Exhibit 1.1
3,500,000 Shares
DOLLAR TREE STORES, INC.
Common Stock
UNDERWRITING AGREEMENT
June __, 1997
XXXXXXXXXX SECURITIES
ALEX. XXXXX & SONS INCORPORATED
XXXXXXX, SACHS & CO.
XXXXX XXXXXX INC.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. INTRODUCTORY. Certain shareholders of Dollar Tree Stores,
Inc., a Virginia corporation (the "Company"), named in Schedule B annexed hereto
(the "Selling Shareholders") propose to transfer and sell an aggregate of
3,500,000 shares of the outstanding Common Stock of the Company (the "Common
Stock") to the several underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as Representatives. Said aggregate of
3,500,000 shares are herein called the "Firm Common Shares." In addition, the
Selling Shareholders propose to grant to the Underwriters an option to purchase
up to 525,000 additional shares of Common Stock (the "Optional Common Shares"),
as provided in Section 5 hereof. The Firm Common Shares and, to the extent such
option is exercised, the Optional Common Shares are hereinafter collectively
referred to as the "Common Shares."
You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-_____) with respect
to the Common Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file prior to
the effective date of such registration statement an amendment or amendments to
such registration statement, which amendment or amendments have been or will be
similarly prepared. There shall be delivered to you, upon your request, two
photocopies of the signed version of such registration statement and amendments,
together with two copies of each exhibit filed therewith. Conformed copies of
such registration statement and amendments (but without exhibits) and of the
related preliminary prospectus have been delivered to you in such reasonable
quantities as you have requested for each of the Underwriters. The Company will
next file with the Commission one of the following: (i) prior to effectiveness
of such registration statement, a further amendment thereto, including the form
of final prospectus, or (ii) a final prospectus in accordance with Rules 430A
and 424(b) of the Rules and Regulations. As filed, such amendment and form of
final prospectus, or such final prospectus, shall include all Rule 430A
Information and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the date and time that this Agreement was executed and delivered by the
parties hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company shall have
previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; PROVIDED, HOWEVER, that such term shall
also include (i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and (ii) any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations relating to
the Common Shares (the "Additional Registration Statement"). The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Common Shares in the form in which it is first filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if
no filing pursuant to Rule 424(b) of the Rules and Regulations is required,
shall mean the form of final prospectus included in the Registration Statement
at the time such registration statement becomes effective. The term "Rule 430A
Information" means information with respect to the Common Shares and the
offering thereof permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A of the Rules and Regulations. Any
reference herein to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Form S-3 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including the First
Closing Date hereinafter mentioned, the Registration Statement will contain all
material statements and information required to be included therein by the Act
and the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and the Registration
Statement will not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Prospectus, as amended and
supplemented, as applicable, at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including the First
Closing Date hereinafter mentioned, will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading; provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or omitted from
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter,
directly or through the Representatives, specifically for use in the preparation
thereof. The documents incorporated by reference in the Prospectus, when they
were filed with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, with full power and
authority (corporate and other) to own and lease their properties and conduct
their respective businesses as described in the Prospectus, except where the
failure to be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; the Company owns of record and
beneficially all of the outstanding capital stock of its subsidiaries free and
clear of all claims, liens, charges and encumbrances (except as disclosed in the
Prospectus); the Company and each of its subsidiaries are in possession of and
operating in compliance with all authorizations, licenses, permits, consents,
certificates and orders material to the conduct of their respective businesses,
all of which are valid and in full force and effect; the Company and each of its
subsidiaries are duly qualified to do business and in good standing as foreign
corporations in each jurisdiction in which the ownership or leasing of
properties or the conduct of their respective businesses requires such
qualification, except for jurisdictions in which the failure to so qualify would
not have a material adverse effect upon the Company and its subsidiaries, taken
as a whole; and 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.
(d) The Company has authorized and outstanding capital stock as set forth
under the heading "Capitalization" in the Prospectus; the issued and outstanding
shares of Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
conform to the description thereof contained in the Prospectus. All issued and
outstanding shares of capital stock of each subsidiary of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as disclosed in or contemplated by the Prospectus and the financial statements
of the Company, and the related notes thereto, included in the Prospectus,
neither the Company nor any subsidiary has outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations, except that the Company has preemptive
rights to acquire shares of its subsidiaries' stock. The description of the
Company's stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be shown
with respect to such plans, arrangements, options and rights.
(e) No shareholder of the Company has any right which has not been waived
or satisfied to require the Company to register the sale of any shares owned by
such shareholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the shareholders or the Board of
Directors of the Company will be required for the transfer and sale of the
Common Shares to be sold by the Selling Shareholders.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited by
applicable law. Except as disclosed in the Prospectus, the making and
performance of this Agreement by the Company and the consummation by the Company
of the transactions herein contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents, of
the Company or any of its subsidiaries, and will not conflict with, result in
the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or any of their respective properties, except for any such
conflicts, breaches or defaults which individually or in the aggregate would not
be material to the Company and its subsidiaries, taken as a whole may be bound
or affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its subsidiaries or any of
their respective properties, except for any such conflicts, breaches or defaults
which individually or in the aggregate would not be material to the Company and
its subsidiaries, taken as a whole. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement by the Company, except such consents, approvals,
authorizations or orders (i) as have been obtained under the Act, (ii) as may be
required under state securities or Blue Sky laws or foreign securities laws in
connection with the purchase and distribution of the Shares by the Underwriters,
(iii) as may be required by the National Association of Securities Dealers, Inc.
(the "NASD") and (iv) the absence of which individually and in the aggregate are
not material to the Company and its subsidiaries, taken as a whole, or to the
Underwriters.
(g) KPMG Peat Marwick LLP, who have expressed their opinion with respect
to the financial statements and schedules of the Company filed with the
Commission as a part of the Registration Statement and/or included or
incorporated by reference in the Prospectus and in the Registration
Statement, are independent accountants as required by the Act and the Rules
and Regulations.
(h) The financial statements and schedules of the Company, and
the related notes thereto, included in the Registration Statement and the
Prospectus and/or incorporated by reference therein present fairly the financial
position of the Company as of the respective dates of such financial
statements and schedules, and the results of operations and cash flows of the
Company for the respective periods covered thereby. Such statements,
schedules and related notes have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis. No other
financial statements or schedules are required to be included in the
Registration Statement or in the documents incorporated by reference therein.
The selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Financial Data" fairly present the information
set forth therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, or as to violations, defaults
and breaches which individually or in the aggregate would not be material to the
Company and its subsidiaries, taken as a whole, neither the Company nor any of
its subsidiaries is in violation or default of any provision of its Articles of
Incorporation or Bylaws, or is in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound; and, except as
disclosed in the Prospectus, there does not exist any state of facts which
constitutes an event of default on the part of the Company or any such
subsidiary as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default.
(j) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement or to any documents incorporated by reference therein by the Act, by
the Exchange Act or by the rules and regulations thereunder which have not been
described or filed as required. Except as disclosed in the Prospectus, the
contracts so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company nor any of its subsidiaries, nor to the
best of the Company's knowledge, any other party is in breach of or default
under any of such contracts.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or may be a party or of which property owned or leased by the Company or any
of its subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might, individually
or in the aggregate, prevent or materially adversely affect the transactions
contemplated by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business, results of operations
or prospects of the Company and its subsidiaries; the descriptions in the
Prospectus of the litigation matters described therein are accurate and complete
in all material respects; and, except as disclosed in the Prospectus, no labor
disturbance by the employees of the Company or any of its subsidiaries exists or
is imminent which might be expected to materially adversely affect such
condition, properties, business, results of operations or prospects. Neither
the Company nor any of its subsidiaries is a party or subject to the provisions
of any material injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body.
(l) The Company or the applicable subsidiary has good and marketable title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements (or elsewhere in the Prospectus), or
(ii) those which are not material in amount and do not adversely affect the use
made and proposed to be made of such property by the Company and its
subsidiaries. The Company or the applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
significant in relation to the business of the Company. Except as disclosed in
the Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction, other than in the ordinary course of business;
(ii) the Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) the Company has not paid or declared any dividends or other distributions
with respect to its capital stock and the Company and its subsidiaries are not
in default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock or
indebtedness material to the Company and its
subsidiaries (other than in the ordinary course of business); and (v) there has
not been any material adverse change in the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company and its
subsidiaries.
(n) Except as disclosed in or specifically contemplated by the Prospectus,
the Company and its subsidiaries have sufficient trademarks, trade names,
copyrights, licenses, approvals and governmental authorizations to conduct their
businesses as now conducted, with such exceptions as would not have a material
adverse effect on the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company and its subsidiaries, taken as
a whole; the expiration of any trademarks (other than "Dollar Tree" or "Dollar
Xxxx$"), trade names, copyrights, licenses, approvals or governmental
authorizations would not have a material adverse effect on the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company or its subsidiaries, taken as a whole; and the Company
has no knowledge of any material infringement by it or its subsidiaries of
trademark, trade name rights, copyrights, licenses, trade secret or other
similar rights of others, and there is no claim being made against the Company
or its subsidiaries regarding trademark, trade name, copyright, license, trade
secret or other infringement which could have a material adverse effect on the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company and its subsidiaries, taken as a whole.
(o) The Company has not been advised, and has no reason to believe, that
either it or any of its subsidiaries is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations, except where failure to be
so in compliance would not materially adversely affect the condition (financial
or otherwise), business, properties, results of operations or prospects of the
Company and its subsidiaries, taken as a whole.
(p) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency which has
been or might be asserted or threatened against the Company or its subsidiaries
which could materially and adversely affect the condition (financial or
otherwise) business, properties, results of operations or prospects of the
Company and its subsidiaries, taken as a whole.
(q) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the offering and
sale of the Common Shares other than the Prospectus, the Registration Statement
and other materials permitted by the Act.
(s) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including,
but not limited to, insurance covering real and personal property (except for
personal property in the stores, which is
uninsured) owned or leased by the Company and its subsidiaries against theft,
damage, destruction and acts of vandalism, all of which insurance is in full
force and effect.
(t) Neither the Company nor any of its subsidiaries has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws or the United States or
any jurisdiction thereof.
(u) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
(v) The Common Stock of the Company has been registered under Section
12(g) of the Exchange Act, and all of the outstanding shares of Common Stock
(including the Common Shares to be sold by the Selling Shareholders hereunder)
have been listed on the National Market of the Nasdaq Stock Market.
(w) The Company has filed with the Commission, on a timely basis, all
documents required to have been filed by the Company pursuant to the Exchange
Act or the rules and regulations promulgated thereunder. Each such document,
when filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING
SHAREHOLDERS.
(a) Each of the Selling Shareholders severally represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and on the First Closing Date
and the Second Closing Date (if applicable) hereinafter mentioned will
have, good and valid title to the Common Shares proposed to be sold by
such Selling Shareholder hereunder on such Closing Date and full
right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver such Common Shares hereunder, free and
clear of all voting trust arrangements, liens, encumbrances, equities,
security interests, restrictions and claims whatsoever; and upon
delivery of and payment for such Common Shares hereunder, assuming the
Underwriters acquire such Common Shares without notice of any adverse
claim, the Underwriters will acquire good and valid title thereto,
free and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, voting trusts or other defects of
title whatsoever.
(ii) This Agreement has been duly authorized, executed and delivered
by such Selling Shareholder and constitutes the valid and binding
obligation and agreement of such Selling Shareholder, enforceable against
such Selling Shareholder in accordance with its terms, except as rights to
indemnity and contribution hereunder may be limited by applicable law.
(iii)Such Selling Shareholder has executed and delivered a Power of
Attorney and caused to be executed and delivered on his behalf a Custody
Agreement (hereinafter collectively referred to with respect to each
Selling Shareholder as the "Shareholders Agreement") and in connection
herewith such Selling Shareholder further represents, warrants and agrees
that such Selling Shareholder has deposited in custody, under the
Shareholders Agreement, with the agent named therein (the "Agent") as
custodian, certificates in negotiable form for the Common Shares to be sold
hereunder by such Selling Shareholder, for the purpose of further delivery
pursuant to this Agreement. Such Selling Shareholder agrees that the
Common Shares to be sold by such Selling Shareholder on deposit with the
Agent are subject to the interests of the Company and the Underwriters,
that the arrangements made for such custody are to that extent irrevocable
(except as otherwise provided in this Agreement or the Shareholders
Agreement), and that the obligations of such Selling Shareholder hereunder
shall not be terminated, except as provided in this Agreement or in the
Shareholders Agreement, by any act of such Selling Shareholder, by
operation of law, by the death or incapacity of such Selling Shareholder or
by the occurrence of any other event. If the Selling Shareholder should
die or become incapacitated, or if any other event should occur, before the
delivery of the Common Shares hereunder, the documents evidencing Common
Shares then on deposit with the Agent shall be delivered by the Agent in
accordance with the terms and conditions of this Agreement as if such
death, incapacity or other event had not occurred, regardless of whether or
not the Agent shall have received notice thereof. This Agreement and the
Shareholders Agreement have been duly executed and delivered by or on
behalf of such Selling Shareholder and the form of such Shareholders
Agreement has been delivered to you.
(iv) The performance of this Agreement and the Shareholders Agreement
by such Selling Shareholder and the consummation of the transactions
contemplated hereby and thereby will not result in a breach or violation by
such Selling Shareholder of any of the terms or provisions of, or
constitute a default by such Selling Shareholder under, (A) any indenture,
mortgage, deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement, trust instrument or
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder or any of its properties is bound, (B) if such Selling
Shareholder is not a natural person, the partnership agreement, trust
instrument or any other organizational documents of such Selling
Shareholder, or (C) any statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to such
Selling Shareholder or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and
delivery by such Selling Shareholder of this Agreement and the Shareholders
Agreement or the consummation by such Selling Shareholder of the
transactions
contemplated by this Agreement and the Shareholders Agreement, except such
consents, approvals, authorizations or orders (i) as have been obtained
under the Act, (ii) as may be required under state securities or Blue Sky
laws or foreign securities laws in connection with the purchase and
distribution of the Shares by the Underwriters, (iii) as may be required by
the NASD and (iv) the absence of which individually and in the aggregate
are not material to the Company and its subsidiaries, taken as a whole, or
to the Underwriters.
(v) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or
which 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 Common Shares.
(vi) Each Preliminary Prospectus and the Prospectus, insofar as it has
related to such Selling Shareholder, has not included any untrue statement
of a material fact or omitted to state a material fact necessary to make
the statements therein not misleading in light of the circumstances under
which they were made; and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, as it relates to such
Selling Shareholder, will include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(vii) Such Selling Shareholder is not aware that the Registration
Statement or Prospectus includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. It is agreed the aggregate
liability of a Selling Shareholder to the Underwriters (A) for a breach of
this representation and (B) under Section 11(a) hereof shall not exceed the
amount of the After Tax Net Proceeds (as defined in Section 11(a)) received
by such Selling Shareholder with respect to the Shares purchased by the
Underwriters from such Selling Shareholder hereunder; and that no Selling
Shareholder shall be liable to any Underwriter for a breach of this
representation unless (1) the Representatives shall have first made demand
for payment on the Company with respect to any damages alleged to result
from the breach of this representation, (2) the Representatives shall
thereafter have used all reasonable efforts to obtain such payment from the
Company, including active pursuit in a court of law of any rights to
indemnity or contribution based on the facts giving rise to the alleged
breach of this representation, and (3) the Company shall have failed to
make such payment within one year after receipt of the notice described in
clause (1).
(b) Each of the Selling Shareholders agree with the Company and
the Underwriters not to offer to sell, sell or contract to sell or
otherwise dispose of any shares of Common Stock or securities
convertible into or exchangeable for any shares of Common Stock, for a
period of 90 days after the date of the Prospectus, without the prior
written consent of Xxxxxxxxxx Securities, as a Representative of the
Underwriters, which consent may be withheld at the sole discretion of
Xxxxxxxxxx Securities.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representatives, on behalf of the several Underwriters, represent and warrant
to the Company and the Selling Shareholders that the information set forth
(i) in the first sentence of the last paragraph of text on the cover page of
the Prospectus, (ii) in the stabilization language on the inside front cover
of the Prospectus and (iii) in the second paragraph under "Underwriting" in
the Prospectus concerning the terms of the offering by the Underwriters and
in the sixth paragraph of text under "Underwriting," was furnished to the
Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement and the Prospectus and is correct
in all material respects. The Representatives represent and warrant that
they have been authorized by each of the other Underwriters as the
Representatives to enter into this Agreement on its behalf and to act for it
in the manner herein provided.
SECTION 5. PURCHASE, SALE AND DELIVERY OF COMMON SHARES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Selling Shareholders agree,
severally and not jointly, to sell to the Underwriters in the respective amounts
set forth in Schedule B hereto, an aggregate of 3,500,000 Firm Common Shares.
The Underwriters agree, severally and not jointly, to purchase from the Selling
Shareholders the number of Firm Common Shares described below. The purchase
price per share to be paid by the several Underwriters to the Selling
Shareholders shall be $_____ per share.
The obligation of each Underwriter to the Selling Shareholders shall be to
purchase from the Selling Shareholders that number of full shares set forth
opposite the name of such Underwriter in Schedule A hereto.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Representatives) at such time
and date, not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m.
Washington D.C. time, the fourth) full business day following the first date
that any of the Common Shares are released by you for sale to the public, as you
shall designate by at least 48 hours prior notice to the Company (or at such
other time and date, not later than one week after such third or fourth, as the
case may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that any
of the Common Shares are released by you for sale to the public or the date that
is 48 hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Selling Shareholders to you, for the respective accounts of the
Underwriters, against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer of same day funds
to the order of the Agent. The certificates for the Firm Common Shares shall
be registered in such names and denominations as you shall have requested at
least two full business days prior to the First Closing Date, and shall be made
available for checking and packaging on the business day preceding the First
Closing Date at a location in New York, New York, as may be designated by you.
Time shall be of the essence, and delivery at the time and place specified in
this Agreement is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein
set forth, the Selling Shareholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, in the respective
amounts set forth in Schedule B hereto, up to an aggregate of 525,000
Optional Common Shares at the purchase price per share to be paid for the
Firm Common Shares, for use solely in covering any over-allotments made by
you for the account of the Underwriters in the sale and distribution of the
Firm Common Shares. The option granted hereunder may be exercised at any
time (but not more than once) within 30 days after the first date that any of
the Common Shares are released by you for sale to the public, upon notice by
you to the Company and the Agent setting forth the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for such shares
are to be registered and the time and place at which such certificates will
be delivered. Such time of delivery (which may not be earlier than the First
Closing Date), being herein referred to as the "Second Closing Date," shall
be determined by you, but if at any time other than the First Closing Date
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. The number of Optional Common Shares to
be purchased by each Underwriter shall be determined by multiplying the
number of Optional Common Shares to be sold by the Selling Shareholders
pursuant to such notice of exercise by a fraction, the numerator of which is
the number of Firm Common Shares to be purchased by such Underwriter as set
forth opposite its name in Schedule A and the denominator of which is
3,500,000 (subject to such adjustments to eliminate any fractional share
purchases as you and the Selling Shareholders may mutually agree). If the
option granted hereunder is exercised in part, the number of Optional Common
Shares to be sold by each Selling Shareholder shall be determined by
multiplying the number of Optional Common Shares set forth opposite his or
its name in Schedule B by a fraction, the numerator of which is the number of
Optional Common Shares to be sold by the Selling Shareholders as specified in
such notice of exercise and the denominator of which is 525,000 (subject to
such adjustments to eliminate any fractional share purchases as you and the
Selling Shareholders may mutually agree). Certificates for the Optional
Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment for and delivery of
the Optional Common Shares shall be the same as for the Firm Common Shares
purchased from the Selling Shareholders as specified in the two preceding
paragraphs. At any time before lapse of the option, you may cancel such
option by giving written notice of such cancellation to the Company and the
Agent.
You have advised the Company and the Selling Shareholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt
therefor. You, individually and not as the Representatives of the Underwriters,
may (but shall not be obligated to) make payment for any Common Shares to be
purchased by any Underwriter whose funds shall not have been received by you by
the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in the judgment of the
Representatives is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly
advise you in writing (i) of the receipt of any comments of the Commission,
(ii) of any request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information,
(iii) when the Registration Statement shall have become effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose. If the Commission shall enter any such stop
order at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. The Company will
not file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus of which you have not been furnished with a copy a reasonable
time prior to such filing or to which you reasonably object (except to the
extent any amendment or supplement to which you object is necessary in the
opinion of counsel to the Company to ensure that the Prospectus does not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading) or which is not in compliance in all material respects with the
Act and the Rules and Regulations.
(b) The Company will fully and completely comply with the provisions
of Rule 430A of the Rules and Regulations with respect to information
omitted from the Registration Statement in reliance upon such Rule.
(c) If during such period after the first date of the public offering
of the Shares as, in the opinion of your counsel, the Prospectus is
required by law to be delivered in
connection with sales by an Underwriter or dealer, any event occurs, as a
result of which the Prospectus, including any amendments or supplements,
would include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or if it is necessary at any time to
amend the Prospectus, including any amendments or supplements, to comply
with the Act or the Rules and Regulations, the Company will promptly advise
you thereof and will promptly prepare and file with the Commission, at its
own expense, an amendment or supplement which will correct such statement
or omission or an amendment or supplement which will effect such compliance
and will use its best efforts to cause the same to become effective (to the
extent effectiveness is required under the Act or the Rules and
Regulations) as soon as possible; and, in case any Underwriter is required
to deliver a prospectus after such period, the Company upon request, but at
the expense of such Underwriter, will promptly prepare such amendment or
amendments to the Registration Statement and such Prospectus or
Prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you or mail to your order
copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents (other
than periodic filings under the Exchange Act) in each case as soon as
available and in such quantities as you may reasonably request, for the
purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the Blue Sky laws of such jurisdictions as you
designate and Canadian securities laws, will comply with such laws and will
continue such qualifications, registrations and exemptions in effect so
long as reasonably required for the distribution of the Common Shares. The
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise you promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives: (i) as soon as practicable after the end
of each fiscal year, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, shareholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public
accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Xxxxxxxxxx Securities, as a Representative of the
Underwriters, or each of the Representatives (which consent may be withheld
at the sole discretion of any of the Representatives), the Company will not
issue, offer, sell, grant options to purchase or otherwise dispose of any
of the Company's equity securities or any other securities convertible into
or exchangeable with its Common Stock or other equity security; provided,
however, that the Company may (i) issue shares of Common Stock upon the
exercise of stock options and warrants outstanding on the date hereof, as
described in the Prospectus (it being agreed that the Company shall not
accelerate the exercisability of any such options or grant any waiver or
acceleration under the terms of the Stock Restriction Agreement to be
entered into by the optionee upon the exercise of such options), and
(ii) grant options and issue shares of Common Stock in accordance with its
Amended and Restated Stock Option Plan, Stock Incentive Plan or Employee
Stock Purchase Plan, as described in the Prospectus or in materials
incorporated by reference in the Prospectus.
(i) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with such
Blue Sky laws and will continue such qualifications, registrations and
exemptions in effect for a period of five years after the date hereof.
You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, each Selling Shareholder agrees to pay its pro rata portion of all
costs, fees and expenses incurred in connection with the performance of the
obligations of the Company or the Selling Shareholders hereunder, including
without limiting the generality of the foregoing, (i) all expenses incident to
the delivery of the Common Shares (including all printing, copying, and
engraving costs), (ii) all fees and expenses of the registrar and transfer agent
of the Common Stock, (iii) all necessary
transfer and other stamp taxes in connection with the transfer and sale of the
Common Shares to the Underwriters, (iv) all fees and expenses of the Company's
counsel and the Company's independent accountants, (v) all costs and expenses
incurred in connection with the preparation, printing, copying, filing, shipping
and distribution of the Registration Statement, each Preliminary Prospectus and
the Prospectus (including all exhibits and financial statements) and all
amendments and supplements provided for herein, this Agreement, the Agreement
Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire and the Blue Sky memorandum, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the Blue Sky laws and Canadian securities laws (provided that such fees and
expenses shall not exceed $12,000), (vii) the filing fee of the NASD, and
(viii) all other fees, costs and expenses referred to in Item 14 of the
Registration Statement. Except as provided in this Section 7, Section 9 and
Section 11 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification, registration or exemption under the Blue Sky laws and Canadian
securities laws and the Blue Sky memorandum referred to above). Each Selling
Shareholder's pro rata portion of the expenses described in this Section 7 shall
be that amount which bears to the total expenses the same proportion as the
number of Firm Shares to be sold by such Selling Shareholder bears to 525,000.
SECTION 8. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Shareholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M. (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares,
not later than 10:00 P.M.), Washington, D.C. Time, on the date of this
Agreement, or at such later time as shall have been consented to by you; if
the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and Regulations; and prior to such Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company or you,
shall be contemplated by the Commission; and any request of the Commission
for inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any change in the capital stock of the
Company (other than as contemplated by Section 6(h) above) or any of its
subsidiaries or any material change in the indebtedness (other than in the
ordinary course of business) of the Company or any of its subsidiaries,
(ii) except as set forth in or contemplated by the Registration Statement
or the Prospectus, no material verbal or written agreement or other
transaction shall have been entered into by the Company or any of its
subsidiaries, which is not in the ordinary course of business, (iii) no
loss or damage (whether or not insured) to the property of the Company or
any of its subsidiaries shall have been sustained which materially and
adversely affects the condition (financial or otherwise), business, results
of operations or prospects of the Company and its subsidiaries, taken as a
whole, (iv) no legal or governmental action, suit or proceeding affecting
the Company or any of its subsidiaries which is material to the Company and
its subsidiaries, taken as a whole, or which affects or may affect the
transactions contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material change in the
condition (financial or otherwise), business, management, results of
operations or prospects of the Company and its subsidiaries, taken as a
whole, which makes it impractical or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase the Common
Shares as contemplated hereby.
(c) There shall have been furnished to you, as Representatives of the
Underwriters, on each Closing Date, in form and substance satisfactory to
you, except as otherwise expressly provided below:
(i) An opinion of Hofheimer, Nusbaum, XxXxxxx & Xxxxxxx, P.C.,
counsel for the Company and the Selling Shareholders identified as the
"Virginia Selling Shareholders" on Schedule B hereto (the "Virginia
Selling Shareholders"), addressed to the Underwriters and dated the
First Closing Date, or the Second Closing Date, as the case may be, to
the effect that:
(1) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, is duly qualified
to do business as a foreign corporation and is in good standing in
each state in which it owns or leases real property, and has full
corporate power and authority to own its properties and conduct its
business as described in the Registration Statement;
(2) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate proceedings have been taken
in order to validly authorize such authorized capital stock; all
outstanding shares of capital stock (including the Firm Common Shares and
any Optional Common Shares) have been duly and validly issued, are fully
paid and nonassessable, were not issued in violation of or subject to any
preemptive rights or, to the best of such counsel's knowledge, other rights
to subscribe for or purchase any securities and conform to the description
thereof contained in the Prospectus; all outstanding shares
of capital stock of the Company have been issued in compliance with federal
and state securities laws;
(3) All of the issued and outstanding shares of the Company's
subsidiaries have been duly and validly authorized and issued, are fully
paid and nonassessable and are owned beneficially by the Company free and
clear of all liens, encumbrances, equities, claims, security interests,
voting trusts or other defects of title whatsoever;
(4) The certificates evidencing the Common Shares to be delivered
hereunder are in due and proper form under Virginia law, and when duly
countersigned by the Company's transfer agent and registrar, and delivered
to you or upon your order against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement, the Common
Shares represented thereby will be duly authorized and validly issued,
fully paid and nonassessable, will not have been issued in violation of or
subject to any preemptive rights or, to the best of such counsel's
knowledge, other rights to subscribe for or purchase securities and will
conform in all respects to the description thereof contained in the
Prospectus;
(5) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any security convertible into or exchangeable for
capital stock of the Company;
6(a) To the best of such counsel's knowledge, there are no franchises,
leases, contracts, agreements or documents of a character required to be
disclosed in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement or to any document incorporated by
reference therein which are not disclosed or filed, as required; and
(b) To the best of such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened against
the Company which are required to be described in the Prospectus which are
not described as required.
(7) The Company has full right, power and authority to enter into
this Agreement; this Agreement has been duly and validly authorized by all
necessary corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and except as to those provisions relating to indemnity or
contribution for liabilities, as to which no opinion need be expressed; and
no approval, authorization, order, consent, registration, filing,
qualification, license or permit of or with any court, regulatory,
administrative or other governmental body is required for the execution and
delivery of this Agreement by the Company or the consummation of the
transactions contemplated by this Agreement; provided, however, no opinion
need be
expressed as to the Act, the rules of the NASD or applicable state
securities or Blue Sky laws or foreign securities laws in connection with
the purchase and distribution of the Common Shares;
(8) Except as disclosed in the Prospectus, the execution and
performance of this Agreement and the consummation of the transactions
herein contemplated will not conflict with, result in the breach of, or
constitute, either by themselves or upon notice or the passage of time or
both, a default under, any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument known to such
counsel to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of its or their
property may be bound or affected which is material to the Company and its
subsidiaries, taken as a whole, or violate any of the provisions of the
certificate of incorporation or bylaws, or other organizational documents,
of the Company or any of its subsidiaries or, so far as is known to such
counsel, violate any statute, judgment, decree, order, rule or regulation
of any court or governmental body having jurisdiction over the Company or
any of its subsidiaries or any of its or their property;
(9) Except as disclosed in the Prospectus, neither the Company nor
any subsidiary is in violation of its Articles of Incorporation or Bylaws,
or other organizational documents, or to the best of such counsel's
knowledge, in breach of or default with respect to any provision of any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument known to such counsel to which the Company or
any such subsidiary is a party or by which it or any of its properties may
be bound or affected, except where such breach or default would not
materially adversely affect the Company and its subsidiaries, taken as a
whole; and, to the best of such counsel's knowledge, the Company and its
subsidiaries are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or jurisdiction to
which they are subject, except where noncompliance would not materially
adversely affect the Company and its subsidiaries, taken as a whole;
(10) To the best of such counsel's knowledge, no holders of securities
of the Company have rights which have not been waived to the registration
of shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering contemplated hereby;
(11) No transfer taxes are required to be paid in connection with the
sale and delivery of the Common Shares to the Underwriters hereunder.
(12) This Agreement and the Shareholders Agreement have been duly
authorized, executed and delivered by or on behalf of each Virginia Selling
Shareholder; the Agent has been duly and validly authorized to act as the
custodian of the Common Shares to be sold by each Virginia Selling
Shareholder; and the performance of this Agreement and the Shareholders
Agreement and the consummation of the transactions contemplated herein and
therein by each Virginia Selling Shareholder will not result in a
breach or violation of, or constitute a default under, (A) any indenture,
mortgage, deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or instrument known to such
counsel to which such Virginia Selling Shareholder is a party or by which
it or any of its properties may be bound, (B) any organizational documents
of any Virginia Selling Shareholder that is not a natural person, or (C)
any statute, or, to the best of such counsel's knowledge, any judgment,
decree, order, rule or regulation of any court or governmental body having
jurisdiction over such Virginia Selling Shareholder or any of its
properties; and no approval, authorization, order or consent of any court,
regulatory body, administrative agency or other governmental body is
required for the execution and delivery by each Virginia Selling
Shareholder of this Agreement or the Shareholders Agreement or the
consummation by each Virginia Selling Shareholder of the transactions
contemplated by this Agreement or the Shareholders Agreement, provided,
however, no opinion need be expressed as to the Act, the rules of the NASD
or applicable state securities or Blue Sky laws or foreign securities laws
in connection with the purchase and distribution of the Common Shares;
provided that the opinions expressed in this clause 8(c)(i)(12) with
respect to the due and valid authorization of the Agent to act as the
custodian of the Common Shares to be sold by each such Virginia Selling
Shareholder need not cover the provisions contained in the second and third
sentences of Section 3(a)(iii) hereof, [the second full paragraph on page 5
of the Selling Shareholders Power of Attorney or the seventh paragraph of
the Selling Shareholders Custody Agreement];
(13) Each Virginia Selling Shareholder that is not an individual has
trust power and authority to enter into this Agreement and the Shareholders
Agreement and to sell, transfer and deliver the Common Shares to be sold on
such Closing Date by such Virginia Selling Shareholders; immediately prior
to each Closing Date, each Virginia Selling Shareholder was the sole
registered owner of the Shares to be sold by such Virginia Selling
Shareholder on such Closing Date; upon issuance of new certificates in the
names of the Underwriters representing such Shares, assuming the
Underwriters purchased the Shares in good faith and without notice of any
adverse claim within the meaning of the Uniform Commercial Code, the
Underwriters will have acquired all rights of such Virginia Selling
Shareholder in the Shares free of any adverse claim, any lien in favor of
the Company, and any restrictions on transfer imposed by the Company;
(14) This Agreement and the Shareholders Agreement are valid and
binding agreements of each Virginia Selling Shareholder in accordance with
their terms, except (i) as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally, (ii) with respect to
those provisions relating to indemnities or contributions for liabilities
under the Act, as to which no opinion need be expressed, and (iii) with
respect to the provisions contained in the second and third sentences of
Section 3(a)(iii) hereof, [the second full paragraph on page 5 of the
Selling Shareholders Power of Attorney or the seventh paragraph of the
Selling Shareholders Custody Agreement], as to which no opinion need be
expressed;
(15) The documents incorporated by reference in the Prospectus
(except for the financial statements and schedules included in such
documents as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder.
(16)(a) The Registration Statement (assuming compliance with clause
(2) of Rule 462(b) in the case of any Additional Registration Statement)
has become effective under the Act, and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission; any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules and Regulations
has been made in the manner and within the time period required by such
Rule 424(b);
(b) The Registration Statement, the Prospectus and each amendment or
supplement thereto, if any (except for the financial statements and
schedules included therein as to which such counsel need express no
opinion), comply as to form in all material respects with the requirements
of the Act and the Rules and Regulations.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of officers of the Company, of the
Virginia Selling Shareholders and of governmental officials, in
which cases their opinion is to state that they are so doing and
that the Underwriters are justified in relying on such
certificates and copies of such certificates are to be attached
to the opinion. Such counsel's opinion may also state that
they have made no independent factual investigation and may
assume the capacity of all natural persons and may assume the
conformity of all copies or facsimiles to the originals
thereof. Moreover, such counsel's opinion shall be made with
respect to federal and Virginia law only. Such counsel shall
also include in such opinion (or provide separately to you) a
statement to the effect that nothing has come to such counsel's
attention that would lead such counsel to believe that at its
effective date the Registration Statement 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, if applicable, at the applicable Closing
Date includes an untrue statement of material fact or omits to
state a material fact necessary in order to make the statements,
in the light of the circumstances under which they were made, not
misleading. Such counsel may also state that they have assumed
the conformity of documents filed as exhibits to the Registration
Statement with the Commission via the Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX"), except for required
XXXXX formatting changes, to the physical copis of the documents
submitted for their examination. Such counsel shall also permit
Xxxx and Xxxx LLP, as counsel to the Underwriters, to rely on
such opinion (insofar as it relates to matters of Virginia law)
in rendering their opinion pursuant to Section 8(c)(iii) hereof;
(ii) An opinion of ____________________, special counsel for the
Selling Shareholders identified as the "New York Selling Shareholders" on
Schedule B hereto
(the "New York Selling Shareholders"), addressed to the Underwriters and
dated the First Closing Date, or the Second Closing Date, as the case may
be, to the effect that:
(1) This Agreement and the Shareholders Agreement have been duly
authorized, executed and delivered by or on behalf of each New York Selling
Shareholder; the Agent has been duly and validly authorized to act as the
custodian of the Common Shares to be sold by each such New York Selling
Shareholder; and the performance of this Agreement and the Shareholders
Agreement by each New York Selling Shareholder will not result in a breach
or violation of, or constitute a default under, (A) any indenture,
mortgage, deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or instrument known to such
counsel to which such New York Selling Shareholder is a party or by which
it or any of its properties may be bound, (B) if such Selling Shareholder
is not a natural person, any organizational documents of such New York
Selling Shareholder, or (C) any statute, or, to the knowledge of such
counsel, any judgment, decree, order, rule or regulation of any court or
governmental body having jurisdiction over such New York Selling
Shareholder or any of its properties; and no approval, authorization, order
or consent of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery by each New
York Selling Shareholder of this Agreement or the Shareholders Agreement or
the consummation by each New York Selling Shareholder of the transactions
contemplated by this Agreement or the Shareholders Agreement, except such
consents, approvals, authorizations or orders (i) as have been obtained
under the Act, (ii) as may be required under state securities or Blue Sky
laws or foreign securities laws in connection with the purchase and
distribution of the Shares by the Underwriters and (iii) as may be required
by the NASD; provided that the opinions expressed in this clause
8(c)(ii)(1) with respect to the due and valid authorization of the Agent to
act as the custodian of the Common Shares to be sold by each such New York
Selling Shareholder need not cover the provisions contained in the second
and third sentences of Section 3(a)(iii) hereof, [the second full paragraph
on page 5 of the Selling Shareholders Power of Attorney or the seventh
paragraph of the Selling Shareholders Custody Agreement];
(2) Each New York Selling Shareholder that is not an individual has,
as applicable, corporate, partnership or trust power and authority to enter
into this Agreement and the Shareholders Agreement and to sell, transfer
and deliver the Common Shares to be sold on such Closing Date by such New
York Selling Shareholder; immediately prior to each Closing Date, each New
York Selling Shareholder was the sole registered owner of the Shares to be
sold by such New York Selling Shareholder on such Closing Date; upon
registration of the Shares in the names of the Underwriters in the stock
records of the Company, and the issuance of new certificates registered in
the names of the Underwriters representing such Shares, assuming the
Underwriters purchased the Shares in good faith and without notice of any
adverse claim within the meaning of the Uniform Commercial Code, the
Underwriters will have acquired all rights of such New York Selling
Shareholder in the Shares free of any adverse claim, any lien in favor of
the Company, and any restrictions on transfer imposed by the Company; and
the owner of
the Shares, if other than such New York Selling Shareholder, is precluded
from asserting against the Underwriters the ineffectiveness of any
unauthorized endorsement;
(3) This Agreement and the Shareholders Agreement are valid and
binding agreements of each New York Selling Shareholder in accordance with
their terms, except (i) as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally, (ii) with respect to
those provisions relating to indemnities or contributions for liabilities
under the Act, as to which no opinion need be expressed, and (iii) with
respect to the provisions contained in the second and third sentences of
Section 3(a)(iii) hereof, [the second full paragraph on page 5 of the
Selling Shareholders Power of Attorney or the seventh paragraph of the
Selling Shareholders Custody Agreement], as to which no opinion need be
expressed; and
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of the New York Selling
Shareholders and of governmental officials, in which cases their
opinion is to state that they are so doing and copies of such
certificates are to be attached to the opinion. Such counsel may
also state that they have made no independent factual
investigation and have assumed the capacity of all natural
persons. Such counsel shall also permit Xxxx and Xxxx LLP, as
counsel to the Underwriters, to rely on the opinions set forth
above (insofar as they relate to matters of New York law) in
rendering their opinion pursuant to Section 8(c)(iii) hereof;
(iii) Such opinion or opinions of Xxxx and Xxxx LLP, counsel for
the Underwriters, dated the First Closing Date or the Second Closing Date,
as the case may be, with respect to the incorporation of the Company, the
sufficiency of all corporate proceedings and other legal matters relating
to this Agreement, the validity of the Common Shares, the Registration
Statement and the Prospectus and other related matters as you may
reasonably require, and the Company and the Selling Shareholders shall have
furnished to such counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request for the purpose of
enabling them to pass upon such matters. In connection with such opinions,
such counsel may rely on representations or certificates of officers of the
Company and governmental officials.
(iv) A certificate of the Company executed by the Chairman of the
Board or President and the chief financial or accounting officer of the
Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied on or
prior to such Closing Date;
(2) The Commission has not issued any order preventing or suspending
the use of the Prospectus or any Preliminary Prospectus filed as a part of
the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been issued;
and to the best of the knowledge of the respective signers, no proceedings
for that purpose have been instituted or are pending or contemplated under
the Act;
(3) Each of the respective signers of the certificate has carefully
examined the Registration Statement and the Prospectus on behalf of the
Company; the Registration Statement and the Prospectus and any amendments
or supplements thereto contain all statements required to be stated therein
regarding the Company and its subsidiaries; and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(4) Since the initial date on which the Registration Statement was
filed, no agreement, written or oral, transaction or event has occurred
which should have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any prospectus which has
not been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as disclosed in
or contemplated by the Prospectus, there has not been any material adverse
change or a development involving a material adverse change in the
condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company and its subsidiaries,
taken as a whole; and no legal or governmental action, suit or proceeding
is pending or threatened against the Company or any of its subsidiaries
which is material to the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, or which may adversely affect the transactions contemplated by
this Agreement; since such dates and except as so disclosed, neither the
Company nor any of its subsidiaries has entered into any verbal or written
agreement or other transaction that is material to the Company and its
subsidiaries, taken as a whole, which is not in the ordinary course of
business or incurred any material liability or obligation, direct,
contingent or indirect, made any change in its capital stock, made any
material change in its short-term debt or funded debt or repurchased or
otherwise acquired any of the Company's capital stock; and the Company has
not declared or paid any dividend, or made any other distribution, upon its
outstanding capital stock payable to shareholders of record on a date prior
to the First Closing Date or Second Closing Date, as the case may be; and
(6) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus and except as disclosed in or
contemplated by the Prospectus, the Company and its subsidiaries have not
sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other calamity
(whether or not insured).
(v) On the First Closing Date or the Second Closing Date, as the case
may be, a certificate, dated such Closing Date and addressed to you, signed
by or on behalf of each of the Selling Shareholders to the effect that the
representations and warranties of such Selling Shareholder in this
Agreement are true and correct, as if made at and as of the First Closing
Date or the Second Closing Date, as the case may be, and such Selling
Shareholder has complied with all the agreements and satisfied all the
conditions on his part to be performed or satisfied prior to the First
Closing Date or the Second Closing Date, as the case may be.
(vi) On the date this Agreement is executed and also on the First
Closing Date and the Second Closing Date, letters addressed to you, as
Representatives of the Underwriters, from KPMG Peat Marwick LLP,
independent accountants, the first of each to be dated the date of this
Agreement, the second of each to be dated the First Closing Date and the
third of each (in the event of a Second Closing) to be dated the Second
Closing Date, in form and substance satisfactory to you.
(vii) An opinion of Goldberg, Kohn, Bell, Black, Xxxxxxxxxx &
Moritz, Ltd., special litigation counsel for the Company, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date,
as the case may be, to the effect that the section of the Prospectus
entitled "Risk Factors -- Legal Proceedings" (except for the first sentence
and the last two sentences) contain fair and accurate summaries of the
litigation described therein, and that nothing has come to their attention
that would lead them to believe that either at the effective date of the
Registration Statement or the applicable Closing Date, the above-listed
sections of the Prospectus contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein regarding the litigation described therein
not misleading.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you
and to Xxxx and Xxxx LLP, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request. Any certificate signed
by any officer of the Company and delivered to the Representatives or to
counsel for the Underwriters shall be deemed to be a representation and
warranty by the Company to the Underwriters as to the statements made
therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you as Representatives to the
Company and the Selling Shareholders without liability on the part of any
Underwriter or the Company except for the expenses to be paid or
reimbursed by the Company and the Selling Shareholders pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof.
SECTION 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. Notwithstanding any
other provisions hereof, if the sale to the Underwriters of the Common Shares at
the First Closing is not consummated because of any refusal, inability or
failure on the part of the Company or any Selling Shareholder to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Common Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph charges and telephone charges relating directly to
the offering contemplated by the Prospectus. Any such termination shall be
without liability of any party to any other party except that the provisions of
this Section, Section 7 and Section 11 shall at all times be effective and shall
apply.
SECTION 10. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the Company and
the Selling Shareholders will use your and its best efforts to cause the
Registration Statement to become effective, to prevent the issuance of any stop
order suspending the effectiveness of the Registration Statement and, if such
stop order be issued, to obtain as soon as possible the lifting thereof.
SECTION 11. INDEMNIFICATION. (a) The Company and each of the Selling
Shareholders, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of them
not misleading; and will reimburse each Underwriter and each such controlling
person for any legal and other expenses as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, that neither the Company nor any Selling
Shareholder shall be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto (i) in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof or (ii) in
reliance upon and in conformity with information furnished to the Company by a
Selling Shareholder with respect to such Selling Shareholder (except that the
Selling Shareholder furnishing such information shall not be so relieved of
liability); PROVIDED FURTHER, that no Selling Shareholder shall be liable under
this
Section 11(a) for an amount in excess of the After Tax Net Proceeds (as defined
below) received by such Selling Shareholder with respect to the Shares purchased
by the Underwriters from such Selling Shareholder hereunder; PROVIDED FURTHER
that no Selling Shareholder shall be required to provide indemnification
hereunder unless (1) the Representatives shall have first made demand for
payment on the Company with respect to any such loss, claim, damage, liability
or expense, (2) the Representatives shall thereafter have used all reasonable
efforts to obtain such payment from the Company, including active pursuit in a
court of law of any rights hereunder to indemnity or contribution for such loss,
claim, damage, liability or expense, and (3) the Company shall have failed to
make such payment within one year after receipt of the notice described in
clause (1); and PROVIDED FURTHER that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such loss, claim, damage,
liability or expenses purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The Company and the Selling Shareholders may
agree, as among themselves and without limiting the rights of the Underwriters
under this Agreement, as to their respective amounts of such liability for which
they each shall be responsible. In addition to their other obligations under
this Section 11(a), the Company and the Selling Shareholders agree that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, all as described in this Section 11(a), they
will reimburse each Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding. To the extent that
any such interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company or the Selling Shareholders,
as applicable, together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
the Company or the Selling Shareholders may otherwise have. The "After Tax Net
Proceeds" received by a Selling Shareholder with respect to Shares sold by it
hereunder shall mean the proceeds (net of the applicable underwriting discount)
received by such Selling Shareholder with respect to such Shares, as adjusted to
reflect both (i) the amount of any taxes paid or payable by such Selling
Shareholder by virtue of the sale of such Shares and (ii) the value of any tax
benefit realized or realizable (taking into account the probability that any
such tax benefit will be realized) by such Selling Shareholder by virtue of the
payment of amounts under this Section 11 or the payment of amounts in regard to
a breach of a representation of such Selling Shareholder set forth in Section
3(a).
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, each Selling
Shareholder and each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses to which the Company, or any such director, officer or
controlling person may become subject, under the Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or 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 the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof; and will reimburse the Company, or any such director, officer, Selling
Shareholder or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer, Selling Shareholder or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(b), each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 11(b) which relates to information furnished to the
Company pursuant to Section 4 hereof, it will reimburse the Company (and, to the
extent applicable, each officer, director, Selling Shareholder or controlling
person) on a quarterly basis for all reasonable legal or other expenses incurred
in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, Selling Shareholder or controlling person)
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, the Company
(and, to the extent applicable, each officer, director, Selling Shareholder or
controlling person) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Company within 30 days
of a request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel, approved
by the Representatives in the case of paragraph (a), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party. The indemnifying
party shall not be liable for any settlement of such action effected without its
written consent, which shall not be unreasonably withheld or delayed, but if
settled with such consent, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement.
(d) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party (subject to the limits set
forth in subparagraph (a) of this Section 11) shall contribute to the amount
paid or payable by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Selling Shareholders and the Underwriters from the offering of the Common Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Selling Shareholders and the Underwriters in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling Shareholders
and the Underwriters shall be deemed to be in the same proportion, in the case
of the Company and the Selling Shareholders on the one hand, as the total price
paid to the Selling Shareholders for the Common Shares sold by them to the
Underwriters (net of underwriting commissions but before deducting expenses),
and in the case of the Underwriters, on the other hand, as the underwriting
commissions received by them bears to the total of such amounts paid to the
Selling Shareholders and received by the Underwriters as underwriting
commissions. The relative fault of the Company, the Selling Shareholders and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Shareholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in subparagraph (c) of this Section 11, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in subparagraph (c) of
this Section 11 with respect to notice of commencement of any action shall apply
if a claim for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 11 were determined solely 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 in this paragraph. Notwithstanding the provisions of this Section
11, no Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter in
connection with the Common Shares underwritten by it and distributed to the
public. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 11 are several in proportion
to their respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a) and 11(b) hereof,
including the amounts of any requested reimbursement payments and the method of
determining such amounts, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of the New
York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of
the NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does not
make such designation of an arbitration tribunal in such demand or notice, then
the party responding to said demand or notice is authorized to do so.
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to this
Agreement and the obligation of the Selling Shareholders to sell and deliver the
Common Shares hereunder, and of each Underwriter to purchase the Common Shares
in the manner as described herein, that, except as hereinafter in this paragraph
provided, each of the Underwriters shall purchase and pay for all the Common
Shares agreed to be purchased by such Underwriter hereunder upon tender to the
Representatives of all such shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares which such defaulting Underwriter or Underwriters agreed
but failed to purchase on such Closing Date does not exceed 10% of the total
number of Common Shares which the Underwriters are obligated to purchase on such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and the aggregate
number of Common Shares with respect to which such default occurs is more than
the above percentage and arrangements satisfactory to the Representatives and
the Company for the purchase of such Common Shares by other persons are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Shareholders except for the expenses to be paid by the Selling
Shareholders pursuant to Section 7 hereof and except to the extent provided in
Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 15 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams
(i) advising Underwriters that the Common Shares are released for public
offering, or (ii) offering the Common Shares for sale to securities dealers,
whichever may occur first.
SECTION 14. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Shareholders or by you by notice to the Company and the
Selling Shareholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the
Company or any Selling Shareholder to any Underwriter (except for the
expenses to be paid or reimbursed by the Company and the Selling
Shareholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof) or of any Underwriter to the Company or any
Selling Shareholder (except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company and the Selling Shareholders (i) if
additional material governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock
Exchange or in the over the counter market by the NASD, or trading in
securities generally shall have been suspended on either such Exchange or
in the over the counter market by the NASD, or a general banking moratorium
shall have been established by federal, New York or California authorities,
(ii) if an outbreak of major hostilities or other national or international
calamity or any substantial change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated to
such an extent, as, in the judgment of the Representatives, to affect
adversely the marketability of the Common Shares, (iii) if any adverse
event shall have occurred or shall exist which makes untrue or incorrect in
any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained therein not
misleading in any material respect, or (iv) if there shall be any action,
suit or proceeding pending or threatened, or there shall have been any
development or prospective development involving particularly the business
or properties or securities of the Company or any of its subsidiaries or
the transactions contemplated by this Agreement, which, in the reasonable
judgment of the Representatives, may materially and adversely affect the
Company's business or earnings and makes it impracticable or inadvisable to
offer or sell the Common Shares. Any termination pursuant to this
subparagraph (b) shall be without liability on the part of any Underwriter
to the Company or any Selling Shareholder or on the part of the Company or
any Selling Shareholder to any Underwriter (except for expenses to be paid
or reimbursed by the Selling Shareholders pursuant to Section 7 hereof and
except to the extent provided in Section 11 hereof.
SECTION 15. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any Selling Shareholder or any of its
or their partners, officers or directors or any controlling person, as the case
may be, and will survive delivery of and payment for the Common Shares sold
hereunder and any termination of this Agreement.
SECTION 16. NOTICES. All communications hereunder shall be in writing
and, if sent to the Representatives shall be mailed, delivered or telecopied to
you at 000 Xxxxxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxx, with a copy to Xxxx
and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx
X. Xxxxxxx, Esq.; if sent to the Company, shall be mailed, delivered or
telecopied to the Company, at 2555 Ellsmere Avenue, Norfolk Commerce Park,
Norfolk, Virginia 23501-2500 with a copy to Hofheimer, Nusbaum, XxXxxxx &
Xxxxxxx, 0000 Xxxxxxxx Xxxxx, 000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxxx X. Old, Esq.; if sent to any Virginia Selling Shareholder,
shall be mailed, delivered or telecopied to the Selling Shareholder c/o the
Company at 2555 Ellsmere Avenue, Norfolk Commerce Park, Norfolk, Virginia
23501-2500 with a copy to Hofheimer, Nussbaum, XxXxxxx & Xxxxxxx, 0000 Xxxxxxxx
Xxxxx, 00 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Old,
Esq.; and if sent to any of the New York Selling Shareholders, to the New York
Selling Shareholder x/x Xxxxxxxx, Xxxx & Co., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 with a copy to ______________________________. The
Company, the Selling Shareholders or you may change the address for receipt of
communications hereunder by giving notice to the others.
SECTION 17. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 18. REPRESENTATION OF UNDERWRITERS. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Xxxxxxxxxx Securities, as Representatives, will be binding upon
all the Underwriters.
SECTION 19. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
SECTION 20. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 21. GENERAL. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders (to the extent
such amendment affects them) and you.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
DOLLAR TREE STORES, INC.
By:______________________________
Name:
Title:
THE SELLING SHAREHOLDERS IDENTIFIED ON SCHEDULE B
By:______________________________
Name:
By:______________________________
Name:
Each as Attorney-in-Fact acting
on behalf of each such Selling
Shareholder
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
ALEX. XXXXX & SONS INCORPORATED
XXXXXXX, SACHS & CO.
XXXXX XXXXXX INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By XXXXXXXXXX SECURITIES
By:______________________________
Partner
SCHEDULE A
Number of Firm
Name of Underwriter Common Shares to Be Purchased
------------------- ---------------
Xxxxxxxxxx Securities
Alex. Xxxxx & Sons Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx Inc.
TOTAL 3,500,000
=========
SCHEDULE B
Number of Firm Number of Optional
Common Shares Common Shares
Name of Selling Shareholder to be Sold to be Sold
--------------------------- -------------- ------------------
The Virginia Selling Shareholders:
J. Xxxxxxx Xxxxx 350,000 114,187
Macon X. Xxxxx, Xx. 245,750 114,188
H. Xxx Xxxxxxx 125,000 34,125
Xxxx X. Xxxxx 245,751 --
Xxxxxx X. Xxxxxx and
J. Xxxxxxx Xxxxx, as
Trustees for Xxxxxx
X. Xxxxx 50,000 --
Xxxxxx X. Xxxxxx and
J. Xxxxxxx Xxxxx, as
Trustees for Xxxxxxx
X. Xxxxx 50,000 --
Xxxxxx X. Xxxxxx and
J. Xxxxxxx Xxxxx, as
Trustees for Xxxxx Page
Perry 50,000 --
Xxxxxx X. Xxxxxx and
Macon X. Xxxxx, Xx., as
Trustees of the Xxxxx
Children's Trust 8,499 --
Xxxxx X. Xxxxxxx, Trustee
of the Brymar Descendants
Trust 25,000 --
The New York Selling Shareholders:
SK Equity Fund, L.P. . 2,337,727 261,130
Xxxxx X. Xxxx 3,835 428
Xxxxxxxxxxx X. Xxxxxx 767 86
Xxxxxxx X. Xxxxxx, Custodian
for Xxxx Xxxxxxxxx
Xxxxxx 1,918 214
Xxxxxxx X. Xxxxxx, Custodian
for Xxxxxxxxxxx Xxxxxxxxx
Xxxxxx 1,918 214
Xxxxxx X. Xxxxxxxx, III and
Xxxxxx X. Xxxxxxx, as
Trustees for the
Xxxxxxxx Dollar Tree
Trust 3,835 428
--------- -------
TOTAL 3,500,000 525,000
========= =======
