and the
published rules and regulations of the Commission thereunder.
(xi) The Registration Statement is effective under the
Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are threatened, pending or contemplated. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under
the Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xii) The Shares have been approved for listing on the Nasdaq
National Market.
(xiii) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xiv) The Company is not and, before and after giving effect
to the offering and sale of the Shares and the application of
proceeds thereof as described in the Prospectus, will not be an
"investment company" within the meaning of the Investment Company
Act.
To the extent deemed advisable by such counsel, such counsel may
rely as to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel
satisfactory to the Representatives as to matters which are governed by
laws other than the laws of the State of New York, the General Corporation
Law of the State of Delaware and the federal laws of the United States;
provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions.
Copies of such certificates and other opinions shall be furnished to the
Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as
20
specified in the foregoing opinion), on the basis of the foregoing, no
facts have come to the attention of such counsel which lead such counsel
to believe that the Registration Statement at the time it became effective
(except with respect to the financial statements and notes and schedules
thereto and other financial data, as to which such counsel need express no
belief) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus as amended
or supplemented (except with respect to the financial statements, notes
and schedules thereto and other financial data, as to which such counsel
need make no statement) on the date thereof contained any untrue statement
of a material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(h) The Representatives shall have received on the Firm Shares
Closing Date from ________________________, counsel for the Selling
Stockholders, an opinion, addressed to the Representatives and dated such
Closing Date, and stating in effect that:
(i) This Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder.
(ii) Each of the Custody Agreement, the Power of Attorney and
the Lock-up Agreement has been duly authorized, executed and
delivered by each Selling Stockholder.
(iii) This Agreement, the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement each constitute the legal, valid
and binding obligation of each Selling Stockholder enforceable
against each Selling Stockholder in accordance with its terms except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles.
(iv) Each Selling Stockholder has the legal right, power and
authority to enter into this Agreement and to sell, transfer and
deliver in the manner provided in this Agreement, the Shares to be
sold by such Selling Stockholder hereunder.
(v) The execution, delivery and performance of this
Agreement, the Power of Attorney, the Custody Agreement and the
Lock-Up Agreement and the sale and delivery by each Selling
Stockholder of the Shares to be sold by such Selling Stockholder as
contemplated by this Agreement and the consummation of the
transactions contemplated in this Agreement and in the Registration
Statement and the Prospectus and compliance by such Selling
Stockholder with its obligations hereunder do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Shares or any property or assets of such
Selling
21
Stockholder pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other instrument or
agreement to which such Selling Stockholder is a party or by which such
Selling Stockholder may be bound, or to which any of the property or
assets of such Selling Stockholder may be subject nor will such action
result in any violation of the provisions of the charter or by-laws of
such Selling Stockholder, if applicable, or any law, administrative
regulation, judgment or order of any governmental agency or body or any
administrative or court decree having jurisdiction over such Selling
Stockholder or any of its properties.
(vi) To such counsel's knowledge, each Selling Stockholder has valid
and marketable title to the Shares to be sold by such Selling Stockholder
pursuant to this Agreement, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind, and has full
right, power and authority to sell, transfer and deliver such Shares
pursuant to this Agreement. By delivery of a certificate or certificates
therefor each Selling Stockholder will transfer to the Underwriters who
have purchased such Shares pursuant to this Agreement (without notice of
any defect in the title of each Selling Stockholder and who is otherwise a
bona fide purchaser for purposes of the Uniform Commercial Code) valid and
marketable title to such Shares, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(vii) No filing with, consent, approval, authorization, license,
certificate, permit or order of any court, governmental or regulatory
agency, authority or body or financial institution is required in
connection with the performance of this Agreement, the Custody Agreement,
the Power of Attorney or the Lock-up Agreement by each Selling Stockholder
or the consummation of the transactions contemplated hereby or thereby,
including the delivery and sale of the Shares to be delivered and sold by
each Selling Stockholder, except such as may be required under state
securities or blue sky laws in connection with the purchase and
distribution of the Shares by the several Underwriters.
To the extent deemed advisable by such counsel, such counsel may rely as
to matters of fact on certificates of the Selling Stockholders and on the
opinions of other counsel satisfactory to the Representatives as to matters
which are governed by laws other than the laws of the States of New York and the
General Corporate Law of the State of Delaware or the federal laws of the United
States; provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions. Copies of
such certificates and other opinions shall be furnished to the Representatives
and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
public accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed.
While such counsel has not undertaken to independently verify and does not
assume any responsibility for the accuracy,
22
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that the Registration Statement at the time
it became effective (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof and the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) The Representatives shall have received on each Closing Date from DLA
Xxxxx Xxxxxxx Xxxx Xxxx US LLP, counsel for the Representatives, an opinion,
addressed to the Representatives and dated such Closing Date, and stating in
effect that:
(i) The issuance and sale of the Shares have been duly authorized by
requisite corporate action on the part of the Company and when delivered
to and paid for by the Underwriters in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and
non-assessable, and to our knowledge the issuance of such Shares will not
be subject to any preemptive or similar rights: (A) contained in the
Company's Charter and Bylaws or (B) under the Delaware General Corporate
Law, except such as have been validly waived.
(ii) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(iii) As of the date of the Prospectus, the statements in the
Prospectus under the captions "Description of Capital Stock" and
"Underwriters" insofar as such statements constituted summaries of the
legal matters, documents or proceedings referred to therein, fairly
presented the information called for with respect to such legal matters,
documents and proceedings and fairly summarized the matters referred to
therein.
(iv) The Registration Statement, all Preliminary Prospectuses and
the Prospectus and each amendment or supplement thereto (except for the
financial statements and schedules and other financial data included
therein, as to which such counsel expresses no opinion) comply as to form
in all material respects with the requirements of the Securities Act and
the Rules, all Preliminary Prospectuses and the Prospectuses and any
further amendment or supplement to any such incorporated document made by
the Company (except for the financial statements and schedules and other
financial data included therein, as to which such counsel expresses no
opinion) when they became effective or were filed with the Commission, as
the case may be, complied as to form in all material respects
23
with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder.
(v) The Registration Statement is effective under the Securities
Act, and to such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened,
pending or contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act has
been made in the manner and within the time period required by such Rule
424(b).
To the extent deemed advisable by such counsel, such counsel may rely as
to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of New York, the General Corporation Law of the State of Delaware and
the federal laws of the United States; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on such
other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect to
the financial statements, supporting schedules and other financial data, as to
which such counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements, supporting schedules and other financial data, as to which such
counsel need express no belief) on the date thereof contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(j) The Representatives shall have received copies of the Lock-Up
Agreements executed by each entity or person listed on Schedule III hereto.
(k) The Shares shall have been approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
24
(l) The Company and each Selling Stockholder shall have furnished or
caused to be furnished to the Representatives such further certificates or
documents as the Representatives shall have reasonably requested.
5. Covenants of the Company and the Selling Stockholders.
(a) Each of the Company and the Selling Stockholders (to the extent set
forth in clause (ix) below) covenants and agrees as follows:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement,
and any amendments thereto, to become effective as promptly as possible.
The Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by the
Rules.
(ii) The Company shall promptly advise the Representatives in
writing (A) when any post-effective amendment to the Registration
Statement shall have become effective or any supplement to the Prospectus
shall have been filed, (B) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any
additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or
the institution or threatening of any proceeding for that purpose and (D)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not file
any such proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare and file
with the Commission, subject to the second sentence of paragraph (ii) of
this Section 5(a), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such compliance.
25
(iv) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs
(or 90 days if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions of
Section 11(a) of the Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) and to
each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Securities
Act or the Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as the
Representatives may reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment and supplement
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(vi) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale in
connection with the offering under the laws of such jurisdictions as the
Representatives may designate and shall maintain such qualifications in
effect so long as required for the distribution of the Shares; provided,
however, that the Company shall not be required in connection therewith,
as a condition thereof, to qualify as a foreign corporation or to execute
a general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act and the Rules or the Exchange
Act, will file all reports and other documents required to be filed with
the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within
the time periods required by the Exchange Act and the regulations
promulgated thereunder.
(viii) Without the prior written consent of CIBC World Markets
Corp., for a period of 180 days after the date of this Agreement, the
Company and each of its individual directors and executive officers shall
not issue, sell or register with the Commission (other than on Form S-8 or
on any successor form), or otherwise dispose of, directly or indirectly,
any equity securities of the Company (or any securities convertible into,
exercisable for or exchangeable for equity securities of the Company),
except for the issuance of the Shares pursuant to the Registration
Statement and the issuance of shares pursuant to the Company's existing
stock option plan or bonus plan as described in the
26
Registration Statement and the Prospectus. In the event that during this
period, (A) any shares are issued pursuant to the Company's existing stock
option plan or bonus plan that are exercisable during such 180 day period
or (B) any registration is effected on Form S-8 or on any successor form
relating to shares that are exercisable during such 180 period, the
Company shall obtain the written agreement of such grantee or purchaser or
holder of such registered securities that, for a period of 180 days after
the date of this Agreement, such person will not, without the prior
written consent of CIBC World Markets Corp., offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect
to, any shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common Stock) owned by
such person.
(ix) Neither the Company nor any Selling Stockholder shall take,
directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in the stabilization or manipulation of the
price of the Common Stock or any security of the Company to facilitate the
sale or resale of any of the Shares.
(x) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by the Nasdaq
National Market (including any required registration under the Exchange
Act).
(xi) Prior to the Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no press
conference with respect to the Company, the condition, financial or
otherwise, or the earnings, business affairs or business prospects of any
of them, or the offering of the Shares without the prior written consent
of the Representatives unless in the judgment of the Company and its
counsel, and after notification to the Representatives, such press release
or communication is required by law.
(xii) [The Company will comply with all applicable securities laws
and other applicable laws, rules and regulations in each foreign
jurisdiction in which the Directed Shares are offered in connection with
the Friends and Family Program.]
(xiii) The Company will apply the net proceeds from the offering of
the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus, and the Company will at all times prior to the application of
the net proceeds from the offering operate its business so as not to
become an "investment company" within the meaning of the Investment
Company Act.
(xiv) [The Company will ensure that the Directed Shares will be
restricted, to the extent required by the NASD or the NASD rules, from
sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of the effectiveness of the Registration
Statement. The Representatives will notify the Company as to which
Participants will need to be
27
so restricted. The Company shall direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.]
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or blue sky laws of the various jurisdictions referred to in Section
5(a)(vi), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary blue sky memoranda, if any; (iv) the furnishing (including costs
of shipping and mailing) to the Representatives and to the Underwriters of
copies of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold; (v) the filing fees of the NASD in connection with its
review of the terms of the public offering and reasonable fees and disbursements
of counsel for the Underwriters in connection with such review; (vi) inclusion
of the Shares for quotation on the Nasdaq National Market; and (vii) all
transfer taxes, if any, with respect to the sale and delivery of the Shares by
the Company to the Underwriters [(viii) payments to counsel for costs incurred
by the Underwriters in connection with the Friends and Family Program and
payment of any stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Friends and Family Program.]
Subject to the provisions of Section 8, the Underwriters agree to pay, whether
or not the transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the Company
pursuant to the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
(c) The Selling Stockholders, jointly and severally, will pay all expenses
incident to the performance of their respective obligations under, and the
consummation of the transactions contemplated by, this Agreement, including (i)
any stamp duties, capital duties and stock transfer taxes, if any, payable upon
the sale of the Shares to the Underwriters, and their transfer between the
Underwriters pursuant to an agreement between such Underwriters, and (ii) the
fees and disbursements of their respective counsel and accountants.
28
6. Indemnification.
(a) The Company and the Selling Stockholders, jointly and severally,
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any and all losses, claims,
damages and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or in any blue sky application or other information or other documents
executed by the Company filed in any state or other jurisdiction to qualify any
or all of the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that such
indemnity shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement thereto, or in any Blue Sky
Application in reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any Underwriter
specifically for use therein. Notwithstanding the foregoing, the liability of
the Selling Stockholders pursuant to the provisions of this Section 6(a) shall
be limited to an amount equal to the aggregate net proceeds received by such
Selling Stockholders from the sale of the Shares sold by the Selling
Stockholders hereunder. This indemnity agreement will be in addition to any
liability which the Company and Selling Stockholders may otherwise have.
[The Company agrees to indemnify and hold harmless the Representatives and
each person, if any, who controls any Representative within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages, expenses and liabilities (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted) (i) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any material prepared by or
with the consent of the Company for distribution to Participants in connection
with the Friends and Family Program or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) arising
out of or based upon the failure of any Participant to pay for and accept
delivery of Directed Shares otherwise reserved for such Participant pursuant to
the Friends and Family Program, and (iii) related to, arising out of, or in
connection with the Friends and Family Program,
29
other than losses, claims, damages or liabilities (or expenses relating thereto)
that are finally judicially determined to have resulted from the bad faith or
gross negligence of the Representatives.]
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
the Selling Stockholders and each person, if any, who controls the Company or
the Selling Stockholders within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each director of the Company, and each
officer of the Company who signs the Registration Statement, against any losses,
claims, damages or liabilities to which such party may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any preliminary
prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative
expressly for use therein (it being understood that such information is limited
to the statements identified in Section 2(a) above); provided, however, that the
obligation of each Underwriter to indemnify the Company or the Selling
Stockholders (including any controlling person, director or officer thereof)
shall be limited to the net proceeds received by the Company from such
Underwriter.
(c) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 6(a) or 6(b) shall be available to any party who shall fail to give
notice as provided in this Section 6(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof.
30
The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have been advised by counsel
that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party
(in which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action,
suit, and proceeding or claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 6(a) or 6(b) is due in accordance with its terms but for any reason is
unavailable to or insufficient to hold harmless an indemnified party in respect
to any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand from the
offering of the Shares pursuant to this Agreement or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other hand in connection with the statements or omissions [,or in connection
with any violation of the nature referred to in Section 6(a) hereof with respect
to Directed Shares,] which resulted in such losses, liabilities, claims, damages
or expenses, as well as any other relevant equitable considerations. The
Company, the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 7,
(i) no Underwriter (except as may be provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of the amount
by which the total price at which the shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of damages which
such underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission; and (ii) no Selling
Stockholders shall be required to
31
contribute any amount in excess of the aggregate net proceeds of the sale of
Shares received by the Selling Stockholders. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company or any Selling Stockholders within the meaning of the Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company or any/the Selling Stockholders, as the case may be.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 7. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
underwriting commitments and not joint.
8. Termination.
(a) This Agreement may be terminated with respect to the Shares to
be purchased on a Closing Date by the Representatives by notifying the
Company and the Selling Stockholders at any time at or before a Closing
Date in the absolute discretion of the Representatives if: (i) there has
occurred any material adverse change in the securities markets or any
event, act or occurrence that has materially disrupted, or in the opinion
of the Representatives, will in the future materially disrupt, the
securities markets or there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares or enforce contracts for the sale of
the Shares; (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
judgment of the Representatives, inadvisable or impracticable to market
the Shares or enforce contracts for the sale of the Shares; (iii) trading
in the Shares or any securities of the Company has been suspended or
materially limited by the Commission or trading generally on the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. or the Nasdaq
National Market has been suspended or materially limited, or minimum or
maximum ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc., or any other governmental or
regulatory authority; or (iv) a banking moratorium has been declared by
any state or Federal authority; or (v) in the judgment of the
Representatives, there has been, since the time of execution of this
Agreement or
32
since the respective dates as of which information is given in the
Prospectus, any material adverse change in the assets, properties,
condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Stockholders shall be
under any liability to any Underwriter, and no Underwriter shall be under
any liability to the Company or a Selling Stockholders, except that (y) if
this Agreement is terminated by the Representatives or the Underwriters
because of any failure, refusal or inability on the part of the Company or
the Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, the Company will reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the
proposed purchase and sale of the Shares or in contemplation of performing
their obligations hereunder and (z) no Underwriter who shall have failed
or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall
be relieved of liability to the Company, the Selling Stockholders or to
the other Underwriters for damages occasioned by its failure or refusal.
9. Substitution of Underwriters. If any Underwriter shall default in
its obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representatives shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representatives shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to the Underwriters to purchase such Shares on such
terms. If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided above, the aggregate number of Shares which remains
unpurchased on such Closing Date does not exceed one-eleventh of the aggregate
number of all the Shares that all the Underwriters are obligated to purchase on
such date, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default. In any such case, either the Representatives or the Company and the
Selling Stockholders shall have the right to postpone the applicable Closing
Date for a period of not more than seven days in order to effect any necessary
changes and arrangements (including any necessary amendments or supplements to
the Registration Statement or Prospectus or any other documents), and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in the opinion of the Company and the Underwriters and
their counsel may thereby be made necessary.
33
If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided above, the aggregate number of such Shares which remains
unpurchased exceeds 10% of the aggregate number of all the Shares to be
purchased at such date, then this Agreement, or, with respect to a Closing Date
which occurs after the First Closing Date, the obligations of the Underwriters
to purchase and of the Company or the Selling Stockholders, as the case may be,
to sell the Option Shares to be purchased and sold on such date, shall
terminate, without liability on the part of any non-defaulting Underwriter to
the Company or the Selling Stockholders, and without liability on the part of
the Company or the Selling Stockholders, except as provided in Sections 5(b), 6,
7 and 8. The provisions of this Section 9 shall not in any way affect the
liability of any defaulting Underwriter to the Company or the non-defaulting
Underwriters arising out of such default. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section 9 with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.
10. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company, Selling
Stockholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or the Company or the
Selling Stockholders or any of their respective officers, directors or
controlling persons referred to in Sections 6 and 7 hereof, and shall survive
delivery of and payment for the Shares. In addition, the provisions of Sections
5(b), 6, 7, 8 and this Section 10 shall survive the termination or cancellation
of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., 000 Xxxxxxx Xxxxxx Xxx
Xxxx, Xxx Xxxx 00000 Attention: ________, with a copy to Xxxxxxx X. Xxxxxxxx,
Esq., DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, 0000 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000
and (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement with a copy to Xxxxxxx
X. Xxxxxxxxx, Esq., Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, XX 00000 and (c) if to the Selling Stockholders to __________ with a
copy to __________.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
34
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
CITI TRENDS, INC.
By: ____________________________________
Name:
Title:
SELLING STOCKHOLDERS
By: ____________________________________
Name:
Title: Custodian
35
Confirmed:
CIBC WORLD MARKETS CORP.
WACHOVIA CAPITAL MARKETS, LLC
XX XXXXX & CO., LLC
XXXXX XXXXXXX & CO.
________________________________________
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
CIBC WORLD MARKETS CORP.
By _____________________________________
Name:
Title:
WACHOVIA CAPITAL MARKETS, LLC
By _____________________________________
Name:
Title:
XX XXXXX & CO., LLC
By _____________________________________
Name:
Title:
XXXXX XXXXXXX & CO.
By _____________________________________
Name:
Title:
36
SCHEDULE I
Number of
Firm Shares
to
Be
Name Purchased
---- -----------
CIBC World Markets Corp...............................................................
Wachovia Capital Markets, LLC.........................................................
XX Xxxxx & Co., LLC...................................................................
Xxxxx Xxxxxxx & Co....................................................................
-----------
Total
Sch I - 1
SCHEDULE II
Number of
Firm Shares
to
Name of Selling Stockholders Be Sold
---------------------------- ---------
Total ---------
Sch II - 1
SCHEDULE III
Lock-up Signatories
Sch III - 1
Exhibit A
FORM OF LOCK-UP AGREEMENT
_______________, 2005
CIBC World Markets Corp.
Wachovia Capital Markets, LLC
XX Xxxxx & Co., LLC
Xxxxx Xxxxxxx & Co.
as Representatives of the several
Underwriters named in Schedule I to
the Underwriting Agreement
c/o CIBC World Markets Corp.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Citi Trends, Inc.
Ladies and Gentlemen:
The undersigned, a holder of common stock, par value $0.01 ("Common
Stock"), or rights to acquire Common Stock, of Citi Trends, Inc. (the "Company")
understands that you, as Representative of the several Underwriters, propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") with the
Company, providing for the public offering (the "Public Offering") by the
several Underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), of shares of Common Stock of the Company (the "Securities").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Underwriting Agreement.
In consideration of the Underwriters' agreement to enter into the
Underwriting Agreement and to proceed with the Public Offering of the
Securities, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees for the benefit of the
Company, you and the other Underwriters that, without the prior written consent
of CIBC World Markets Corp. on behalf of the Underwriters, the undersigned will
not, during the period ending 180 days (the "Lock-Up Period") after the date of
the prospectus relating to the Public Offering (the "Prospectus"), directly or
indirectly (1) offer, pledge, assign, encumber, announce the intention to sell,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock owned either of
record or beneficially (as defined in the Securities Exchange Act of 1934, as
amended) by the undersigned on the date hereof or hereafter acquired or (2)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the Common Stock, whether any
A-1
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, or
publicly announce an intention to do any of the foregoing. In addition, the
undersigned agrees that, without the prior written consent of CIBC World Markets
Corp. on behalf of the Underwriters, it will not, during the period ending 180
days after the date of the Prospectus, make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. The foregoing
shall not apply to (x) Common Stock to be transferred as a gift or gifts
(provided that any donee thereof agrees in writing to be bound by the terms
hereof), (y) the sale of the Securities to be sold pursuant to the Prospectus
and (y) sales under any 10b-5 plan.
Notwithstanding the foregoing, if (x) during the last 17 days of the
Lock-Up Period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (y) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the 90-day period; the
restrictions imposed in this Letter Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event; provided,
however, that this sentence shall not apply if the research published or
distributed on the Company is compliant under Rule 139 of the Securities Act and
the Company's securities are actively traded as defined in Rule 101(c)(1) of
Regulation M of the Exchange Act.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released form all obligations under this Letter Agreement.
The undersigned, whether or not participating in the Offering, understands
that the Underwriters are entering into the Underwriting Agreement and
proceeding with the Public Offering in reliance upon this Letter Agreement.
A - 2
This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
[STOCKHOLDER]
By: ____________________________________
Name:
Title:
A - 3
Exhibit B
FORM OF CUSTODY AGREEMENT
for sale of shares of common stock,
par value $0.01 per share, of Citi Trends, Inc.
Citi Trends, Inc. (the "Custodian")
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Ladies and Gentlemen:
There are delivered to you herewith certificate(s) representing shares of
Common Stock, par value $0.01 per share ("Common Stock"), of Citi Trends, Inc.,
a Delaware corporation (the "Company") as set forth at the end of this letter on
the page entitled "CERTIFICATE(S) DEPOSITED." Each of the certificates so
delivered is accompanied by an executed assignment form duly endorsed for
transfer and is in negotiable form bearing the signature of the undersigned
guaranteed by a commercial bank or trust company having an office or a
correspondent in New York City, New York or by a member firm of the New York,
American or Pacific Stock Exchange. The certificate(s) are to be held by you as
Custodian for the account of the undersigned and are to be disposed of by you in
accordance with this Custody Agreement (this "Custody Agreement").
If the undersigned is (i) acting as trustee or in any fiduciary or
representative capacity, the undersigned has also delivered duly certified
copies of each trust agreement, will, letters testamentary or other instrument
pursuant to which the undersigned is authorized to act as a Selling Stockholder
(as defined herein); (ii) a corporation, the undersigned has also delivered duly
certified resolutions of its board of directors authorizing it to enter into
this Custody Agreement, the Underwriting Agreement (as defined herein) and the
Power of Attorney (as defined herein) and duly certified copies of such
corporation's by-laws, certificate of incorporation or other organizational
documents; or (iii) a partnership, the undersigned has also delivered extracts
of any applicable provisions of its partnership agreement (and applicable
provisions of the organizational documents or partnership agreement(s) of the
general partner(s) of such partnership) authorizing such partnership to enter
into this Custody Agreement, the Underwriting Agreement and the Power of
Attorney.
The undersigned agrees to deliver such additional documentation as you,
the Attorneys (as defined herein), the Company or the Representatives (as
defined herein) or any of their respective counsel may reasonably request to
effectuate or confirm compliance with any of the provisions hereof or of the
Power of Attorney or the Underwriting Agreement, all of the foregoing to be in
form and substance satisfactory in all respects to the party requesting such
documentation.
B - 1
Concurrently with the execution and delivery of this Custody Agreement,
the undersigned has executed a power of attorney (the "Power of Attorney")
irrevocably appointing R. Xxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx, each with full
power and authority to act alone in any matter thereunder and with full power of
substitution, the true and lawful attorneys-in-fact of the undersigned
(individually, an "Attorney," and collectively, the "Attorneys"), with full
power and authority in the name of, for and on behalf of, the undersigned with
respect to all matters arising in connection with the sale of the Common Stock
by the undersigned including, but not limited to entering into and performing an
underwriting agreement (the "Underwriting Agreement") among the Company, certain
stockholders of the Company including the undersigned (the "Selling
Stockholders"), CIBC World Markets Corp., Wachovia Capital Markets, LLC, XX
Xxxxx & Co., LLC and Xxxxx Xxxxxxx & Co., as representatives (the
"Representatives") of the several underwriters to be named in Schedule I to the
Underwriting Agreement (the "Underwriters"). The total number of shares of
Common Stock to be sold by the undersigned to the Underwriters and set forth
opposite the name of the undersigned in Schedule II to the Underwriting
Agreement is hereinafter referred to as the "Shares."
You are authorized and directed to hold the certificate(s) deposited with
you hereunder in your custody and, subject to the instructions of the Attorneys,
(i) to take all necessary action to cause the Shares to be transferred on the
books of the Company into such names as the Representatives, on behalf of the
several Underwriters, shall have instructed, including surrendering the
certificate(s) representing the Shares to the transfer agent for the Common
Stock for cancellation, in exchange for new certificate(s) for shares of Common
Stock registered in such names and in such denominations as the Representatives
shall have instructed; (ii) to deliver such new certificate(s) to the
Representatives, for the accounts of the several Underwriters, against payment
for such Shares at the purchase price per Share specified in the Underwriting
Agreement and to give receipt for such payment; (iii) to deposit the same to
your account as Custodian and draw upon such account to pay such transfer taxes,
if any, payable in connection with the transfer of the Shares to the
Underwriters ("Transfer Taxes") as you may be instructed to pay by the
Attorneys; (iv) to transmit to the undersigned in the manner set forth under
"Manner of Payment" below, within 24 hours of receiving instructions from the
Attorneys to do so, the excess, if any (the "Net Proceeds"), of the amount
received by you as payment for the Shares over the Transfer Taxes, if any. The
amount of such Net Proceeds is to be paid in the manner requested by the
undersigned at the end of this Custody Agreement or in such manner as you, in
accordance with the terms hereof, shall deem appropriate. Upon receipt of
instructions from the Attorneys, you shall also return to the undersigned, new
certificate(s) representing the excess, if any, of the number of shares of
Common Stock represented by the certificate(s) deposited with you hereunder over
the number of Shares sold by the undersigned to the Underwriters.
Under the terms of the Power of Attorney, the authority conferred thereby
is granted and conferred subject to and in consideration of the interests of the
Attorneys, the several Underwriters, the Company and the other Selling
Stockholders (as defined in the Underwriting Agreement) and is irrevocable and
not subject to withdrawal or termination by any act of the undersigned or by
operation of law, whether by the death or incapacity of the undersigned (or
either or any of the undersigned) or by the occurrence of any other event or
events (including, without limitation, the termination of any trust or estate
for which the undersigned is acting as
B - 2
fiduciary or fiduciaries, the death or incapacity of one or more trustees,
guardians, executors or administrators under such trust or estate or the merger,
consolidation, dissolution or liquidation of any corporation or partnership)
(any of the foregoing being hereinafter referred to as an "Event"). Accordingly,
the certificate(s) deposited with you hereunder and this Custody Agreement and
your authority hereunder are subject to and in consideration of the interests of
the several Underwriters, the Company, the Attorneys and the other Selling
Stockholders, and this Custody Agreement and your authority hereunder, prior to
[outside date, 2005] are irrevocable and are not subject to withdrawal or
termination by the occurrence of any Event. If an Event shall occur after the
execution hereof but before the delivery of the Shares to the Underwriters, then
certificate(s) representing such Shares will be delivered by you to the
Underwriters on behalf of the undersigned in accordance with the terms and
conditions of the Underwriting Agreement and this Custody Agreement and any
actions taken by you pursuant to this Custody Agreement shall be as valid as if
such Event had not occurred, regardless of whether or not you, the Attorneys,
the Underwriters or any one of them, shall have received notice of such Event.
Notwithstanding any of the foregoing provisions, if the Underwriting
Agreement shall not have been executed and delivered prior to [outside date,
2005], then, upon the written request of the undersigned to you (accompanied by
written notice of termination of the Power of Attorney addressed to each of the
Attorneys) on or after that date, you are to return to the undersigned, all
certificate(s), together with any stock powers, delivered herewith.
Until payment of the purchase price for the Shares has been made to you by
or for the account of the several Underwriters, the undersigned shall remain the
owner of all shares of Common Stock represented by the certificate(s) deposited
with you hereunder and shall have the right to vote such shares and all other
securities, if any, represented by such certificate(s) and to receive all
dividends and distributions thereon, except the right to retain custody and
dispose of such shares, which is subject to the rights of the Custodian under
this Custody Agreement, the Attorneys under the Power of Attorney and the
Underwriters under the Underwriting Agreement. The Underwriters shall not
acquire the power or the right to direct the investment of the Shares by virtue
of this Custody Agreement until the consideration therefor is paid pursuant to
the Underwriting Agreement.
You shall be entitled to act and rely upon any statement, request, notice
or instruction respecting this Custody Agreement given to you by the Attorneys,
or any one of them. Any Attorney has the authority to instruct you on
irregularities or discrepancies in the certificates representing shares of
Common Stock and any accompanying documents.
In taking any action requested or directed by the Representatives under
the terms of this Custody Agreement, you will be entitled to rely upon a writing
signed by a Vice President, Senior Vice President, Managing Director, Counsel,
Assistant General Counsel or General Counsel of CIBC World Markets Corp.
It is understood that you assume no responsibility or liability to any
person other than to deal with the certificate(s) deposited with you hereunder
and the proceeds from the sale of all or a portion of the securities represented
thereby in accordance with the provisions of this Custody Agreement. The
undersigned agrees to indemnify you for and to hold you free from and
B - 3
harmless against any and all loss, claim, damage, liability or expense incurred
by you arising out of or in connection with acting as Custodian hereunder, as
well as the cost and expense of defending against any claim of liability
hereunder, which is not due to your own gross negligence or willful misconduct.
The representations and warranties of the undersigned set forth in the
Underwriting Agreement are hereby incorporated by reference herein and the
undersigned represents and warrants that such representations and warranties are
true and correct on the date hereof as if made on the date hereof. The
representations, warranties and agreements contained herein, as well as those
contained in the Underwriting Agreement, are made for the benefit of, and may be
relied upon by, you, the other Selling Stockholders, the Attorneys, the Company,
[Company counsel], the Underwriters and DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP and
their representatives, agents and counsel. These representations, warranties and
agreements shall remain operative and in full force and effect, and shall
survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any of the persons listed in the preceding sentence, (ii) acceptance of the
Shares and payment for them under the Underwriting Agreement and (iii)
termination of this Custody Agreement.
This Custody Agreement shall be binding upon the undersigned and the
heirs, legal representatives, distributees, successors and assigns of the
undersigned.
This Custody Agreement may be signed in counterparts which together shall
constitute one and the same agreement.
This Custody Agreement shall be governed by the laws of the State of New
York.
Please acknowledge your acceptance hereof as Custodian, and receipt of the
certificate(s) deposited with you hereunder, by executing and returning the
enclosed copy hereof to the undersigned in care of R. Xxxxxx Xxxxxxxx and Xxxxxx
X. Xxxxxx.
Dated:______________, 2005
Very truly yours,
By:_________________________________________
Name:
Title:
B - 4
Print Name(s) and Address of Selling
Stockholder(s) and Name and Title of
any Person Signing as Agent or
Fiduciary:
___________________________________
___________________________________
___________________________________
___________________________________
Taxpayer I.D.: ____________________
Telephone: ____________________
B - 5
Instruction: If you are an individual and are married, your spouse is required
to complete this form:
SPOUSAL CONSENT
I am the spouse of ____________. On behalf of myself, my heirs and
legatees, I hereby join in and consent to the terms of the foregoing Custody
Agreement and agree to the sale of the shares of Common Stock of
_______________, registered in the name of my spouse or otherwise registered,
which my spouse proposes to sell pursuant to the Underwriting Agreement (as
defined therein).
Dated_____________, 2005
___________________________________________
(Signature of Spouse)
B - 6
Instruction: Complete each column as to certificate(s) to be deposited with the
Custodian.
CERTIFICATE(S) DEPOSITED
Stock Maximum Number of Shares
Certificate of Common Stock To Be Sold
No. from Certificate
TOTAL: -------------------------
B - 7
Instruction: Indicate how you wish to receive payment for the shares of Common
Stock sold to the Underwriters. Please note that if you are selling shares of
Common Stock registered in the name of a corporation or other association or a
trust, payment will be made only to the corporation or other association or
trust. A wire transfer can be made only to an account standing in exactly the
same name as the person or entity, including the corporation or other
association or trust, that is the registered owner of the Common Stock being
sold.
MANNER OF PAYMENT
I request that payment of the net proceeds from the sale of the shares of
Common Stock of the Company to be sold by me pursuant to the Underwriting
Agreement be made in the following manner (CHECK ONE):
[ ] CHECK made payable to:
to be sent to the following address:
__________________________________________
__________________________________________
Phone: ( ) _________________________
Please send by (check one):
[ ] First class mail
[ ] Federal Express
Federal Express account number
________________________________
[ ] or transfer to the following account:
Account No.
Bank _____________________________ See attached wire transfer instructions
(name)
____________________________________
(address)
ABA No._____________________________
Phone:( )___________________________
[ ] Other (please specify)
__________________________________________
B - 8
CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
Citi Trends, Inc., as Custodian, acknowledges acceptance of the duties of
the Custodian under the foregoing Custody Agreement and receipt of the
certificate(s) referred therein.
Dated: ______________, 2005
CITI TRENDS, INC.
By: _________________________________________
Name:
Title:
DO NOT DETACH FROM CUSTODY AGREEMENT
B - 9
Exhibit C
SELLING STOCKHOLDERS'
IRREVOCABLE POWER OF ATTORNEY
for sale of shares of common stock,
par value $0.01 per share, of Citi Trends, Inc.
R. Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
c/o Citi Trends, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned stockholder and certain other holders of common
stock of Citi Trends, Inc. (the "Company") (such holders and the undersigned
being hereinafter sometimes collectively referred to as the "Selling
Stockholders"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with the Company, CIBC World Markets Corp., Wachovia
Capital Markets, LLC, XX Xxxxx & Co., LLC and Xxxxx Xxxxxxx & Co., as
representatives (the "Representatives") of the several underwriters to be named
in Schedule I to the Underwriting Agreement (the "Underwriters"). The Selling
Stockholders propose to sell to the Underwriters pursuant to the Underwriting
Agreement certain authorized and issued shares of the common stock, par value
$0.01 per share, of the Company (the "Common Stock") owned by them. It is
understood that at this time there is no commitment on the part of the
Underwriters to purchase any shares of Common Stock and no assurance that the
Underwriting Agreement will be entered into by the Company or the Underwriters.
The undersigned hereby irrevocably constitutes and appoints R.
Xxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx each with full power and authority to act
alone in any matter hereunder and with full power of substitution, the true and
lawful attorneys-in-fact of the undersigned (individually an "Attorney," and
collectively the "Attorneys"), with full power and authority in the name of, for
and on behalf of, the undersigned with respect to all matters arising in
connection with the sale of Common Stock by the undersigned including, but not
limited to, the power and authority on behalf of the undersigned to take any and
all of the following actions:
1. To sell, assign, transfer and deliver to the several
Underwritersup to the number of shares of Common Stock set forth on the
signature page hereof such shares of Common Stock to be represented by
certificate(s) deposited by the undersigned pursuant to the Custody Agreement
(the "Custody Agreement") between the undersigned and Citi Trends, Inc., as
Custodian (the "Custodian"), at a purchase price per share, after deducting
underwriting discounts and commissions, to be paid by the Underwriters, as the
Attorneys, in their sole discretion, shall determine, but at the same price per
share at which the Company and all other
Selling Stockholders (as defined in the Underwriting Agreement) sell Common
Stock to the Underwriters;
2. To determine the number of shares of Common Stock to be sold by
the undersigned to the Underwriters, which numbers shall be no greater but may
be fewer than the corresponding numbers set forth on the signature page hereof
(such total number of shares of Common Stock as is finally determined by the
Attorneys and set forth opposite the name of the undersigned in Schedule II to
the Underwriting Agreement is hereinafter referred to as the "Shares");
3. To execute, deliver and perform the Underwriting Agreement in
customary form with such customary representations, warranties and covenant as
the Attorneys, in their sole discretion, may deem appropriate, with full power
to make such amendments to the Underwriting Agreement as the Attorneys, in their
sole discretion, may deem advisable;
4. On behalf of the undersigned, to make the representations and
warranties and enter into the agreements contained in the Underwriting Agreement
(including, without limitation, entering into the "lock-up" agreements);
5. (a) To instruct the Custodian on all matters pertaining to the
sale of the Shares and the delivery of certificates therefor, including: (i) the
transfer of the Shares on the books of the Company in order to effect the sale
of the Shares (including designating the name or names in which new
certificate(s) for Shares are to be issued and the denominations thereof), (ii)
the delivery to or for the account of the Underwriters of the certificate(s) for
the Shares against receipt by the Custodian of the purchase price to be paid
therefor, (iii) the payment, out of the proceeds (net of underwriting discounts
and commissions) from the sale of the Shares by the undersigned to the
Underwriters, of any expense incurred in accordance with paragraph 6 which is
not payable by the Company and any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters ("Transfer Taxes") and (iv) the
transmission to the undersigned of the proceeds, if any, from the sale of the
Shares (after deducting all amounts payable by the undersigned pursuant to
clause (iii) above) and the return to the undersigned, of new certificate(s)
representing the excess, if any, of the number of shares of Common Stock
represented by certificate(s) deposited with the Custodian over the number of
Shares sold to the Underwriters; and (b) to amend the Custody Agreement and any
related documents in such manner as the Attorneys may determine to be not
materially adverse to the undersigned.
6. To incur or authorize the incurrence of any necessary or
appropriate expense in connection with the sale of the Shares and to determine
the amount of any Transfer Taxes;
7. To take any and all steps deemed necessary or desirable by the
Attorneys in connection with the registration of the Shares under the Securities
Act of 1933, as amended (the "Act"), the Securities Exchange Act of 1934, as
amended, and the securities or blue sky laws of various states and
jurisdictions, including, without limitation, the giving, making or filing of
such undertakings, consents to service of process and representations and
agreements and the taking of such other steps as the Attorneys may deem
necessary or desirable;
8. To retain legal counsel to represent the undersigned in
connection with any and all matters referred to herein (which counsel may, but
need not be, counsel for the Company);
9. To make, execute, acknowledge and deliver all such other
contracts, stock powers, orders, receipts, notices, instructions, certificates,
letters and other writings, including, without limitation, communications with
the Securities and Exchange Commission state securities commissions and the
National Association of Securities Dealers, Inc. ("NASD"), and in general to do
all things and to take all actions which the Attorneys, in their sole
discretion, may consider necessary or desirable in connection with the sale of
Shares to the Underwriters and the public offering thereof, as fully as could
the undersigned if personally present and acting;
10. If necessary, to endorse (in blank or otherwise) on behalf of
the undersigned the certificate(s) representing the Shares, or a stock power or
powers attached to such certificate(s); and
11. To sign such other certificates, documents and agreements and
take any and all other actions as the Attorneys may deem necessary or desirable
in connection with the consummation of the transactions contemplated by the
Underwriting Agreement, the Custody Agreement and this Power of Attorney.
Each Attorney may act alone in exercising the rights and powers
conferred on the Attorneys in this Power of Attorney, and the act of any
Attorney shall be the act of the Attorneys. Each Attorney is hereby empowered to
determine in his or her sole discretion the time or times when, the purpose for
and the manner in which any power herein conferred upon him or her shall be
exercised, and the conditions, provisions or covenants of any instrument or
document which may be executed by him or her pursuant hereto.
The undersigned acknowledges receipt of a copy of the Registration
Statement on Form S-1 (the "Registration Statement") relating to the offering of
the Shares and the other shares of Common Stock (together, the "Offered Shares")
to be sold by the Selling Stockholders and a copy of the draft form of the
Underwriting Agreement dated_________, 2005. The undersigned has reviewed the
Registration Statement and the form of the Underwriting Agreement and
understands the obligations and agreements of the undersigned set forth in the
Underwriting Agreement. All representations and warranties of the Selling
Stockholders in the Underwriting Agreement with respect to the undersigned will
be as of the date of the execution of the Underwriting Agreement, the Closing
Dates (as determined in accordance with the Underwriting Agreement), true and
correct. All such representations and warranties will, as provided in the
Underwriting Agreement, survive the termination of the Underwriting Agreement
and the delivery of and payment for the Shares.
Upon the execution and delivery of the Underwriting Agreement by the
Attorneys on behalf of the Selling Stockholders, the undersigned agrees to be
bound by and to perform each and every covenant and agreement contained therein
of the undersigned as a Selling Stockholders.
The undersigned agrees, if so requested, to provide an opinion of
counsel, addressed to Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, which opinion shall
expressly permit reliance thereon by such counsel, setting forth such matters as
such counsel may reasonably request in rendering its opinion pursuant to the
Underwriting Agreement and such other documentation as the Attorneys, the
Company, the Representatives or any of their respective counsel may request to
effectuate any of the provisions hereof or of the Underwriting Agreement, all of
the foregoing to be in form and substance satisfactory in all respects to the
party requesting such documentation.
This Power of Attorney and all authority conferred hereby are
granted and conferred subject to and in consideration of the interests of the
Attorneys, the several Underwriters, the Company and the other Selling
Stockholders who may become parties to the Underwriting Agreement, and for the
purposes of completing the transactions contemplated by the Underwriting
Agreement and this Power of Attorney.
This Power of Attorney is an agency coupled with an interest and all
authority conferred hereby shall be irrevocable, and shall not be withdrawn or
terminated by any act of the undersigned or by operation of law, whether by the
death or incapacity of the undersigned (or either or any of the undersigned) or
by the occurrence of any other event or events (including, without limitation,
the termination of any trust or estate for which the undersigned is acting as a
fiduciary or fiduciaries, the death or incapacity of one or more trustees,
guardians, executors or administrators under such trust or estate or the merger,
consolidation, dissolution or liquidation of any corporation or partnership)
(any of the foregoing being hereinafter referred to as an "Event"). If an Event
shall occur after the execution hereof but before completion of the transactions
contemplated by the Underwriting Agreement or this Power of Attorney, then
certificate(s) representing the Shares will be delivered to the Underwriters by
or on behalf of the undersigned in accordance with the terms and conditions of
the Underwriting Agreement and the Custody Agreement and any actions taken
hereunder by the Attorneys shall be as valid as if such Event had not occurred
regardless of whether or not the Custodian, the Attorneys, the Underwriters, or
any one of them, shall have received notice of such Event.
Notwithstanding any of the foregoing provisions, if the Underwriting
Agreement shall not have been executed and delivered prior to [outside date],
2005 then, upon the written notice of the undersigned on or after that date to
the Attorneys, this Power of Attorney shall terminate subject, however, to all
lawful action done or performed pursuant hereto prior to the receipt of actual
notice.
It is understood that the Attorneys assume no responsibility or
liability to any person other than to deal with the certificate(s) for shares of
Common Stock deposited with the Custodian pursuant to the Custody Agreement and
the proceeds from the sale of the Shares in accordance with the provisions
hereof. The Attorneys make no representations with respect to and shall have no
responsibility for the Registration Statement or the Prospectus nor, except as
herein expressly provided, for any aspect of the offering of Common Stock, and
the Attorneys shall not be liable for any error of judgment or for any act done
or omitted or for any mistake of fact or law except for the Attorneys' own gross
negligence or willful misconduct. The
undersigned agrees to indemnify the Attorneys for and to hold the Attorneys,
jointly and severally, free from and harmless against any and all loss, claim,
damage, liability or expense incurred by or on behalf of the Attorneys, or any
of them, arising out of or in connection with acting as Attorneys under this
Power of Attorney, as well as the cost and expense of defending against any
claim of liability hereunder, which is not due to the Attorneys' own gross
negligence or willful misconduct. The undersigned agrees that the Attorneys may
consult with counsel of their choice (which may but need not be counsel for the
Company) and the Attorneys shall have full and complete authorization and
protection for any action taken or suffered by the Attorneys, or any of them
hereunder, in good faith and in accordance with the opinion of such counsel.
It is understood that the purchase price per share of Common Stock
to be paid in connection with the offering contemplated by the Prospectus and
the Underwriting Agreement could be higher or lower than the price per share of
Common Stock as of the date hereof.
It is understood that the Attorneys shall serve entirely without
compensation.
This Power of Attorney shall be binding upon the undersigned and the
heirs, legal representatives, distributees, successors and assigns of the
undersigned.
This Power of Attorney shall be governed by the laws of the State of
New York.
Witness the due execution of the foregoing Power of Attorney as of the date
written below.
Maximum Number of Shares of
Common Stock to be Sold by Selling
Stockholders(s):
___________________________________
Very truly yours,
By:_________________________________________
Name:
Title:
DATED:_____________, 2005
Print Name and Address of Selling
Stockholder(s) and Name and Title of any Person
Signing as Agent or Fiduciary:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Telephone:( )______________________
Facsimile:( )______________________
ACKNOWLEDGMENT
State of )
) ss.
County of )
On this the _____ day of ________ 2005 before me personally appeared
_____________________________ who acknowledged the signing of the foregoing
instrument and that the same is the free act and deed of such person (and if
such person is signing on behalf of a corporation, partnership or trust that the
same is the free act and deed of such corporation, partnership or trust and that
such person is duly authorized to sign the foregoing instrument).
WITNESS my hand and official seal.
Notary's Signature
