Exhibit 1.1
THE WHITE HOUSE, INC.
_________________ Shares Common Stock
(Plus an Option to Acquire Up to ____ Shares to Cover Overallotments)
UNDERWRITING AGREEMENT
_________________ ____, 2003
Xxxxxxx Xxxxx & Company, L.L.C.
XX Xxxxx Securities Corporation
RBC Xxxx Xxxxxxxx Inc.
As Representatives of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. The White House, Inc. ("Company"), a Maryland
corporation, proposes to issue and sell an aggregate of ________________ shares
of common stock, having par value of $0.01 per share ("Common Stock"), and
certain stockholders of the Company (collectively referred to as the "Selling
Stockholders" and named in SCHEDULE B) propose to sell ________ shares of the
Company's issued and outstanding Common Stock to the several underwriters named
in SCHEDULE A as it may be amended by the Pricing Agreement hereinafter defined
("Underwriters"), who are acting severally and not jointly. Collectively, such
total of _________ shares of Common Stock proposed to be sold by the Company and
the Selling Stockholders is hereinafter referred to as the "Firm Shares." In
addition, certain of the Selling Stockholders propose to grant to the
Underwriters an option to purchase up to _________ additional shares of Common
Stock ("Option Shares") as provided in Section 5 hereof. The Firm Shares and, to
the extent such option is exercised, the Option Shares, are hereinafter
collectively referred to as the "Shares." For purposes of this Agreement, (a)
"Management Selling Stockholders" means Xxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx Xxxxx, (b) "Institutional Selling Stockholders" means Chancellor
Private Capital Offshore Partners I, C.V., Chancellor Private Capital Offshore
Partners II, L.P., Chancellor Private Capital Partners III, L.P., Citiventure 96
Partnership, L.P. and Xxxxxxxx-Xxxxx Specialty Retail Group III, L.P.; and (c)
"Other Selling Stockholders" means all Selling Stockholders who are not
Management Selling Stockholders or Institutional Selling Stockholders.
Subsequent to the date hereof and prior to the closing on the First
Closing Date (as defined herein) the Company will file amended and restated
articles of incorporation with the State Department of Assessments and Taxation
of Maryland (the "Charter Amendment") which, among other things, cause (i) the
Company to have authorized capital stock comprised solely of 25,000,000 shares
of Common Stock and 5,000,000 shares of preferred stock, par value $.01 per
share, and (ii) all shares of Class A common stock, par value $0.01 per share,
("Class A Common Stock") of the Company, and Class C common stock, par value
$0.01 per share ("Class C Common Stock") of the Company (no shares of Class B
common stock of the Company being outstanding) outstanding immediately prior to
such Charter Amendment to be automatically, without any action by any person,
converted into shares of Common Stock (on a share for share basis). All
references in this Agreement to "Common Stock" refer to the single class of
Common Stock of the Company following the effective time of the Charter
Amendment being offered and sold to the Underwriters pursuant to this Agreement.
All references in this Agreement to a number of "Shares" shall (i) prior to the
effective time of the Charter Amendment, refer to the shares of Class A Common
Stock and Class C Common Stock deposited under the Powers of Attorney and
Custody Agreements (as hereinafter defined) (as adjusted to reflect any stock
split effected in connection with the offering contemplated by the Registration
Statement hereinafter defined) and (ii) from and after the effective time of the
Charter Amendment, refer to the shares of Common Stock into which such shares of
Class A Common Stock and Class C Common Stock were converted pursuant to the
Charter Amendment (as adjusted to reflect any stock split effected in connection
with the offering contemplated by the Registration Statement hereinafter
defined).
As part of the offering contemplated by this Agreement, the
Underwriters agree to reserve out of the Shares to be sold pursuant to this
Agreement, up to ______ Shares for sale to employees, relatives of executive
officers and business associates of the Company ("Participants"), as set forth
in the Registration Statement hereinafter defined and Prospectus herein defined
("Directed Share Program"). The Shares to be sold by the Underwriters pursuant
to the Directed Share Program ("Directed Shares") will be sold by the
Underwriters pursuant to this Agreement at the public offering price. Any
Directed Shares not orally confirmed for purchase by any Participant by the end
of the business day on which this Agreement is executed will be offered to the
public by the Underwriters as set forth in the Prospectus. Under no
circumstances will any Underwriter be liable to the Company or to any of the
Participants for any action taken or omitted to be taken other than any such
action or inaction resulting from the bad faith, willful misconduct or gross
negligence of such Underwriter in connection with the transactions effected with
regard to any of the Participants.
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon as you deem advisable after the registration statement
hereinafter referred to becomes effective, if it has not yet become effective,
and the Pricing Agreement as hereinafter defined has been executed and
delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, the Selling Stockholders, and the Representatives,
acting on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of EXHIBIT A hereto ("Pricing Agreement"). The Pricing
Agreement may take the form of an exchange of any standard form of written
telecommunication between the Company, the Selling Stockholders and the
Representatives and shall specify such applicable information as is indicated in
EXHIBIT A hereto. The offering of the Shares will be governed by this
Underwriting Agreement (this "Agreement"), as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company and each of the Selling Stockholders hereby confirm their
agreements with the Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-105482) and a
related preliminary prospectus with respect to the Shares have been prepared and
filed with the Securities and Exchange Commission ("Commission") by the Company
in conformity with the requirements of the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder (collectively, the
"1933 Act;" unless indicated to the contrary all references herein to specific
rules are rules promulgated under the 0000 Xxx); and the Company has so prepared
and has filed such amendments thereto, if any, and such amended preliminary
prospectuses as may have been required to the date hereof and will file such
additional amendments thereto and such amended prospectuses as may hereafter be
required under the 1933 Act. Without limiting the foregoing, (i) if the Company
has elected not to rely upon Rule 430A, the Company has prepared and will
promptly file an amendment to the registration statement and an amended
prospectus and (ii) if the Company has elected to rely upon Rule 430A, it will
prepare and file a
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prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. There have been or will
promptly be delivered to you three signed copies of such registration statement
and amendments, together with three copies of each exhibit filed therewith, and
conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus or prospectuses and final
forms of prospectus for each of the Underwriters.
Such registration statement (as amended, if applicable) at the time it
becomes effective and the prospectus constituting a part thereof (including the
information, if any, deemed to be part thereof pursuant to Rule 430A(b) and/or
Rule 434), as from time to time amended or supplemented, are hereinafter
referred to as the "Registration Statement," and the "Prospectus," respectively,
except that if any revised prospectus shall be provided to the Underwriters by
the Company for use in connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time the Registration
Statement became or becomes effective (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule 424(b)), the term
Prospectus shall, as the context requires, refer to such revised prospectus from
and after the time it was provided to the Underwriters for such use. If the
Company elects to rely on Rule 434 of the 1933 Act, all references to
"Prospectus" shall be deemed to include, without limitation, the form of
prospectus and the term sheet, taken together, provided to the Underwriters by
the Company in accordance with Rule 434 of the 1933 Act ("Rule 434 Prospectus").
Any registration statement (including any amendment or supplement thereto or
information which is deemed part thereof) filed by the Company under Rule 462(b)
("Rule 462(b) Registration Statement") shall be deemed to be part of the
"Registration Statement" as defined herein, and any prospectus (including any
amendment or supplement thereto or information which is deemed part thereof)
included in such registration statement shall be deemed to be part of the
"Prospectus" as defined herein, as appropriate. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."
(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 with the requirements of the 1933 Act 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 not
misleading; and when the Registration Statement became or becomes effective, and
at all times subsequent thereto, up to the First Closing Date or the Second
Closing Date hereinafter defined, as the case may be, the Registration
Statement, including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if applicable,
and the Prospectus and any amendments or supplements thereto, contained or will
contain all statements that are required to be stated therein in accordance with
the 1933 Act and in all material respects conformed or will in all material
respects conform to the requirements of the 1933 Act, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company makes no representation or warranty as 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 the information specified in Section 4 of this Agreement.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with the corporate power and authority to own its properties and
conduct its business as described in the Prospectus; the Company is duly
qualified or licensed to do business as a foreign corporation under the
corporation law of, and is in good standing as such in, each jurisdiction in
which it owns or leases properties, has an office, or in which business is
conducted and such qualification or license is required except where the failure
to so qualify or be in good standing would not, individually or in the
aggregate, have a material adverse effect upon the condition (financial or
otherwise), business, assets, results of operations or prospects of the Company
or upon the
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Company's ability to perform its obligations under this Agreement or the
transactions contemplated hereby (a "Material Adverse Effect"); and no
proceeding of which the Company has knowledge has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification or license. The Company owns
no capital stock or other beneficial interest in any corporation, limited
liability company, partnership, joint venture or other entity.
(d) As of the date of this Agreement, the Company has an authorized and
outstanding capitalization as set forth in the column entitled "actual" under
the caption "Capitalization" in the Prospectus and as of the First Closing Date,
the Company will have an authorized and outstanding capitalization as set forth
in the column entitled "as adjusted" under the caption "Capitalization" in the
Prospectus and the first sentence of the second paragraph of Section 1 of this
Agreement. The issued and outstanding shares of capital stock of the Company as
set forth in the Prospectus (including the Shares to be sold by the Selling
Stockholders) have been duly authorized and validly issued, are fully paid and
nonassessable, and conform to the description thereof contained in the
Prospectus; and except as described in the Prospectus, there is no commitment,
plan or arrangement to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of the Company; and
except as described in the Prospectus, there is outstanding no security or other
instrument that by its terms is convertible into or exchangeable for capital
stock of the Company, and there is no commitment, plan or arrangement to issue
such a security or instrument.
(e) The Shares to be sold by the Company have been duly authorized and
when issued, delivered and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and (i) will conform to the description
thereof contained in the Prospectus, (ii) will be free of any Encumbrance
(hereinafter defined) or preemptive rights, rights of first refusal, rights of
co-sale or similar rights in favor of stockholders with respect to any of the
Shares, or the issuance or sale thereof, whether pursuant to the Charter
Documents, the Order or Regulation of any Governmental Authority, Contract (as
these terms are hereinafter defined) or otherwise, (iii) will not be subject to
any voting trust arrangements and (iv) will be duly and validly authorized and
qualified for inclusion on the Nasdaq National Market, subject to notice of
issuance.
(f) The making and performance by the Company of this Agreement and the
Pricing Agreement and the consummation of the transactions contemplated herein
or therein have been duly authorized by all necessary corporate action and will
not violate any provision of the Company's articles of incorporation or bylaws
(together referred to as "Charter Documents") and do not and will not result in
the breach, violation or contravention of (i) any provision of any contract,
agreement, lease, franchise, License (as hereinafter defined), loan agreement,
credit agreement, promissory note, indenture, mortgage, deed of trust,
instrument or other obligation (collectively, "Contract") to which the Company
is a party or by which the Company or its property may be bound or affected,
(ii) any consent, decree, writ, judgment, award, injunction or order
(collectively, "Order") or statute, law, rule, regulation, permit,
authorization, approval or registration (collectively "Regulation") applicable
to the Company or its property of any court, arbitration authority or other
alternative dispute forum, government or governmental department, agency, board,
commission, bureau or instrumentality or other regulatory authority or body, (in
each case whether foreign, federal, state, local or otherwise and collectively
referred to as a "Governmental Authority") having jurisdiction over the Company
or any of its properties or (iii) any order of any Governmental Authority
entered in any proceeding to which the Company was or is now a party, by which
it is bound or by which it or any of its properties are affected. No consent,
approval, authorization or other order of any Governmental Authority is required
for the execution and delivery of this Agreement or the Pricing Agreement or the
consummation of the transactions contemplated herein or therein, except for
compliance with the 1933 Act and state or province securities laws applicable to
the public offering of the Shares by the several Underwriters and clearance of
such offering with the National Association of Securities Dealers, Inc.
("NASD"). This Agreement has been duly executed and delivered by the Company.
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(g) The accountants who have expressed their opinions with respect to
the financial statements and schedules included in the Registration Statement
are independent accountants as required by the 1933 Act, the Xxxxxxxx-Xxxxx Act
of 2002, and the rules and regulations of the Commission thereunder.
(h) The financial statements and schedules of the Company included in
the Registration Statement and Prospectus, including the notes thereto, present
fairly the financial position of the Company as of the respective dates of such
financial statements, and the results of operations and cash flow of the Company
for the respective periods covered thereby, all in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed in the Prospectus, and the supporting schedules
included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be stated
therein. The other financial and statistical information and data set forth in
the Registration Statement and Prospectus, including the financial information
set forth under "Summary Financial and Operating Data" and "Selected Financial
and Operating Data," present fairly on the basis stated in the Prospectus, the
information set forth therein and have been prepared on a basis consistent with
that of the financial statements included in the Registration Statement and
Prospectus and the books and records of the Company. The pro forma and as
adjusted information included in the Prospectus present fairly the information
shown therein, have been prepared in accordance with generally accepted
accounting principles and the Commission's rules and guidelines with respect to
pro forma information, have been properly compiled on the pro forma basis
described therein, and, in the opinion of the Company, the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate under the circumstances. No "non-GAAP financial measures" (as
defined in Regulation G) is disclosed in the Registration Statement or
Prospectus except for disclosure which complies with the requirements of Item 10
of Regulation S-K and Regulation G promulgated by the Commission. The
statistical and market-related data included in the Prospectus are based on or
derived from sources which the Company reasonably and in good faith believes are
reliable and accurate.
(i) The Company is not in violation of its Charter Documents or in
default, violation or contravention under any Order of any Governmental
Authority; the Company is not in default, breach, violation or contravention
with respect to any material provision of any Contract to which it is a party or
by which its property may be bound or affected; and there does not exist any
state of facts which constitutes an event of default, breach, violation or
contravention under or of such Contracts or which, with notice or lapse of time
or both, would constitute such an event of default, breach, violation or
contravention, in each case, except for defaults, breaches, violations or
circumstances of contravention which neither singly nor in the aggregate are
material to the Company or would have a Material Adverse Effect.
(j) There are no material legal or Governmental Authority proceedings
pending, or to the Company's knowledge, threatened to which the Company is or
may be a party or of which material property owned or leased by the Company is
or may be the subject, or which are related to environmental or discrimination
matters which are not disclosed in the Prospectus, or which question the
validity of this Agreement or the Pricing Agreement or any action taken or to be
taken pursuant hereto or thereto.
(k) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(l) The Company has designed and established, and is maintaining,
(a) "disclosure controls and procedures" (as defined below) adequate to ensure
that material information relating to the Company is made known to the Company's
principal executive officer and principal financial officer by others within
those entities, and (b) "internal controls and procedures for financial
reporting" which provide reasonable assurance that the Company's financial
statements are fairly presented in conformity with generally accepted accounting
principles. For the purposes of the foregoing sentence, (a) the phrase
"disclosure controls and procedures" means controls and other procedures of the
Company that are designed to ensure that information required to be disclosed by
the issuer in registration statements under the 1933 Act or reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and forms;
"disclosure controls and procedures" include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in such registration statements and reports that it files or submits is
accumulated and communicated to the Company's management, including its
principal executive officer or officers and principal financial officer or
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure; and (b) the phrase "internal
controls and procedures for financial reporting" means controls that pertain to
the preparation of financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting principals as
addressed by the Codification of Statements on Auditing Standards ss. 319 or any
superseding definition or other literature that is adopted by the Public Company
Accounting Oversight Board.
(m) Except as disclosed in the Prospectus, there are no holders of
securities of the Company having rights to registration thereof or any person
having preemptive rights or rights of first refusal to purchase Common Stock.
All holders of registration rights who are not Selling Stockholders have waived
such rights with respect to the offering being made by the Prospectus.
(n) The Company 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, security interest, mortgage,
pledge, charge, claim, assignment, hypothecation, interest of another person or
encumbrance of any kind (collectively, "Encumbrance") except those, if any,
reflected in such financial statements (or elsewhere in the Prospectus) or which
are not material to the Company. The Company holds its leased properties under
valid and binding leases. The Company has not received any notice of any claim
adverse to its ownership of any property of any claim against the continued
possession of any property, whether owned or held under lease or sublease by the
Company.
(o) The Company 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, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(p) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, and except as contemplated by the
Prospectus, the Company has not paid any dividends on its capital stock and has
not incurred any material liabilities or obligations, direct or contingent, nor
entered into any material transactions not in the ordinary course of business
and there has not been any material adverse change in its condition (financial
or otherwise), business, properties, assets, results of operations or prospects
nor any material change in its capital stock, short-term debt or long-term debt.
Except as disclosed in writing to the Representatives and their counsel, prior
to the date hereof, the Company has not received notice (either formally or
informally) of an adverse change in or termination of, the Company's business
relationship with any manufacturer, distributor or vendor (whether of private
label brand, national brand name or otherwise) or with any sales representative
of the Company, which change(s) or termination(s), individually or in the
aggregate, would or could reasonably be expected to have a Material Adverse
Effect.
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(q) There is no material document of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement (including the exhibits, schedules and
appendices to such exhibit, whether or not incorporated by reference into the
registration statement) which is not described or filed as required. Except as
disclosed in the Prospectus, there are no relationships, direct or indirect, or
related-party transactions involving the Company or any other person that are
required to be described in the Registration Statement or the Prospectus. The
Company is not, directly or indirectly, extending or maintaining credit,
arranging for the extension of credit or renewing an extension of credit, in the
form of a personal loan to or for any director or executive officer (or
equivalent thereof) of the Company.
(r) The Company owns and possesses all right, title and interest in and
to, or has duly licensed from third parties a valid, enforceable right to use,
all patents, patent rights, trade secrets, inventions, know-how, trademarks,
trade names, copyrights, service marks and other proprietary rights ("Trade
Rights") material to the business of the Company. The Company has not received
any notice of, and has no knowledge of, infringement, misappropriation or
conflict from any third party as to such material Trade Rights which has not
been resolved or disposed of, and the Company has not infringed, misappropriated
or otherwise conflicted with Trade Rights of any third parties, which
infringement(s), misappropriation(s) or conflict(s), individually or in the
aggregate, would or could reasonably be expected to have a Material Adverse
Effect.
(s) No labor disturbance by the employees of the Company exists or, to
the best of the Company's knowledge, is imminent and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers, customers or contractors, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
(t) The Company and any "employee benefit plan" (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company are in compliance in all material respects with ERISA
and the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code"). No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company.
No "employee benefit plan" established or maintained by the Company, if such
"employee benefit plan" were terminated, would have any "amount of unfounded
benefit liabilities" (as defined under ERISA). The Company has not incurred or
does not reasonably expect to incur any liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "employee benefit plan"
or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit
plan" established or maintained by the Company that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification.
(u) The Company and the conduct of the Company's business is in
compliance in all respects with applicable federal, state, local and foreign
Regulations (including, without limitation, all applicable effective provisions
of the Xxxxxxxx-Xxxxx Act of 2002), except where the failure(s) to be in
compliance, individually or in the aggregate, would not or could not reasonably
be expected to have a Material Adverse Effect. The Company has no knowledge of,
nor has the Company received notice of, any material violation or alleged
material violation by the Company of any such Regulations.
(v) All offers, sales, transfers, issuances and grants of the Company's
securities prior to the date hereof were at all relevant times exempt from the
registration requirements of the 1933 Act or were registered in accordance with
the provisions of the 1933 Act and were duly registered with or the subject of
an available exemption from the registration requirements of the applicable
state or foreign securities laws. Except as described in the Registration
Statement, the Company has not sold or issued any shares
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of Common Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Regulation D or Regulation S or
which are were otherwise exempt from registration under the 1933 Act other than
shares issued or options granted pursuant the exemption from registration under
the 1933 Act provided by Rule 701.
(w) The Company has accurately prepared and timely filed all necessary
foreign, federal, state and local tax returns (whether related to income,
profits, receipts, premium, franchise, value-added, sales, use, property, ad
valorem, severance, occupation, service, lease, valuation, transfer, excise,
custom duties, employment, employee welfare or retirement, social security,
withholding and payroll) and paid all taxes shown as due thereon, and there is
no tax deficiency that has been, or to the knowledge of the Company might be,
asserted against the Company or any of its properties or assets that would or
could reasonably be expected to have a Material Adverse Effect.
(x) A registration statement relating to the Common Stock has been
declared effective by the Commission pursuant to the Exchange Act and the Common
Stock is duly registered thereunder and no amendment to such registration is or
will be required upon the consummation of the transactions contemplated hereby.
The Company has filed an application to list the Shares on the Nasdaq National
Market, and has received notification that the listing has been approved,
subject to notice of issuance or sale of the Shares, as the case may be.
(y) The Company is not, and does not intend to conduct its business in
a manner in which it would become, an "investment company" as defined in Section
3(a) of the Investment Company Act of 1940, as amended ("Investment Company
Act").
(z) The Company is insured by recognized, financially sound and
reputable institutions with policies in such amounts and with such deductibles
and covering such risks as are generally deemed adequate and customary for its
business.
(aa) Except as disclosed in the Prospectus, the Company is not
currently prohibited, directly or indirectly, from paying any dividends to its
stockholders, from making any other distribution on its capital stock, from
repaying to any lender or third party extending credit any loans or advances to
it or from transferring any of its property or assets and to the Company's
knowledge no such prohibition is threatened or proposed.
(bb) The Company has obtained all licenses, permits, certificates,
authorizations, approvals or consents (collectively, the "Licenses") required by
any Governmental Authority to properly and legally operate or conduct the
business in which it is engaged on the date hereof and which are necessary or
desirable for the successful conduct of its business as conducted and as
proposed to be conducted, except in each case where the failure to obtain such
Licenses would not and could not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect. Each such License has been duly
obtained, is valid and in full force and effect, is renewable by its terms or in
the ordinary course of business without the need to comply with any more
burdensome qualifications or procedures than applicable in the past or to pay
any amount other than routine filing fees. The Company (i) is not subject to any
pending or, to its knowledge, threatened administrative or judicial proceeding
to revoke, cancel or declare any License granted to it invalid in any respect,
(ii) is not acting outside the scope and authority granted to it pursuant to any
such License, or otherwise is not in default or in violation with respect to any
such License, and no event has occurred which constitutes, or with due notice or
lapse of time or both may constitute, a default by it or a violation of any
License and (iii) has not permitted any Licenses granted to it to lapse since
its original effective date, except where such default, violation or lapse would
not, and could not be reasonably expected to, individually or in the aggregate,
have a Material Adverse Effect. The Company has completed and submitted, on a
timely basis, all reports and filings associated with its business as are
required by any Governmental Authority, except where the failure to timely file
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such reports or filings would not and could not be reasonably expected to
individually or in the aggregate have a Material Adverse Effect..
(cc) Neither the Company nor, to the best of the Company's knowledge,
any employee or agent of the Company, has made any contribution or other payment
to any employee of any Governmental Authority or any official of, or candidate
for, any federal, state or foreign office in violation of any Regulation or of
the character required to be disclosed in the Prospectus. There are no
transactions, arrangements or other relationships which are required to be
disclosed in the Prospectus by Item 303 of Regulation S-K or the Commission's
"Statement About Management's Discussion and Analysis of Financial Condition and
Results of Operations" (January 22, 2002) or which are not so described or
described as required.
(dd) The Company has not offered, or caused the Underwriters to offer,
any securities to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer, vendor, strategic
partner or supplier of the Company to alter such party's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
(ee) The Charter Amendment (i) has been duly authorized and approved by
all necessary corporate, board and stockholder action, (ii) will be filed with
and accepted for recording by the State Department of Assessments and Taxation
of Maryland on or before the closing on the First Closing Date, (iii) requires
no governmental or third party consent or approval prior to its becoming
effective other than acceptance for recording by the Department of Assessments
and Taxation of Maryland of the Charter Amendment, and (iv) will be in full
force and effect before the closing on the First Closing Date. The issuance of
shares of Common Stock pursuant to and in accordance with the Charter Amendment
upon the conversion of the Class A Common Stock and Class C Common Stock does
not require registration under the 1933 Act and will not be integrated with the
sale of the securities by the Underwriters contemplated by this Agreement. The
filing and effectiveness of the Charter Amendment will not (x) conflict with or
result in a breach or violation of any of terms or provisions of, or constitute
a default under, any Contract which the Company is bound or to which any of the
property or assets of the Company is subject, other than such conflicts,
breaches, violations or defaults that, individually or in the aggregate, would
not and could not reasonable be expected to have a Material Adverse Effect, (y)
result in any violation of the provisions of the Charter of the Company, or (z)
result in any violation of the provisions of any statute or any order, rule or
regulation of any court or Governmental Authority having jurisdiction over the
Company or its properties other than a violations which would not and could not
reasonably be expected to have a Material Adverse Effect. Immediately subsequent
to the filing of the Charter Amendment, the Company will be duly incorporated
and validly existing as a corporation in good standing under the laws of the
State of Maryland.
(ff) The amendment to the Company's articles of incorporation which
effect a 1 for 3.25 reverse stock split (the "Stock Split Amendment") (i) has
been duly authorized and approved by all necessary corporate, board and
stockholder action, (ii) has been filed with and accepted for recording by the
State Department of Assessments and Taxation of Maryland prior to the date of
this Agreement, (iii) requires no governmental or third party consent or
approval prior to its becoming effective, and (iv) is in full force and effect.
The filing and effectiveness of the Stock Split Amendment did not (x) conflict
with or result in a breach or violation of any of terms or provisions of, or
constitute a default under, any Contract which the Company is bound or to which
any of the property or assets of the Company is subject, other than such
conflicts, breaches, violations or defaults that, individually or in the
aggregate, would not and could not reasonable be expected to have a Material
Adverse Effect, (y) result in any violation of the provisions of the Charter of
the Company, or (z) result in any violation of the provisions of any statute or
any order, rule or regulation of any court or Governmental Authority having
jurisdiction
9
over the Company or its properties other than a violations which would not and
could not reasonably be expected to have a Material Adverse Effect.
(gg) The Company currently intends to use the net proceeds received by
it from the sale of the Shares being sold by it as follows: $11.8 million of the
net proceeds to make required distributions to holders of the Company's Class C
common stock, to fund capital expenditures and pay expenses incurred in
connection with the planned relocation of its headquarters and distribution
center (which the Company currently estimates to be approximately $1.7 million)
and the remaining net proceeds to for general corporate purposes, including the
opening of new stores and working capital.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLING
STOCKHOLDERS.
(a) Each Selling Stockholder severally, solely for and on behalf of
itself, represents and warrants to, and agrees with, the Company and the several
Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing
Date (hereinafter defined) or the Second Closing Date (hereinafter defined), as
the case may be, will have, valid marketable title to the Shares proposed to be
sold by such Selling Stockholder hereunder on such date and full right, power
and authority and all authorization and approval required by law to enter into
this Agreement, the Pricing Agreement and the Power of Attorney and Custody
Agreement (hereinafter defined) and to sell, assign, transfer and deliver such
Shares hereunder, free and clear of all voting trust arrangements, Encumbrances,
equities, claims and community property rights; and upon delivery of and payment
for such Shares hereunder, the Underwriters will acquire valid marketable title
thereto, free and clear of all voting trust arrangements, Encumbrances,
equities, claims and community property rights.
(ii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or which might be
reasonably expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(iii) Such Selling Stockholder has duly executed and
delivered a Power of Attorney and Custody Agreement among Xxxxxxx X. Xxxxxxxxx,
Xxxxx X. Xxxxx, and Xxxxxx X. Xxxxxxxxx (collectively Xx. Xxxxxxxxx, Xx. Xxxxx
and Xx. Xxxxxxxxx are referred to herein as the "Agents"), Registrar and
Transfer Company, as custodian ("Custodian") and the Selling Stockholders (the
"Power of Attorney and Custody Agreement"), a copy of which has been delivered
to you, naming the Agents as such Selling Stockholder's attorneys-in-fact (and,
by the execution by any Agent of this Agreement, such Agent hereby represents
and warrants that he has been duly appointed as attorney-in-fact by each of the
Selling Stockholders pursuant to the Power of Attorney and Custody Agreement)
for the purpose of entering into and carrying out this Agreement and the Pricing
Agreement; the Power of Attorney and Custody Agreement constitutes a valid and
binding agreement on the part of such Selling Stockholder, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles.
Such Selling Stockholder has deposited in custody, under the Power of
Attorney and Custody Agreement, certificates in negotiable form for the Shares
to be sold hereunder by such Selling Stockholder, for the purpose of further
delivery pursuant to this Agreement. Such Selling Stockholder agrees that the
Shares to be sold by such Selling Stockholder on deposit with the Custodian are
subject to the interests of the Company, the Underwriters and the other Selling
Stockholders, that the arrangements made for such custody, and the appointment
of the Agents pursuant to the Power of Attorney and Custody Agreement, are to
that extent irrevocable, and that the obligations of such Selling Stockholder
hereunder and under the Power of Attorney and Custody Agreement shall not be
terminated except as provided in this Agreement or in the Power of Attorney and
Custody Agreement by any act of such Selling
10
Stockholder, by operation of law, whether, in the case of an individual Selling
Stockholder, by the death or incapacity of such Selling Stockholder or, in the
case of a trust or estate, by the death of the trustee or trustees or the
executor or executors or the termination of such trust or estate, or, in the
case of a partnership, corporation or other entity, by the dissolution,
winding-up or other event affecting the legal life of such entity, or by the
occurrence of any other event. If any individual Selling Stockholder, trustee or
executor should die or become incapacitated, or any such trust, estate,
partnership, corporation or other entity should be terminated, or if any other
event should occur before the delivery of the Shares hereunder, the documents
evidencing Shares then on deposit with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death, incapacity, termination or other event had not occurred, regardless
of whether or not the Custodian shall have received notice thereof. Each Agent
has been authorized by such Selling Stockholder to execute and deliver this
Agreement and the Pricing Agreement and the Custodian has been authorized to
receive and acknowledge receipt of the proceeds of sale of the Shares to be sold
by such Selling Stockholder against delivery thereof and otherwise act on behalf
of such Selling Stockholder.
(iv) The execution and delivery by the Agent on behalf of
such Selling Stockholder of, and the performance by such Selling Stockholder of
its obligations under, this Agreement, the Pricing Agreement or the Power of
Attorney and Custody Agreement, do not and will not contravene any provision of
applicable law, or any agreement or other instrument binding upon such Selling
Stockholder or any judgment, order or decree of any Governmental Authority or
court having jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of or qualification with any Governmental
Authority is required for the performance by such Selling Stockholder of its
obligations under this Agreement, the Pricing Agreement and the Power of
Attorney and Custody Agreement, except as may be required by the 1933 Act and
state or province securities or blue sky laws in connection with the offer and
sale of the Shares.
(v) Such Selling Stockholder has executed and delivered to
the Representatives a lock-up letter agreement in substantially the form
attached hereto as EXHIBIT B pursuant to which such Selling Stockholder agrees
with the Company and the Underwriters, among other things, not to offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
Common Stock or any securities exercisable for or convertible into Common Stock,
or to announce an intent to do any of the foregoing or to exercise any
registration rights with respect to any of the foregoing, for a period of 180
days after this Agreement becomes effective without the prior written consent of
Xxxxxxx Xxxxx & Company, L.L.C.
(vi) The representations and warranties of such Selling
Stockholder in the Power of Attorney and Custody Agreement are and will be true
and correct, and such Selling Stockholder acknowledges that any certificate
signed by or on behalf of such Selling Stockholder and delivered to the
Representatives or to Underwriters' counsel shall be deemed to be a
representation and warranty by such Selling Stockholder to each Underwriter as
to the matters covered thereby.
(b) Each Management Selling Stockholder represents and warrants to, and
agrees with, the several Underwriters that the representations and warranties of
the Company set forth in Section 2 of this Agreement are true and correct.
(c) Each Institutional Selling Stockholder, severally, solely for and
on behalf of itself, represents and warrants to, and agrees with, the several
Underwriters that each preliminary prospectus, insofar as it has related to such
Institutional Selling Stockholder and, to the knowledge of such Institutional
Selling Stockholder in all other respects, as of its date, has conformed in all
material respects with the requirements of the 1933 Act 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 not misleading; and with
respect to the Registration Statement at the time of effectiveness, and at all
times subsequent thereto, up to the First Closing Date or the Second Closing
Date hereinafter defined, as the case may be,
11
(1) such parts of the Registration Statement and the Prospectus and any
amendments or supplements thereto as relate to such Institutional Selling
Stockholder, and the Registration Statement and the Prospectus and any
amendments or supplements thereto, to the knowledge of such Institutional
Selling Stockholder in all other respects, contained or will contain all
statements that are required to be stated therein in accordance with the 1933
Act and in all material respects conformed or will in all material respects
conform to the requirements of the 1933 Act, and (2) neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, as it
relates to such Institutional Selling Stockholder, and, to the knowledge of such
Institutional Selling Stockholder in all other respects, included or will
include any untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that neither clause (1) nor (2)
shall have any effect if information has been given by such Institutional
Selling Stockholder to the Company and the Representatives in writing which
would eliminate or remedy any such untrue statement or omission.
(d) Each Other Selling Stockholder, severally, solely for and on behalf
of itself, represents and warrants to, and agrees with, the several Underwriters
that each preliminary prospectus, insofar as it has related to such Other
Selling Stockholder, as of its date, has conformed in all material respects with
the requirements of the 1933 Act 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 not misleading; and with respect to the
Registration Statement at the time of effectiveness, and at all times subsequent
thereto, up to the First Closing Date or the Second Closing Date hereinafter
defined, as the case may be, (1) such parts of the Registration Statement and
the Prospectus and any amendments or supplements thereto as relate to such Other
Selling Stockholder contained or will contain all statements that are required
to be stated therein in accordance with the 1933 Act and in all material
respects conformed or will in all material respects conform to the requirements
of the 1933 Act, and (2) neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, as it relates to such Other Selling
Stockholder, included or will include any untrue statement of a material fact or
omitted or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that neither
clause (1) nor (2) shall have any effect if information has been given by such
Other Selling Stockholder to the Company and the Representatives in writing
which would eliminate or remedy any such untrue statement or omission.
(e) In order to document the Underwriter's compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or on the First Closing
Date a properly completed and executed United States Treasury Department Form
W-8 or W-9 (or other applicable form of statement specified by Treasury
Department regulations in lieu thereof).
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 Stockholders that the information set forth (a) on
the cover page of the Prospectus with respect to price and underwriting discount
and (b) the _______, _________, and ________ paragraphs under the caption
"Underwriting" in the Prospectus was comprises the information furnished to the
Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement.
SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company and the
Selling Stockholders, severally and not jointly, agree to sell to the
Underwriters named in SCHEDULE A hereto, and the Underwriters agree, severally
and not jointly, to purchase from the Company and the Selling Stockholders,
respectively, _______ Firm Shares from the Company and the respective number of
Firm Shares set forth opposite the names of the Selling Stockholders in SCHEDULE
B hereto at the price per share set forth in the Pricing Agreement. The
12
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full shares which (as nearly as practicable, as
determined by you) bears ____ to Shares, the same proportion as the number of
Shares set forth opposite the name of such Underwriter in SCHEDULE A hereto
bears to the total number of Firm Shares to be purchased by all Underwriters
under this Agreement. The obligation of each Underwriter to each Selling
Stockholder shall be to purchase from such Selling Stockholder the number of
full shares which (as nearly as practicable, as determined by you) bears to
that number of Firm Shares set forth opposite the name of such Selling
Stockholder in SCHEDULE B hereto, the same proportion as the number of Shares
set forth opposite the name of such Underwriter in SCHEDULE A hereto bears to
the total number of Firm Shares to be purchased by all Underwriters under
this Agreement. The initial public offering price and the purchase price
shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted
under Rule 15c6-1 under the Exchange Act, (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless postponed in accordance with
the provisions of Section 12 of this Agreement) following the date the
Registration Statement becomes effective (or, if the Company has elected to rely
upon Rule 430A, the fourth business day, if permitted under Rule 15c6-1 under
the Exchange Act, (or the third business day if required under Rule 15c6-1 under
the Exchange Act) after execution of the Pricing Agreement), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company, the Company and the Custodian will deliver to
you at the offices of counsel for the Underwriters or through the facilities of
The Depository Trust Company for the accounts of the several Underwriters,
certificates representing the Firm Shares to be sold by them, respectively,
against payment of the purchase price therefor by delivery of federal or other
immediately available funds, by wire transfer or otherwise, to the Company and
the Custodian. Such time of delivery and payment is herein referred to as the
"First Closing Date." The certificates for the Firm Shares so to be delivered
will be in such denominations and registered in such names as you request by
notice to the Company and the Custodian prior to 10:00 A.M., Chicago Time, on
the second business day preceding the First Closing Date, and will be made
available at the Company's expense for checking and packaging by the
Representatives at 10:00 A.M., Chicago Time, on the business day preceding the
First Closing Date. Payment for the Firm Shares so to be delivered shall be made
at the time and in the manner described above at the offices of counsel for the
Underwriters.
In addition, on the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, certain of the Selling Stockholders, severally and not jointly,
hereby grant an option to the several Underwriters to purchase, severally and
not jointly, up to the respective number of Option Shares set forth opposite the
name of the Selling Stockholders on SCHEDULE B hereto, at the same purchase
price per share to be paid for the Firm Shares, for use solely in covering any
overallotments made by the Underwriters in the sale and distribution of the Firm
Shares. The option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the date of the initial public offering upon
notice by you to the Company and the Agents setting forth the aggregate number
of Option 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 10 full business days after delivery of such notice of
exercise. The number of Option Shares to (i) be sold by each Selling Stockholder
shall be determined by multiplying the aggregate number of Option Shares to be
purchased by the Underwriters, as set forth in the notice of exercise, by a
fraction, the numerator of which is the number of Option Shares set forth
opposite such Selling Stockholder's name in SCHEDULE B and the denominator of
which is the aggregate number of Options Shares set forth opposite all of the
Selling Stockholders' names in SCHEDULE B (subject to such adjustments to
eliminate any fractional share purchases as you in your absolute discretion may
make) and (ii) be purchased by each Underwriter
13
shall be determined by multiplying the number of Option Shares to be sold by the
Selling Stockholders pursuant to such notice of exercise by a fraction, the
numerator of which is the number of Firm Shares to be purchased by such
Underwriter as set forth opposite its name in SCHEDULE A and the denominator of
which is the total number of Firm Shares (subject to such adjustments to
eliminate any fractional share purchases as you in your absolute discretion may
make). Certificates for the Option Shares will be made available at the
Company's expense for checking and packaging at 10:00 A.M., Chicago Time, on the
first full business day preceding the Second Closing Date. The manner of payment
for and delivery of the Option Shares shall be the same as for the Firm Shares
as specified in the preceding paragraph.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Shares and to make
payment and to acknowledge receipt therefor. You, individually and not as the
Representatives of the Underwriters, may make payment for any 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 obligation hereunder.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) The Company will advise you and the Selling Stockholders promptly
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, or of any notification of the suspension of qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceedings
for that purpose, and will also advise you and the Selling Stockholders promptly
of any request of the Commission for amendment or supplement of the Registration
Statement, of any preliminary prospectus or of the Prospectus, or for additional
information.
(b) The Company will give you and the Selling Stockholders notice of
its intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any Rule 462(b) Registration
Statement or any amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by the Underwriters in
connection with the offering of the Shares which differs from the prospectus on
file at the Commission at the time the Registration Statement became or becomes
effective, whether or not such revised prospectus is required to be filed
pursuant to Rule 424(b) and any term sheet as contemplated by Rule 434) and will
furnish you and the Selling Stockholders with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such amendment or supplement or use any
such prospectus to which you or counsel for the Underwriters shall reasonably
object.
(c) If the Company elects to rely on Rule 434 of the 1933 Act, the
Company will prepare a term sheet that complies with the requirements of Rule
434. If the Company elects not to rely on Rule 434, the Company will provide the
Underwriters with copies of the form of prospectus, in such numbers as the
Underwriters may reasonably request, and file with the Commission such
prospectus in accordance with Rule 424(b) of the 1933 Act by the close of
business in New York City on the second business day immediately succeeding the
date of the Pricing Agreement. If the Company elects to rely on Rule 434, the
Company will provide the Underwriters with copies of the form of Rule 434
Prospectus, in such numbers as the Underwriters may reasonably request, by the
close of business in New York on the business day immediately succeeding the
date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the Shares is required
to be delivered under the 1933 Act 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, in the light of the
circumstances
14
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus, including any amendments or supplements
thereto and including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Shares which differs
from the prospectus on file with the Commission at the time of effectiveness of
the Registration Statement, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) to comply with the 1933 Act, the Company
promptly will advise you thereof and will promptly prepare and file with the
Commission an amendment or supplement (in form and substance satisfactory to
counsel for the Underwriters) which will correct such statement or omission or
an amendment or supplement which will effect such compliance; and, in case any
Underwriter is required to deliver a prospectus nine months or more after the
effective date of the Registration Statement, the Company upon request, but at
the expense of such Underwriter, will prepare promptly such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the 1933 Act.
(e) The Company will not, prior to the earlier of the Second Closing
Date or termination or expiration of the option relating to the Option Shares,
incur any liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, except as
contemplated by the Prospectus.
(f) The Company will not acquire any capital stock of the Company prior
to the earlier of the Second Closing Date or termination or expiration of the
option relating to the Option Shares nor will the Company declare or pay any
dividend or make any other distribution upon the Common Stock payable to
stockholders of record on a date prior to the earlier of the Second Closing Date
or termination or expiration of the option relating to the Option Shares, except
in either case as contemplated by the Prospectus.
(g) As soon as practicable, but in any event not later than 15 months
after the effective date of the Registration Statement, the Company will make
generally available to its security holders an earnings statement (which need
not be audited) covering a period of at least 12 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 1933 Act.
(h) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an underwriter or
dealer, the Company will furnish to you at its expense, subject to the
provisions of subsection (d) hereof, copies of the Registration Statement, the
Prospectus, each preliminary prospectus and all amendments and supplements to
any such documents in each case as soon as available and in such quantities as
you may reasonably request, for the purposes contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the state and foreign securities laws and
blue sky laws of such jurisdictions as you designate, and will continue such
qualifications in effect so long as reasonably required for the distribution of
the Shares. In connection with such qualification or registration of the 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
currently qualified or where it would be subject to taxation as a foreign
corporation.
(j) During the period of five years hereafter, the Company will furnish
you and each of the other Underwriters with a copy (i) as soon as practicable
after the filing thereof, of each report filed by the Company with the
Commission, any securities exchange, any national securities association or the
NASD; (ii) as soon as practicable after the release thereof, of each material
press release in respect of the Company; (iii) as soon as available, of each
report of the Company mailed to stockholders; and (iv) any
15
additional information of a public nature concerning the Company or its business
that you may reasonably request.
(k) Promptly after the First Closing, the Company will use
$11.8 million of the net proceeds from the offering to make required
distributions to holders of the Company's Class C common stock.
(l) If, at the time of effectiveness of the Registration Statement, any
information shall have been omitted therefrom in reliance upon Rule 430A and/or
Rule 434, then immediately following the execution of the Pricing Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A, Rule 424(b) and/or Rule 434, copies of an
amended Prospectus, or, if required by such Rule 430A and/or Rule 434, a
post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted. If required, the Company
will prepare and file, or transmit for filing, a Rule 462(b) Registration
Statement not later than the date of the execution of the Pricing Agreement. If
a Rule 462(b) Registration Statement is filed, the Company shall make payment
of, or arrange for payment of, the additional registration fee owing to the
Commission required by Rule 111 of the 1933 Act.
(m) The Company will comply with all registration, filing and reporting
requirements of the Exchange Act and the National Association of Securities
Dealers Automated Quotation ("Nasdaq") National Market System which from time to
time may be applicable to the Company and will file with the Commission such
information on Form 10-Q or Form 10-K as may be required by Rule 463.
(n) The Company agrees not to sell, contract to sell or otherwise
dispose of, or file a registration statement with the Commission with respect
to, any Common Stock or securities convertible into Common Stock for a period of
180 days after this Agreement becomes effective without the prior written
consent of Xxxxxxx Xxxxx & Company, L.L.C., except (i) in connection with the
offering of the Shares, (ii) in connection with any acquisition of all or
substantially all of the assets of another business or all of the stock of a
corporation in a business combination; provided, however, that prior to the
issuance of shares in accordance with this clause the recipients of such shares
deliver executed lock- up letters to Xxxxxxx Xxxxx & Company, L.L.C. in
substantially the form attached hereto as EXHIBIT B, (iii) the grant, in the
ordinary course of business, to employees and/or directors of options to
purchase shares of Common Stock, or (v) in the ordinary course of business
pursuant to the Company's Employee Stock Purchase Plan. At or before the time
the Pricing Agreement is executed, the Company shall delivered to you a letter
substantially in the form of Exhibit B hereto from each of the Company's
officers, directors and security holders pursuant to which each such person
agrees, except as expressly permitted therein, not to offer, sell, contract to
sell or otherwise dispose of any Common Stock or any securities exercisable for
or convertible into Common Stock for a period of 180 days after the date of this
Agreement without the prior written consent of Xxxxxxx Xxxxx & Company, L.L.C.
(o) The Company agrees to furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statement of income, stockholders' equity and cash flows of
the Company certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its stockholders summary financial
information of the Company for such quarter in reasonable detail.
(p) The Company will list the Shares on the Nasdaq National Market and
the Company will promptly deliver to the Underwriters copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Shares under the 1933 Act and listing
of the Shares on the Nasdaq National Market.
16
(q) Prior to the Closing on the First Closing Date, the Charter
amendment shall have been filed with the State Department of Assessments and
Taxation of Maryland and shall have become effective in all respects.
(r) Prior to the First Closing Date, the Company will issue no press
release or other communication to the public, directly or indirectly, with
respect to the Company or with respect to its financial condition, results of
operations, business, properties, assets or liabilities or the offering of the
Shares, without your prior consent, which consent shall not be unreasonably
withheld.
(s) In connection with the Directed Share Program, the Company will
place stop transfer orders on any Directed Shares that have been sold to
Participants subject to the three month restriction on sale, transfer,
assignment, pledge or hypothecation imposed by NASD Regulation, Inc. under its
Interpretative Material 2110-1 on free-riding and withholding to the extent
necessary to ensure compliance with the three month restrictions.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company's obligations hereunder,
including without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing 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 Pricing Agreement and the blue sky memorandum, (ii) all costs,
fees and expenses (including legal fees and disbursements of counsel for the
Underwriters) incurred by the Underwriters in connection with qualifying or
registering all or any part of the Shares for offer and sale under applicable
state and foreign securities laws and blue sky laws, including the preparation
of a blue sky memorandum relating to the Shares and clearance of such offering
with the NASD, (iii) the fees of the Custodian and other fees and expenses
related to the offering of Shares by the Selling Stockholders, (iv) all fees and
expenses of the Company's transfer agent, printing of the certificates for the
Shares and all transfer taxes, if any, with respect to the sale and delivery of
the Shares to the several Underwriters, (v) all fees and expenses in connection
with qualification and inclusion of the Shares and the other then outstanding
shares of Common Stock on the Nasdaq National Market, (vi) the cost of printing
or producing any agreement among underwriters, this Agreement, closing documents
(including compilations thereof) and any other documents in connection with the
offering, purchase, sale and delivery of the Shares and (vii) all costs, fees,
expenses and disbursement of counsel incurred by the Underwriters in connection
with the Directed Share Program and stamp duties, similar taxes or duties or
other taxes, if any, incurred by the Underwriters in connection with the
Directed Share Program. The provisions of this Section shall not affect any
agreement which the Company and the Selling Stockholders may make for the
allocation or sharing of such expenses and costs.
SECTION 8. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and, to the extent the Underwriters have elected to
purchase the Option Shares but only to the extent of such election, the Option
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
Stockholders 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 officers of the Company made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
17
(a) The Registration Statement shall have become effective either prior
to the execution of this Agreement or not later than 1:00 P.M., Chicago Time, on
the first full business day after the date of this Agreement, or such later time
as shall have been consented to by you but in no event later than 1:00 P.M.,
Chicago Time, on the third full business day following the date hereof; and
prior to the First Closing Date or the Second Closing Date, as the case may be,
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, the Selling
Stockholders or you, shall be contemplated by the Commission. If the Company has
elected to rely upon Rule 430A and/or Rule 434, the information concerning the
initial public offering price of the Shares and price-related information shall
have been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed period and the Company will provide evidence satisfactory
to the Representatives of such timely filing (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rules 430A and 424(b)). If a Rule 462(b)
Registration Statement is required, such Registration Statement shall have been
transmitted to the Commission for filing and become effective within the
prescribed time period and, prior to the First Closing Date, the Company shall
have provided evidence of such filing and effectiveness in accordance with Rule
462(b).
(b) The Shares shall have been qualified for sale under state and
foreign securities laws and the blue sky laws of such jurisdictions as shall
have been specified by the Representatives.
(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of the
certificates representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate proceedings and other
legal matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements) shall have been approved by counsel
for the Underwriters.
(d) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto, contains an
untrue statement of fact, which, in the opinion of counsel for the Underwriters,
is material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change, or any development involving a prospective
change, in or affecting the condition, results of operations, business,
properties or prospects of the Company, whether or not arising in the ordinary
course of business, which, in the judgment of the Representatives, makes it
impractical or inadvisable to proceed with the public offering or purchase of
the Shares as contemplated hereby.
(f) There shall have been furnished to you, as Representatives of the
Underwriters, on the First Closing Date or the Second Closing Date, as the case
may be, except as otherwise expressly provided below:
(i) An opinion of Venable, Baetjer, Xxxxxx & Civiletti, LLP,
counsel for the Company and for the Selling Stockholders, 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) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Maryland with corporate power and authority to own its
properties and conduct its business as described in the Prospectus; and
the Company has been duly qualified to do business as a foreign
corporation under the corporation law of, and is in good standing as
such in, every jurisdiction where the ownership or leasing of
18
property, or the conduct of its business requires such qualification
except where the failure so to qualify would not have, individually or
in the aggregate, a Material Adverse Effect;
(2) the Charter Amendment was authorized by all
necessary corporate action (including, without limitation, stockholder
approval) on the part of the Company; to the best of such counsel's
knowledge, all consents, approvals, authorizations, orders, Licenses,
certificates, permits, registrations or qualifications required to be
obtained in connection with the Charter Amendment were obtained, other
than such consents, approvals, authorizations, orders, Licenses,
certificates, permits, registrations or qualifications which,
individually or in the aggregate, would not have a Material Adverse
Effect; the Charter Amendment did not and will not (i) conflict with or
result in a breach or violation of any of terms or provisions of, or
constitute a default under, any Contract known to such counsel to which
the Company is bound or to which any of the property or assets of the
Company is subject, (ii) result in any violation of the provisions of
the articles of incorporation or by-laws of the Company or (iii) result
in any violation of the provisions of any statute or any order, rule or
regulation known to such counsel of any court or Governmental Authority
having jurisdiction over the Company or any of its properties, other
than, in the case of clauses (i) and (iii) above, such conflicts,
breaches, violations or defaults that, individually or in the
aggregate, would not have a Material Adverse Effect; the Charter
Amendment and such other documents as are required by the Maryland
Business Corporation Act to be filed with the Department of Assessments
and Taxation of Maryland have been duly filed, and the Charter
Amendment became effective in accordance with all applicable laws;
(3) the authorized capital stock of the Company, of
which there is outstanding the amount set forth in the Registration
Statement and Prospectus (except for subsequent issuances, if any,
pursuant to stock options, warrants or other rights referred to in the
Prospectus) and which consists of (i) 5,000,000 shares of preferred
stock, which may be designated in series with such rights, preferences
and obligations as determined by resolution of the Company's board of
directors of which no shares were issued and outstanding as of the date
hereof and (ii) 25,000,000 shares of Common Stock of which __________
shares were issued and outstanding as of the date hereof conforms as to
legal matters in all material respects to the description thereof in
the Registration Statement and Prospectus; and the issued and
outstanding capital stock of the Company has been duly authorized and
validly issued and is fully paid and nonassessable and free of
statutory preemptive rights;
(4) the certificates for the Shares to be delivered
hereunder are in due and proper form, and when duly countersigned by
the Company's transfer agent and delivered to you or upon your order
against payment of the agreed consideration therefor in accordance with
the provisions of this Agreement and the Pricing Agreement, the Shares
represented thereby will be duly authorized and validly issued, fully
paid and nonassessable and will be free of any pledge, lien,
encumbrance, equities, claim or preemptive rights of, rights of first
refusal in favor of stockholders with respect to any of the Shares, or
the issuance or sale thereof, whether pursuant to the Company's
articles of incorporation, bylaws, contract or otherwise; and there are
no contractual preemptive rights, rights of first refusal, rights of
co-sale or other similar rights which exist with respect to any of the
Shares, or the issuance or sale thereof; and the Shares sold hereunder
have been duly and validly authorized and qualified for inclusion on
the Nasdaq National Market, subject to notice of issuance;
(5) the Registration Statement has become effective
under the 1933 Act, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or
are pending or contemplated under the 1933 Act, and the Registration
Statement (including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant
19
to Rule 430A(b) and/or Rule 434, if applicable), the Prospectus and
each amendment or supplement thereto (except for the financial
statements and other statistical or financial data included therein as
to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act; such counsel
have no reason to believe that either the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b) and/or
Rule 434, if applicable) or the Prospectus, or the Registration
Statement or the Prospectus as amended or supplemented (except for the
financial statements and other statistical or financial data included
therein as to which such counsel need express no opinion), as of their
respective effective or issue dates, 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, as of the First Closing Date or the Second Closing Date, as
the case may be, contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements
therein not misleading in light of the circumstances under which they
were made; the statements in the Registration Statement and the
Prospectus summarizing statutes, rules and regulations are accurate and
fairly and correctly present the information disclosed therein or
required to be presented by the 1933 Act or the rules and regulations
thereunder, in all material respects and such counsel does not know, of
any statute, rule, regulation, indenture, lease, credit agreement or
other agreement or instrument required to be described or referred to
in the Registration Statement or the Prospectus that are not described
or referred to therein as required; and such counsel does not know of
any legal or governmental proceedings pending or threatened required to
be described in the Prospectus which are not described as required, nor
of any contracts or documents of a character required to be described
in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement which are not described or filed, as
required;
(6) the statements under the captions "Management,"
"Description of Capital Stock" and "Shares Eligible for Future Sale" in
the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, are accurate summaries
and fairly and correctly present, in all material respects, the
information disclosed or required to be disclosed with respect to such
documents and matters by the 1933 Act and the rules and regulations
thereunder;
(7) this Agreement and the Pricing Agreement and the
performance of the Company's obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and this
Agreement and the Pricing Agreement have been duly executed and
delivered by and on behalf of the Company, and are legal, valid and
binding agreements of the Company, except as enforceability of the same
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights and by the exercise of
judicial discretion in accordance with general principles applicable to
equitable and similar remedies and except as to those provisions
relating to indemnities for liabilities arising under the 1933 Act as
to which no opinion need be expressed; and no approval, authorization
or consent of any Governmental Authority is necessary in connection
with the execution, delivery, performance and enforcement of this
Agreement and the Pricing Agreement or the consummation of the
transactions contemplated hereby or thereby (other than under the 1933
Act, applicable state securities laws and blue sky laws and the rules
of the NASD);
(8) the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation of
the transactions contemplated hereby will not (i) violate or contravene
any of the provisions of, or result in a default under, any agreement,
contract, franchise, license, indenture, mortgage, deed of trust or
other instrument, known to such counsel, of the Company or by which the
property of the Company is bound except where such
20
violation, contravention, or default would not be material to the
Company or prevent or impair the consummation of the transactions
contemplated hereby, (ii) violate or contravene any of the provisions
of the articles of incorporation or bylaws of the Company, (iii) or so
far as is known to such counsel, violate any statute, rule or
regulation of any governmental authority having jurisdiction over the
Company or of its properties;
(9) to the best of such counsel's knowledge after due
inquiry and investigation, the Company is not (i) in violation of its
articles of incorporation or bylaws, (ii) in breach of or in default
under (nor has any event occurred which, with notice, lapse of time or
both would constitute a breach of, or default under) any contract,
lease, franchise, license, indenture, mortgage, deed of trust, credit
agreement or other agreement or instrument to which the Company is a
party or by which the Company or its properties may be bound or
affected or (iii) in violation of any statute, rule or regulation of
any governmental authority having jurisdiction over the Company, or its
properties, where such violation, contravention, breach or default,
individually or in the aggregate, could have a Material Adverse Effect;
(10) other than as set forth in the Prospectus, to
such counsel's knowledge, there are no legal or governmental
proceedings pending to which the Company is a party or of which any
property of the Company is subject which, if determined adversely to
the Company, would individually or in the aggregate have a Material
Adverse Effect; and to such counsel's knowledge no such proceedings are
threatened or contemplated by any Governmental Authority or third
parties;
(11) to the best of such counsel's knowledge after due
inquiry and investigation, the Company has obtained all Licenses
required by any Governmental Authority to properly and legally operate
or conduct the businesses in which it is engaged on the First Closing
Date and the Second Closing Date and which are necessary or desirable
for the successful conduct of its business as it is conducted and
proposed to be conducted (except in each case where the failure to
obtain such Licenses would not and could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect), and
each such License has been duly obtained, is valid and in full force
and effect, and is renewable by its terms or in the ordinary course of
business without the need to comply with any more burdensome
qualification procedures than applicable in the past or to pay any
amount other than routine filing fees. To the best of such counsel's
knowledge, the Company (a) is not subject to any pending or threatened
administrative or judicial proceeding to revoke, cancel or declare any
License granted to it invalid in any respect, (b) is not acting outside
the scope and authority granted to it pursuant to any such License, or
otherwise is in default or in violation with respect to any such
License, and no event has occurred which constitutes, or with due
notice or lapse of time or both may constitute, a default by it or a
violation of, any License and (c) has not permitted any Licenses
granted to it to lapse since its original effective date, except where
such default, violation or lapse would not nor could be reasonably
expected to, individually or in the aggregate, have a Material Adverse
Effect;
(12) to the best of such counsel's knowledge after due
inquiry and investigation, all offers and sales of the Company's
capital stock during the three years prior to the date hereof were at
all relevant times exempt from the registration requirements of the
1933 Act and were duly registered or the subject of an available
exemption from the registration requirements of the applicable state
and foreign securities laws and blue sky laws;
(13) with respect to each Selling Stockholder, this
Agreement, the Pricing Agreement and the Power of Attorney and Custody
Agreement have been duly authorized, executed and delivered by or on
behalf of each such Selling Stockholder; the Agents and the Custodian
for each such Selling Stockholder have been duly and validly authorized
to carry out
21
all transactions contemplated herein on behalf of each such Selling
Stockholder; and the performance of this Agreement, the Pricing
Agreement and the Power of Attorney and Custody Agreement and the
consummation of the transactions herein and therein contemplated by
such Selling Stockholders will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any
statute, rule or regulation of any governmental authority or any
contract, lease, franchise, license, indenture, mortgage, deed of
trust, credit agreement or other agreement or instrument known to such
counsel to which any of such Selling Stockholders is a party or by
which any are bound or to which any of the property of such Selling
Stockholders is subject, or any order, rule or regulation known to such
counsel of any Governmental Authority having jurisdiction over any of
such Selling Stockholders or any of their properties; and no consent,
approval, authorization or order of any Governmental Authority is
required for the consummation of the transactions contemplated by this
Agreement, the Pricing Agreement and the Power of Attorney and Custody
Agreement in connection with the sale of Shares to be sold by such
Selling Stockholders hereunder, except such as have been obtained under
the 1933 Act and such as may be required under applicable state
securities laws or blue sky laws in connection with the purchase and
distribution of such Shares by the Underwriters and the clearance of
such offering with the NASD;
(14) each Selling Stockholder has full right, power and
authority to enter into this Agreement, the Pricing Agreement and the
Power of Attorney and Custody Agreement and to sell, transfer and
deliver the Shares to be sold on the First Closing Date or the Second
Closing Date, as the case may be, by such Selling Stockholder hereunder
and good and marketable title to such Shares so sold, free and clear of
all voting trust arrangements, pledges, liens, encumbrances, equities,
claims and community property rights whatsoever, has been transferred
to the Underwriters (who counsel may assume to be bona fide purchasers)
who have purchased such Shares hereunder;
(15) this Agreement, the Pricing Agreement and the Power
of Attorney and Custody Agreement are legal, valid and binding
agreements of each Selling Stockholder except as enforceability of the
same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights and by the
exercise of judicial discretion in accordance with general principles
applicable to equitable and similar remedies and except with respect to
those provisions relating to indemnities for liabilities arising under
the 1933 Act, as to which no opinion need be expressed;
(16) the Company is not, and, assuming the application
of the Company's proceeds as described under the caption "Use of
Proceeds" in the Prospectus, upon consummation of the transactions
contemplated hereby will not be, an "investment company" or a person
"controlled by" an "investment company" within the meaning of the
Investment Company Act; and
(17) within the six months immediately preceding the
date of this Agreement, neither the Company nor, such counsel's
knowledge, any person acting on behalf of the Company has offered or
sold to any person any Common Stock or Common Stock Equivalents, other
than the Shares and other than offers and sales under restrictions and
other circumstances reasonably designed to prevent such offers and
sales from becoming integrated into the offer and sale of the Shares
contemplated by this Agreement in the United States and to United
States persons so as to cause such offer and sale of the Shares
contemplated by this Agreement not to be in compliance with the
registration provisions of the 1933 Act.
In rendering such opinion, such counsel may state that they are relying
upon the certificate of Registrar and Transfer Company, the transfer agent for
the Common Stock, as to the number of shares of
22
Common Stock at any time or times outstanding, and that insofar as their opinion
under clause (5) above relates to the accuracy and completeness of the
Prospectus and Registration Statement, it is based upon a general review with
the Company's representatives and independent accountants of the information
contained therein, without independent verification by such counsel of the
accuracy or completeness of such information. Such counsel may also rely upon
the opinions of competent local or foreign counsel, satisfactory to counsel to
the Underwriters as to local or foreign legal matters in jurisdictions other
than those in which they are licensed to practice and, as to factual matters, on
certificates of the Selling Stockholders and of officers of the Company and of
state officials, in which case their opinion is to state that they are so doing
and copies of such opinions or certificates are to be attached to the opinion
unless such opinions or certificates (or, in the case of certificates, the
information therein) have been otherwise previously furnished to the
Representatives and accurately identified in such opinion. Additionally, in
rendering the opinion required by clauses (4) and (14) above, counsel may rely
in part upon a certificate of the applicable Selling Stockholders and the
Company in respect of matters of fact as to ownership of, and contractual liens,
encumbrances, equities or claims on or rights of first refusal with respect to
the shares sold which are not otherwise reflected on the certificates evidencing
the Shares or in the Company's records provided that such counsel states they
believe both the underwriter's legal counsel and they are justified in relying
upon such certificate and, in rendering the opinion required by clauses (7) and
(15) above, may assume that applicable provisions of Illinois law are similar to
the provisions of Maryland law; provided counsel has no knowledge to the
contrary.
(ii) Such opinion or opinions of Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx, 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 validity of the Shares to be sold by the Company, the
Registration Statement and the Prospectus and other related matters as you may
reasonably require, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they
request for the purpose of enabling them to pass upon such matters.
(iii) A certificate of the chief executive officer and the
principal financial 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 at or prior to such Closing Date; and
(2) the Commission has not issued an 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 knowledge of the respective
signers, no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this subparagraph shall
be and constitute a representation and warranty of the Company as to the facts
required in the immediately foregoing clauses (1) and (2) of this subparagraph
to be set forth in such certificate.
(iv) A certificate of each Selling Stockholder (which may be
signed by one or more Agents on behalf of such Selling Stockholder) dated the
First Closing Date or the Second Closing Date, as the case may be, to the effect
that the representations and warranties of such Selling Stockholder set forth in
Section 3 of this Agreement are true and correct as of such date and the Selling
Stockholder has
23
complied with all the agreements and satisfied all the conditions on the part of
such Selling Stockholder to be performed or satisfied at or prior to such date.
(v) At the time the Pricing Agreement is executed and also
on the First Closing Date or the Second Closing Date, as the case may be, there
shall be delivered to you a letter addressed to you, as Representatives of the
Underwriters, from KPMG LLP, independent accountants, the first one to be dated
the date of the Pricing Agreement, the second one to be dated the First Closing
Date and the third one (in the event of a second closing) to be dated the Second
Closing Date, to the effect set forth in SCHEDULE C. There shall not have been
any change or decrease specified in the letters referred to in this subparagraph
which makes it impractical or inadvisable in the judgment of the Representatives
to proceed with the public offering or purchase of the Shares as contemplated
hereby.
(vi) At or before the time the Pricing Agreement is
executed, there shall be delivered to you a letter substantially in the form of
EXHIBIT B hereto from each of the Company's officers, directors and
stockholders.
(vii) Such further certificates, opinions and other documents
as you may reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, which approval
shall not be unreasonably withheld. The Company shall furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as you request.
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 to the Company and
the Selling Stockholders without liability on the part of any Underwriter or the
Company or any Selling Stockholder, except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof.
SECTION 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company or the
Selling Stockholders to perform any agreement herein or to comply with any
provision hereof, unless such failure to satisfy such condition or to comply
with any provision hereof is due to the default or omission of any Underwriter,
the Company agrees to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Shares. Any such termination
shall be without liability of any party to any other party except that the
provisions of this Section, Section 9 and Section 11 shall at all times be
effective and shall apply.
SECTION 10. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the Company
and the Selling Stockholders will use your, its and their best efforts to cause
the Registration Statement to become effective, if it has not yet become
effective, and to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 11. INDEMNIFICATION.
(a) The Company and each Management Selling Stockholder, 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 1933 Act
or the Exchange Act against any losses, claims, damages or liabilities,
24
joint or several, to which such Underwriter or such controlling person may
become subject under the 1933 Act, the Exchange Act or other foreign, federal or
state statutory law or regulation, at common law or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company and/or such Management Selling Stockholders, as the case
may be), 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 the Registration Statement,
including the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A and/or Rule 434, if applicable, 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; and will reimburse each Underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) neither the Company nor any Management Selling Stockholder will be
liable in any such case 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 or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with information contained in a
writing signed by an Underwriter furnished to the Company by or on behalf of any
such Underwriter through the Representatives, specifically for use in the
preparation thereof and (ii) 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 losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if (a) the
Prospectus was required by law to have been delivered at or prior to the written
confirmation of the sale of the Shares to such person and it is established that
a copy of the Prospectus was not sent or given by or on behalf of such
Underwriter to such person, (b) such Prospectus (as then amended or
supplemented) was furnished by the Company to such Underwriter in the requisite
quantity on a timely basis to permit such sending or giving and was included in
the Registration Statement on file with the Commission at the time the
Registration Statement became effective, and (c) the Prospectus (as then amended
or supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 6(b), Section 6(d) or Section 6(h). In addition to
their other obligations under this Section 11(a), the Company and the Management
Selling Stockholders 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,
described in this Section 11(a), they will reimburse the Underwriters on a
monthly basis for all reasonable legal and 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 Company's and the Management Selling
Stockholders' obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement will be in addition to
any liability which the Company and the Management Selling Stockholders may
otherwise have. Each Management Selling Stockholder's obligations with respect
to indemnification pursuant to this Section 11(a) are subject to the limitations
set forth in the last paragraph of Section 11(b).
The Company further agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the 1933 Act or the Exchange Act, from and against any and all
losses, claims, damages and liability (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim), joint or several, (i) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the consent of the Company for
distribution to Participants in connection with the Directed Share Program or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
25
statements therein not misleading; (ii) arising out of or based upon the failure
of any Participant to pay for and accept delivery of Directed Shares that the
Participants agreed to purchase; or (iii) related to, arising out of, or in
connection with the Directed Share Program, other than losses, claims, damages
or liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith, willful misconduct or gross
negligence of any such Underwriter.
(b) Each Institutional Selling Stockholder and Other Selling
Stockholder agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the 1933 Act
or the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become subject
under the 1933 Act, the Exchange Act or other foreign, federal or state
statutory law or regulation, at common law or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of
such Selling Stockholder), 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
the Registration Statement, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A and/or
Rule 434, if applicable, 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; and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, that (i) no such Selling
Stockholder will be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (A) 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 in reliance upon and in conformity with
information contained in a writing signed by an Underwriter furnished to the
Company by or on behalf of any such Underwriter through the Representatives,
specifically for use in the preparation thereof, or (B) the breach by any other
Selling Stockholder of any representation, warranty or covenant contained in
Section 3(a) of this Agreement (or in any certificate of such person delivered
pursuant hereto relating thereto) insofar as the loss, claim, damage or
liability arose out of or is based upon such breach; (ii) no Other Selling
Stockholder will be liable in any such case except to the extent that any such
loss, claim, damage or liability arises out of or is based upon (A) a breach of
any representation, warranty or covenant of such Other Selling Stockholder
contained in Section 3 hereof (or in any certificate of such person delivered
pursuant hereto relating thereto), or (B) any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by or on behalf of any such Other Selling
Stockholder expressly for use in the Registration Statement, preliminary
prospectus, the Prospectus or any amendment or supplement thereto; (iii) with
respect to liability arising from any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
including the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A and/or Rule 434, if applicable, any
preliminary prospectus, the Prospectus, or any amendment or supplement thereto,
or 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, an
Institutional Selling Stockholder will be liable only with respect to untrue
statements or omissions of which such Institutional Selling Stockholder had
knowledge and untrue statements or omissions related to, resulting from arising
out of facts or circumstances of which such Institutional Selling Stockholder
had knowledge (for the purposes of this clause (iii) "knowledge" shall mean the
actual knowledge of an Institutional Selling Stockholder and includes the
knowledge of their respective representative on the board of directors of the
Company); and (iv) 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 losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if (a) the
Prospectus was required by law to have been delivered at or prior to the written
confirmation of the sale of the Shares to such person and it is established that
a
26
copy of the Prospectus was not sent or given by or on behalf of such Underwriter
to such person, (b) such Prospectus (as then amended or supplemented) was
furnished by the Company to such Underwriter in the requisite quantity on a
timely basis to permit such sending or giving and was included in the
Registration Statement on file with the Commission at the time the Registration
Statement became effective, and (c) the Prospectus (as then amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 6(b), Section 6(d) or Section 6(h). In addition to
their other obligations under this Section 11(b), such Selling Stockholders
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, described in this
Section 11(b), they will reimburse the Underwriters on a monthly basis for all
reasonable legal and 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 such Selling Stockholders' obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. This
indemnity agreement will be in addition to any liability which such Selling
Stockholders may otherwise have.
Without limiting the full extent of (i) the Company's agreement to
indemnify each Underwriter (and controlling persons thereof, if any), as herein
provided, (ii) the liability of the Company with respect to the breach by the
Company of any representation, warranty or covenant contained in this Agreement
(or in any certificate of the Company delivered pursuant hereto) and (iii) the
liability of any Selling Stockholder with respect to the breach by such Selling
Stockholders of any representation, warranty or covenant contained in Section
3(a) of this Agreement (or in any certificate of such Selling Stockholder
delivered pursuant hereto relating thereto), notwithstanding anything contained
in this Agreement to the contrary, each Selling Stockholder shall be liable
under (A) the indemnification agreements contained in Section 11(a) (in the case
of the Management Selling Stockholders) and the first paragraph of this Section
11(b) (in the case of the Institutional Selling Stockholders and the Other
Selling Stockholders), (B) the representations and warranties of such Selling
Stockholder contained in Sections 3(b), 3(c) and 3(d) hereof (or in any
certificate of such Selling Stockholder delivered pursuant hereto relating to
such representations and warranties), or (C) the contribution provisions
contained in Section 11(e) of this Agreement, only for an amount not exceeding,
in the aggregate, the net proceeds received by such Selling Principal
Stockholder from the sale of Shares by such Selling Principal Stockholder
hereunder. The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters and controlling
persons under this Agreement, as to the respective amounts of such liability for
which each of them shall be responsible.
(c) 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 Stockholder and each person, if any, who controls the
Company within the meaning of the 1933 Act or the Exchange Act, against any
losses, claims, damages or liabilities to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, 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 or liabilities (or actions
in respect thereof) 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 information contained in a writing signed by such
Underwriter furnished to the Company by such Underwriter through the
Representatives specifically for
27
use in the preparation thereof. In addition to their other obligations under
this Section 11(c), the Underwriters 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, described in this Section 11(c), they will reimburse the Company
and the Selling Stockholders on a monthly basis for all reasonable legal and
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 the Selling
Stockholders for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 11 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 11, notify the indemnifying party 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 except to the
extent that the indemnifying party was prejudiced by such failure to notify. 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 in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel 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 legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
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 11 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 defense 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 all indemnified parties not having different or additional defenses
or potential conflicting interest among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding 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 settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
(e) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party under paragraphs (a), (b) or (c) hereof in
respect of any losses, claims, damages or liabilities referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholders and the Underwriters from the offering of the
Shares
28
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 Stockholders and the Underwriters 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
respective relative benefits received by the Company, the Selling Stockholders
and the Underwriters shall be deemed to be in the same proportion in the case of
the Company and the Selling Stockholders as the total price paid to the Company
and the Selling Stockholders for the Shares by the Underwriters (net of
underwriting discount but before deducting expenses), and in the case of the
Underwriters as the underwriting discount received by them bears to the total of
such amounts paid to the Company and the Selling Stockholders and received by
the Underwriters as underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the Selling Stockholders 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 to state a material fact relates to information supplied by the Company
or by the Selling Stockholders or by 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 and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. Each Selling
Stockholder's obligations with respect to contribution pursuant to this Section
11(e) are subject to the limitations set forth in the last paragraph of Section
11(b).
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 11
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
11, no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of 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 0000 Xxx) 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. Each Selling Stockholder's
obligations to contribute pursuant to this Section 11(e) are subject to the
limitation set forth in the last paragraph of Section 11(b) hereof.
(f) The provisions of this Section 11 shall survive any termination of
this Agreement.
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to the
agreement and obligation of the Company and the Selling Stockholders to sell and
deliver the Shares hereunder, and of each Underwriter to purchase the Shares
hereunder, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all 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 Shares hereunder on the First Closing Date or
the Second Closing Date, as the case may be, and the aggregate number of Shares
which such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10 percent of the total number of Shares which the Underwriters
are obligated to purchase on the First Closing Date or the Second Closing Date,
as the case may be, the Representatives may make arrangements satisfactory to
the Company and the Selling Stockholders for the purchase of such Shares by
other persons, including any of the Underwriters, but if no such arrangements
are made by such date the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Shares which such defaulting Underwriters agreed but failed to purchase on
such date. If any Underwriter or Underwriters so default and the aggregate
number of Shares with respect to which
29
such default or defaults occur is more than the above percentage and
arrangements satisfactory to the Representatives and the Company and the Selling
Stockholders for the purchase of such Shares by other persons are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Company or the
Selling Stockholders, except for the expenses to be paid by the Company pursuant
to Section 6 hereof and except to the extent provided in Section 10 hereof.
In the event that Shares to which a default relates are to be purchased
by the nondefaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, for not more than
seven 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, 8, 11 and 13 and as to all other provisions at
10:00 A.M., Chicago Time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday), unless prior
to such time you shall have given notice to the Company that you elect that such
other provisions of this Agreement shall not become effective; but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company and the Selling Stockholders or by release of any Shares
for sale to the public. For the purposes of this Section, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by you of
telegrams (i) advising Underwriters that the Shares are released for public
offering, or (ii) offering the 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 Stockholders or by you by notice to the Company and the Selling
Stockholders 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 the Selling Stockholders to any Underwriter (except
for the expenses to be paid or reimbursed pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof) or of any Underwriter to the
Company or the Selling Stockholders.
(b) This Agreement may also be terminated by you prior to the First
Closing Date, and the option referred to in Section 5, if exercised, may be
cancelled at any time prior to the Second Closing Date, if (i) trading in
securities on the New York Stock Exchange or the Nasdaq National Market shall
have been suspended or minimum prices shall have been established on such
exchanges, or (ii) a banking moratorium shall have been declared by Illinois,
Maryland, New York or United States authorities, or (iii) there shall have been
any change in financial markets or in political, economic or financial
conditions which, in the opinion of the Representatives, either renders it
impracticable or inadvisable to proceed with the offering and sale of the Shares
on the terms set forth in the Prospectus or materially and adversely affects the
market for the Shares, or (iv) there shall have been an outbreak of major armed
hostilities between the United States and any foreign power which in the opinion
of the Representatives makes it impractical or inadvisable to offer or sell the
Shares. Any termination pursuant to this paragraph (b) shall be without
liability on the part of any Underwriter to the Company or the Selling
Stockholders or on the
30
part of the Company to any Underwriter or the Selling Stockholders (except for
expenses to be paid or reimbursed 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 Stockholders, 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 or the Company or any of its or their partners,
principals, members, officers or directors or any controlling person, or the
Selling Stockholders, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder.
SECTION 16. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o Xxxxxxx Xxxxx & Company, L.L.C., 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, with a copy to Xxxxxxx X. Xxxx, Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000; and if sent to the
Company will be mailed, delivered or telegraphed and confirmed to the Company at
the corporate headquarters, 0000 Xxxxxxxxx Xxxxx, Xxxx Xxxxxx, XX 00000, with a
copy to Xxxxxxxxx X. Hughes, Venable, Xxxxxxx, Xxxxxx & Civiletti, LLP, 0000 Xxx
Xxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxxxxx, XX 00000-0000; and if sent to the
Selling Stockholders will be mailed, delivered or telegraphed and confirmed to
the Agents and the Custodian at such address as they have previously furnished
to the Company and the Representatives, with a copy to Xxxxxxxxx X. Hughes,
Venable, Xxxxxxx, Xxxxxx & Civiletti, LLP, 0000 Xxx Xxxx Xxxxxx, X.X., Xxxxx
0000, Xxxxxxxxxx, XX 00000-0000.
SECTION 17. SUCCESSORS. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 10,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the 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 this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
SECTION 19. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 20. APPLICABLE LAW. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois, without giving effect to any provisions relating to conflicts of laws.
SECTION 21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All
judicial proceedings arising out of or relating to this Agreement and the
Pricing Agreement may be brought in any state or federal court of competent
jurisdiction in the State of Illinois, and by execution and delivery of this
Agreement, the Company and the Selling Stockholders accept for themselves and in
connection with their properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and waive any defense of forum
non conveniens and irrevocably agree to be bound by any final judgment rendered
thereby in connection with this Agreement. The Company and the Selling
Stockholders designate and appoint __________________, and such other persons as
may hereafter be selected by the Company and the Selling Stockholders
irrevocably agreeing in writing to so serve, as their agent to receive on their
behalf service of all process in any such proceedings in any such court, such
service being hereby acknowledged by the Company and the Selling Stockholders to
be effective and binding service in every respect. A copy of any such process to
serviced shall be mailed by registered mail to the Company and the Selling
31
Stockholders at the addresses provided in Section 15 hereof; provided, however,
that, unless otherwise provided by applicable law, any failure to mail such copy
shall not affect the validity of service of such process. If any agent appointed
by the Company or the Selling Stockholders refuses to accept service, the
Company and the Selling Stockholders hereby agree that service of process
sufficient for personal jurisdiction in any action against the Company and the
Selling Stockholders in the State of Illinois may be made by registered or
certified mail, return receipt requested to the Company and the Selling
Stockholders at the addresses provided in Section 15 hereof, and the Company and
the Selling Stockholders hereby acknowledge that such service shall be effective
and binding in every respect. Nothing herein shall affect to right to serve
process in any other manner permitted by law or shall limit the right of any
Underwriter to bring proceeding against the Company and the Selling Stockholders
in the courts of any other jurisdiction.
SECTION 22. INTERPRETATION OF CERTAIN TERMS. Any words herein used in
the singular shall denote the plural as the context so requires and, when used
herein in the plural shall denote the singular as the context so requires.
Pronouns used herein, whether masculine, feminine, or neuter, shall be
interpreted as the context so requires. The word "INCLUDING" shall mean
"INCLUDING, WITHOUT LIMITATION," and thus indicate part of a larger whole; but
shall not be interpreted as indicating the stated limits or extremes. Any
reference to any federal, state, or local law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise.
SECTION 23. COUNTERPARTS. This Agreement may be executed in one or any
number of counterparts, each of which, once so executed, shall be deemed to be
an original, and such counterparts together shall constitute and be one and the
same instrument binding on all the parties hereto. This Agreement may be
executed by facsimile signature and a facsimile signature shall constitute an
original signature for all purposes.
***REMAINDER OF PAGE INTENTIONALLY LEFT BLANK***
32
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Underwriting Agreement to us, whereupon
it will become a binding agreement among the Company and the several
Underwriters including you, all in accordance with its terms.
Very truly yours,
THE WHITE HOUSE, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE B
By:
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Xxxxxxx X. Xxxxxxxxx
as Agent and Attorney-in-Fact
By:
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Xxxxx X. Xxxxx
as Agent and Attorney-in-Fact
By:
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Xxxxxx X. Xxxxxxxxx
as Agent and Attorney-in-Fact
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXX XXXXX & COMPANY, L.L.C.
Acting As Representatives of the Several
Underwriters Named In Schedule A
By: Xxxxxxx Xxxxx & Company, L.L.C.
By:
---------------------------------
Name:
Title:
33
SCHEDULE A
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
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Xxxxxxx Xxxxx & Company, L.L.C.........................................
XX Xxxxx Securities Corporation........................................
RBC Xxxx Xxxxxxxx Inc..................................................
Total.............................................................
SCHEDULE B
NUMBER OF FIRM NUMBER OF OPTION
SHARES TO BE SOLD SHARES TO BE SOLD
----------------- ------------------
Company ................................................................
Xxxxxxx Xxxxxxxxx ......................................................
Xxxxxxxx Xxxxxx Xxxxx ..................................................
Xxxxxxx Xxxxx ..........................................................
Chancellor Private Capital Offshore Partners I, C.V. ...................
Chancellor Private Capital Offshore Partners II, L.P. ..................
Chancellor Private Capital Partners III, L.P. .........................
Citiventure 96 Partnership, L.P. .......................................
Xxxxxxxx-Xxxxx Specialty Retail Group III, L.P. ........................
[Insert Selling Stockholders]...........................................
SCHEDULE C
COMFORT LETTER FOR THE WHITE HOUSE, INC.
TO BE DELIVERED BY KPMG LLP
(1) They are independent public accountants with respect to the Company
within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and schedules of
the Company included in the Registration Statement and the consolidated
financial statements of the Company from which the information presented under
the captions "Summary Financial and Operating Data" and "Selected Financial and
Operating Data" has been derived which are stated therein to have been examined
by them comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company responsible for financial and accounting matters
as to transactions and events subsequent to the end of the most recently
completed fiscal year of the Company, a reading of minutes of meetings of the
stockholders and directors of the Company since the end of the most recently
completed fiscal year, a reading of the latest available interim unaudited
financial statements of the Company (with an indication of the date thereof) and
other procedures as specified in such letter, nothing came to their attention
which caused them to believe that (i) the unaudited financial statements of the
Company included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act or
that such unaudited financial statements are not fairly presented in accordance
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, (ii) the amounts in "Summary Financial and Operating
Data" and "Selected Financial and Operating Data" included in the Prospectus do
not agree with or are not derivable from the corresponding amounts in the
audited financial statements or unaudited financial statements (as applicable)
from which such amounts were derived and (iii) at a specified date not more than
five days prior to the date thereof in the case of the first letter and not more
than two business days prior to the date thereof in the case of the second and
third letters, there was any change in the capital stock or long-term debt or
short-term debt (other than normal payments) of the Company or any decrease
(increase) in consolidated net current assets (total current liabilities) or any
decrease in total stockholders' equity as compared with amounts shown on the
latest unaudited balance sheet of the Company included in the Registration
Statement or for the period from the date of such balance sheet to a date not
more than five days prior to the date thereof in the case of the first letter
and not more than two business days prior to the date thereof in the case of the
second and third letters, there were any decreases, as compared with the
corresponding period of the prior year, in net sales, income before income taxes
or in the total or per share amounts of net income except, in all instances, for
changes or decreases which the Prospectus discloses have occurred or may occur
or which are set forth in such letter.
(4) If any pro forma financial information is included in the Prospectus,
on the basis of reading such pro forma information, carrying out specified
procedures, inquiries of certain officials of the Company who have
responsibility for financial and accounting matters, and proving the arithmetic
accuracy of the application of the pro forma adjustments to the historical
amounts, nothing came to their attention which caused them to believe that the
pro forma financial information does not comply in all material respects with
the applicable accounting requirements of Rule 11-02 of Regulation S-X and the
pro forma adjustments have not been properly applied to the historical amounts
in the compilation of such information.
(5) They have carried out specified procedures, which have been agreed to
by the Representatives, with respect to certain information in the Prospectus
specified by the Representatives, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company.
EXHIBIT A
THE WHITE HOUSE, INC.
___________ Shares Common Stock
(Plus an Option to Acquire Up to ___________ Shares to Cover Overallotments)
PRICING AGREEMENT
_____________, 2003
Xxxxxxx Xxxxx & Company, L.L.C.
XX Xxxxx Securities Corporation
RBC Xxxx Xxxxxxxx Inc.
As Representatives of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated ____________,
2003 (the "Underwriting Agreement") relating to the sale by the Company and the
Selling Stockholders and the purchase by the several Underwriters for whom
Xxxxxxx Xxxxx & Company, L.L.C., XX Xxxxx Securities Corporation and RBC Xxxx
Xxxxxxxx Inc. are acting as representatives (the "Representatives"), of the
above Shares. All terms herein shall have the definitions contained in the
Underwriting Agreement except as otherwise defined herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and
each of the Selling Stockholders agree with the Representatives as follows:
1. The initial public offering price per share for the Shares shall
be $__________.
2. The purchase price per share for the Shares to be paid by the
several Underwriters shall be $__________, being an amount equal to the initial
public offering price set forth above less $__________ per share.
[Schedule A is amended as follows:]
***SIGNATURE PAGE FOLLOWS***
If the forgoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including you, all in accordance with its terms. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement.
Very truly yours,
THE WHITE HOUSE, INC.
By:
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
[SELLING STOCKHOLDERS]
By:
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Agent and Attorney-in-Fact
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXX XXXXX & COMPANY, L.L.C.
Acting as Representatives of the
Several Underwriters
By: Xxxxxxx Xxxxx & Company, L.L.C.
By:
-------------------------------------
Name:
Title:
EXHIBIT B
THE WHITE HOUSE, INC.
FORM OF LOCK-UP AGREEMENT
_______________, 2003
Xxxxxxx Xxxxx & Company, L.L.C.
XX Xxxxx Securities Corporation
RBC Xxxx Xxxxxxxx Inc.
As Representatives of
Several Underwriters
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: THE WHITE HOUSE, INC.- LOCK-UP AGREEMENT
Ladies and Gentlemen:
The undersigned understands that Xxxxxxx Xxxxx & Company, L.L.C.
("Xxxxxxx Xxxxx"), XX Xxxxx Securities Corporation and RBC Xxxx Xxxxxxxx Inc.,
as representatives of the underwriters to be named therein (the "Underwriters"),
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with The White House Inc., a Maryland corporation (the "Company") and the
stockholders named therein, providing for a public offering of the Company's
common stock (the "Offered Shares") pursuant to a registration statement on Form
S-1 (the "Registration Statement") that will be filed with the Securities and
Exchange Commission (the "SEC").
To induce the Underwriters to enter into the Underwriting Agreement and
in consideration of the agreement by the Underwriters to offer and sell the
Offered Shares and in recognition of the benefit that such an offering will
confer upon the undersigned, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned agrees
that, during the period beginning from the date of the final Prospectus covering
the public offering of the Offered Shares and continuing to and including the
date 180 days after the date of such final Prospectus (the "Lock-up Period"),
the undersigned will not, without the prior written consent of Xxxxxxx Xxxxx,
directly or indirectly, (i) offer, sell, contract to sell, assign, transfer,
encumber, pledge, grant any option to purchase, make any short sale or otherwise
dispose of any shares of the Company's common stock ("Common Stock"), or any
options or warrants to purchase any shares of Common Stock of the Company or any
securities convertible into, exchangeable for or that represent the right to
receive shares of Common Stock of the Company (collectively, "Common Stock
Equivalents") held of record by the undersigned (including holding as a
custodian) or with respect to which the undersigned has beneficial ownership
within the rules and regulations of the SEC as of the date of the final
prospectus (collectively the "Lock-up Shares"), (ii) enter into or establish any
arrangement constituting a "put equivalent position," as defined by Rule
16a-1(h) promulgated under the Securities Exchange Act of 1934, as amended,
(iii) enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of the Lock-up
Shares, (iv) exercise any registration rights with respect to any Common Stock
or Common Stock Equivalents or (v) announce an intent to do any of the
foregoing.
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result
in a sale or disposition of the Lock-up Shares even if the Lock-up Shares would
be disposed of by someone other than the undersigned. Such prohibited hedging or
other transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to any of the Lock-up Shares or with respect to any
security that includes, relates to, or derives any significant part of its value
from such of the Lock-up Shares.
Notwithstanding the foregoing, the undersigned may transfer any or all
Lock-up Shares (i) as a BONA FIDE gift or gifts, provided that the donee or
donees thereof have executed and delivered to Xxxxxxx Xxxxx a written agreement
providing their agreement to be bound by the restrictions set forth herein, (ii)
to any trust, partnership, limited liability company or other legal entity
commonly used for estate planning purposes which is established for the direct
or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee, general partner, manager or other
administrator, as the case may be, has executed and delivered to Xxxxxxx Xxxxx a
written agreement providing their agreement to be bound by the restrictions set
forth herein, and provided further that any such transfer shall not involve a
disposition for value, or (iii) with the prior written consent of Xxxxxxx Xxxxx
& Company, L.L.C. on behalf of the Underwriters. For purposes of this letter
agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. In addition, notwithstanding the
foregoing, if the undersigned is a corporation, the corporation may transfer the
capital stock of the Company to any wholly-owned subsidiary of such corporation;
PROVIDED, HOWEVER, that in any such case, it shall be a condition to the
transfer that the transferee has executed and delivered to Xxxxxxx Xxxxx a
written agreement stating that the transferee is receiving and holding such
capital stock subject to the provisions of this Agreement and there shall be no
further transfer of such capital stock except in accordance with this Agreement,
and provided further that any such transfer shall not involve a disposition for
value. The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of the Lock-up Shares except in compliance with the foregoing
restrictions. Following expiration of the Lock-up Period, it is understood and
agreed that the undersigned may dispose of the Lock-up Shares free of any
contractual obligation hereunder. Notwithstanding the foregoing, if, options for
Common Stock held by the undersigned that are exercisable shall expire during
the Lock-Up Period, unless exercised, the undersigned may exercise such options
and sell the shares received upon exercise, to satisfy obligations under a
cashless exercise arrangement, without the consent of the Underwriters, provided
the shares issued upon the exercise of such options shall be subject the terms
of this letter agreement and deemed Lock-up Shares except to the extent sold
pursuant to such cashless exercise.
The undersigned understands that the Company and the Underwriters are
relying upon this letter agreement in proceeding toward consummation of the
offering and the proposed public offering is still confidential. The undersigned
further understands that this letter agreement is irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors, and
assigns. If for any reason the Underwriting Agreement shall be terminate or be
terminated prior to payment for and delivery of the Offered Shares on the First
Closing Date (as defined in the Underwriting Agreement), the agreement set forth
above shall likewise be terminated.
Very truly yours,
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Name - Please Print or Type
[SIGN HERE]:
By:
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Title, if any:
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Date Signed: , 2003
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