4,500,000 Shares
DOLLAR TREE STORES, INC.
Common Stock
UNDERWRITING AGREEMENT
March , 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BT ALEX. XXXXX INCORPORATED
XXXXXXX, SACHS & CO.
XXXXX XXXXXX INC.
As Representatives of the several Underwriters
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Certain shareholders of Dollar Tree
Stores, Inc., a Virginia corporation (the "Company"), named in Schedule B
annexed hereto (the "Selling Shareholders") propose to transfer and sell an
aggregate of 4,500,000 shares of the outstanding Common Stock of the Company
(the "Common Stock") to the several underwriters named in Schedule A annexed
hereto (the "Underwriters"), for whom you are acting as Representatives. Said
aggregate of 4,500,000 shares are herein called the "Firm Common Shares." In
addition, the Selling Shareholders propose to grant to the Underwriters an
option to purchase up to 675,000 additional shares of Common Stock (the
"Optional Common Shares"), as provided in Section 5 hereof. The Firm Common
Shares and, to the extent such option is exercised, the Optional Common
Shares are hereinafter collectively referred to as the "Common Shares."
You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions
of the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
The Company and each of the Selling Shareholders hereby confirm
their respective agreements with respect to the purchase of the Common Shares
by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333- ) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file prior
to the effective date of such registration statement an amendment or
amendments to such registration statement, which amendment or amendments have
been or will be similarly prepared. There shall be delivered to you, upon
your request, two photocopies of the signed version of such registration
statement and amendments, together with two copies of each exhibit filed
therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for each
of the Underwriters. The Company will next file with the Commission one of
the following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus, or (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations. As filed, such amendment and form of final prospectus, or such
final prospectus, shall include all Rule 430A Information and, except to the
extent that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to
the extent not completed at such date and time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus) as the Company shall have previously
advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall
mean such registration statement at the time such registration statement
becomes effective and, in the event any post-effective amendment thereto
becomes effective prior to the First Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended; provided, however,
that such term shall also include (i) all Rule 430A Information deemed to be
included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and (ii) any registration statement filed pursuant to Rule 462(b)
of the Rules and Regulations relating to the Common Shares (the "Additional
Registration Statement"). The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Common
Shares in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to Rule
424(b) of the Rules and Regulations is required, shall mean the form of final
prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A Information"
means information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations. Any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant
to Form S-3 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of the
Act and the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including the First Closing Date hereinafter mentioned, the Registration
Statement will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and the Registration Statement will not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and the Prospectus, as amended and supplemented, as applicable, at the time
the Registration Statement becomes effective, and at all times subsequent
thereto up to and including the First Closing Date hereinafter mentioned,
will not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading; provided, however,
no representation or warranty contained in this subsection 2(b) shall be
applicable to information contained in or omitted from any Preliminary
Prospectus, the Registration Statement, the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter, directly or
through the Representatives, specifically for use in the preparation thereof.
The documents incorporated by reference in the Prospectus, when they were
filed with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the subsidiaries
listed in Exhibit 21 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996. The Company and each of its subsidiaries have been
duly incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, with full
power and authority (corporate and other) to own and lease their properties
and conduct their respective businesses as described in the Prospectus,
except where the failure to be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; the
Company owns of record and beneficially all of the outstanding capital stock
of its subsidiaries free and clear of all claims, liens, charges and
encumbrances (except as disclosed in the Prospectus); the Company and each of
its subsidiaries are in possession of and operating in compliance
with all authorizations, licenses, permits, consents, certificates and orders
material to the conduct of their respective businesses, all of which are
valid and in full force and effect; the Company and each of its subsidiaries
are duly qualified to do business and in good standing as foreign
corporations in each jurisdiction in which the ownership or leasing of
properties or the conduct of their respective businesses requires such
qualification, except for jurisdictions in which the failure to so qualify
would not have a material adverse effect upon the Company and its
subsidiaries, taken as a whole; and no proceeding has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.
(d) The Company has authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and conform to the description thereof contained in the
Prospectus. All issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. Except as disclosed in or contemplated by
the Prospectus and the financial statements of the Company, and the related
notes thereto, included in the Prospectus, neither the Company nor any
subsidiary has outstanding any options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations, except that the Company has preemptive rights to
acquire shares of its subsidiaries' stock. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(e) No shareholder of the Company has any right which has not been
waived or satisfied to require the Company to register the sale of any shares
owned by such shareholder under the Act in the public offering contemplated
by this Agreement. No further approval or authority of the shareholders or
the Board of Directors of the Company will be required for the transfer and
sale of the Common Shares to be sold by the Selling Shareholders.
(f) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contem-plated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company in accordance with
its terms, except as rights to indemnity and contribution hereunder may be
limited by
applicable law. Except as disclosed in the Prospectus, the making and
performance of this Agreement by the Company and the consummation by the
Company of the transactions herein contemplated will not violate any
provisions of the certificate of incorporation or bylaws, or other
organizational documents, of the Company or any of its subsidiaries, and will
not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default
under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties, except for any such conflicts, breaches
or defaults which individually or in the aggregate would not be material to
the Company and its subsidiaries, taken as a whole may be bound or affected,
any statute or any authorization, judgment, decree, order, rule or regulation
of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its subsidiaries or any
of their respective properties, except for any such conflicts, breaches or
defaults which individually or in the aggregate would not be material to the
Company and its subsidiaries, taken as a whole. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery
of this Agreement or the consummation of the transactions contem-plated by
this Agreement by the Company, except such consents, approvals,
authorizations or orders (i) as have been obtained under the Act, (ii) as may
be required under state securities or Blue Sky laws or foreign securities
laws in connection with the purchase and distribution of the Common Shares by
the Underwriters, (iii) as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") and (iv) the absence of which
individually and in the aggregate are not material to the Company and its
subsidiaries, taken as a whole, or to the Underwriters.
(g) KPMG Peat Marwick LLP, who have expressed their opinion with
respect to the financial statements and schedules of the Company filed with
the Commission as a part of the Registration Statement and/or included or
incorporated by reference in the Prospectus and in the Registration
Statement, are independent accountants as required by the Act and the Rules
and Regulations.
(h) The financial statements and schedules of the Company, and the
related notes thereto, included in the Registration Statement and the
Prospectus and/or incorporated by reference therein present fairly the
financial position of the Company as of the respective dates of such
financial statements and schedules, and the results of operations and cash
flows of the Company for the respective periods covered thereby. Such
statements, schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. No
other financial statements or schedules are required to be included in the
Registration Statement or in the documents incorporated by reference therein.
The selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Financial Data" fairly present the information
set forth therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, or as to violations,
defaults and breaches which individually or in the aggregate would not be
material to the Company and its subsidiaries, taken as a whole, neither the
Company nor any of its subsidiaries is in violation or default of any
provision of its Articles of Incorporation or Bylaws, or is in breach of or
default with respect to any provision of any agreement, judgment, decree,
order, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which it is a party or by which it or any of its
properties are bound; and, except as disclosed in the Prospectus, there does
not exist any state of facts which constitutes an event of default on the
part of the Company or any such subsidiary as defined in such documents or
which, with notice or lapse of time or both, would constitute such an event
of default.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement or to any documents incorporated by reference therein
by the Act, by the Exchange Act or by the rules and regulations thereunder
which have not been described or filed as required. Except as disclosed in
the Prospectus, the contracts so described in the Prospectus are in full
force and effect on the date hereof; and neither the Company nor any of its
subsidiaries, nor to the best of the Company's knowledge, any other party is
in breach of or default under any of such contracts.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or may be a party or of which property owned or leased by the
Company or any of its subsidiaries is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or proceedings
might, individually or in the aggregate, prevent or materially adversely
affect the transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company and
its subsidiaries; the descriptions in the Prospectus of the litigation
matters described therein are accurate and complete in all material respects;
and, except as disclosed in the Prospectus, no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent
which might be expected to materially adversely affect such condition,
properties, business, results of operations or prospects. Neither the
Company nor any of its subsidiaries is a party or subject to the provisions
of any material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body.
(l) The Company or the applicable subsidiary has
good and marketable title to all the properties and assets reflected as owned
in the financial statements hereinabove described (or elsewhere in the
Prospectus), subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except (i) those, if any, reflected in such financial statements (or
elsewhere in the Prospectus), or (ii) those which are not material in amount
and do not adversely affect the use made and proposed to be made of such
property by the Company and its subsidiaries. The Company or the applicable
subsidiary holds its leased properties under valid and binding leases, with
such exceptions as are not significant in relation to the business of the
Company. Except as disclosed in the Prospectus, the Company owns or leases
all such properties as are necessary to its operations as now conducted.
(m) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or
written agreement or other transaction, other than in the ordinary course of
business; (ii) the Company and its subsidiaries have not sustained any
material loss or interference with their respective businesses or properties
from fire, flood, windstorm, accident or other calamity, whether or not
covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock and the
Company and its subsidiaries are not in default in the payment of principal
or interest on any outstanding debt obligations; (iv) there has not been any
change in the capital stock or indebtedness material to the Company and its
subsidiaries (other than in the ordinary course of business); and (v) there
has not been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects of the
Company and its subsidiaries.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks,
trade names, copyrights, licenses, approvals and governmental authorizations
to conduct their businesses as now conducted, with such exceptions as would
not have a material adverse effect on the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company and
its subsidiaries, taken as a whole; the expiration of any trademarks (other
than "Dollar Tree" or "Dollar Xxxx$"), trade names, copyrights, licenses,
approvals or governmental authorizations would not have a material adverse
effect on the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company or its subsidiaries, taken
as a whole; and the Company has no knowledge of any material infringement by
it or its subsidiaries of trademark, trade name rights, copyrights, licenses,
trade secret or other similar rights of others, and there is no claim being
made against the Company or its subsidiaries regarding trademark, trade name,
copyright, license, trade secret or other infringement which could have a
material adverse effect on the condition (financial or otherwise), business,
properties, results
of operations or prospects of the Company and its subsidiaries, taken as a
whole.
(o) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not materially
adversely affect the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(p) The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and have paid all
taxes shown as due thereon; and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the
Company or its subsidiaries which could materially and adversely affect the
condition (financial or otherwise) business, properties, results of
operations or prospects of the Company and its subsidiaries, taken as a whole.
(q) The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior
to the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Prospectus, the
Registration Statement and other materials permitted by the Act.
(s) Each of the Company and its subsidiaries maintains insurance of
the types and in the amounts generally deemed adequate for its business,
including, but not limited to, insurance covering real and personal property
(except for personal property in the stores, which is uninsured) owned or
leased by the Company and its subsidiaries against theft, damage, destruction
and acts of vandalism, all of which insurance is in full force and effect.
(t) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the laws
or the United States or any jurisdiction thereof.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Common Shares.
(v) The Common Stock of the Company has been registered under
Section 12(g) of the Exchange Act, and all of the outstanding shares of
Common Stock (including the Common Shares to be sold by the Selling
Shareholders hereunder) have been listed on the National Market of the Nasdaq
Stock Market.
(w) The Company has filed with the Commission, on a timely basis,
all documents required to have been filed by the Company pursuant to the
Exchange Act or the rules and regulations promulgated thereunder. Each such
document, when filed with the Commission, conformed in all material respects
to the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3. Representations, Warranties and Covenants of the
Selling Shareholders.
(a) Each of the Selling Shareholders severally
represents and warrants to, and agrees with, the several Underwriters
that:
(i) Such Selling Shareholder has, and on the First
Closing Date and the Second Closing Date (if applicable) hereinafter
mentioned will have, good and valid title to the Common Shares
proposed to be sold by such Selling Shareholder hereunder on such
Closing Date and full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver such Common
Shares hereunder, free and clear of all voting trust arrangements,
liens, encumbrances, equities, security interests, restrictions and
claims whatsoever; and upon delivery of and payment for such Common
Shares hereunder, assuming the Underwriters acquire such Common
Shares without notice of any adverse claim, the Underwriters will
acquire good and valid title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever.
(ii) This Agreement has been duly authorized,
executed and delivered by such Selling Shareholder and constitutes
the valid and binding obligation and agreement of such Selling
Shareholder, enforceable against such Selling Shareholder in
accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by applicable law.
(iii) Such Selling Shareholder has executed and
delivered a Power of Attorney and caused to be executed and
delivered on his behalf a Custody Agreement (hereinafter
collectively referred to with respect to each Selling Shareholder as
the "Shareholders Agreement") and in connection herewith such
Selling Shareholder further represents, warrants and agrees that
such Selling Shareholder has deposited in custody, under the
Shareholders Agreement, with the agent named therein (the "Agent")
as custodian, certificates in negotiable form for the Common Shares
to be sold hereunder by such Selling Shareholder, for the purpose of
further delivery pursuant to this Agreement. Such Selling
Shareholder agrees that the Common Shares to be sold by such Selling
Shareholder on deposit with the Agent are subject to the interests
of the Company and the Underwriters, that the arrangements made for
such custody are to that extent irrevocable (except as otherwise
provided in this Agreement or the Shareholders Agreement), and that
the obligations of such Selling Shareholder hereunder shall not be
terminated, except as provided in this Agreement or in the
Shareholders Agreement, by any act of such Selling Shareholder, by
operation of law, by the death or incapacity of such Selling
Shareholder or by the occurrence of any other event. If the Selling
Shareholder should die or become incapacitated, or if any other
event should occur, before the delivery of the Common Shares
hereunder, the documents evidencing Common Shares then on deposit
with the Agent shall be delivered by the Agent in accordance with
the terms and conditions of this Agreement as if such death,
incapacity or other event had not occurred, regardless of whether or
not the Agent shall have received notice thereof. This Agreement
and the Shareholders Agreement have been duly executed and delivered
by or on behalf of such Selling Shareholder and the form of such
Shareholders Agreement has been delivered to you.
(iv) The performance of this Agreement and the
Shareholders Agreement by such Selling Shareholder and the
consummation of the transactions contemplated hereby and thereby
will not result in a breach or violation by such Selling Shareholder
of any of the terms or provisions of, or constitute a default by
such Selling Shareholder under, (A) any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement, trust instrument or
instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder or any of its properties is bound, (B) if
such Selling Shareholder is not a natural person, the partnership
agreement, trust instrument or any other organizational documents of
such Selling Shareholder, or (C) any statute, judgment, decree,
order, rule or regulation of any court or governmental agency or
body applicable to such Selling Shareholder or any of its
properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other
governmental body is
required for the execution and delivery by such Selling Shareholder
of this Agreement and the Shareholders Agreement or the consummation
by such Selling Shareholder of the transactions contemplated by this
Agreement and the Shareholders Agreement, except such consents,
approvals, authorizations or orders (i) as have been obtained under
the Act, (ii) as may be required under state securities or Blue Sky
laws or foreign securities laws in connection with the purchase and
distribution of the Common Shares by the Underwriters, (iii) as may
be required by the NASD and (iv) the absence of which individually
and in the aggregate are not material to the Company and its
subsidiaries, taken as a whole, or to the Underwriters.
(v) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to or which
has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Common Shares.
(vi) Each Preliminary Prospectus and the Prospectus,
insofar as it has related to such Selling Shareholder, has not
included any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as it relates to such Selling
Shareholder, will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(vii) Such Selling Shareholder is not aware that the
Registration Statement or Prospectus includes any untrue statement
of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading. It is agreed the aggregate liability of a Selling
Shareholder to the Underwriters (A) for a breach of this
representation and (B) under Section 11(a) hereof shall not exceed
the amount of the After Tax Net Proceeds (as defined in Section
11(a)) received by such Selling Shareholder with respect to the
Common Shares purchased by the Underwriters from such Selling
Shareholder hereunder; and that no Selling Shareholder shall be
liable to any Underwriter for a breach of this representation unless
(1) the Representatives shall have first made demand for payment on
the Company with respect to any damages alleged to result from the
breach of this representation, (2) the Representatives shall
thereafter have used all reasonable efforts to obtain such payment
from the Company, including active pursuit in a court of law of any
rights to indemnity or contribution based on the facts
giving rise to the alleged breach of this representation, and (3) the
Company shall have failed to make such payment within one year after
receipt of the notice described in clause (1).
(b) Each of the Selling Shareholders agree
with the Company and the Underwriters not to offer
to sell, sell or contract to sell or otherwise
dispose of any shares of Common Stock or
securities convertible into or exchangeable for
any shares of Common Stock, for a period of 90
days after the date of the Prospectus, without the
prior written consent of NationsBanc Xxxxxxxxxx
Securities LLC, as a Representative of the
Underwriters, which consent may be withheld at the
sole discretion of NationsBanc Xxxxxxxxxx
Securities LLC.
SECTION 4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant
to the Company and the Selling Shareholders that the information set forth
(i) in the first sentence of the last paragraph of text on the cover page of
the Prospectus, (ii) in the stabilization language on the inside front cover
of the Prospectus and (iii) in the second paragraph under "Underwriting" in
the Prospectus concerning the terms of the offering by the Underwriters and
in the sixth paragraph of text under "Underwriting" was furnished to the
Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement and the Prospectus and is correct
in all material respects. The Representatives represent and warrant that
they have been authorized by each of the other Underwriters as the
Representatives to enter into this Agreement on its behalf and to act for it
in the manner herein provided.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Selling
Shareholders agree, severally and not jointly, to sell to the Underwriters in
the respective amounts set forth in Schedule B hereto, an aggregate of
4,500,000 Firm Common Shares. The Underwriters agree, severally and not
jointly, to purchase from the Selling Shareholders the number of Firm Common
Shares described below. The purchase price per share to be paid by the
several Underwriters to the Selling Shareholders shall be $_____ per share.
The obligation of each Underwriter to the Selling Shareholders shall
be to purchase from the Selling Shareholders that number of full shares set
forth opposite the name of such Underwriter in Schedule A hereto.
Delivery of certificates for the Firm Common Shares to be purchased
by the Underwriters and payment therefor shall be made at the offices of
NationsBanc Xxxxxxxxxx Securities LLC, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as may be agreed upon by the Company and the
Representatives) at such time and date, not later than the third (or, if the
Firm Common Shares are priced, as contemplated by Rule 15c6-1(c) under the
Exchange Act, after 4:30 p.m. Washington
D.C. time, the fourth) full business day following the first date that any of
the Common Shares are released by you for sale to the public, as you shall
designate by at least 48 hours prior notice to the Company (or at such other
time and date, not later than one week after such third or fourth, as the
case may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that
any of the Common Shares are released by you for sale to the public or the
date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Selling Shareholders to you, for the respective accounts
of the Underwriters, against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer of same day
funds to the order of the Agent. The certificates for the Firm Common Shares
shall be registered in such names and denominations as you shall have
requested at least two full business days prior to the First Closing Date,
and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may
be designated by you. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein
set forth, the Selling Shareholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, in the respective
amounts set forth in Schedule B hereto, up to an aggregate of 675,000
Optional Common Shares at the purchase price per share to be paid for the
Firm Common Shares, for use solely in covering any over-allotments made by
you for the account of the Underwriters in the sale and distribution of the
Firm Common Shares. The option granted hereunder may be exercised at any
time (but not more than once) within 30 days after the first date that any of
the Common Shares are released by you for sale to the public, upon notice by
you to the Company and the Agent setting forth the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for such shares
are to be registered and the time and place at which such certificates will
be delivered. Such time of delivery (which may not be earlier than the First
Closing Date), being herein referred to as the "Second Closing Date," shall
be determined by you, but if at any time other than the First Closing Date
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. The number of Optional Common Shares to
be purchased by each Underwriter shall be determined by multiplying the
number of Optional Common Shares to be sold by the Selling Shareholders
pursuant to such notice of exercise by a fraction, the numerator of which is
the number of Firm Common Shares to be purchased by such Underwriter as set
forth opposite its name in Schedule A and the denominator of which is
4,500,000 (subject to such adjustments to eliminate any fractional share
purchases as you
and the Selling Shareholders may mutually agree). If the option granted
hereunder is exercised in part, the number of Optional Common Shares to be
sold by each Selling Shareholder shall be determined by multiplying the
number of Optional Common Shares set forth opposite his or its name in
Schedule B by a fraction, the numerator of which is the number of Optional
Common Shares to be sold by the Selling Shareholders as specified in such
notice of exercise and the denominator of which is 675,000 (subject to such
adjustments to eliminate any fractional share purchases as you and the
Selling Shareholders may mutually agree). Certificates for the Optional
Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment for and delivery of
the Optional Common Shares shall be the same as for the Firm Common Shares
purchased from the Selling Shareholders as specified in the two preceding
paragraphs. At any time before lapse of the option, you may cancel such
option by giving written notice of such cancellation to the Company and the
Agent.
You have advised the Company and the Selling Shareholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to
make payment and to receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but
any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Common Shares
as soon after the effective date of the Registration Statement as in the
judgment of the Representatives is advisable and at the public offering price
set forth on the cover page of and on the terms set forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not
effective at the time and date that this Agreement is
executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A of the Rules and
Regulations, or the filing of the Prospectus is otherwise
required under Rule 424(b) of the Rules and Regulations, the
Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the
Rules and Regulations within the time period prescribed and
will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing
(i) of the receipt of any comments of the Commission,
(ii) of any request of the Commission for amendment of or
supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or
the Prospectus or for additional information, (iii) when the
Registration Statement shall have become effective and
(iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
or of the institution of any proceedings for that purpose.
If the Commission shall enter any such stop order at any
time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. The
Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes
effective), any Preliminary Prospectus or the Prospectus of
which you have not been furnished with a copy a reasonable
time prior to such filing or to which you reasonably object
(except to the extent any amendment or supplement to which
you object is necessary in the opinion of counsel to the
Company to ensure that the Prospectus does not include an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading) or which is not in compliance
in all material respects with the Act and the Rules and
Regulations.
(b) The Company will fully and completely comply with
the provisions of Rule 430A of the Rules and Regulations
with respect to information omitted from the Registration
Statement in reliance upon such Rule.
(c) If during such period after the first date of the
public offering of the Common Shares as, in the opinion of
your counsel, the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or
dealer, any event occurs, as a result of which the
Prospectus, including any amendments or supplements, would
include an untrue statement of a material fact, or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or
if it is necessary at any time to amend the Prospectus,
including any amendments or supplements, to comply with the
Act or the Rules and Regulations, the Company will promptly
advise you thereof and will promptly prepare and file with
the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or
an amendment or supplement which will effect such compliance
and will use its best efforts to cause the same to become
effective (to the extent effectiveness is required under the
Act or the Rules and Regulations) as soon as possible; and,
in case any Underwriter is required to deliver a prospectus
after such period, the Company upon request, but at the
expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and
such Prospectus or Prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3)
of the Act.
(d) As soon as practicable, but not later than 45 days
after the end of the first quarter ending after one year
following the "effective date of the Registration Statement"
(as defined in Rule 158(c) of the Rules and Regulations),
the Company will make generally available to its security
holders an earnings statement (which need not be audited)
covering a period of 12 consecutive months beginning after
the effective date of the Registration Statement which will
satisfy the provisions of the last paragraph of
Section 11(a) of the Act.
(e) During such period as a prospectus is required by
law to be delivered in connection with sales by an
Underwriter or dealer, the Company, at its expense, but only
for the nine-month period referred to in Section 10(a)(3) of
the Act, will furnish to you or mail to your order copies of
the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such
documents (other than periodic filings under the Exchange
Act) in each case as soon as available and in such
quantities as you may reasonably request, for the purposes
contemplated by the Act.
(f) The Company shall cooperate with you and your
counsel in order to qualify or register the Common Shares
for sale under (or obtain exemptions from the application
of) the Blue Sky laws of such jurisdictions as you designate
and Canadian securities laws, will comply with such laws and
will continue such qualifications, registrations and
exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such
jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The
Company will advise you promptly of the suspension of the
qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading
in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification,
registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the
withdrawal thereof.
(g) During the period of five years hereafter, the
Company will furnish to the Representatives: (i) as soon as
practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and
statements of income, shareholders' equity and cash flows
for the year then ended and the opinion thereon of the
Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any
report or communication of the Company mailed generally to
holders of its Common Stock.
(h) During the period of 90 days after the first date
that any of the Common Shares are released by you for sale
to the public, without the prior written consent of
NationsBanc Xxxxxxxxxx Securities LLC, as a Representative
of the Underwriters, or each of the Representatives (which
consent may be withheld at the sole discretion of any of the
Representatives), the Company will not issue, offer, sell,
grant options to purchase or otherwise dispose of any of the
Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or
other equity security; provided, however, that the Company
may (i) issue shares of Common Stock upon the exercise of
stock options and warrants outstanding on the date hereof,
as described in the Prospectus (it being agreed that the
Company shall not accelerate the exercisability of any such
options or grant any waiver or acceleration under the terms
of the Stock Restriction Agreement to be entered into by the
optionee upon the exercise of such options), and (ii) grant
options and issue shares of Common Stock in accordance with
its Amended and Restated Stock Option Plan, Stock Incentive
Plan or Employee Stock Purchase Plan, as described in the
Prospectus or in materials incorporated by reference in the
Prospectus.
(i) The Company will use its best efforts to qualify
or register its Common Stock for sale in non-issuer
transactions under (or obtain exemptions from the
application of) the Blue Sky laws of the State of California
(and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will
comply with such Blue Sky laws and will continue such
qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(j) The Company will cause its counsel to promptly
prepare a reasonable number of copies of bound closing
volumes for the Representatives and their counsel.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or
is terminated, each Selling Shareholder agrees to pay its pro rata portion of
all costs, fees and expenses incurred in connection with the performance of
the obligations of the Company or the Selling Shareholders hereunder,
including without limiting the generality of the foregoing, (i) all expenses
incident to the delivery of the Common Shares (including all printing,
copying, and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary transfer and
other stamp taxes in connection with the transfer and sale of the Common
Shares to the Underwriters, (iv) all fees and expenses of the Company's
counsel and the Company's independent accountants, (v) all costs and expenses
incurred in connection with the preparation, printing, copying, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement,
the Underwriters' Questionnaire and the Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common
Shares for offer and sale under the Blue Sky laws and Canadian securities
laws (provided that such fees and expenses shall not exceed $12,000), (vii)
the filing fee of the NASD, and (viii) all other fees, costs and expenses
referred to in Item 14 of the Registration Statement. Except as provided in
this Section 7, Section 9 and Section 11 hereof, the Underwriters shall pay
all of their own expenses, including the fees and disbursements of their
counsel (excluding those relating to qualification, registration or exemption
under the Blue Sky laws and Canadian securities laws and the Blue Sky
memorandum referred to above). Each Selling Shareholder's pro rata portion of
the expenses described in this Section 7 shall be that amount which bears to
the total expenses the same proportion as the number of Firm Common Shares to
be sold by such Selling Shareholder bears to 4,500,000.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Shareholders herein
set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be, to the accuracy of the statements of
Company officers and the Selling Shareholders made pursuant to the provisions
hereof, to the performance by the Company and the Selling Shareholders of
their respective obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M. (or, in the case of a
registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations relating to the Common Shares, not
later than 10:00 P.M.), Washington, D.C. Time, on the date
of this Agreement, or at such later time as shall have been
consented to by you; if the filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been
filed in the manner and within the time period required by
Rule 424(b) of the Rules and Regulations; and prior to such
Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or
shall be pending or, to the knowledge of the Company or you,
shall be contemplated by the Commission; and any request of
the Commission for inclusion of additional information in
the Registration Statement, or otherwise, shall have been
complied with to your satisfaction.
(b) You shall be satisfied that since the respective
dates as of which information is given in the Registration
Statement and Prospectus, (i) there shall not have been any
change in the capital stock of the Company (other than as
contemplated by Section 6(h) above) or any of its
subsidiaries or any material change in the indebtedness
(other than in the ordinary course of business) of the
Company or any of its subsidiaries, (ii) except as set forth
in or contemplated by the Registration Statement or the
Prospectus, no material verbal or written agreement or other
transaction shall have been entered into by the Company or
any of its subsidiaries, which is not in the ordinary course
of business, (iii) no loss or damage (whether or not
insured) to the property of the Company or any of its
subsidiaries shall have been sustained which materially and
adversely affects the condition (financial or otherwise),
business, results of operations or prospects of the Company
and its subsidiaries, taken as a whole, (iv) no legal or
governmental action, suit or proceeding affecting the
Company or any of its subsidiaries which is material to the
Company and its subsidiaries, taken as a whole, or which
affects or may affect the transactions contemplated by this
Agreement shall have been instituted or threatened and
(v) there shall not have been any material change in the
condition (financial or otherwise), business, management,
results of operations or prospects of the Company and its
subsidiaries, taken as a whole, which makes it impractical
or inadvisable in the judgment of the Representatives to
proceed with the public offering or purchase the Common
Shares as contemplated hereby.
(c) There shall have been furnished to you, as
Representatives of the Underwriters, on each Closing Date,
in form and substance satisfactory to you, except as
otherwise expressly provided below:
(i) An opinion of Xxxxxxxxx Xxxxxxx, P.C.,
counsel for the Company and the Selling Shareholders
identified as the "Virginia Selling Shareholders" on
Schedule B hereto (the "Virginia Selling Shareholders"),
addressed to the Underwriters and dated the First Closing
Date, or the Second Closing Date, as the case may be, to
the effect that:
(1) Each of the Company and its subsidiaries
has been duly incorporated and is validly existing
as a corporation in good standing under the laws
of its jurisdiction of incorporation, is duly
qualified to do business as a foreign corporation
and is in good standing in each state in which it
owns or leases real property, and has full
corporate power and authority to own its
properties and conduct its business as described
in the Registration Statement;
(2) The authorized, issued and outstanding
capital stock of the Company is as set forth under
the caption "Capitalization" in the Prospectus;
all necessary and proper corporate proceedings
have been taken in order to validly authorize such
authorized capital stock; all outstanding shares
of capital stock (including the Firm Common Shares
and any Optional Common Shares) have been duly and
validly issued, are fully paid and nonassessable,
were not issued in violation of or subject to any
preemptive rights or, to the best of such
counsel's knowledge, other rights to subscribe for
or purchase any securities and conform to the
description thereof incorporated by reference in the
Prospectus; all outstanding shares of capital stock of
the Company have been issued in compliance with
federal and state securities laws;
(3) All of the issued and outstanding shares
of the Company's subsidiaries have been duly and
validly authorized and issued, are fully paid and
nonassessable and are owned beneficially by the
Company free and clear of all liens, encumbrances,
equities, claims, security interests, voting
trusts or other defects of title whatsoever;
(4) The certificates evidencing the Common
Shares to be delivered hereunder are in due and
proper form under Virginia law, and when duly
countersigned by the Company's transfer agent and
registrar, and delivered to you or upon your order
against payment of the agreed consideration there-
for in accordance with the provisions of this
Agreement, the Common Shares represented thereby
will be duly authorized and validly issued, fully
paid and nonassessable, will not have been issued
in violation of or subject to any preemptive
rights or, to the best of such counsel's
knowledge, other rights to subscribe for or
purchase securities and will conform in all
respects to the description thereof contained in
the Prospectus;
(5) Except as disclosed in or specifically
contemplated by the Prospectus, to the best of
such counsel's knowledge, there are no outstanding
options, warrants or other rights calling for the
issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock
of the Company or any security convertible into or
exchangeable for capital stock of the Company;
6(a) To the best of such counsel's knowledge,
there are no franchises, leases, contracts,
agreements or documents of a character required to
be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the
Registration Statement or to any document
incorporated by reference therein which are not
disclosed or filed, as required; and
(b) To the best of such counsel's knowledge,
there are no legal or governmental actions, suits
or proceedings pending or threatened against the
Company which are required to be described in the
Prospectus which are not described as required.
(7) The Company has full right, power and
authority to enter into this Agreement; this
Agreement has been duly and validly authorized by
all necessary corporate action by the Company, has
been duly and validly executed and delivered by
and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance
with its terms, except as enforceability may be
limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights
generally and except as to those provisions
relating to indemnity or contribution for
liabilities, as to which no opinion need be
expressed; and no approval, authorization, order,
consent, registration, filing, qualification,
license or permit of or with any court, regulatory,
administrative or other governmental body is
required for the execution and delivery of this
Agreement by the Company or the consummation of
the transactions contemplated by this Agreement;
provided, however, no opinion need be expressed as
to the Act, the rules of the NASD or applicable
state securities or Blue Sky laws or foreign
securities laws in connection with the purchase
and distribution of the Common Shares;
(8) Except as disclosed in the Prospectus,
the execution and performance of this Agreement
and the consummation of the transactions herein
contemplated will not conflict with, result in the
breach of, or constitute, either by themselves or
upon notice or the passage of time or both, a
default under, any agreement, mortgage, deed of
trust, lease, franchise, license, indenture,
permit or other instrument known to such counsel
to which the Company or any of its subsidiaries is
a party or by which the Company or any of its
subsidiaries or any of its or their property may
be bound or affected which is material to the
Company and its subsidiaries, taken as a whole, or
violate any of the provisions of the certificate
of incorporation or bylaws, or other
organizational documents, of the Company or any of
its subsidiaries or, so far as is known to such
counsel, violate any statute, judgment, decree,
order, rule or regulation of any court or
governmental body having jurisdiction over the
Company or any of its subsidiaries or any of its
or their property;
(9) Except as disclosed in the
Prospectus, neither the Company nor any
subsidiary is in violation of its Articles of
Incorporation or Bylaws, or other
organizational documents, or to the best of
such counsel's knowledge, in breach of or
default with respect to any provision of any
agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other
instrument known to such counsel to which the
Company or any such subsidiary is a party or
by which it or any of its properties may be
bound or affected, except where such breach or
default would not materially adversely affect
the Company and its subsidiaries, taken as a
whole; and, to the best of such counsel's
knowledge, the Company and its subsidiaries
are in compliance with all laws, rules,
regulations, judgments, decrees, orders and
statutes of any court or jurisdiction to which
they are subject, except where noncompliance
would not materially adversely affect the
Company and its subsidiaries, taken as a
whole;
(10) To the best of such counsel's knowledge,
no holders of securities of the Company have
rights which have not been waived to the
registration of shares of Common Stock or other
securities, because of the filing of the
Registration Statement by the Company or the
offering contemplated hereby;
(11) No transfer taxes are required to be
paid in connection with the sale and delivery of
the Common Shares to the Underwriters hereunder.
(12) This Agreement and the Shareholders
Agreement have been duly authorized, executed and
delivered by or on behalf of each Virginia Selling
Shareholder; the Agent has been duly and validly
authorized to act as the custodian of the Common
Shares to be sold by each Virginia Selling
Shareholder; and the performance of this Agreement
and the Shareholders Agreement and the
consummation of the transactions contemplated
herein and therein by each Virginia Selling
Shareholder will not result in a breach or
violation of, or constitute a default under, (A)
any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease,
franchise, license or other agreement or
instrument known to such counsel to which such
Virginia Selling Shareholder is a party or by
which it or any of its properties may be bound,
(B) any organizational documents of any Virginia
Selling Shareholder that is not a natural person,
or (C) any statute, or, to the best of such
counsel's knowledge, any judgment, decree, order,
rule or regulation of any court or governmental
body having jurisdiction over such Virginia
Selling Shareholder or any of its properties; and
no approval, authorization, order or consent of
any court, regulatory body, administrative agency
or other governmental body is required for the
execution and delivery by each Virginia Selling
Shareholder of this Agreement or the Shareholders
Agreement or the consummation by each Virginia
Selling Shareholder of the transactions
contemplated by this Agreement or the Shareholders
Agreement, provided, however, no opinion need be
expressed as to the Act, the rules of the NASD or
applicable state securities or Blue Sky laws or
foreign securities laws in connection with the
purchase and distribution of the Common Shares;
provided that the opinions expressed in this
clause 8(c)(i)(12) with respect to the due and
valid authorization of the Agent to act as the
custodian of the Common Shares to be sold by each
such Virginia Selling Shareholder need not cover
the provisions contained in the second and third
sentences of Section 3(a)(iii) hereof, the third
paragraph on page 5 of the Selling Shareholders
Power of Attorney or the seventh paragraph of the
Selling Shareholders Custody Agreement;
(13) Each Virginia Selling Shareholder that
is not an individual has trust power and authority
to enter into this Agreement and the Shareholders
Agreement and to sell, transfer and deliver the
Common Shares to be sold on such Closing Date by
such Virginia Selling Shareholders; immediately
prior to each Closing Date, each Virginia Selling
Shareholder was the sole registered owner of the
Common Shares to be sold by such Virginia Selling
Shareholder on such Closing Date; upon issuance of
new certificates in the names of the Underwriters
representing such Common Shares, assuming the
Underwriters purchased the Common Shares in good
faith and without notice of any adverse claim
within the meaning of the Uniform Commercial Code,
the Underwriters will have acquired all rights of
such Virginia Selling Shareholder in the Common
Shares free of any adverse claim, any lien in
favor of the Company, and any restrictions on
transfer imposed by the Company;
(14) This Agreement and the Shareholders
Agreement are valid and binding agreements of each
Virginia Selling Shareholder in accordance with
their terms, except (i) as enforceability may be
limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights
generally, (ii) with respect to those provisions
relating to indemnities or contributions for
liabilities under the Act, as to which no opinion
need be expressed, and (iii) with respect to the
provisions contained in the second and third
sentences of Section 3(a)(iii) hereof, the third
paragraph on page 5 of the Selling Shareholders
Power of Attorney or the seventh paragraph of the
Selling Shareholders Custody Agreement, as to
which no opinion need be expressed;
(15) The documents incorporated by reference
in the Prospectus (except for the financial
statements and schedules included in such
documents as to which such counsel need express no
opinion) comply as to form in all material
respects with the requirements of the Exchange Act
and the rules and regulations of the Commission
thereunder.
(16)(a) The Registration Statement (assuming
compliance with clause (2) of Rule 462(b) in the
case of any Additional Registration Statement) has
become effective under the Act, and, to the best
of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus
has been issued and no proceedings for that
purpose have been instituted or are pending or
contemplated by the Commission; any required
filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules and
Regulations has been made in the manner and within
the time period required by such Rule 424(b);
(b) The Registration Statement, the
Prospectus and each amendment or supplement
thereto, if any (except for the financial
statements and schedules included therein as to
which such counsel need express no opinion),
comply as to form in all material respects with
the requirements of the Act and the Rules and
Regulations.
In rendering such opinion, such counsel may rely, as to matters of fact, on
certificates of officers of the Company, of the Virginia Selling Shareholders
and of governmental officials, in which cases their opinion is to state that
they are so doing and that the Underwriters are justified in relying on such
certificates and copies of such certificates are to be attached to the
opinion. Such counsel's opinion may state that they have made no independent
factual investigation as to such matters of fact, that they assume the
capacity of all natural persons and that they assume the conformity of all
copies or facsimiles to the originals thereof. Moreover, such counsel's
opinion shall be made with respect to federal and Virginia law only. Such
counsel shall also include in such opinion (or provide separately to you) a
statement to the effect that nothing has come to such counsel's attention
that would lead such counsel to believe that at its effective date the
Registration Statement contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus, as
amended or supplemented, if applicable, at the applicable Closing Date
includes an untrue statement of material fact or omits to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading. Such counsel may
also state that they have assumed the conformity of the documents filed as
exhibits to the Registration Statement with the Commission via the Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX"), except for required
XXXXX formatting changes, to the physical copies of the documents submitted
for their examination. Such counsel shall also permit Xxxx and Xxxx LLP, as
counsel to the Underwriters, to rely on such opinion (insofar as it relates
to matters of Virginia law) in rendering their opinion pursuant to Section
8(c)(iii) hereof;
(ii) An opinion of Xxxxx, Day, Xxxxxx &
Xxxxx, special counsel for the Selling Shareholders
identified as the "New York Selling Shareholders" on
Schedule B hereto (the "New York Selling Shareholders"),
addressed to the Underwriters and dated the First
Closing Date, or the Second Closing Date, as the case
may be, to the effect that:
(1) This Agreement and the Shareholders
Agreement have been duly authorized, executed and
delivered by or on behalf of each New York Selling
Shareholder; the Agent has been duly and validly
authorized to act as the custodian of the Common
Shares to be sold by each such New York Selling
Shareholder; and the performance of this Agreement
and the Shareholders Agreement by each New York
Selling Shareholder will not result in a breach or
violation of, or constitute a default under, (A)
any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease,
franchise, license or other agreement or
instrument known to such counsel to which such New
York Selling Shareholder is a party or by which it
or any of its properties may be bound, (B) if such
Selling Shareholder is not a natural person, any
organizational documents of such New York Selling
Shareholder, or (C) any statute, or, to the
knowledge of such counsel, any judgment, decree,
order, rule or regulation of any court or
governmental body having jurisdiction over such
New York Selling Shareholder or any of its
properties; and no approval, authorization, order
or consent of any court, regulatory body,
administrative agency or other governmental body
is required for the execution and delivery by each
New York Selling Shareholder of this Agreement or
the Shareholders Agreement or the consummation by
each New York Selling Shareholder of the
transactions contemplated by this Agreement or the
Shareholders Agreement, except such consents,
approvals, authorizations or orders (i) as have been
obtained under the Act, (ii) as may be required
under state securities or Blue Sky laws or foreign
securities laws in connection with the purchase
and distribution of the Common Shares by the
Underwriters and (iii) as may be required by the
NASD; provided that the opinions expressed in this
clause 8(c)(ii)(1) with respect to the due and
valid authorization of the Agent to act as the
custodian of the Common Shares to be sold by each
such New York Selling Shareholder need not cover
the provisions contained in the second and third
sentences of Section 3(a)(iii) hereof, the third
paragraph on page 5 of the Selling Shareholders
Power of Attorney or the seventh paragraph of the
Selling Shareholders Custody Agreement;
(2) Each New York Selling Shareholder that
is not an individual has, as applicable,
corporate, partnership or trust power and
authority to enter into this Agreement and the
Shareholders Agreement and to sell, transfer and
deliver the Common Shares to be sold on such
Closing Date by such New York Selling Shareholder;
as of such Closing Date, each New York Selling
Shareholder was the sole registered owner of the
Common Shares to be sold by such New York Selling
Shareholder on such Closing Date; upon
registration of the Common Shares in the names of
the Underwriters in the stock records of the
Company, and the issuance of new certificates
registered in the names of the Underwriters
representing such Common Shares, assuming the
Underwriters purchased the Common Shares in good
faith and without notice of any adverse claim
within the meaning of the Uniform Commercial Code,
the Underwriters will have acquired all rights of
such New York Selling Shareholder in the Common
Shares free of any adverse claim, any lien in
favor of the Company, and any restrictions on
transfer imposed by the Company, and the owner of
the Common Shares, if other than such New York
Selling Shareholder, is precluded from asserting
against the Underwriters the ineffectiveness of
any unauthorized endorsement;
(3) This Agreement and the Shareholders
Agreement are valid and binding agreements of each
New York Selling Shareholder in accordance with
their terms, except (i) as enforceability may be
limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights
generally, (ii) with respect to those provisions
relating to indemnities or contributions for
liabilities under the Act, as to which no opinion
need be expressed, and (iii) with respect to the
provisions contained in the second and third
sentences of Section 3(a)(iii) hereof, the third
paragraph on page 5 of the Selling Shareholders
Power of Attorney or the seventh paragraph of the
Selling Shareholders Custody Agreement, as to
which no opinion need be expressed; and
In rendering such opinion, such
counsel may rely, as to matters of fact,
on certificates of the New York Selling
Shareholders and of governmental
officials, in which cases their opinion
is to state that they are so doing and
copies of such certificates are to be
attached to the opinion. Such counsel
may also state that they have made no
independent factual investigation and
have assumed the capacity of all natural
persons. Such counsel shall also permit
Xxxx and Xxxx LLP, as counsel to the
Underwriters, to rely on the opinions
set forth above (insofar as they relate
to matters of New York law) in rendering
their opinion pursuant to Section
8(c)(iii) hereof;
(iii) Such opinion or opinions of Xxxx and
Xxxx LLP, counsel for the Underwriters, dated the First
Closing Date or the Second Closing Date, as the case
may be, with respect to the incorporation of the
Company, the sufficiency of all corporate proceedings
and other legal matters relating to this Agreement, the
validity of the Common Shares, the Registration
Statement and the Prospectus and other related matters
as you may reasonably require, and the Company and the
Selling Shareholders shall have furnished to such
counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request
for the purpose of enabling them to pass upon such
matters. In connection with such opinions, such
counsel may rely on representations or certificates of
officers of the Company and governmental officials.
(iv) A certificate of the Company executed
by the Chairman of the Board or President and the chief
financial or accounting officer of the Company, dated
the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(1) The representations and warranties of
the Company set forth in Section 2 of this
Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and
the Company has complied with all the agreements
and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing
Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus
or any Preliminary Prospectus filed as a part of
the Registration Statement or any amendment
thereto; no stop order suspending the
effectiveness of the Registration Statement has
been issued; and to the best of the knowledge of
the respective signers, no proceedings for that
purpose have been instituted or are pending or
contemplated under the Act;
(3) Each of the respective signers of the
certificate has carefully examined the
Registration Statement and the Prospectus on
behalf of the Company; the Registration Statement
and the Prospectus and any amendments or
supplements thereto contain all statements
required to be stated therein regarding the
Company and its subsidiaries; and neither the
Registration Statement nor the Prospectus nor any
amendment or supplement thereto includes any
untrue statement of a material fact or omits to
state any material fact required to be stated
therein or necessary to make the statements
therein not misleading;
(4) Since the initial date on which the
Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment
to the Registration Statement or in a supplement
to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement
and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been
any material adverse change or a development
involving a material adverse change in the
condition (financial or otherwise), business,
properties, results of operations, management or
prospects of the Company and its subsidiaries,
taken as a whole; and no legal or governmental
action, suit or proceeding is pending or
threatened against the Company or any of its
subsidiaries which is material to the Company and
its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course
of business, or which may adversely affect the
transactions contemplated by this Agreement; since
such dates and except as so disclosed, neither the
Company nor any of its subsidiaries has entered
into any verbal or written agreement or other
transaction that is material to the Company and
its subsidiaries, taken as a whole, which is not
in the ordinary course of business or incurred any
material liability or obligation, direct,
contingent or indirect, made any change in its
capital stock, made any material change in its
short-term debt or funded debt or repurchased or
otherwise acquired any of the Company's capital
stock; and the Company has not declared or paid
any dividend, or made any other distribution, upon
its outstanding capital stock payable to
shareholders of record on a date prior to the
First Closing Date or Second Closing Date, as the
case may be; and
(6) Since the respective dates as of which
information is given in the Registration Statement
and the Prospectus and except as disclosed in or
contemplated by the Prospectus, the Company and
its subsidiaries have not sustained a material
loss or damage by strike, fire, flood, windstorm,
accident or other calamity (whether or not
insured).
(v) On the First Closing Date or the
Second Closing Date, as the case may be, a certificate,
dated such Closing Date and addressed to you, signed by or
on behalf of each of the Selling Shareholders to the
effect that the representations and warranties of such
Selling Shareholder in this Agreement are true and
correct, as if made at and as of the First Closing Date or
the Second Closing Date, as the case may be, and such
Selling Shareholder has complied with all the agreements
and satisfied all the conditions on his part to be
performed or satisfied prior to the First Closing Date or
the Second Closing Date, as the case may be.
(vi) On the date this Agreement is executed
and also on the First Closing Date and the Second Closing
Date, letters addressed to you, as Representatives of the
Underwriters, from KPMG Peat Marwick LLP, independent
accountants, the first of each to be dated the date of
this Agreement, the second of each to be dated the First
Closing Date and the third of each (in the event of a
Second Closing) to be dated the Second Closing Date, in
form and substance satisfactory to you.
(vii) An opinion of Goldberg, Kohn, Bell,
Black, Xxxxxxxxxx & Moritz, Ltd., special litigation
counsel for the Company, addressed to the Underwriters and
dated the First Closing Date, or the Second Closing Date,
as the case may be, to the effect that the section of the
Prospectus entitled "Risk Factors --Legal Proceedings"
(except for the first sentence of the first paragraph,
the last two sentences of the next to last paragraph and
the last paragraph thereof) contains a fair and accurate
summary of the litigation described therein, and that
nothing has come to their attention that would lead them
to believe that either at the effective date of the
Registration Statement or the applicable Closing Date,
the above-listed sections of the Prospectus contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein regarding the litigation
described therein not misleading.
All such opinions, certificates, letters and
documents shall be in compliance with the provisions
hereof only if they are satisfactory to you and to Xxxx
and Xxxx LLP, counsel for the Underwriters. The
Company shall furnish you with such manually signed or
conformed copies of such opinions, certificates,
letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to
the Representatives or to counsel for the Underwriters
shall be deemed to be a representation and warranty by
the Company to the Underwriters as to the statements
made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company and the Selling Shareholders without liability
on the part of any Underwriter or the Company except for the expenses to be
paid or reimbursed by the Company and the Selling Shareholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding
any other provisions hereof, if the sale to the Underwriters of the Common
Shares at the First Closing is not consummated because of any refusal,
inability or failure on the part of the Company or any Selling Shareholder to
perform any agreement herein or to comply with any provision hereof, the
Company agrees to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses that shall have been reasonably incurred by you
and them in connection with the proposed purchase and the sale of the Common
Shares, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, telegraph charges and telephone
charges relating directly to the offering contemplated by the Prospectus.
Any such termination shall be without liability of any party to any other
party except that the provisions of this Section, Section 7 and Section 11
shall at all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You, the
Company and the Selling Shareholders will use your and its best efforts to
cause the Registration Statement to become effective, to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
and, if such stop order be issued, to obtain as soon as possible the lifting
thereof.
SECTION 11. Indemnification. (a) The Company (in furtherance of
its agreement set forth in Section 22) and each of the Selling Shareholders,
jointly and severally, agree to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
the Act against any losses, claims, damages, liabilities or expenses, joint
or several, to which such Underwriter or such controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of
the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them not misleading; and will reimburse each Underwriter
and each such controlling person for any legal and other expenses as such
expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, that neither the Company nor any Selling Shareholder shall
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto (i) in reliance upon and in conformity with
the information furnished to the Company pursuant to Section 4 hereof or (ii)
in reliance upon and in conformity with information furnished to the Company
by a Selling Shareholder with respect to such Selling Shareholder (except
that the Selling Shareholder furnishing such information shall not be so
relieved of liability); provided further, that no Selling Shareholder shall
be liable under this Section 11(a) for an amount in excess of the After Tax
Net Proceeds (as defined below) received by such Selling Shareholder with
respect to the Common Shares purchased by the Underwriters from such Selling
Shareholder hereunder; provided further that no Selling Shareholder shall be
required to provide indemnification hereunder unless (1) the Representatives
shall have first made demand for payment on the Company with respect to any
such loss, claim, damage, liability or expense, (2) the Representatives shall
thereafter have used all reasonable efforts to obtain such payment from the
Company, including active pursuit in a court of law of any rights hereunder
to indemnity or contribution for such loss, claim, damage, liability or
expense, and (3) the Company shall have failed to make such payment within
one year after receipt of the notice described in clause (1); and
providedfurther that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such loss, claim, damage, liability or expenses
purchased Common Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given
by or on behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of
the Common Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The Company and the Selling Shareholders may
agree, as among themselves and without limiting the rights of the
Underwriters under this Agreement, as to their respective amounts of such
liability for which they each shall be responsible. In addition to their
other obligations under this Section 11(a), the Company and the Selling
Shareholders agree that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
all as described in this Section 11(a), they will reimburse each Underwriter
on a quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding. To the extent that any such
interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company or the Selling
Shareholders, as applicable, together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate
for borrowers of the highest credit standing) announced from time to time by
Bank of America NT&SA,
San Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
the Company or the Selling Shareholders may otherwise have. The "After Tax
Net Proceeds" received by a Selling Shareholder with respect to Common Shares
sold by it hereunder shall mean the proceeds (net of the applicable
underwriting discount) received by such Selling Shareholder with respect to
such Common Shares, as adjusted to reflect both (i) the amount of any taxes
paid or payable by such Selling Shareholder by virtue of the sale of such
Common Shares and (ii) the value of any tax benefit realized or realizable
(taking into account the probability that any such tax benefit will be
realized) by such Selling Shareholder by virtue of the payment of amounts
under this Section 11 or the payment of amounts in regard to a breach of a
representation of such Selling Shareholder set forth in Section 3(a).
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, each Selling Shareholder and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of the
Act, against any losses, claims, damages, liabilities or expenses to which
the Company, or any such director, officer or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company pursuant to Section
4 hereof; and will reimburse the Company, or any such director, officer,
Selling Shareholder or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer, Selling
Shareholder or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. In addition to its other obligations under
this Section 11(b), each Underwriter severally agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 11(b) which
relates to information furnished to the Company pursuant to Section 4 hereof,
it will reimburse the Company (and, to the extent applicable, each officer,
director, Selling Shareholder or controlling person) on a quarterly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Underwriters' obligation to
reimburse the Company (and, to the extent applicable, each officer, director,
Selling Shareholder or controlling person) for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company (and, to
the extent applicable, each officer, director, Selling Shareholder or
controlling person) shall promptly return it to the Underwriters together
with interest, compounded daily, determined on the basis of the Prime Rate.
Any such interim reimbursement payments which are not made to the Company
within 30 days of a request for reimbursement, shall bear interest at the
Prime Rate from the date of such request. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement
contained in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled
to participate in, and, to the extent that it may wish, jointly with all
other indemnifying parties similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and
to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel,
approved by the Representatives in the case of paragraph (a), representing
the indemnified parties who
are parties to such action) or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party. The indemnifying
party shall not be liable for any settlement of such action effected without
its written consent, which shall not be unreasonably withheld or delayed, but
if settled with such consent, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement.
(d) If the indemnification provided for in this Section 11 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party (subject
to the limits set forth in subparagraph (a) of this Section 11) shall
contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Selling Shareholders and the
Underwriters from the offering of the Common Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
the Selling Shareholders and the Underwriters in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling
Shareholders and the Underwriters shall be deemed to be in the same
proportion, in the case of the Company and the Selling Shareholders on the
one hand, as the total price paid to the Selling Shareholders for the Common
Shares sold by them to the Underwriters (net of underwriting commissions but
before deducting expenses), and in the case of the Underwriters, on the other
hand, as the underwriting commissions received by them bears to the total of
such amounts paid to the Selling Shareholders and received by the
Underwriters as underwriting commissions. The relative fault of the Company,
the Selling Shareholders and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Shareholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subparagraph (c) of this
Section 11, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (c) of this Section 11 with respect to
notice of commencement of any action shall apply if a claim for
contribution is to be made under this subparagraph (d); provided, however,
that no additional notice shall be required with respect to any action for
which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to
this Section 11 were determined solely by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in this paragraph. Notwithstanding the provisions
of this Section 11, no Underwriter shall be required to contribute any amount
in excess of the amount of the total underwriting commissions received by
such Underwriter in connection with the Common Shares underwritten by it and
distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 11(a) and
11(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said demand
or notice is authorized to do so.
SECTION 12. Default of Underwriters. It shall be a condition to
this Agreement and the obligation of the Selling Shareholders to sell and
deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter
in this paragraph provided, each of the Underwriters shall purchase and pay
for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing
Date does not exceed 10% of the total number of Common Shares which the
Underwriters are obligated to purchase on such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Common Shares which
such defaulting Underwriters agreed but failed to purchase on such Closing
Date. If any Underwriter or Underwriters so default and the aggregate number
of Common Shares with respect to which such default occurs is more than the
above percentage and arrangements satisfactory to the Representatives and the
Company for the purchase of such Common Shares by other persons are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Shareholders except for the expenses to be paid by the Selling
Shareholders pursuant to Section 7 hereof and except to the extent provided
in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties,
the Representatives or the Company shall have the right to postpone the First
or Second Closing Date, as the case may be, for not more than five business
days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 15 and, as to all other
provisions, (i) if at the time of execution of this Agreement the
Registration Statement has not become effective, at 2:00 P.M., California
time, on the first full business day following the effectiveness of the
Registration Statement, or (ii) if at the time of execution of this Agreement
the Registration Statement has been declared effective, at 2:00 P.M.,
California time, on the first full business day following the date of
execution of this Agreement; but this Agreement shall nevertheless become
effective at such earlier time after the Registration Statement becomes
effective as you may determine on and by notice to the Company or by release
of any of the Common Shares for sale to the public. For the purposes of this
Section 13, the Common Shares shall be deemed to have been so released upon
the release for publication of any newspaper advertisement relating to the
Common Shares or upon the release by you of telegrams (i) advising
Underwriters that the Common Shares are released for public offering, or (ii)
offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 14. Termination. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by
notice to you and the Selling Shareholders or by you by
notice to the Company and the Selling Shareholders at any
time prior to the time this Agreement shall become effective
as to all its provisions, and any such termination shall be
without liability on the part of the Company or any Selling
Shareholder to any Underwriter (except for the expenses to
be paid or reimbursed by the Company and the Selling
Shareholders pursuant to Sections 7 and 9 hereof and except
to the extent provided in Section 11 hereof) or of any
Underwriter to the Company or any Selling Shareholder
(except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior
to the First Closing Date by notice to the Company and the
Selling Shareholders (i) if additional material governmental
restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally
or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by
the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter
market by the NASD, or a general banking moratorium shall
have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or
other national or international calamity or any substantial
change in political, financial or economic conditions shall
have occurred or shall have accelerated or escalated to such
an extent, as, in the judgment of the Representatives, to
affect adversely the marketability of the Common Shares,
(iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material
respect any statement or information contained in the
Registration Statement or Prospectus or which is not
reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements
or information contained therein not misleading in any
material respect, or (iv) if there shall be any action, suit
or proceeding pending or threatened, or there shall have
been any development or prospective development involving
particularly the business or properties or securities of the
Company or any of its subsidiaries or the transactions
contemplated by this Agreement, which, in the reasonable
judgment of the Representatives, may materially and
adversely affect the Company's business or earnings and
makes it impracticable or inadvisable to offer or sell the
Common Shares. Any termination pursuant to this
subparagraph (b) shall be without liability on the part of
any Underwriter to the Company or any Selling Shareholder or
on the part of the Company or any Selling Shareholder to any
Underwriter (except for expenses to be paid or reimbursed by
the Selling Shareholders pursuant to Section 7 hereof and
except to the extent provided in Section 11 hereof.
SECTION 15. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and
of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter, the Company or any Selling Shareholder or
any of its or their partners, officers or directors or any controlling
person, as the case may be, and will survive delivery of and payment for the
Common Shares sold hereunder and any termination of this Agreement.
SECTION 16. Notices. All communications hereunder shall be in
writing and, if sent to the Representatives shall be mailed, delivered or
telecopied to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx X. Xxxx, with a copy to Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx, Esq.; if sent to
the Company, shall be mailed, delivered or telecopied to the Company, at 000
Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 with a copy to Xxxxxxxxx Xxxxxxx,
P.C., 1700 Dominion Tower, 000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxxx X. Old, Esq.; if sent to any Virginia Selling
Shareholder, shall be mailed, delivered or telecopied to the Selling
Shareholder c/o
the Company at 000 Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 with a copy to
Xxxxxxxxx Xxxxxxxx, P.C., 0000 Xxxxxxxx Xxxxx, 00 Xxxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxxxx X. Old, Esq.; and if sent to any of the
New York Selling Shareholders, to the New York Selling Shareholder x/x
Xxxxxxxx, Xxxx & Co., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 with a copy to Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Esq. The Company, the
Selling Shareholders or you may change the address for receipt of
communications hereunder by giving notice to the others.
SECTION 17. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 12 hereof, and to the benefit of the
officers and directors and controlling persons referred to in Section 11, and
in each case their respective successors, personal representatives and
assigns, and no other person will have any right or obligation hereunder. No
such assignment shall relieve any party of its obligations hereunder. The
term "successors" shall not include any purchaser of the Common Shares as
such from any of the Underwriters merely by reason of such purchase.
SECTION 18. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by NationsBanc Xxxxxxxxxx Securities LLC, as Representatives, will
be binding upon all the Underwriters.
SECTION 19. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by
and construed in accordance with the internal laws (and not the laws
pertaining to conflicts of laws) of the State of California.
SECTION 21. General. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may
be executed in several counterparts, each one of which shall be an original,
and all of which shall constitute one and the same document.
SECTION 22. Certain Agreements of the Company. The Selling
Shareholders have caused the Company to file the Registration Statement
pursuant to Section 3.1 of a certain Amended and Restated Stockholders
Agreement (the "Stockholders Agreement") by and among the Company and certain
of its current or former shareholders. Section 3.5 of the Stockholders
Agreement obligates the Company to pay certain expenses relating to an offering
of shares conducted pursuant to Section 3.1.
However, by a letter agreement dated March __, 1998, the parties to the
Stockholders Agreement agreed that, notwithstanding Section 3.5 of the
Stockholders Agreement, the Selling Shareholders would pay the expenses
relating to the registration and offering of Common Shares contemplated by
this Agreement, with each Selling Shareholder bearing his, her or its pro
rata share of such expenses. The Stockholders Agreement also contemplates in
Section 3.6 that the Company shall indemnify and hold harmless the Selling
Stockholders under certain circumstances and subject to certain conditions.
In consideration of the agreement by the Selling Shareholders to relieve the
Company of its obligation to pay expenses of the registration and offering of
the Common Shares contemplated by this Agreement, the Company agrees (i) to
indemnify and hold harmless the Underwriters, and contribute to losses of the
Underwriters, under certain circumstances and subject to certain conditions
as contemplated in Section 11 of this Agreement and (ii) to make similar
indemnification and contribution agreements in favor of the underwriters for
any future offering of shares pursuant to Section 3.1 or Section 3.2 of the
Stockholders Agreement.
In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not
affect the construction or interpretation of this Agreement. This Agreement
may be amended or modified, and the observance of any term of this Agreement
may be waived, only by a writing signed by the Company, the Selling
Shareholders (to the extent such amendment affects them) and you.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon
it will become a binding agreement among the Company, the Selling
Shareholders and the several Underwriters including you, all in accordance
with its terms.
Very truly yours,
DOLLAR TREE STORES, INC.
By:
--------------------------------
Name:
Title:
THE SELLING SHAREHOLDERS IDENTIFIED
ON SCHEDULE B
By:
--------------------------------
Name:
By:
--------------------------------
Name:
Each as Attorney-in-Fact acting
on behalf of each such Selling
Shareholder
The foregoing Underwriting Agreement is hereby confirmed and accepted by us
in San Francisco, California as of the date first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BT ALEX. XXXXX INCORPORATED
XXXXXXX, SACHS & CO.
XXXXX XXXXXX INC.
Acting as Representatives of the several Underwriters named in the attached
Schedule A.
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
By:
-----------------------------
Partner
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
NationsBanc Xxxxxxxxxx Securities LLC . . . . . .
BT Alex. Xxxxx Incorporated . . . . . . . . . . .
Xxxxxxx, Sachs & Co. . . . . . . . . . . . . . . .
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . 4,500,000
