EXHIBIT 1.1
1,500,000 Shares
CITI TRENDS, INC.
Common Stock
UNDERWRITING AGREEMENT
January , 2006
CIBC World Markets Corp.
Wachovia Capital Markets, LLC
XX Xxxxx & Co., LLC
Xxxxx Xxxxxxx & Co.
as Representatives of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The persons listed on Schedule II hereto (each, a "Selling
Stockholder," and together, the "Selling Stockholders"), propose, subject to the
terms and conditions contained herein, to sell to you and the other underwriters
named on Schedule I to this Agreement (the "Underwriters"), for whom you are
acting as Representatives (the "Representatives"), an aggregate of 1,500,000
shares (the "Firm Shares") of common stock, $0.01 par value per share (the
"Common Stock") of Citi Trends, Inc., a Delaware corporation (the "Company").
The respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I hereto. In
addition, the Selling Stockholders (each in the amount set forth on Schedule II
hereto) propose to grant to the Underwriters an option to purchase up to an
additional 225,000 shares (the "Option Shares") of Common Stock, for the purpose
of covering over-allotments, if any, in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are collectively called the
"Shares."
The Company has prepared and filed in conformity, in all material
respects, with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the published rules and regulations
thereunder (the "Rules") adopted by the Securities and Exchange Commission (the
"Commission") a Registration Statement (as hereinafter defined) on Form S-1 (No.
333-130863), including a preliminary prospectus relating to the Shares, and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement and of the related Preliminary Prospectus
(as hereinafter defined) have heretofore been delivered by the Company to you.
The term "Preliminary Prospectus" means any preliminary prospectus included at
any time as a part of the Registration Statement or filed
with the Commission by the Company pursuant to Rule 424(a) of the Rules. The
term "Registration Statement" as used in this Agreement means the initial
registration statement (including all exhibits and financial schedules) as
amended at the time and on the date it becomes effective (the "Effective Date"),
including the information (if any) contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and deemed to be
part thereof at the time of effectiveness pursuant to Rule 430A of the Rules. If
the Company has filed an abbreviated registration statement to register
additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement"), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement.
The term "Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement at the time of effectiveness or, if Rule
430A of the Rules is relied on, the term Prospectus shall also include the final
prospectus filed with the Commission pursuant to and within the time limits
described in Rule 424(b) of the Rules and any amendments thereof and supplements
thereto.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Statutory Prospectus (as hereinafter defined) and the
Prospectus, as soon after the Effective Date and the date of this Agreement as
the Representatives deem advisable. The Company and the Selling Stockholders
hereby confirm that the Underwriters and dealers have been authorized to
distribute or cause to be distributed each Preliminary Prospectus, each Issuer
Free Writing Prospectus (as hereinafter defined), if any, and are authorized to
distribute the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares. On the
basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Selling Stockholders agree to sell to each of the
Underwriters the number of Shares set forth opposite the name of such
Selling Stockholder on Schedule II hereto, subject to adjustment in
accordance with Section 9 hereof, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Selling Stockholders, at a
purchase price of $_______ per share (the "Initial Price"), the number of
Firm Shares set forth opposite the name of such Underwriter under the
column "Number of Firm Shares to be Purchased from the Selling
Stockholders" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 9 hereof.
(b) The Selling Stockholders hereby grant to the several
Underwriters an option to purchase, severally and not jointly, all or any
part of the Option Shares at the Initial Price. The number of Option
Shares to be sold by each Selling Stockholder is set forth opposite the
name of each such Selling Stockholder on Schedule II hereto. The number of
Option Shares to be purchased by each Underwriter shall be the same
percentage (adjusted by the Representatives to eliminate fractions) of the
total number of Option Shares to be purchased by the Underwriters as such
Underwriter is purchasing of the Firm Shares. Such option may be exercised
only to cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time
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on or before 12:00 noon, New York City time, on the business day before
the Firm Shares Closing Date (as defined below), and from time to time
thereafter within 30 days after the date of this Agreement, in each case
upon written, facsimile or telegraphic notice, or verbal or telephonic
notice confirmed by written, facsimile or telegraphic notice, by the
Representatives to the Company no later than 12:00 noon, New York City
time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined
below), as the case may be, setting forth the number of Option Shares to
be purchased and the time and date (if other than the Firm Shares Closing
Date) of such purchase.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of DLA Xxxxx Xxxxxxx
Xxxx Xxxx US LLP, 0000 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, at 10:00 a.m.,
local time, on the fourth business day following the date of this
Agreement or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by
the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date"). In addition, in the
event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price, and delivery of the
certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representatives and the Company, on each date of delivery as specified in
the notice from the Representatives to the Company (such time and date of
delivery and payment are called the "Option Shares Closing Date"). The
Firm Shares Closing Date and any Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Selling Stockholders by wire
transfer of immediately available funds or by certified or official bank
check or checks payable in New York Clearing House (same day) funds to the
order of the Selling Stockholders, against delivery of the respective
certificates to the Representatives for the respective accounts of the
Underwriters of certificates for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing
Date or, in the case of Option Shares, on the day of notice of exercise of
the option as described in Section 1(b) and shall be delivered by or on
behalf of the Company to the Representatives through the facilities of the
Depository Trust Company ("DTC") for the account of such Underwriter. The
Company will cause the certificates representing the Shares to be made
available for checking and packaging, at such place as is designated by
the Representatives, on the full business day before the Firm Shares
Closing Date (or the Option Shares Closing Date in the case of the Option
Shares).
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
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(a) On the Effective Date, the Registration Statement complied, and
on the date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and each Closing
Date (each such date referred to in this sentence, a "Determination
Date"), the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the applicable requirements of the Securities Act and the Rules and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
published rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date and the date of
the Prospectus, and will not, as of any other Determination Date, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and the Prospectus did not, as of its date or the
Effective Date, and will not, as of any other Determination Date contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed
as part of the Registration Statement or any amendment thereto or pursuant
to Rule 424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary prospectus
as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. If applicable, each Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T. Notwithstanding the
foregoing, none of the representations and warranties in this Section 2(a)
shall apply to statements in, or omissions from, the Registration
Statement or the Prospectus made in reliance upon, and in conformity with,
information furnished in writing by the Representatives on behalf of the
several Underwriters for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company
acknowledges that the only information furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus is the statements contained in
the third, fourth, fifth and sixth sentences of the fourth paragraph, and
the eleventh, thirteenth, fourteenth and seventeenth paragraphs under the
caption "Underwriting" in the Statutory Prospectus and the Prospectus
(collectively, the "Underwriter Information").
(b) As of the Applicable Time (as defined below), neither (i) the
Issuer Free Writing Prospectus(es) (as defined below) issued at or prior
to the Applicable Time, and the Statutory Prospectus (as defined below),
all considered together (collectively, the "General Disclosure Package"),
nor (ii) any individual Issuer Free Writing Prospectus when considered
together with the General Disclosure Package included any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply
to statements in or omissions from any
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prospectus included in the General Disclosure Package made in reliance
upon and in conformity with the Underwriter Information.
Each Issuer Free Writing Prospectus, including any electronic road
show (including without limitation any "bona fide electronic road show" as
defined in Rule 433(h)(5) under the Securities Act) (each, a "Road Show")
(i) is identified in Schedule V hereto and (ii) complied when issued, and
complies, in all material respects with the requirements of the Securities
Act and the Rules and the Exchange Act and the rules and regulations of
the Commission thereunder. Except for the free writing prospectuses, if
any, identified in Schedule V hereto, the Company has not prepared, used
or referred to, and will not, without the prior consent of the
Representatives, prepare, use or refer to, any Issuer Free Writing
Prospectus.
As used in this Section and elsewhere in this Agreement:
"Applicable Time" means ___:00 [a/p]m (Eastern time) on the date of this
Underwriting Agreement.
"Statutory Prospectus" as of any time means the Preliminary Prospectus
relating to the Shares that is included in the Registration Statement
immediately prior to the Applicable Time. For purposes of this definition,
information contained in a form of prospectus that is deemed retroactively
to be a part of the Registration Statement pursuant to Rule 430A of the
Rules shall be considered to be included in the Statutory Prospectus as of
the actual time that form of prospectus is filed with the Commission
pursuant to Rule 424(b).
"Issuer Free Writing Prospectus" means each "free writing prospectus" (as
defined in Rule 405 of the Rules), if any, prepared by or on behalf of the
Company or used or referred to by the Company in connection with the
offering of the Shares.
(c) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of any
Preliminary Prospectus, the Prospectus or any "free writing prospectus"
(as defined in Rule 405 of the Rules) has been issued by the Commission
and, to the Company's knowledge, no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) of
the Rules has been or will be made in the manner and within the time
period required by such Rule 424(b). Any material required to be filed by
the Company pursuant to Rule 433(d) or Rule 163(b)(2) of the Rules has
been or will be made in the manner and within the time periods required by
such Rules.
(d) Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the public offer and sale
of the Shares or until any earlier date that the Company notified or
notifies the Representatives as described in the next sentence, did not,
does not and will not include any information that conflicted, conflicts
or will conflict with the information contained in the Registration
Statement, the Statutory Prospectus or the Prospectus. If at any time
following issuance of an Issuer
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Free Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus conflicted or
would conflict with the information contained in the Registration
Statement, the Statutory Prospectus or the Prospectus or included or would
include an untrue statement of a material fact or omitted or would omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading, the Company has
promptly notified or will promptly notify the Representatives and has
promptly amended or will promptly amend or supplement, at its own expense,
such Issuer Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission.
(e) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement, the Statutory
Prospectus and the Prospectus present fairly the financial position of the
Company at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company for the periods
specified; and such financial statements and related schedules and notes
thereto, and the unaudited financial information included as part of the
Registration Statement, have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the
periods involved. The summary and selected financial data included in the
Registration Statement, the Statutory Prospectus and the Prospectus
present fairly the information shown therein as at the respective dates
and for the respective periods specified and have been presented on a
basis consistent with the consolidated financial statements set forth in
the Registration Statement, the Statutory Prospectus and the Prospectus.
(f) KPMG LLP, whose reports are filed with the Commission as a part
of the Registration Statement, are and, during the periods covered by
their reports, were an independent registered public accounting firm as
required by the Securities Act and the Rules. The Company has not had any
"disagreements" (as that term is defined in Item 304 of Regulation S-K
promulgated under the Securities Act) with its current or former
independent auditors on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure and none of
the events listed in Item 304(a)(1)(v)(A) through (D) of Regulation S-K
promulgated under the Securities Act have occurred during the immediately
preceding five fiscal years.
(g) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware. The Company
has no subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or
other business organization. The Company is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in
which the nature of the business conducted by it or location of the assets
or properties owned, leased or licensed by it requires such qualification
(which jurisdictions are listed on Schedule III hereto), except for such
jurisdictions where the failure to so qualify, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the assets, properties, condition, financial or otherwise, or in
the results of operations, business affairs or business prospects of the
Company (a "Material Adverse Effect"); and to the Company's knowledge, no
proceeding has been instituted in
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any such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification. The
Company does not own, lease or license any asset or property or conduct
any business outside the United States of America.
(h) The Company has all requisite corporate power and authority, and
all necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory bodies
(collectively, the "Permits"), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in full
force and effect, except where the lack of such Permits, individually or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect. The Company has fulfilled and performed in all material
respects all of its obligations with respect to such Permits and; to the
Company's knowledge, no event has occurred that allows, or after notice or
lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the Company thereunder.
Except as may be required under the Securities Act and state and foreign
blue sky laws, no other Permits are required to enter into, deliver and
perform this Agreement and to issue and sell the Shares.
(i) At the time of filing the Registration Statement and at the date
hereof, the Company was not and is not an "ineligible issuer," as defined
in Rule 405 of the Rules.
(j) (i) To the best of the Company's knowledge, the Company owns or
possesses legally enforceable rights to use all patents, patent rights,
inventions, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other
similar rights and proprietary knowledge (collectively, "Intangibles")
currently used in or necessary for the conduct of its business, and (ii)
to the best of the Company's knowledge, the Company has not knowingly
infringed upon or misappropriated the intellectual property rights of any
third-parties, and (iii) no claims in connection with any of the items in
clause (ii) are pending or, to the Company's knowledge, threatened, and to
the Company's knowledge there are no bases for such claims. To the best of
the Company's knowledge, none of the Intangibles currently used in
connection with its business is currently being infringed by a third-party
and the Company has not made any claims that a third-party has violated or
infringed any of the Company's rights in such Intangibles.
(k) The Company has good and marketable title in fee simple to all
real property, and good and marketable title to all other property owned
by it, in each case free and clear of all liens, encumbrances, claims,
security interests and defects, except such as are described in the
Registration Statement and Prospectus and which could not reasonably be
expected to have a Material Adverse Effect. All property held under lease
by the Company is held by it under valid, existing and enforceable leases,
free and clear of all liens, encumbrances, claims, security interests and
defects, except such as are described in the Registration Statement and
Prospectus and which could not reasonably be expected to have a Material
Adverse Effect. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) there has
not been any Material Adverse Effect and (ii) the Company has not
sustained any loss or
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interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which could
reasonably be expected to have a Material Adverse Effect. Since the date
of the latest balance sheet included in the Registration Statement and the
Prospectus, the Company has not (A) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except
such liabilities or obligations incurred in the ordinary course of
business, (B) entered into any transaction not in the ordinary course of
business or (C) declared or paid any dividend or made any distribution on
any shares of its stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its capital
stock.
(l) There is no document, contract or other agreement required to be
described in the Registration Statement, the Statutory Prospectus or the
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed, as applicable, as required by the
Securities Act or Rules. Each description of a contract, document,
agreement or instrument in the Registration Statement, the Statutory
Prospectus or the Prospectus accurately reflects in all respects the
material terms of the underlying contract, document, agreement or
instrument. Each contract, document or other agreement described in the
Registration Statement, the Statutory Prospectus or the Prospectus or
listed in the Exhibits to the Registration Statement is in full force and
effect and is valid and enforceable by and against the Company, as the
case may be, in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles. Neither the Company nor, to the Company's knowledge, any other
party is in default in the observance or performance of any term or
obligation to be performed by it under any such contract, document,
agreement or instrument, and, to the Company's knowledge, no event has
occurred which with notice or lapse of time or both would constitute such
a default. No default exists, and no event has occurred which with notice
or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the
Company of any other contract, document, agreement or instrument to which
the Company is a party or by which Company or its properties or business
may be bound or affected which default or event, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(m) The statistical and market related data included in the
Registration Statement, the Statutory Prospectus and the Prospectus are
based on or derived from sources that the Company believes to be reliable
and accurate.
(n) The Company is not in violation of any term or provision of its
certificate of incorporation or by-laws, each as amended through the date
hereof and each Closing Date (respectively, the "Charter" and "Bylaws"),
or of any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
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(o) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default)
under, or require any consent or waiver under, or result in the execution
or imposition of any lien, charge or encumbrance upon any properties or
assets of the Company pursuant to the terms of, any indenture, mortgage,
deed of trust or other contract, document, agreement or instrument to
which the Company is a party or by which the Company or any of its
properties or businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the
Company or violate any provision of the Charter or Bylaws, except for such
consents or waivers which have already been obtained and are in full force
and effect.
(p) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Statutory Prospectus and
the Prospectus. All of the issued and outstanding shares of Common Stock
have been duly and validly issued and are fully paid and nonassessable.
There are no preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock or any such rights pursuant
to the Charter or Bylaws or any contract, document, agreement or
instrument to or by which the Company is a party or bound. The Shares are
duly and validly issued, fully paid and nonassessable, except as provided
in the next sentence, and have not been issued in violation of any
preemptive or other similar right. The Shares that are not issued and
outstanding as of the date hereof have been duly reserved and authorized
by the Company and, when issued and delivered upon exercise of the
applicable Stock Options, as defined below, will be validly issued, fully
paid and non-assessable. The Stock Options to be exercised by certain
Selling Stockholders in connection with the transactions contemplated by
the Custody Agreements, the Powers of Attorney and this Agreement and to
be deposited with the Custodian in accordance with the Custody Agreements
(collectively, the "Stock Options") have been duly granted to, are fully
vested in and may be exercised by, such relevant Selling Stockholder. The
Stock Options were granted in accordance with the Company's Amended and
Restated 1999 Stock Option Plan and/or 2005 Long-Term Incentive Plan (the
"Plans").
(q) Except as disclosed in the Registration Statement, the Statutory
Prospectus and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment, plan
or arrangement to issue, any share of capital stock of the Company or any
security convertible into, or exercisable or exchangeable for, such
capital stock. The Common Stock and the Shares conform in all material
respects to all statements in relation thereto contained in the
Registration Statement, the Statutory Prospectus and the Prospectus.
(r) No holder of any security of the Company has any right, which
has not been waived in writing, to have any security owned by such holder
included in the Registration Statement or to demand registration of any
security owned by such holder for a period of 180 days after the date of
this Agreement. Each director and executive officer of the Company and
each stockholder of the Company listed on Schedule IV has delivered to
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the Representatives his enforceable written lock-up agreement in the form
attached to this Agreement as Exhibit A hereto ("Lock-Up Agreement").
(s) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will constitute
the legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(t) There is not pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, to which the Company is a party, or to which
its properties or assets are subject, before or brought by any court,
arbitrator or governmental agency or body.
(u) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
could reasonably be expected to have a Material Adverse Effect. The
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which could
reasonably be expected to have a Material Adverse Effect. The Company is
not aware of any threatened or pending litigation between the Company and
any of its officers, directors, employees or stockholders which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect and has no reason to believe that such officers will not
remain in the employment of the Company.
(v) No transaction has occurred between or among the Company and any
of its officers, directors, employees or shareholders or any affiliate or
affiliates of any such officer or director or shareholder that is required
to be described in and is not described in the Registration Statement, the
Statutory Prospectus and the Prospectus.
(w) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of the Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares.
(x) The Company has filed all federal, state, local and foreign tax
returns which are required to be filed through the date hereof, which
returns are true and correct in all material respects or has received
timely extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are
material and have become due. There are no tax audits or investigations
pending, which if adversely determined could reasonably be expected to
have a Material Adverse Effect; nor are there any material proposed
additional tax assessments against the Company.
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(y) The Company's Common Stock is listed on the National Association
of Securities Dealers Automated Quotation National Market System
("Nasdaq"). The Company is in compliance with all applicable corporate
governance requirements set forth in the Nasdaq Marketplace Rules that are
in effect with respect to it and is actively taking steps to ensure that
it will be in compliance with other applicable corporate governance
requirements set forth in the Nasdaq Marketplace Rules which will in the
future become applicable to it.
(z) The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq National
Market, nor has the Company received any notification that the Commission
or the Nasdaq National Market is contemplating terminating such
registration or quotation.
(aa) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences; the chief executive
officer and the chief financial officer of the Company have made all
certifications required by the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act") and any related rules and regulations promulgated by
the Commission, and the statements contained in any such certification are
complete and correct; the Company maintains "disclosure controls and
procedures" (as defined in Rule 13a-15(e) under the Exchange Act).
(bb) Based on the evaluation of its internal control over financial
reporting, the Company is not aware of (i) any significant deficiency or
material weakness in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal control over financial reporting.
(cc) Except as described in the Statutory Prospectus and the
Prospectus and as preapproved in accordance with the requirements set
forth in Section 10A of the Exchange Act, KPMG LLP has not been engaged by
the Company to perform any "prohibited activities" (as defined in Section
10A of the Exchange Act).
(dd) The Company's Board of Directors has validly appointed an audit
committee whose composition satisfies the requirements of Rule 4350(d)(2)
of the Rules of the National Association of Securities Dealers (the "NASD
Rules") and the Board of
11
Directors and/or the audit committee has adopted a charter that satisfies
the requirements of Rule 4350(d)(1) of the NASD Rules. The audit committee
has reviewed the adequacy of its charter within the past twelve months.
(ee) The Company is actively taking steps to ensure that it will be
in compliance with all other applicable provisions of the Xxxxxxxx-Xxxxx
Act and any related rules and regulations promulgated by the Commission
and corporate governance requirements under the NASD Rules upon the
effectiveness of such provisions and has no reason to believe that it will
not be able to comply with such provisions at the time of effectiveness.
(ff) There are no material off-balance sheet arrangements (as
defined in Regulation S-K Item 303(a)(4)(ii) promulgated under the
Securities Act) that may have a material current or future effect on the
assets, properties, condition, financial or otherwise, or in the results
of operations, business affairs or business prospects of the Company.
(gg) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged or propose to engage
after giving effect to the transactions described in the Statutory
Prospectus and the Prospectus; all policies of insurance and fidelity or
surety bonds insuring the Company or the Company's businesses, assets,
employees, officers and directors are in full force and effect; the
Company is in compliance with the terms of such policies and instruments
in all material respects; and the Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that is not materially
greater than the current cost. Except as disclosed in the Registration
Statement, the Statutory Prospectus and the Prospectus, the Company has
not been denied any insurance coverage which it has sought or for which it
has applied.
(hh) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or blue sky laws) has been obtained or made and
is in full force and effect.
(ii) There are no affiliations with the NASD among the Company's
officers or directors or, to the knowledge of the Company, any stockholder
of the Company, except as set forth in the Registration Statement.
(jj) (i) The Company is in compliance in all material respects with
all rules, laws and regulation relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to
12
its business; (ii) the Company has not received any notice from any
governmental authority or third party of an asserted claim under
Environmental Laws; (iii) the Company has received all permits, licenses
or other approvals required of it under applicable Environmental Laws to
conduct its business and is in compliance with all terms and conditions of
any such permit, license or approval; (iv) to the Company's knowledge, no
facts currently exist that will require the Company to make future
material capital expenditures to comply with Environmental Laws; and (v)
no property which is or has been owned or, to the best of the Company's
knowledge after due inquiry, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42 U.S.C.
Section 9601, et. seq.) ("CERCLA") or otherwise designated as a
contaminated site under applicable state or local law. The Company has not
been named as a "potentially responsible party" under CERCLA.
(kk) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(ll) The Company is not and, after giving effect to the offering and
sale of the Shares and before or after the application of proceeds thereof
as described in the Statutory Prospectus and the Prospectus, will not be
an "investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act").
(mm) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company, has, directly or
indirectly, while acting on behalf of the Company (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
(nn) The operations of the Company are and have been conducted at
all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency (collectively, the "Money Laundering Laws") and
no action, suit or proceeding by or before any court or governmental
agency, authority or body or any
13
arbitrator involving the Company with respect to the Money Laundering Laws
is pending, or to the best knowledge of the Company, threatened.
(oo) Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Company will not directly or indirectly use the proceeds of the offering,
or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(pp) Except as described in the Statutory Prospectus and the
Prospectus, the Company has not offered, sold or issued any shares of
Common Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(qq) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in
Section 3(3) of ERISA and such regulations and published interpretations
in which its employees are eligible to participate and each such plan is
in compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. No
"Reportable Event" (as defined in 12 ERISA) has occurred with respect to
any "Pension Plan" (as defined in ERISA) for which the Company could have
any liability.
(rr) None of the Company, its directors or its officers has
distributed, nor will they distribute, prior to the later of (i) the Firm
Shares Closing Date, or the Option Shares Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act and consistent with Section 5(e) below.
(ss) No forward looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Prospectus has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
3. Representations and Warranties of the Selling Stockholders. Each
of the Selling Stockholders hereby represents and warrants to each Underwriter
as of the date hereof, as of the Firm Shares Closing Date and as of each Option
Shares Closing Date (if any) as follows:
(a) Each Selling Stockholder has caused certificates for the number
of Shares to be sold by such Selling Stockholder hereunder (except with
respect to Shares to be issued upon exercise of Stock Options) to be
delivered to American Stock Transfer & Trust Company
14
(the "Custodian"), endorsed in blank or with blank stock powers duly
executed, with a signature appropriately guaranteed, such certificates to
be held in custody by the Custodian for delivery, pursuant to the
provisions of this Agreement and an agreement dated January ___, 2006
among the Custodian and the Selling Stockholders substantially in the form
attached hereto as Exhibit B (the "Custody Agreement"). The Stock Options,
if any, to be exercised by each Selling Stockholder in connection with the
transactions contemplated by the relevant Custody Agreement, the relevant
Power of Attorney and this Agreement have been duly granted to, are fully
vested and may be exercised by, such Selling Stockholder in accordance
with the Plans. Each Selling Stockholder has deposited the requisite
number of certificates and/or Stock Options representing its respective
portion of the Shares allowing such Selling Stockholder to fulfill its
obligations pursuant to the terms of this Agreement.
(b) Each Selling Stockholder has granted an irrevocable power of
attorney substantially in the form attached hereto as Exhibit C (the
"Power of Attorney") to the person named therein, on behalf of each such
Selling Stockholder, to execute and deliver this Agreement and any other
document necessary or desirable in connection with the transactions
contemplated hereby and to deliver the shares to be sold by each the
Selling Stockholder pursuant hereto.
(c) This Agreement, the Custody Agreement, the Power of Attorney and
the Lock-Up Agreement have each been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder and, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes the valid and legally binding agreement of each Selling
Stockholder, enforceable against each such Selling Stockholder in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(d) The execution and delivery by each Selling Stockholder of this
Agreement and the performance by each Selling Stockholder of its
obligations under this Agreement, including the sale and delivery of the
Shares to be sold by each such Selling Stockholder and the consummation of
the transactions contemplated herein and compliance by each Selling
Stockholder with its obligations hereunder, do not and will not, whether
with our without the giving of notice or the passage of time or both, (i)
violate or contravene any provision of the charter or bylaws or other
organizational instrument of any Selling Stockholder, if applicable, or
any applicable law, statute, regulation, or filing or any agreement or
other instrument binding upon any Selling Stockholder or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over any Selling Stockholder, (ii) conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the shares to be
sold by any Selling Stockholder or any property or assets of any Selling
Stockholder pursuant to the terms of any agreement or instrument to which
any Selling Stockholder is a party or by which any Selling Stockholder may
be bound or to which any of the property or assets of any Selling
Stockholder is subject or (iii) require any consent, approval,
authorization or order of or registration or filing with any court or
15
governmental agency or body having jurisdiction over it, except such as
may be required by the blue sky laws of the various states in connection
with the offer and sale of the Shares which have been or will be effected
in accordance with this Agreement.
(e) Each Selling Stockholder has, and on the Firm Shares Closing
Date and the Option Share Closing Date, if applicable, will have, valid
and marketable title to the Shares to be sold by such Selling Stockholder
free and clear of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer, except as
otherwise described in the Registration Statement and Prospectus.
(f) Each Selling Stockholder has, and on the Firm Shares Closing
Date and the Option Share Closing Date, if applicable, will have, full
legal right, power and authority, and any approval required by law, to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder in the manner provided by this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by each
Selling Stockholder pursuant to this Agreement, assuming each Underwriter
has no notice of any adverse claim, the several Underwriters will receive
valid and marketable title to such Shares free and clear of any lien,
claim, mortgage, pledge, security interest or other encumbrance.
(h) All information relating to each Selling Stockholder furnished
in writing by such Selling Stockholder expressly for use in the
Registration Statement and Prospectus is, and on each Closing Date will
be, true, correct, and complete, and does not, and on each Closing Date
will not, contain any untrue statement of a material fact or omit to state
any material fact necessary to make such information not misleading.
(i) Each Selling Stockholder has reviewed the Registration
Statement, the Prospectus and any Issuer Free Writing Prospectus and,
although such Selling Stockholder has not independently verified the
accuracy or completeness of all the information contained therein, nothing
has come to the attention of such Selling Stockholder that would lead such
Selling Stockholder to believe that (i) on the Effective Date, the
Registration Statement contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements made therein not misleading;
(ii) on the Effective Date the Prospectus, any amendment thereof or
supplement thereto contained and, on each Closing Date contains, any
untrue statement of a material fact or omitted or omits to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; or
(iii) as of the Applicable Time, either the General Disclosure Package or
any individual Issuer Free Writing Prospectus, when considered together
with the General Disclosure Package, included any untrue statement of any
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except for
the free writing prospectuses, if any, identified in Schedule V hereto, no
Selling Stockholder or group of Selling Stockholders has prepared, used or
referred to, nor will, without the prior consent of the Representatives,
prepare, use or refer to, any free writing prospectus.
16
(j) The sale of Shares by each Selling Stockholder pursuant to this
Agreement is not prompted by such Selling Stockholder's knowledge of any
material information concerning the Company which is not set forth in the
Prospectus.
(k) No Selling Stockholder has taken, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(l) The representations and warranties of each Selling Stockholder
in the Custody Agreement are, and on each Closing Date will be, true and
correct.
4. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares are subject
to each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 5(a) of this Agreement, and any material required to be filed
by the Company pursuant to Rule 433(d) of the Rules shall have been timely
filed with the Commission in accordance with such Rule.
(b) No order preventing or suspending the use of any Preliminary
Prospectus, the Prospectus or any "free writing prospectus," as defined in
Rule 405 of the Rules, shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
the satisfaction of the Commission and the Representatives. If the Company
has elected to rely upon Rule 430A, Rule 430A information previously
omitted from the effective Registration Statement pursuant to Rule 430A
shall have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period and the Company shall have
provided evidence satisfactory to the Underwriters of such timely filing,
or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A.
(c) The representations and warranties of the Company and the
Selling Stockholders contained in this Agreement and in the certificates
delivered pursuant to Section 4(d) shall be true and correct when made and
on and as of each Closing Date as if made on such date. The Company and
the Selling Stockholders shall have performed all covenants and agreements
and satisfied all the conditions contained in this Agreement, and shall
have performed all agreements contained in the Custody Agreement, required
to be performed or satisfied by them at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive officer and the chief financial officer or chief
accounting officer of the Company to the
17
effect that: (i) the representations, warranties and agreements of the
Company in this Agreement were true and correct when made and are true and
correct as of such Closing Date; (ii) the Company has performed all
covenants and agreements and satisfied all conditions contained herein;
(iii) they have carefully examined the Registration Statement, the
Prospectus, the General Disclosure Package and any individual Issuer Free
Writing Prospectus and, in their opinion (A) (x) as of the Effective Date,
the Registration Statement, the Statutory Prospectus and the Prospectus
and (y) as of the Applicable Time, the General Disclosure Package and any
individual Issuer Free Writing Prospectus, when considered together with
the General Disclosure Package, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (B)
since the Effective Date no event has occurred which should have been set
forth in a supplement or otherwise required an amendment to the
Registration Statement, the Statutory Prospectus or the Prospectus; and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and, to their knowledge, no proceedings for that
purpose have been instituted or are pending under the Securities Act.
(e) The Representatives shall have received on each Closing Date a
certificate addressed to the Representatives and dated such Closing Date,
of each Selling Stockholder, to the effect that: (i) the representations,
warranties and agreements of each Selling Stockholder in this Agreement
were true and correct when made and are true and correct as of such
Closing Date; (ii) each Selling Stockholder has performed all covenants
and agreements and satisfied all conditions contained herein; and (iii)
each Selling Stockholder has carefully examined the Registration
Statement, the Prospectus, the General Disclosure Package and any
individual Issuer Free Writing Prospectus, and, in the opinion of such
Selling Stockholder, (A) with respect to the information relating to such
Selling Stockholder, (x) as of the Effective Date, the Registration
Statement, the Statutory Prospectus and the Prospectus, and (y) as of the
Applicable Time, the General Disclosure Package and any individual Issuer
Free Writing Prospectus, when considered together with the General
Disclosure Package, did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (B) since
the Effective Date no event has occurred with respect to such Selling
Stockholder which should have been set forth in a supplement or otherwise
required an amendment to the Registration Statement or the Prospectus.
(f) The Representatives shall have received, (i) simultaneously with
the execution of this Agreement and (ii) on each Closing Date, a signed
letter from KPMG LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement, the Statutory Prospectus and the Prospectus, as
the case may be.
18
(g) The Representatives shall have received on each Closing Date
from Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date
stating the opinions set forth in Exhibit D attached hereto.
(h) The Representatives shall have received on the Firm Shares
Closing Date from Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the
Selling Stockholders, an opinion, addressed to the Representatives and
dated such Closing Date, and stating the opinions set forth in Exhibit E
attached hereto.
(i) The Representatives shall have received on each Closing Date
from DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, counsel for the Representatives,
an opinion, addressed to the Representatives and dated such Closing Date,
and stating the opinions set forth in Exhibit F hereto.
With respect to the opinions referred to in Section 4(g), Section
4(h) and Section 4(i), to the extent deemed advisable by such counsel,
such counsel may rely as to matters of fact on certificates of responsible
officers of the Company and public officials and on the opinions of other
counsel satisfactory to the Representatives as to matters which are
governed by laws other than the laws of the State of New York, the General
Corporation Law of the State of Delaware and the federal laws of the
United States; provided that such counsel shall state that in their
opinion the Underwriters and they are justified in relying on such other
opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives.
(j) The Representatives shall have received copies of the Lock-Up
Agreements executed by each entity or person listed on Schedule IV hereto.
(k) On or prior to the date of this Agreement, each Selling
Stockholder shall have deposited with the Custodian under the relevant
Custody Agreement certificates and/or Stock Options representing the
maximum aggregate number of Shares which may be sold by such Selling
Stockholder as indicated on Schedule II hereto.
(l) On or prior to any Closing Date, the Attorney shall have
exercised, on the corresponding Selling Stockholder's behalf and in full
compliance with the requirements of the Plans, the requisite number of
Stock Options required to allow such Selling Stockholder to meet its
obligations hereunder; upon the exercise of any Stock Options, the Company
shall have, on or prior to the Closing Date in question, issued, and the
Custodian shall have issued certificates representing, the Shares
underlying such Stock Options.
(m) The Company and each Selling Stockholder shall have furnished or
caused to be furnished to the Representatives such further certificates or
documents as the Representatives shall have reasonably requested.
19
5. Covenants of the Company, the Selling Stockholders and the
Underwriters.
(a) Each of the Company and the Selling Stockholders (to the extent
set forth in clause (ix) below) covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, to become effective as promptly as possible. The
Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as
may be required by the Rules. The Company will file with the
Commission all Issuer Free Writing Prospectuses in the time and
manner required under Rule 433(d).
(ii) The Company shall promptly advise the Representatives in
writing (A) when any post-effective amendment to the Registration
Statement shall have become effective or any supplement to the
Prospectus shall have been filed, (B) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or any "free writing prospectus,"
as defined in Rule 405 of the Rules, or the institution or
threatening of any proceeding for that purpose and (D) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus or any Issuer
Free Writing Prospectus unless the Company has furnished the
Representatives a copy for their review prior to filing and shall
not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules
(or, in lieu thereof, the notice referred to in Rule 173(a)), an
event or development occurs as a result of which the Statutory
Prospectus or the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or
if it shall be necessary to amend or supplement the Statutory
Prospectus or the Prospectus to comply with the Securities Act or
the Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of this
Section 5(a), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such
compliance.
20
(iv) If at any time following issuance of an Issuer Free
Writing Prospectus an event or development occurs as a result of
which such Issuer Free Writing Prospectus would (A) conflict with
the information contained in the Registration Statement or (B)
include an untrue statement of a material fact or would omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances prevailing at the subsequent time, not misleading, the
Company will promptly notify the Representatives and will promptly
amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(v) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at
the end of the fiscal quarter of the Company during which the
Effective Date occurs (or 90 days if such 12-month period coincides
with the Company's fiscal year), an earning statement (which need
not be audited) of the Company, covering such 12-month period, which
shall satisfy the provisions of Section 11(a) of the Securities Act
or Rule 158 of the Rules.
(vi) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required
by the Securities Act or the Rules, as many copies of any
preliminary prospectus, any Issuer Free Writing Prospectus and the
Prospectus as the Representatives may reasonably request. If
applicable, the copies of the Registration Statement, Preliminary
Prospectus, any Issuer Free Writing Prospectus and Prospectus and
each amendment and supplement thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(vii) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and
sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company
shall not be required in connection therewith, as a condition
thereof, to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself
to taxation as doing business in any jurisdiction.
(viii) The Company, during the period when the Prospectus (or
in lieu thereof, the notice referred to in Rule 173(a) of the Rules)
is required to be delivered under the Securities Act and the Rules
or the Exchange Act, will file all reports and other documents
required to be filed with the Commission pursuant to
21
Section 13, 14 or 15 of the Exchange Act within the time periods
required by the Exchange Act and the regulations promulgated
thereunder.
(ix) Without the prior written consent of CIBC World Markets
Corp., for a period of 90 days after the date of this Agreement, the
Company shall not issue, sell or register with the Commission (other
than on Form S-8 or on any successor form), or otherwise dispose of,
directly or indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable for
equity securities of the Company), except for the issuance of the
Shares pursuant to the Registration Statement and the issuance of
shares (or securities convertible into or exercisable or
exchangeable for equity securities of the Company) pursuant to the
Company's existing stock option plan or bonus plan as described in
the Registration Statement and the Prospectus. In the event that
during this period, (A) any shares are issued pursuant to the
Company's existing stock option plan or bonus plan that are
exercisable during such 90-day period or (B) any registration is
effected on Form S-8 or on any successor form relating to shares
that are exercisable during such 90-day period, the Company shall
obtain the written agreement of such grantee or purchaser or holder
of such registered securities that, for a period of 90 days after
the date of this Agreement, such person will not, without the prior
written consent of CIBC World Markets Corp., offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by such person. Notwithstanding the foregoing,
(i) the Company represents and warrants that each such grantee or
purchaser or holder of such registered securities shall be subject
to similar lockup restrictions as set forth on Exhibit A attached
hereto and the Company shall enforce such rights and impose
stop-transfer restrictions on any such sale or other transfer or
disposition of such shares until the end of the applicable period
and (ii) if (x) during the last 17 days of the 90-day period
described in this Section 5(a)(ix) the Company issues an earnings
release or material news or a material event relating to the Company
occurs; or (y) prior to the expiration of such 90-day period, the
Company announces that it will release earnings results during the
16-day period beginning on the last day of the 90-day period; the
restrictions imposed by this Section 5(a)(ix) shall continue to
apply until the expiration of the 18-day period beginning on the
date of the issuance of the earnings release or material news or the
occurrence of the material event; provided, however, that this
sentence shall not apply if the research published or distributed on
the Company is compliant under Rule 139 of the Securities Act and
the Company's securities are actively traded as defined in Rule
101(c) of Regulation M under the Exchange Act.
(x) Neither the Company nor any Selling Stockholder shall
take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock or any security of the
Company to facilitate the sale or resale of any of the Shares.
22
(xi) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws and
by the Nasdaq National Market (including any required registration
under the Exchange Act).
(xii) Prior to the Closing Date, the Company will issue no
press release or other communications directly or indirectly and
hold no press conference with respect to the Company, the condition,
financial or otherwise, or the earnings, business affairs or
business prospects of any of them, or the offering of the Shares
without the prior written consent of the Representatives unless in
the judgment of the Company and its counsel, and after notification
to the Representatives, such press release or communication is
required by law.
(b) Subject to the provisions of Section 8, the Company agrees to
pay, or reimburse if paid by the Representatives, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the public offering of the
Shares and the performance of the obligations of the Company under this
Agreement including those relating to: (i) the preparation, printing,
reproduction, filing and distribution of the Registration Statement
including all exhibits thereto, each Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus, all amendments and
supplements thereto, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for the Shares
to the Underwriters; (iii) the registration or qualification of the Shares
for offer and sale under the securities or blue sky laws of the various
jurisdictions referred to in Section 5(a)(vii); (iv) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each Preliminary Prospectus, the Prospectus and
all amendments and supplements to the Prospectus, any Issuer Free Writing
Prospectus, and of the several documents required by this Section to be so
furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold; and (v) the filing fees of the NASD in connection with
its review of the terms of the public offering. Subject to the provisions
of Section 8, the Underwriters agree to pay, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation,
the fees and disbursements of counsel for the Underwriters.
(c) The Selling Stockholders, jointly and severally, will pay all
expenses incident to the performance of their respective obligations
under, and the consummation of the transactions contemplated by, this
Agreement, including (i) any stamp duties, capital duties and stock
transfer taxes, if any, payable upon the sale of the Shares to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements
of their respective counsel and accountants.
23
(d) The Company will prepare a final term sheet relating to the
Shares, containing only information that describes the final terms of the
Shares and otherwise in a form consented to by the Representative, and
will file such final term sheet within the period required by Rule
433(d)(5)(ii) following the date such final terms have been established
for all classes of the offering of the Shares. Any such final term sheet
is an Issuer Free Writing Prospectus for purposes of this Agreement.
(e) The Company represents and agrees that, unless it obtains the
prior consent of the Representatives, and each Underwriter represents and
agrees that, unless it obtains the prior consent of the Company and the
Representatives, it has not made and will not make any offer relating to
the Shares that would constitute an "issuer free writing prospectus," as
defined in Rule 433, or that would otherwise constitute a "free writing
prospectus," as defined in Rule 405, required to be filed with the
Commission. The Company has complied and will comply with the requirements
of Rule 433 applicable to any Issuer Free Writing Prospectus, including
timely filing with the Commission where required, legending and
record-keeping. The Company consents to the use by any Underwriter of a
free writing prospectus that (i) is not an "issuer free writing
prospectus" as defined in Rule 433, and (ii) contains only (A) information
describing the preliminary terms of the Shares or their offering or (B)
information that describes the final terms of the Shares or their offering
and that is included in the final term sheet of the Company contemplated
in Section 5(d).
(f) When Stock Options are exercised in accordance with this
Agreement and the Powers of Attorney, the Company will issue the
appropriate number of certificates in negotiable form on each Closing
Date.
6. Indemnification.
(a) The Company and the Selling Stockholders, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted), to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Statutory
Prospectus, the Prospectus, any Issuer Free Writing Prospectus or any
"issuer information" filed or required to be filed pursuant to Rule 433(d)
of the Rules, or any amendment thereof or supplement thereto, or in any
blue sky application or other information or other documents executed by
the Company filed in any state or other jurisdiction to qualify any or all
of the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
24
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Shares
to any person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such Preliminary
Prospectus, the Registration Statement, the Prospectus the Statutory
Prospectus, any Issuer Free Writing Prospectus or such amendment or
supplement thereto, or in any Blue Sky Application in reliance upon and in
conformity with Underwriter Information. Notwithstanding the foregoing,
the liability of each of the Selling Stockholders pursuant to the
provisions of this Section 6(a) shall be limited to an amount equal to the
aggregate net proceeds received by such Selling Stockholder from the sale
of the Shares sold by the Selling Stockholders hereunder. This indemnity
agreement will be in addition to any liability which the Company and
Selling Stockholders may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, the Selling Stockholders and each person, if any, who controls
the Company or the Selling Stockholders within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each director of
the Company, and each officer of the Company who signs the Registration
Statement, against any losses, claims, damages or liabilities to which
such party may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Statutory Prospectus or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the
Registration Statement, the Statutory Prospectus or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with the
Underwriter Information (it being understood that such information is
limited to the statements identified in Section 2(a) above); provided,
however, that the obligation of each Underwriter to indemnify the Company
or the Selling Stockholders (including any controlling person, director or
officer thereof) shall be limited to the net proceeds received by the
Selling Stockholders from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6(a) or 6(b) shall be available to
any party who shall fail to give notice as provided in this Section 6(c)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution or
otherwise than
25
under this Section. In case any such action, suit or proceeding shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in
writing by the indemnifying parties, (ii) the indemnified party shall have
been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available
to the indemnifying party (in which case the indemnifying parties shall
not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which cases the
fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of
any action, suit, and proceeding or claim effected without its written
consent, which consent shall not be unreasonably withheld or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 6(a) or 6(b) is due in accordance with its terms but for any reason is
unavailable to or insufficient to hold harmless an indemnified party in respect
to any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand from the
offering of the Shares pursuant to this Agreement or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating,
26
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 7,
(i) no Underwriter (except as may be provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of the amount
by which the total price at which the shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of damages which
such underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission; and (ii) no Selling
Stockholders shall be required to contribute any amount in excess of the
aggregate net proceeds of the sale of Shares received by the Selling
Stockholders. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company including any person who,
with his or her consent, is named in the Registration Statement as about to
become a director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Stockholders within the meaning of the Section 15 of the Securities Act
or Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company or any/the Selling Stockholders, as the case may be. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this Section
7, notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 7. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to their respective underwriting commitments and not joint.
8. Termination.
(a) This Agreement may be terminated with respect to the Shares to
be purchased on a Closing Date by the Representatives by notifying the
Company and the Selling Stockholders at any time at or before a Closing
Date in the absolute discretion of the Representatives if: (i) there has
occurred any material adverse change in the securities markets or any
event, act or occurrence that has materially disrupted, or in the opinion
of the Representatives, will in the future materially disrupt, the
securities markets or there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares or enforce contracts for the sale of
the Shares; (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
judgment of the Representatives, inadvisable or impracticable to market
the Shares or enforce contracts for the sale of the Shares; (iii) trading
in the Shares or any
27
securities of the Company has been suspended or materially limited by the
Commission or trading generally on the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. or the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum ranges for prices
for securities shall have been fixed, or maximum ranges for prices for
securities have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental or
regulatory authority; (iv) a banking moratorium has been declared by any
state or Federal authority; or (v) in the judgment of the Representatives,
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or business
prospects of the Company considered as a whole, whether or not arising in
the ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Stockholders shall be
under any liability to any Underwriter, and no Underwriter shall be under
any liability to the Company or the Selling Stockholders, except that (y)
if this Agreement is terminated by the Representatives or the Underwriters
because of any failure, refusal or inability on the part of the Company or
the Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, the Company will reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the
proposed purchase and sale of the Shares or in contemplation of performing
their obligations hereunder and (z) no Underwriter who shall have failed
or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall
be relieved of liability to the Company, the Selling Stockholders or to
the other Underwriters for damages occasioned by its failure or refusal.
9. Substitution of Underwriters. If any Underwriter shall default in
its obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representatives shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representatives shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to the Underwriters to purchase such Shares on such terms.
If, after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the Representatives and the Company as
provided above, the aggregate number of Shares which remains unpurchased on such
Closing Date does not exceed one-eleventh of the aggregate number of all the
Shares that all the Underwriters are obligated to purchase on such date, then
the Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing
28
herein shall relieve a defaulting Underwriter from liability for its default. In
any such case, either the Representatives or the Company and the Selling
Stockholders shall have the right to postpone the applicable Closing Date for a
period of not more than seven days in order to effect any necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus or any other documents), and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in the opinion of the Company and the Underwriters and their
counsel may thereby be made necessary.
If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided above, the aggregate number of such Shares which remains
unpurchased exceeds 10% of the aggregate number of all the Shares to be
purchased at such date, then this Agreement, or, with respect to a Closing Date
which occurs after the First Closing Date, the obligations of the Underwriters
to purchase and of the Company or the Selling Stockholders, as the case may be,
to sell the Option Shares to be purchased and sold on such date, shall
terminate, without liability on the part of any non-defaulting Underwriter to
the Company or the Selling Stockholders, and without liability on the part of
the Company or the Selling Stockholders, except as provided in Sections 5(b), 6,
7 and 8. The provisions of this Section 9 shall not in any way affect the
liability of any defaulting Underwriter to the Company or the non-defaulting
Underwriters arising out of such default. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section 9 with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.
10. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company, Selling
Stockholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or the Company or the
Selling Stockholders or any of their respective officers, directors or
controlling persons referred to in Sections 6 and 7 hereof, and shall survive
delivery of and payment for the Shares. In addition, the provisions of Sections
5(b), 6, 7, 8 and this Section 10 shall survive the termination or cancellation
of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., 000 Xxxxxxx Xxxxxx Xxx
Xxxx, Xxx Xxxx 00000 Attention: Xxxx Xxxxxxx, with a copy to Wm. Xxxxx Xxxxx,
Esq., DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, 0000 Xxxxx Xxxxxx, Xxxxxxxxx, XX
00000, (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement with a copy to
29
Xxxxxxx X. Xxxxxxxxx, Esq., Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX 00000 and (c) if to the Selling Stockholders, to R. Xxxxxx
Xxxxxxxx, as attorney-in-fact, c/o Citi Trends, Inc., 000 Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx 00000, with a copy to Xxxxxxx X. Xxxxxxxxx, Esq., Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000.
30
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
CITI TRENDS, INC.
By:
-----------------------------
Name: R. Xxxxxx Xxxxxxxx
Title: Chief Executive Officer
SELLING STOCKHOLDERS
By:
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Attorney-in-Fact
31
Confirmed:
CIBC WORLD MARKETS CORP.
WACHOVIA CAPITAL MARKETS, LLC
XX XXXXX & CO., LLC
XXXXX XXXXXXX & CO.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
CIBC WORLD MARKETS CORP.
By
--------------------------
Name: Xxxx Xxxxxxx
Title: Managing Director
32
SCHEDULE I
-------------------------
Number of Firm
Shares to be
Purchased
Name ----------------------
----
CIBC World Markets Corp.......................
Wachovia Capital Markets, LLC.................
XX Xxxxx & Co., LLC...........................
Xxxxx Xxxxxxx & Co............................
----------------------
Total...................................... 1,500,000
======================
Sch I - 1
SCHEDULE II
Number of Firm Number of
Shares to be Sold Option Shares
Name of Selling Stockholder ----------------------------------
---------------------------
Hampshire Equity Partners II, L.P............. 1,018,652
Hampshire Equity Partners Cayman X.X. XX, LP.. 167,989
Hampshire Equity Partners Cayman II, LP....... 3,359
R. Xxxxxx Xxxxxxxx............................ 125,000
Xxxxxx X. Xxxxxxx............................. 125,000
Xxxxxx X. Xxxxxx.............................. 20,000
Xxxxx X. Xxxx................................. 20,000
----------------------------------
Xxxxx X. Xxxx................................. 20,000
----------------------------------
Total...................................... 1,500,000 225,000
==================================
Sch II - 1
SCHEDULE III
Foreign Jurisdictions
Alabama
Arkansas
Florida
Georgia
Kentucky
Louisiana
Maryland
Mississippi
North Carolina
Ohio
South Carolina
Tennessee
Virginia
Texas
Sch III - 1
SCHEDULE IV
Lock-up Signatories
Hampshire Equity Partners II, L.P.
Hampshire Equity Partners Cayman X.X. XX, LP
Hampshire Equity Partners Cayman II, LP
R. Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxxx X. Xxxx
Xxxx X. Xxxx
Sch IV - 1
SCHEDULE V
Issuer Free Writing Prospectuses
Sch V - 1
Exhibit A
FORM OF LOCK-UP AGREEMENT
A - 1
Exhibit B
FORM OF CUSTODY AGREEMENT
for sale of shares of common stock,
par value $0.01 per share, of Citi Trends, Inc.
B - 1
Exhibit C
SELLING STOCKHOLDERS'
IRREVOCABLE POWER OF ATTORNEY
for sale of shares of common stock,
par value $0.01 per share, of Citi Trends, Inc.
C - 1
Exhibit D
FORM OF OPINION OF COUNSEL FOR THE COMPANY
D - 1
Exhibit E
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
E - 1
Exhibit F
FORM OF OPINION OF COUNSEL FOR REPRESENTATIVES
F - 1
