EXHIBIT 1.1
17,500,000 SHARES
CAPITALSOURCE INC.
COMMON STOCK
UNDERWRITING AGREEMENT
February __, 2004
CREDIT SUISSE FIRST BOSTON LLC
CITIGROUP GLOBAL MARKETS INC.
XXXXXX BROTHERS INC.
As Representatives of the Several Underwriters (the "REPRESENTATIVES"),
c/o Credit Suisse First Boston LLC,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. The stockholders listed in Schedule A hereto (each a
"SELLING STOCKHOLDER" and collectively, the "SELLING STOCKHOLDERS") propose
severally to sell to the Underwriters an aggregate of 17,500,000 outstanding
shares ("FIRM SECURITIES") of the common stock, par value $0.01 per share
("Securities") of CapitalSource Inc., a Delaware corporation ("COMPANY"), and
certain of the Selling Stockholders (each, an "OPTIONAL SELLING STOCKHOLDER" and
collectively, the "OPTIONAL SELLING STOCKHOLDERS") also propose severally to
sell to the Underwriters, at the option of the Underwriters, an aggregate of not
more than 2,500,000 additional outstanding shares ("OPTIONAL SECURITIES") of the
Company's Securities as set forth below. The Firm Securities and the Optional
Securities are herein collectively called the "OFFERED SECURITIES". The Company
and the Selling Stockholders hereby agree with the several Underwriters named in
Schedule B hereto ("UNDERWRITERS") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-112002) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("COMMISSION") and either (A) has
been declared effective under the Securities Act of 1933 ("ACT") and is
not proposed to be amended or (B) is proposed to be amended by amendment
or post-effective amendment. If such registration statement (the
"INITIAL REGISTRATION STATEMENT") has been declared effective, either
(A) an additional registration statement (the "ADDITIONAL REGISTRATION
STATEMENT") relating to the Offered Securities may have been filed with
the Commission pursuant to Rule 462(b) ("RULE 462(b)") under the Act
and, if so filed, has become effective upon filing pursuant to such Rule
and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (B) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule
462(b) and will become effective upon
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filing pursuant to such Rule and upon such filing the Offered Securities
will all have been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If
the Company does not propose to amend the initial registration statement
or if an additional registration statement has been filed and the
Company does not propose to amend it, and if any post-effective
amendment to either such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement, the
most recent amendment (if any) to each such registration statement has
been declared effective by the Commission or has become effective upon
filing pursuant to Rule 462(c) ("RULE 462(c)") under the Act or, in the
case of the additional registration statement, Rule 462(b). For purposes
of this Agreement, "EFFECTIVE TIME" with respect to the initial
registration statement or, if filed prior to the execution and delivery
of this Agreement, the additional registration statement means (A) if
the Company has advised the Representatives that it does not propose to
amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (B) if the Company has
advised the Representatives that it proposes to file an amendment or
post-effective amendment to such registration statement, the date and
time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement has
not been filed prior to the execution and delivery of this Agreement but
the Company has advised the Representatives that it proposes to file
one, "EFFECTIVE TIME" with respect to such additional registration
statement means the date and time as of which such registration
statement is filed and becomes effective pursuant to Rule 462(b).
"EFFECTIVE DATE" with respect to the initial registration statement or
the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended
at its Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the Act,
is hereinafter referred to as the "INITIAL REGISTRATION STATEMENT". The
additional registration statement, as amended at its Effective Time,
including the contents of the initial registration statement
incorporated by reference therein and including all information (if any)
deemed to be a part of the additional registration statement as of its
Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "ADDITIONAL REGISTRATION STATEMENT". The Initial Registration
Statement and the Additional Registration are hereinafter referred to
collectively as the "REGISTRATION STATEMENTS" and individually as a
"REGISTRATION STATEMENT". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("RULE 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, is
hereinafter referred to as the "PROSPECTUS". No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the applicable rules and regulations of the
Commission promulgated thereunder ("RULES AND REGULATIONS") and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed or will conform, in all material respects to the requirements
of the Act and the Rules and Regulations and did not include, or will
not include, any untrue statement of a material fact and did
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not omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all material
respects to the requirements of the Act and the Rules and Regulations,
and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Act and the
Rules and Regulations, none of such documents will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no Additional Registration Statement has
been or will be filed. The two preceding sentences do not apply to
statements in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the Company by
any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information
is that described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus; and the Company is duly
authorized, qualified or registered, as the case may be, to do business
as a foreign corporation in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such authorization, qualification or registration, except where the
failure to obtain such authorization, qualification or registration
would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries, taken as a
whole ("MATERIAL ADVERSE EFFECT").
(iv) (A) Each subsidiary of the Company has been duly formed or
incorporated and is an existing limited liability company ("LLC") or
corporation in good standing under the laws of the jurisdiction of its
formation or incorporation, with LLC or corporate power and authority,
as applicable, to own its properties and conduct its business as
described in the Prospectus; and each subsidiary of the Company is duly
authorized, qualified or registered, as the case may be, to do business
as a foreign LLC or corporation in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such authorization, qualification or registration, except where the
failure to obtain such authorization, qualification or registration
would not, individually or in the aggregate, have a Material Adverse
Effect; all of the issued and outstanding shares of capital stock of
each corporate subsidiary of the Company have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by the
Company, directly or through subsidiaries, free from liens, encumbrances
and defects; all of the issued and outstanding equity interests of each
LLC subsidiary of the Company have been duly authorized and validly
issued and all capital contributions of the members of such LLC
subsidiaries have been satisfied to the extent provided under Section
18-502 of the Delaware Limited Liability Company Act; and the equity
interests of each LLC subsidiary owned by the Company, directly or
through subsidiaries, are owned free from liens, encumbrances and
defects, and (B) the significant subsidiaries of the Company, as that
term is defined in Regulation S-X under the Act, are CapitalSource
Finance LLC, CapitalSource Funding LLC, CapitalSource Holdings LLC,
CapitalSource Commercial Loan Trust 2003-1, CapitalSource Commercial
Loan Trust 2003-2, and CS Funding II
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Depositor LLC.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized and validly
issued, fully paid and nonassessable and conform in all material
respects to the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect to
the Securities.
(vi) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter
for a brokerage commission, finder's fee or other like payment in
connection with this offering.
(vii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(viii) The Securities have been approved for listing on the New York
Stock Exchange.
(ix) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the transactions
contemplated by this Agreement, except such as have been obtained and
made and such as may be required under state securities laws.
(x) The execution, delivery and performance of this Agreement, and
the consummation of the transactions herein contemplated will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order
of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company or
any of their properties, or any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or any
such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or by-laws of
the Company or any organizational documents of such subsidiary.
(xi) This Agreement has been duly authorized, executed and delivered
by the Company.
(xii) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from
liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof
by them; and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a Material Adverse Effect.
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(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(xv) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are
executed in accordance with management's general or specific
authorization; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to such
statements and to maintain accountability for assets; (c) access to
assets is permitted only in accordance with management's general or
specific authorization; and (d) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company maintains
disclosure controls and procedures (as such term is defined in Rule
13a-15 under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules
and forms of the Commission, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate to allow
timely decisions regarding required disclosure.
(xvi) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(xvii) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is, to its knowledge, liable for any off-site
disposal or contamination pursuant to any environmental laws, or is, to
its knowledge, subject to any claim relating to any environmental laws,
which violation, contamination, liability or claim would individually or
in the aggregate have Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
(xviii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of
its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(xix) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates
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shown and their results of operations and cash flows for the periods
shown, and such financial statements have been prepared in conformity
with the generally accepted accounting principles in the United States
applied on a consistent basis; and the assumptions used in preparing the
pro forma financial data included in each Registration Statement and the
Prospectus provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma data therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts. Neither the Registration Statement nor the
Prospectus contains any non-GAAP financial information subject to the
requirements of Regulation G and Item 10 of Regulation S-K.
(xx) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving
a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole, and, except as disclosed in or
contemplated by the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(xxi) The Company is subject to the reporting requirements of either
Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
(xxii) The Company is not and, as of each Closing Date, will not be
an "investment company" within the meaning of the Investment Company Act
of 1940.
(xxiii) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes and the
Company agrees to comply with such Section if prior to the completion of
the distribution of the Offered Securities it commences doing such
business.
(xxiv) There is and has been no failure on the part of the Company
and any of the Company's directors or officers, in their capacities as
such, to comply with any applicable provision of the Sarbanes Oxley Act
of 2002 and the rules and regulations promulgated in connection
therewith (the "SARBANES OXLEY ACT").
(xxv) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is aware of or has
taken any action, directly or indirectly, that would result in a
violation by such persons of the FCPA, including, without limitation,
making use of the mails or any means or instrumentality of interstate
commerce corruptly in furtherance of an offer, payment, promise to pay
or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to
any "foreign official" (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company, its
subsidiaries and, to the knowledge of the Company, its affiliates have
conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and
which are reasonably expected to continue to ensure, continued
compliance therewith. "FCPA" means Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder.
(xxvi) The operations of the Company and its subsidiaries are and
have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the
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Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "MONEY LAUNDERING LAWS") and no action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its subsidiaries
with respect to the Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.
(xxvii) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Company will
not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(b) Each Selling Stockholder severally and not jointly represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder (A) on each Closing Date will have valid
and unencumbered title to the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date; (B) has on the date hereof all
necessary corporate, limited liability company, trust or partnership, as
the case may be, power and authority to enter into this Agreement and
will have on each Closing Date all necessary corporate, limited
liability company, trust or partnership, as the case may be, power and
authority to sell, assign, transfer and deliver the Offered Securities
to be delivered by such Selling Stockholder on such Closing Date
hereunder; and (C) upon the delivery of and payment for the Offered
Securities to be sold by such Selling Stockholder pursuant to this
Agreement, delivery of such Offered Securities, as directed by the
Underwriters, to Cede & Co. ("CEDE") or such other nominee as may be
designated by the Depository Trust Company ("DTC"), registration of such
Offered Securities in the name of Cede or such other nominee and the
crediting of such Offered Securities on the books of DTC to securities
accounts of the Underwriters (assuming that neither DTC nor any such
Underwriter has notice of any adverse claim (within the meaning of
Section 8-105 of the New York Uniform Commercial Code (the "UCC")) to
such Offered Securities), (1) DTC shall be a "protected purchaser" of
such Offered Securities within the meaning of Section 8-303 of the UCC,
(2) under Section 8-501 of the UCC, the Underwriters will acquire a
valid security entitlement in respect of such Offered Securities and (3)
no action based on any "adverse claim", within the meaning of Section
8-102 of the UCC, to such Offered Securities may be asserted against the
Underwriters with respect to such security entitlement; for purposes of
this representation, such Selling Stockholder may assume that when such
payment, delivery and crediting occur, (x) such Offered Securities will
have been registered in the name of Cede or another nominee designated
by DTC, in each case on the Company's share registry in accordance with
its certificate of incorporation, bylaws and applicable law, (y) DTC
will be registered as a "clearing corporation" within the meaning of
Section 8-102 of the UCC and (z) appropriate entries to the accounts of
the several Underwriters on the records of DTC will have been made
pursuant to the UCC.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the information
relating to such Selling Stockholder set forth in the Initial
Registration Statement did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
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therein or necessary to make the statements therein not misleading, (B)
on the Effective Date of the Additional Registration Statement (if any),
the information relating to such Selling Stockholder set forth in each
Registration Statement did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (C) on the date of this
Agreement, the information relating to such Selling Stockholder set
forth in the Initial Registration Statement and, if the Effective Time
of the Additional Registration Statement is prior to the execution and
delivery of this Agreement, the information relating to such Selling
Stockholder set forth in the Additional Registration Statement, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, the
information relating to such Selling Stockholder set forth in each
Registration Statement and the Prospectus does not include, or will not
include, any untrue statement of a material fact or did not omit, or
will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the information relating to such
Selling Stockholder set forth in the Initial Registration Statement and
the Prospectus will not include any untrue statement of a material fact
or will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. This
subsection (ii) applies only to statements in or omissions from a
Registration Statement or the Prospectus based upon information
furnished in writing to the Company by such Selling Stockholder
specifically for use therein; it being understood and agreed that the
only such information furnished to the Company by any Selling
Stockholder consists of the name of such Selling Stockholder, the number
of Offered Securities to be offered by such Selling Stockholder and the
address and other information with respect to such Selling Stockholder
(excluding any percentages), which appear under the caption "Principal
and Selling Shareholders" in the Prospectus.
(iii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any
person that would give rise to a valid claim against such Selling
Stockholder or any Underwriter for a brokerage commission, finder's fee
or other like payment in connection with the sale of Offered Securities
by such Selling Stockholder.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, each Selling Stockholder agrees,
severally and not jointly, to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Stockholder, at
a purchase price of $_____ per share, that number of Firm Securities (rounded up
or down, as determined by the Representatives in their discretion, in order to
avoid fractions) obtained by multiplying the number of Firm Securities set forth
opposite the name of such Selling Stockholder in Schedule A hereto, in each
case, by a fraction the numerator of which is the number of Firm Securities set
forth opposite the name of such Underwriter in Schedule B hereto and the
denominator of which is the total number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under separate Custody Agreements made with Wachovia Bank,
National Association, as custodian ("CUSTODIAN"), and each Selling Stockholder
individually. Each Selling Stockholder agrees that the Offered Securities
represented by the certificates held in custody for such Selling Stockholder
under its respective Custody Agreement are subject to the interests of the
Underwriters hereunder, that the arrangements made by such Selling Stockholder
for such custody are to that extent irrevocable, except as set forth in its
respective Custody Agreement, and that the obligations of such Selling
Stockholder hereunder shall not be terminated by operation of law, whether by
the death of any
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individual Selling Stockholder or the occurrence of any other event, or in the
case of a trust, by the death of any trustee or trustees or the termination of
such trust. If any individual Selling Stockholder or any such trustee or
trustees should die, or if any other such event should occur, or if any of such
trusts should terminate, before the delivery of the Offered Securities
hereunder, certificates for such Offered Securities shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death or other event or termination had not occurred, regardless of whether
or not the Custodian shall have received notice of such death or other event or
termination.
The Custodian will deliver the Firm Securities to the Representatives
for the accounts of the Underwriters, against payment of the purchase price in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to the Representatives drawn to the order of each
Selling Stockholder in respect of the Firm Securities sold by such Selling
Stockholder, at the office of Xxxxxx Xxxxxx Xxxxxxxxx LLP, at 9:00 A.M.,
New York time, on February __, 2004, or at such other time not later than seven
full business days thereafter as the Representatives and the Custodian
determine, such time being herein referred to as the "FIRST CLOSING DATE". For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the offering. The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as the Representatives request upon written notice
to the Attorneys-in-Fact for the Selling Stockholders who have executed Powers
of Attorney and any other Selling Stockholders given at least 72 hours prior to
the First Closing Date and will be made available for checking and packaging at
the office of Xxxxxx Xxxxxx Xxxxxxxxx LLP at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from the Representatives given to the
Company and the Optional Selling Stockholders from time to time but on not more
than two occasions and not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per Security to be paid for the Firm
Securities. The Optional Selling Stockholders agree, severally and not jointly,
to sell to the Underwriters the respective numbers of Optional Securities
(subject to adjustment by the Representatives to eliminate fractions) obtained
by multiplying the number of Optional Securities specified in such notice by a
fraction the numerator of which is the number of shares set forth opposite the
names of such Optional Selling Stockholders in Schedule A hereto under the
caption "Number of Optional Securities to be Sold" and the denominator of which
is the total number of Optional Securities. Such Optional Securities shall be
purchased from each Optional Selling Stockholder for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by the Representatives to eliminate fractions) and may be
purchased by the Underwriters only for the purpose of covering over-allotments
made in connection with the sale of the Firm Securities. No Optional Securities
shall be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by the Representatives to the Company and the Optional Selling
Stockholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by the
Representatives but shall be not later than five full business days after
written notice of election to purchase Optional Securities is given. The
Custodian will deliver the Optional Securities being purchased on each Optional
Closing Date to the Representatives for the accounts of the several
Underwriters, against payment of the purchase price therefor in Federal (same
day) funds by official bank check or checks or wire transfer to an account at a
bank acceptable to the Representatives drawn to the order of each Optional
Selling Stockholder in
9
respect of the Optional Securities sold by such Optional Selling Stockholder,
at the office of Xxxxxx Xxxxxx Xxxxxxxxx LLP. The certificates for the Optional
Securities being purchased on each Optional Closing Date will be in definitive
form, in such denominations and registered in such names as the Representatives
request upon reasonable written notice to the Attorneys-in-Fact for the Optional
Selling Stockholders who have executed Powers of Attorney and any other Selling
Stockholders prior to such Optional Closing Date and will be made available for
checking and packaging at the office of Xxxxxx Xxxxxx Xxxxxxxxx LLP at a
reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. (i)
In the case of paragraphs (a) through (g) below, the Company agrees with the
several Underwriters and the several Selling Stockholders, and (ii) in the case
of paragraphs (h) and (i) below, the Selling Stockholders severally and not
jointly agree with the several Underwriters and the Company, that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance
with subparagraph (1) (or, if applicable and if consented to by the
Representatives, subparagraph (4)) of Rule 424(b) not later than the
earlier of (A) the second business day following the execution and
delivery of this Agreement or (B) the fifteenth business day after the
Effective Date of the Initial Registration Statement.
The Company will advise the Representatives and the Selling Stockholders
promptly of any such filing pursuant to Rule 424(b). If the Effective
Time of the Initial Registration Statement is prior to the execution and
delivery of this Agreement and an additional registration statement is
necessary to register a portion of the Offered Securities under the Act
but the Effective Time thereof has not occurred as of such execution and
delivery, the Company will file the additional registration statement
or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior to
10:00 P.M., New York time, on the date of this Agreement or, if earlier,
on or prior to the time the Prospectus is printed and distributed to any
Underwriter, or will make such filing at such later date as shall have
been consented to by the Representatives.
(b) The Company will advise the Representatives and the Selling
Stockholders promptly of any proposal to amend or supplement the initial
or any additional registration statement as filed or the related
prospectus or the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not effect
such amendment or supplement without the Representatives' consent; and
the Company will also advise the Representatives and the Selling
Stockholders promptly of the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of a
Registration Statement or the Prospectus and of the institution by the
Commission of any stop order proceedings in respect of a Registration
Statement and will use its best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if
issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to
10
amend the Prospectus to comply with the Act, the Company will promptly
notify the Representatives and the Selling Stockholders of such event
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 which will effect such compliance. Neither the
Representatives' consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional
Registration Statement) which will satisfy the provisions of Section
11(a) of the Act. For the purpose of the preceding sentence,
"AVAILABILITY DATE" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter of
the Company's fiscal year, "AVAILABILITY DATE" means the 90th day after
the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (four of which will be signed and will include
all exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be
delivered under the Act in connection with sales by any Underwriter or
dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as the Representatives
reasonably request. The Company will use its best efforts to furnish the
Prospectus on or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or
the Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will
pay the expenses of printing and distributing to the Underwriters all
such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as the
Representatives designate and will continue such qualifications in
effect so long as required for the distribution; provided, that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(g) Until May 20, 2004, the Company will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, or file
with the Commission a registration statement under the Act relating to,
any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of the
Representatives, except for registration statements on Form S-8,
issuances of Securities pursuant to exercise of options, in each case
outstanding on the date hereof, grants of employee stock options, shares
of restricted stock and other awards pursuant to the terms of a plan
described in the Prospectus, issuances of Securities pursuant to the
exercise of such options or issuances of Securities pursuant to the
Company's employee stock purchase plan in effect on the date hereof and
described in the Prospectus.
(h) Each Selling Stockholder agrees with the several Underwriters and
the Company that such Selling Stockholder will pay its pro rata share of
the expenses identified in item 13 of the Registration Statement as well
as any additional expenses incident to the performance of the
obligations of the Company under this Agreement, including any travel
expenses of the Company's officers and employees and any other expenses
of the Company in connection with attending or hosting meetings
11
with prospective purchasers of the Offered Securities (including fifty
percent (50%) of the cost of any private aviation). Each Selling
Stockholder agrees, severally and not jointly, with the several
Underwriters and the Company that such Selling Stockholder will pay for
any transfer taxes on the sale by such Selling Stockholder of the
Offered Securities sold by it to the Underwriters.
(i) Each of the Selling Stockholders listed on Schedule C hereto
agrees until May 20, 2004 not to (i) offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any additional
shares of the Securities of the Company or securities convertible into
or exchangeable or exercisable for any shares of Securities, enter into
a transaction which would have the same effect, or enter into any swap,
hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of the Securities, whether any
such aforementioned transaction is to be settled by delivery of the
Securities or such other securities, in cash or otherwise, or (ii)
publicly disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of the
Representatives. A transfer or distribution of Securities (A) to a
trust, (B) to an affiliate (as that term is defined in Rule 405 under
the Act) of such Selling Stockholder, (C) to a partner or member of such
Selling Stockholder, (D) as a bona fide gift or (E) in any other private
resale may be made without the consent of the Representatives, provided
the transferee or distributee enters into a lock-up letter,
substantially in the form attached hereto as Exhibit A, prior to such
transfer.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement, shall be prior to the
filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time), of Ernst &
Young LLP confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements examined by them
and included in the Registration Statements comply as to form in
all material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing
Standards No. 100, Interim Financial Information, on the
unaudited financial statements included in the Registration
Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company
who have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that:
12
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all
material respects with the applicable accounting
requirements of the Act and the related published Rules
and Regulations or any material modifications should be
made to such unaudited financial statements for them to be
in conformity with generally accepted accounting
principles;
(B) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not
more than three business days prior to the date of this
Agreement, there was any change in the capital stock or
any increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or, at
the date of the latest available balance sheet read by
such accountants, there was any decrease in consolidated
net assets, as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(C) for the period from the closing date of the latest
income statement included in the Prospectus to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the
period of corresponding length ended the date of the
latest income statement included in the Prospectus, in the
total or per share amounts of consolidated net income;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter;
and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the
extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of
the Company and its subsidiaries subject to the internal controls
of the Company's accounting system or are derived directly from
such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have
found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as
otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statements is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statements is prior to the execution and delivery of this Agreement but
the Effective Time of the Additional Registration Statement is
subsequent to such execution and delivery, "REGISTRATION STATEMENTS"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to its
Effective Time, and (iii) "PROSPECTUS" shall mean the prospectus
included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement
is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or such later date as shall have
been consented to by
13
the Representatives. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution and
delivery of this Agreement, such Effective Time shall have occurred not
later than 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, the time the Prospectus is printed and distributed to any
Underwriter, or shall have occurred at such later date as shall have
been consented to by the Representatives. If the Effective Time of the
Initial Registration Statement is prior to the execution and delivery of
this Agreement, the Prospectus shall have been filed with the Commission
in accordance with the Rules and Regulations and Section 5(a) of this
Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Representatives, shall be contemplated
by the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or
event involving a prospective change, in the condition (financial or
other), business, properties or results of operations of the Company and
its subsidiaries taken as one enterprise which, in the judgment of the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any change in U.S. or international
financial, political or economic conditions or currency exchange rates
or exchange controls as would, in the judgment of the Representatives,
be likely to prejudice materially the success of the proposed issue,
sale or distribution of the Offered Securities, whether in the primary
market or in respect of dealings in the secondary market; (iv) any
suspension or limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (v) any
general banking moratorium declared by U.S. Federal or New York
authorities; (vi) any major disruption of settlements of securities or
clearance services in the United States or (vii) any attack on, outbreak
or escalation of hostilities or act of terrorism involving the United
States, any declaration of war by Congress or any other national or
international calamity or emergency if, in the judgment of the
Representatives, the effect of any such attack, outbreak, escalation,
act, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date, of Xxxxx & Xxxxxxx L.L.P., counsel for the Company,
to the effect set forth in Exhibit B hereto.
(e) The Representatives shall have received an opinion, dated
such Closing Date, of counsel for each of the Selling Stockholders, to
the effect set forth in Exhibit C-1 through Exhibit C-10 hereto.
(f) The Representatives shall have received from Xxxxxx Xxxxxx
Xxxxxxxxx LLP, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities delivered on such
Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representatives may require, and the Selling
Stockholders and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, Xxxxxx Xxxxxx
Xxxxxxxxx LLP may rely as to the incorporation of the Company upon the
14
opinion of Xxxxx & Xxxxxxx LLP referred to above.
(g) The Representatives shall have received a certificate, dated
such Closing Date, of the Chairman and Chief Executive Officer or the
President or any Vice President and a principal financial or accounting
officer of the Company in which such officers shall state that: the
representations and warranties of the Company in this Agreement are true
and correct; the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or
prior to such Closing Date; no stop order suspending the effectiveness
of any Registration Statement has been issued and no proceedings for
that purpose have been instituted or are contemplated by the Commission;
the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee
in accordance with Rule 111(a) or (b) under the Act, prior to the time
the Prospectus was printed and distributed to any Underwriter; and,
subsequent to the date of the most recent unaudited financial statements
in the Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except
as set forth in the Prospectus or as described in such certificate.
(h) The Representatives shall have received a letter, dated such
Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
such Closing Date for the purposes of this subsection.
(i) On or prior to the date of this Agreement, the
Representatives shall have received lock-up letters, substantially in
the form attached hereto as Exhibit D, from each of the directors of the
Company and Xxxxxx X. Xxxx, the only executive officer of the Company
that is not a Selling Stockholder.
(j) The Custodian will deliver to the Representatives a letter
stating that they will deliver to each Selling Stockholder a United
States Treasury Department Form 1099 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof)
on or before January 31 of the year following the date of this
Agreement.
(k) No Underwriter shall have notice of an adverse claim on the
Offered Securities within the meaning of Section 8-105 of the UCC.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. The Representatives may in their sole
discretion waive on behalf of the Underwriters compliance with any conditions to
the obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter and Selling Stockholder, its partners, members,
managers, directors, officers, agents, investment advisers, counsels, and each
person, if any, who controls such Underwriter or Selling Stockholder within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or Selling Stockholder
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
15
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, and will reimburse each Underwriter and Selling Stockholder for any
legal or other expenses reasonably incurred by such Underwriter or Selling
Stockholder in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable in any such case to such Underwriter, in the
case of (i) below, or such Selling Stockholder in the case of (ii) below, to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company (i) by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below or (ii) by any Selling
Stockholder specifically for use therein, it being understood that the only such
information furnished by such Selling Stockholder consists of the name of such
Selling Stockholder, the number of Offered Securities to be offered by such
Selling Stockholder and the address and other information with respect to such
Selling Stockholder (excluding any percentages), which appear under the caption
"Principal and Selling Shareholders" in the Prospectus; and provided, further,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Underwriter under the Act in connection with such purchase and any such
loss, claim, damage or liability of such Underwriter results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus if the Company had previously furnished copies thereof to such
Underwriter.
(b) Each Selling Stockholder, severally and not jointly, will indemnify
and hold harmless the Company, each Underwriter, its partners, directors and
officers and each person, if any, who controls the Company or such Underwriter
within the meaning of Section 15 of the Act, against any losses, claims, damages
or liabilities, joint or several, to which the Company or such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, 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, and will reimburse the Company and each Underwriter for any legal or
other expenses reasonably incurred by the Company or such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, in each case to the extent,
but only to the extent, that the untrue statement or alleged untrue statement or
omission or alleged omission is based upon and in conformity with written
information furnished to the Company by such Selling Stockholder specifically
for use therein, it being understood and agreed that the only such information
furnished to the Company by such Selling Stockholder consists of the name of
such Selling Stockholder, the number of Offered Securities to be offered by such
Selling Stockholder and the address and other information with respect to such
Selling Stockholder (excluding any percentages) which appear under the caption
"Principal and Selling Shareholders" in the Prospectus; and provided that with
respect to any untrue statement or alleged untrue statement in or omission or
alleged omission from any preliminary prospectus, the indemnity agreement
contained in this subsection (b) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Underwriter under the Act in connection with such purchase and any such
loss, claim, damage or liability (or action in respect thereof) of such
Underwriter results from the fact that there was not
16
sent or given to such person, at or prior to the written confirmation of the
sale of such Offered Securities to such person, a copy of the Prospectus if the
Company had previously furnished copies thereof to such Underwriter; and
provided, further, that the liability (or action in respect thereof) under this
subsection (b) of each Selling Stockholder shall be limited to an amount equal
to the aggregate gross proceeds after underwriting commissions and discounts,
but before expenses to such Selling Stockholder from the sale of Offered
Securities sold by such Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder, its partners, members, managers, directors, officers,
agents, investment advisers, counsels, and each person, if any, who controls
such Selling Stockholder within the meaning of Section 15 of the Act against any
losses, claims, damages or liabilities (or actions in respect thereof), joint or
several, to which the Company or such Selling Stockholder may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the 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 reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Stockholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of (i) the following information in the
Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the paragraph under the caption "Underwriting";
and (ii) the following information in the Prospectus furnished on behalf of
Wachovia Capital Partners, LLC, an affiliate of Wachovia Capital Markets, LLC:
the sentence under the caption "Underwriting" that sets forth the number of
shares of common stock of the Company that will be owned by Wachovia Capital
Partners, LLC.
(d) 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
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the failure to notify the indemnifying party shall not
relieve it from any liability that it may have under subsection (a), (b) or (c)
above except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided
further that the failure to notify the indemnifying party shall not relieve it
from any liability that it may have to an indemnified party otherwise than under
subsection (a), (b) or (c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section, as the case may be, for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such (i) settlement includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or
17
an admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party. No indemnifying party shall be liable for any settlement of
any proceeding without its prior written consent.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the Securities 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 and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company and the Selling Stockholders bear to the total underwriting discounts
and commissions received by the Underwriters. The relative fault 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
Stockholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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 in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint and the Company's and each Selling Stockholder's
obligations in this subsection (e) to contribute are several in proportion to
their respective proceeds from the sale of the Offered Securities hereunder and
not joint. The liability under this subsection (e) of each Selling Stockholder
shall be limited to an amount equal to (i) the aggregate gross proceeds after
underwriting commissions and discounts, but before expenses to such Selling
Stockholder from the sale of Securities sold by such Selling Stockholder
hereunder, less (ii) any amounts for which such Selling Stockholder is liable
under Section 7(b) hereof.
(f) The obligations of the Company and the Selling Stockholders under
this Section shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each Selling Stockholder, its
partners, members, managers, directors, officers, agents, investment advisers
and counsels, to each officer of the Company who has signed a Registration
Statement and to each person, if any, who controls the Company or each Selling
Stockholder within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate
18
number of shares of Offered Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date, the Representatives may make arrangements
satisfactory to the Selling Stockholders for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of shares of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to the
Representatives and the Selling Stockholders for the purchase of such Offered
Securities 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 or the Selling Stockholders, except as provided in
Section 9 (provided that if such default occurs with respect to Optional
Securities after the First Closing Date, this Agreement will not terminate as to
the Firm Securities or any Optional Securities purchased prior to such
termination). 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.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
several Selling Stockholders, of the Company or its officers 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, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors, partners, members, managers, agents, investment advisers, counsels or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Selling Stockholders shall remain responsible for the expenses
to be paid or reimbursed by them pursuant to Section 5 and the respective
obligations of the Company, the Selling Stockholders, and the Underwriters
pursuant to Section 7 shall remain in effect, and if any Offered Securities have
been purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of the
Offered Securities by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or
(vii) of Section 6(c), the Company will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or faxed and confirmed to
the Representatives, c/o Credit Suisse First Boston LLC, Eleven Madison Avenue,
New York, N.Y. 10010-3629, Attention: Transactions Advisory Group (fax: (212)
000-0000) with a copy to Citigroup Global Markets Inc., 000 Xxxxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel's Office (fax:
(000) 000-0000), and a copy to Xxxxxx Brothers Inc., 000 Xxxxxxx Xxx., Xxx Xxxx,
Xxx Xxxx (fax: (212) --------), or, if sent to the Company, will be mailed,
delivered or faxed and confirmed to it at CapitalSource Inc., 0000 Xxxxxxx
Xxxxxx, 12th Floor, Chevy Chase, Maryland 20815, Attention: Xxxxxx X. Xxxxxxx
(fax: (000) 000-0000), or, if sent to the Selling Stockholders or any of them,
will be mailed, delivered or faxed and confirmed to each of them at its
respective address set forth on Schedule A hereto; provided, however, that any
notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
faxed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the partners, members, managers, agents,
19
investment advisers and counsels, officers and directors and controlling persons
referred to in Section 7, and no other person will have any right or obligation
hereunder. The purchaser of Securities from any Underwriter shall not be deemed
a successor because of such purchase.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly will be
binding upon all the Underwriters. Xxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X.
Xxxx or Xxxxxx X. Xxxxxxx will act for the Selling Stockholders who have
delivered Powers of Attorney in connection with such transactions, and any
action under or in respect of this Agreement taken pursuant to the Powers of
Attorney by any of them, acting singly or together, will be binding upon such
Selling Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
20
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
CAPITALSOURCE INC.
By:
--------------------------------------
Name:
Title:
FARALLON CS INSTITUTIONAL FINANCE II, L.P.
By: Farallon CS Institutional Finance, L.L.C., its
general partner
By: Farallon Capital Management, L.L.C., its
manager
By:
---------------------------------
Name:
Title: Managing Member
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C., its general partner
By:
---------------------------------------
Name:
Title: Managing Member
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C., its general partner
By:
---------------------------------------
Name:
Title: Managing Member
MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By: Madison Dearborn Partners III, L.P., its
general partner
By: Madison Dearborn Partners LLC, its general
partner
By:
------------------------------------
Name:
Title:
MADISON DEARBORN SPECIAL EQUITY III, L.P.
By: Madison Dearborn Partners III, L.P., its
general partner
By: Madison Dearborn Partners LLC, its
general partner
By:
------------------------------------
Name:
Title:
SPECIAL CO-INVEST PARTNERS I
By:
--------------------------------------
Name:
Title:
SPECIAL ADVISORS FUND I, LLC
By: Madison Dearborn Partners III, L.P., its
general partner
By: Madison Dearborn Partners LLC, its
general partner
By:
------------------------------------
Name:
Title:
XXXXXXXX STREET PARTNERS II
By:
--------------------------------------
Name:
Title: Managing Director
HIGHFIELDS CAPITAL LTD.
HIGHFIELDS CAPITAL I LP
HIGHFIELDS CAPITAL II LP
WACHOVIA CAPITAL PARTNERS, LLC
OZ OVERSEAS FUND, LTD.
OZ DOMESTIC PARTNERS, X.X.
XXXXXXXX, XXXXXXXXX & XXXX CPS, LLC
FFL EXECUTIVE PARTNERS, X.X.
XXXXXXXX, XXXXXXXXX & XXXX CPS-BLC, LLC
KBRWJ INVESTORS, LP
ROSEWOOD CAPITAL IV, L.P.
THE PISCES FUND
ROSEWOOD CAPITAL III, L.P.
CROWN SFO ASSOCIATES LLC
ROCK 2000 B CHARITABLE REMAINDER TRUST
XXXX X. XXXXXXX
XXXXX X. XXXX
XXXX X. XXXXXX
XXXXXX X. XXXXXX, XX.
XXXXXXX X. XXXXXXXXXXX
XXXXX X. XXXXXXX
XXXXXX X. XXXXXXX
XXXXX X. XXXXXXX
XXXXXX X. XXXX
CAPITALSOURCE EMPLOYEES (OTHER THAN EXECUTIVE
OFFICERS) NAMED ON SCHEDULE D HERETO
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON LLC
CITIGROUP GLOBAL MARKETS INC.
XXXXXX BROTHERS INC.
Acting on behalf of themselves and as the Representatives of the several
Underwriters.
By CREDIT SUISSE FIRST BOSTON LLC
By:
------------------------------------
Name:
Title:
By CITIGROUP GLOBAL MARKETS INC.
By:
------------------------------------
Name:
Title:
By XXXXXX BROTHERS INC.
By:
------------------------------------
Name:
Title:
