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15,000,000 Shares
DOLLAR TREE STORES, INC.
Common Stock
UNDERWRITING AGREEMENT
August __, 2000
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES, INC.
FIRST UNION SECURITIES, INC.
SALOMON SMITH BARNEY INC.
U.S. BANCORP PIPER JAFFRAY
As Representatives of the several Underwriters
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs:
SECTION 1. INTRODUCTORY. Certain shareholders of Dollar Tree Stores, Inc., a
Virginia corporation (the "Company"), named in Schedule B annexed hereto (the
"Selling Shareholders") propose to transfer and sell an aggregate of (a)
10,747,848 shares of the outstanding Common Stock, $.01 par value per share, of
the Company (the "Common Stock") and (b) warrants to purchase 4,252,152 shares
of Common Stock, to the several underwriters named in Schedule A annexed hereto
(the "Underwriters"), for whom you are acting as Representatives. Said aggregate
of 10,747,848 shares of Common Stock are herein called the "Firm Common Shares",
and said Warrants to purchase 4,252,152 shares of Common Stock are herein called
the "Warrants". In addition, the Selling Shareholders propose to grant to the
Underwriters an option to purchase up to 2,250,000 additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 5 hereof. The Firm
Common Shares and, to the extent the option described in Section 5 hereof is
exercised, the Optional Common Shares, are hereinafter collectively referred to
as the "Common Shares." The Common Shares and the shares of Common Stock
issuable upon exercise of the Warrants are hereinafter collectively referred to
as the "Shares".
You have advised the Company and the Selling Shareholders that the Underwriters
propose to make a public offering of the Shares on the effective date of the
registration statement hereinafter referred to, or as soon thereafter as in your
judgment is advisable.
The Company and each of the Selling Shareholders hereby confirm their respective
agreements with respect to the purchase of the Common Shares and Warrants by the
Underwriters as follows:
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333- 41280) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file prior to
the effective date of such registration statement an amendment or amendments to
such registration statement, which amendment or amendments have been or will be
similarly prepared. There shall be delivered to you, upon your request, two
photocopies of the signed version of such registration statement and amendments,
together with two copies of each exhibit filed therewith. Conformed copies of
such registration statement and amendments (but without exhibits) and of the
related preliminary prospectus have been delivered to you in such reasonable
quantities as you have requested for each of the Underwriters. The Company will
next file with the Commission one of the following: (i) prior to effectiveness
of such registration statement, a further amendment thereto, including the form
of final prospectus, or (ii) a final prospectus in accordance with Rules 430A
and 424(b) of the Rules and Regulations. As filed, such amendment and form of
final prospectus, or such final prospectus, shall include all Rule 430A
Information and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the date and time that this Agreement was executed and delivered by the
parties hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company shall have
previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; PROVIDED, HOWEVER, that such term shall
also include (i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and (ii) any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations relating to
the Shares (the "Additional Registration Statement"). The term "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the preceding
paragraph and any preliminary prospectus included in the Registration Statement
at the time it becomes effective that omits Rule 430A Information. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to the
Shares in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to Rule
424(b) of the Rules and Regulations is required, shall mean the form of final
prospectus included in the Registration Statement at the time such registration
statement becomes effective. The term "Rule 430A Information" means information
with respect to the Shares and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule 430A of
the Rules and Regulations. Any reference herein to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the Act, as of the
date of such Preliminary Prospectus or Prospectus, as the case may be.
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(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including the First
Closing Date hereinafter mentioned, the Registration Statement will contain all
material statements and information required to be included therein by the Act
and the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and the Registration
Statement will not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Prospectus, as amended and
supplemented, as applicable, at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including the First
Closing Date hereinafter mentioned, will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading; provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or omitted from
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter,
directly or through the Representatives, specifically for use in the preparation
thereof. The documents incorporated by reference in the Prospectus, when they
were filed with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and other than DT Keystone Distribution, Inc., DE&S Finance
Company, Dollar Express, Inc., Dollar Express Stores, Inc., Dollar Express
Royalties, Inc. and Dollar Express Management, Inc.. The Company and each of its
subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, with full power and authority (corporate and other) to own and
lease their properties and conduct their respective businesses as described in
the Prospectus, except where the failure to be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole;
the Company owns of record and beneficially all of the outstanding capital stock
of its subsidiaries free and clear of all claims, liens, charges and
encumbrances (except as disclosed in the Prospectus); the Company and each of
its subsidiaries are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders material to
the conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and each of its subsidiaries are duly qualified to
do business and in good standing as foreign corporations in each jurisdiction in
which the ownership or leasing of properties or the conduct of their respective
businesses requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect upon the Company
and
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its subsidiaries, taken as a whole; and no proceeding has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.
(d) The Company has authorized capital stock as set forth in the
financial statements included in the Company's Current Report on Form 8-K dated
July 12, 2000 (the "Current Report"), and as of July 26, 2000, the Company had
103,044,657 issued and outstanding shares of Common Stock and no outstanding
shares of any other class or series of capital stock; the issued and outstanding
shares of Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
conform to the description thereof contained in the Prospectus. All issued and
outstanding shares of capital stock of each subsidiary of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. The
Warrants have been duly authorized, executed and delivered by the Company and
constitute valid, binding and enforceable obligations of the Company. The shares
of Common Stock issuable upon exercise of the Warrants have been duly authorized
and reserved for issuance upon such exercise, and, when issued and delivered
upon exercise of the Warrants in accordance with the terms thereof, such shares
of Common Stock will be validly issued, fully paid and non-assessable, free from
any restrictions on transfer (after giving effect to the registration of such
shares under the Act), and will not be subject to any preemptive or similar
rights. The Warrants, when purchased by the Underwriters as contemplated herein,
will be exercisable in full by the Underwriters in accordance with the terms
thereof. Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, neither the Company nor any subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations, except that the Company
has preemptive rights to acquire shares of its subsidiaries' stock.
(e) No shareholder of the Company has any right which has not been
waived or satisfied to require the Company to register the sale of any shares
owned by such shareholder under the Act in the public offering contemplated by
this Agreement. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the transfer and sale of
the Common Shares and Warrants to be sold by the Selling Shareholders.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited by
applicable law. Except as disclosed in the Prospectus, the making and
performance of this Agreement by the Company and the consummation by the Company
of the transactions herein contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents, of
the Company or any of its subsidiaries, and will not conflict with, result in
the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
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the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or any of their respective properties, except for any such
conflicts, breaches or defaults which individually or in the aggregate would not
be material to the Company and its subsidiaries, taken as a whole may be bound
or affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its subsidiaries or any of
their respective properties, except for any such conflicts, breaches or defaults
which individually or in the aggregate would not be material to the Company and
its subsidiaries, taken as a whole. No consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement by the Company,
except such consents, approvals, authorizations or orders (i) as have been
obtained under the Act, (ii) as may be required under state securities or Blue
Sky laws or foreign securities laws in connection with the purchase of the
Common Shares and Warrants and the distribution of the Shares by the
Underwriters, (iii) as may be required by the National Association of Securities
Dealers, Inc. (the "NASD") and (iv) the absence of which individually and in the
aggregate are not material to the Company and its subsidiaries, taken as a
whole, or to the Underwriters.
(g) KPMG LLP, who have expressed their opinion with respect to the
financial statements and schedules of the Company filed with the Commission and
incorporated by reference in the Prospectus and in the Registration Statement,
are independent accountants as required by the Act and the Rules and
Regulations.
(h) The financial statements and schedules of the Company, and the
related notes thereto, incorporated by reference in the Registration Statement
and the Prospectus present fairly the financial position of the Company as of
the respective dates of such financial statements and schedules, and the results
of operations and cash flows of the Company for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis. No other financial statements or schedules are required to be included in
the Registration Statement or in the documents incorporated by reference
therein. The selected financial data set forth in the Prospectus under the
captions "Summary Financial Information and Operating Data" and "Selected
Financial Data" fairly present the information set forth therein on the basis
stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, or as to violations, defaults
and breaches which individually or in the aggregate would not be material to the
Company and its subsidiaries, taken as a whole, (A) neither the Company nor any
of its subsidiaries is in violation or default of any provision of its Articles
of Incorporation or Bylaws, or is in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound; and (B) there does
not exist any state of facts which constitutes an event of default on the part
of the Company or any such subsidiary as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of default.
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(j) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement or to any documents incorporated by reference therein by the Act, by
the Exchange Act or by the rules and regulations thereunder which have not been
described or filed as required. Except as disclosed in the Prospectus, the
contracts so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company nor any of its subsidiaries, nor to the
best of the Company's knowledge, any other party is in breach of or default
under any of such contracts.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or may be a party or of which property owned or leased by the Company or any
of its subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might, individually
or in the aggregate, prevent or materially adversely affect the transactions
contemplated by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business, results of operations
or prospects of the Company and its subsidiaries; the descriptions in the
Prospectus of the litigation matters described therein are accurate and complete
in all material respects; and, except as disclosed in the Prospectus, no labor
disturbance by the employees of the Company or any of its subsidiaries exists or
is imminent which might be expected to materially adversely affect such
condition, properties, business, results of operations or prospects. Neither the
Company nor any of its subsidiaries is a party or subject to the provisions of
any material injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body.
(l) The Company or the applicable subsidiary has good and valid title to
all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements (or elsewhere in the Prospectus), or (ii)
those which are not material in amount and do not adversely affect the use made
and proposed to be made of such property by the Company and its subsidiaries.
The Company or the applicable subsidiary holds its leased properties under valid
and binding leases, with such exceptions as are not significant in relation to
the business of the Company. Except as disclosed in the Prospectus, the Company
owns or leases all such properties as are necessary to its operations as now
conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction, other than in the ordinary course of business;
(ii) the Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) the Company has not paid or declared any dividends or other distributions
with respect to its capital stock and the Company and its subsidiaries are not
in default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock (except, as
of any Closing Date, for any change as a result of the exercise of the Warrants
by the Underwriters) or indebtedness material to the
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Company and its subsidiaries (other than in the ordinary course of business);
and (v) there has not been any material adverse change in the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company and its subsidiaries.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks, trade
names, copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as now conducted, with such exceptions as would not
have a material adverse effect on the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"); the expiration of
any trademarks (other than "Dollar Tree", "Only $One", "Dollar Express" or
"Dollar Bill$"), trade names, copyrights, licenses, approvals or governmental
authorizations would not have a Material Adverse Effect; and the Company has no
knowledge of any infringement by it or its subsidiaries of trademark, trade name
rights, copyrights, licenses, trade secret or other similar rights of others
which could have a Material Adverse Effect, and there is no claim being made
against the Company or its subsidiaries regarding trademark, trade name,
copyright, license, trade secret or other infringement which could have a
Material Adverse Effect.
(o) The Company has not been advised, and has no reason to believe, that
either it or any of its subsidiaries is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations, except where failure to be
so in compliance would not materially adversely affect the condition (financial
or otherwise), business, properties, results of operations or prospects of the
Company and its subsidiaries, taken as a whole.
(p) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency which has
been or might be asserted or threatened against the Company or its subsidiaries
which could materially and adversely affect the condition (financial or
otherwise) business, properties, results of operations or prospects of the
Company and its subsidiaries, taken as a whole.
(q) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the offering and
sale of the Shares other than the Prospectus, the Registration Statement and
other materials permitted by the Act.
(s) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including,
but not limited to, insurance covering real and personal property (except for
personal property in the stores, which is uninsured) owned or leased by the
Company and its subsidiaries against theft, damage, destruction and acts of
vandalism, all of which insurance is in full force and effect.
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(t) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any candidate
for foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws or the United States or
any jurisdiction thereof.
(u) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares.
(v) The Common Stock of the Company has been registered under Section
12(g) of the Exchange Act, and all of the outstanding shares of Common Stock
(including the Shares) have been listed on the National Market of the Nasdaq
Stock Market.
(w) Of the 2,250,000 Optional Shares, 438,597 Shares (the "Escrow
Shares") are subject to the terms of that certain Escrow Agreement, dated as of
May 5, 2000 (the "Escrow Agreement"), by and among the Company, certain holders
of the Company's Common Stock State Street Bank & Trust Company, and Bernard
Spain and David Mussafer. The Company has consented to the sale of the Escrow
Shares pursuant to the terms of this Agreement. Effective upon the sale of the
Escrow Shares to the Underwriters pursuant to the exercise of the option
described in Section 5 hereof, the Company will have validly and completely
released any claim or interest it might have with respect to the sale of the
Escrow Shares (but not with respect to the proceeds of the sale of the Escrow
Shares), and the Underwriters will acquire the Escrow Shares free and clear of
any claim or interest arising under the Escrow Agreement.
(x) The Company has filed with the Commission, on a timely basis, all
documents required to have been filed by the Company pursuant to the Exchange
Act or the rules and regulations promulgated thereunder. Each such document,
when filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 3. Representations, Warranties and Covenants of the Selling
Shareholders.
(a) Each of the Selling Shareholders severally represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and on the First Closing
Date and the Second Closing Date (if applicable) hereinafter mentioned
will have, good and valid title to the Common Shares and Warrants proposed
to be sold by such Selling Shareholder hereunder on such Closing Date and
full right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver such Common Shares and Warrants hereunder,
free and clear of all voting trust arrangements, liens, encumbrances,
equities, security interests, restrictions and claims whatsoever, except
for any claims on or interests in the Escrow Shares arising under the
Escrow Agreement, which will be
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released in full effective upon the sale of the Escrow Shares to the
Underwriters pursuant to the exercise of the option described in Section 5
hereof; upon delivery of and payment for such Common Shares and Warrants
hereunder, assuming the Underwriters acquire such Common Shares and
Warrants without notice of any adverse claim, the Underwriters will
acquire good and valid title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting
trusts or other defects of title whatsoever, and, in the case of the
Warrants, the Underwriters will have the right to exercise the Warrants in
full in accordance with the terms thereof and will acquire good and valid
title to the Shares issuable upon exercise thereof, free and clear of all
liens, encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever; and, if such Selling
Shareholder is selling Warrants hereunder, the exercise price of such
Warrants is $_____ per share.
(ii) This Agreement has been duly authorized, executed and
delivered by such Selling Shareholder and constitutes the valid and
binding obligation and agreement of such Selling Shareholder, enforceable
against such Selling Shareholder in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited by
applicable law.
(iii) Such Selling Shareholder has executed and delivered a
Power of Attorney and caused to be executed and delivered on his behalf a
Custody Agreement (hereinafter collectively referred to with respect to
each Selling Shareholder as the "Shareholders Agreement") and in
connection herewith such Selling Shareholder further represents, warrants
and agrees that such Selling Shareholder has deposited in custody, under
the Shareholders Agreement, with the agent named therein (the "Agent") as
custodian, certificates in negotiable form, or the original instruments or
agreements evidencing the Warrants properly endorsed for transfer, as the
case may be, for the Common Shares and Warrants to be sold hereunder by
such Selling Shareholder, for the purpose of further delivery pursuant to
this Agreement. Such Selling Shareholder agrees that the Common Shares and
Warrants to be sold by such Selling Shareholder on deposit with the Agent
are subject to the interests of the Company and the Underwriters, that the
arrangements made for such custody are to that extent irrevocable (except
as otherwise provided in this Agreement or the Shareholders Agreement),
and that the obligations of such Selling Shareholder hereunder shall not
be terminated, except as provided in this Agreement or in the Shareholders
Agreement, by any act of such Selling Shareholder, by operation of law, by
the death or incapacity of such Selling Shareholder or by the occurrence
of any other event. If the Selling Shareholder should die or become
incapacitated, or if any other event should occur, before the delivery of
the Common Shares and Warrants hereunder, the documents evidencing Common
Shares and Warrants then on deposit with the Agent shall be delivered by
the Agent in accordance with the terms and conditions of this Agreement as
if such death, incapacity or other event had not occurred, regardless of
whether or not the Agent shall have received notice thereof. This
Agreement and the Shareholders Agreement have been duly executed and
delivered by or on behalf of such Selling Shareholder and the form of such
Shareholders Agreement has been delivered to you.
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(iv) The performance of this Agreement and the Shareholders
Agreement by such Selling Shareholder and the consummation of the
transactions contemplated hereby and thereby will not result in a breach
or violation by such Selling Shareholder of any of the terms or provisions
of, or constitute a default by such Selling Shareholder under, (A) any
indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement, trust instrument
or instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder or any of its properties is bound, (B) if such
Selling Shareholder is not a natural person, the partnership agreement,
trust instrument or any other organizational documents of such Selling
Shareholder, (C) any statute, judgment, decree, order, rule or regulation
of any court or governmental agency or body applicable to such Selling
Shareholder or any of its properties and, if the Selling Shareholder is
selling Warrants hereunder, (D) the agreements or instruments evidencing
such Warrants. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body
is required for the execution and delivery by such Selling Shareholder of
this Agreement and the Shareholders Agreement or the consummation by such
Selling Shareholder of the transactions contemplated by this Agreement and
the Shareholders Agreement, except such consents, approvals,
authorizations or orders (i) as have been obtained under the Act, (ii) as
may be required under state securities or Blue Sky laws or foreign
securities laws in connection with the purchase and distribution of the
Shares by the Underwriters, (iii) as may be required by the NASD and (iv)
the absence of which individually and in the aggregate are not material to
the Company and its subsidiaries, taken as a whole, or to the
Underwriters.
(v) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(vi) Each Preliminary Prospectus and the Prospectus, solely
insofar as each relates to such Selling Shareholder, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made; and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto,
solely insofar as each relates to such Selling Shareholder, will include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(vii) Such Selling Shareholder is not aware that the
Registration Statement or Prospectus includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
liability of a Selling Shareholder for a breach of this representation
shall not exceed the Maximum Indemnity Amount (as defined in SCHEDULE C to
this Agreement) of such Selling Shareholder, and no Selling Shareholder
shall be liable to any Underwriter for a breach of this representation
unless (1) the Representatives shall have first made demand for payment on
the Company with respect to any damages alleged to
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result from the breach of this representation, (2) the Representatives
shall thereafter have used all reasonable efforts to obtain such payment
from the Company, including active pursuit in a court of law of any rights
to indemnity or contribution based on the facts giving rise to the alleged
breach of this representation, and (3) the Company shall have failed to
make such payment within one year after receipt of the notice described in
clause (1).
(b) Each of the Selling Shareholders agree with the Company and
the Underwriters not to offer to sell, sell or contract to sell or
otherwise dispose of any shares of Common Stock or securities convertible
into or exchangeable for any shares of Common Stock, for a period of 90
days after the date of the Prospectus, without the prior written consent
of Goldman, Sachs & Co., as a Representative of the Underwriters, which
consent may be withheld at the sole discretion of Goldman, Sachs & Co.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and the Selling Shareholders that the information set forth (i) in
the last sentence of text on the cover page of the Prospectus and (ii) in the
fifth paragraph under "Underwriting" in the Prospectus concerning the terms of
the offering by the Underwriters and in the seventh, eighth and ninth paragraphs
of text under "Underwriting" was furnished to the Company by and on behalf of
the Underwriters for use in connection with the preparation of the Registration
Statement and the Prospectus and is correct in all material respects. The
Representatives represent and warrant that they have been authorized by each of
the other Underwriters as the Representatives to enter into this Agreement on
its behalf and to act for it in the manner herein provided.
SECTION 5. PURCHASE, SALE AND DELIVERY OF COMMON SHARES AND WARRANTS. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Selling Shareholders
agree, severally and not jointly, to sell to the Underwriters in the respective
amounts set forth in Schedule B hereto, the Firm Common Shares and the Warrants.
The Underwriters agree, severally and not jointly, to purchase from the Selling
Shareholders the number of Firm Common Shares and Warrants described below. The
purchase price to be paid by the several Underwriters to the Selling
Shareholders shall be (A) in the case of the Common Shares, $_____ per share
(the "Common Share Price") and (2) in the case of the Warrants, an amount equal
to the Common Share Price less $_____ per share [THE WARRANT EXERCISE PRICE],
multiplied by the number of Shares issuable upon exercise of the Warrants
purchased by the Underwriters. The Company agrees, upon exercise and tender by
the respective Underwriters of the applicable warrant exercise price, to issue
to the respective Underwriters the number of Shares issuable upon exercise of
the Warrants so exercised.
The obligation of each Underwriter to the Selling Shareholders shall be to
purchase from the Selling Shareholders that number of Firm Common Shares and/or
Warrants set forth opposite the name of such Underwriter in Schedule A hereto.
Delivery of certificates for the Firm Common Shares and original warrant
agreements or instruments for the Warrants to be purchased by the Underwriters
and payment therefor shall be made at the offices of Hofheimer Nusbaum, P.C.,
999 Waterside Drive, Norfolk, Virginia (or such other place as may be agreed
upon by the Company and the Representatives) at such time
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and date, not later than the third (or, if the Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m.
Washington D.C. time, the fourth) full business day following the first date
that any of the Shares are released by you for sale to the public, as you shall
designate by at least 48 hours prior notice to the Company (or at such other
time and date, not later than one week after such third or fourth, as the case
may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that any
of the Shares are released by you for sale to the public or the date that is 48
hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares and original warrant
agreements or instruments representing the Warrants shall be made by or on
behalf of the Selling Shareholders to you, for the respective accounts of the
Underwriters, against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer of same day funds
to the order of the Agent. The certificates for the Firm Common Shares and the
Shares issuable upon exercise of the Warrants shall be registered in such names
and denominations as you shall have requested at least two full business days
prior to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First Closing Date at a location in
Norfolk, Virginia, as may be designated by you. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Selling Shareholders hereby grant an option to the several Underwriters to
purchase, severally and not jointly, in the respective amounts set forth in
Schedule B hereto, up to an aggregate of 2,250,000 Optional Common Shares at the
Common Share Price, for use solely in covering any over-allotments made by you
for the account of the Underwriters in the sale and distribution of the Firm
Common Shares and the Shares issuable upon exercise of the Warrants. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Shares are released by you for sale
to the public, upon notice by you to the Company and the Agent setting forth the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such Optional Common Shares are to be registered and the time and place at which
such certificates will be delivered. Such time of delivery (which may not be
earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Selling
Shareholders pursuant to such notice of exercise by a fraction, the numerator of
which is the number of Firm Common Shares to be purchased by such Underwriter
plus the number of Shares issuable upon the exercise of Warrants to be purchased
by such Underwriter, as set forth opposite its name in Schedule A, and the
denominator of which is 15,000,000 (subject to such adjustments to eliminate any
fractional share purchases as you and the Selling Shareholders may mutually
agree). If the option granted hereunder is exercised in part, the number of
Optional Common Shares to be sold by each
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Selling Shareholder shall be determined by multiplying the number of Optional
Common Shares set forth opposite his or its name in Schedule B by a fraction,
the numerator of which is the number of Optional Common Shares to be sold by the
Selling Shareholders, as specified in such notice of exercise, and the
denominator of which is 2,250,000 (subject to such adjustments to eliminate any
fractional share purchases as you and the Selling Shareholders may mutually
agree). Certificates for the Optional Common Shares will be made available for
checking and packaging on the business day preceding the Second Closing Date at
a location in Norfolk, Virginia, as may be designated by you. The manner of
payment for and delivery of the Optional Common Shares shall be the same as for
the Firm Common Shares purchased from the Selling Shareholders as specified in
the two preceding paragraphs. At any time before lapse of the option, you may
cancel such option by giving written notice of such cancellation to the Company
and the Agent.
You have advised the Company and the Selling Shareholders that each Underwriter
has authorized you to accept delivery of its Common Shares and/or Warrants and
to make payment and receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares and Warrants to be purchased by any Underwriter
whose funds shall not have been received by you by the First Closing Date or the
Second Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after the
effective date of the Registration Statement as in the judgment of the
Representatives is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter any such stop
order at any time, the Company will use its best efforts to obtain the lifting
of such order at the earliest possible moment. The Company will not file any
amendment or supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus of which you
have not been furnished with a copy a reasonable time prior to
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<PAGE>
such filing or to which you reasonably object (except to the extent any
amendment or supplement to which you object is necessary in the opinion of
counsel to the Company to ensure that the Prospectus does not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading) or which is not in
compliance in all material respects with the Act and the Rules and Regulations.
(b) The Company will fully and completely comply with the provisions of
Rule 430A of the Rules and Regulations with respect to information omitted from
the Registration Statement in reliance upon such Rule.
(c) If during such period after the first date of the public offering of
the Shares as, in the opinion of your counsel, the Prospectus is required by law
to be delivered in connection with sales by an Underwriter or dealer, any event
occurs, as a result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or if it is necessary at any time to amend
the Prospectus, including any amendments or supplements, to comply with the Act
or the Rules and Regulations, the Company will promptly advise you thereof and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance and will use its best
efforts to cause the same to become effective (to the extent effectiveness is
required under the Act or the Rules and Regulations) as soon as possible; and,
in case any Underwriter is required to deliver a prospectus after such period,
the Company upon request, but at the expense of such Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company, at
its expense, but only for the nine-month period referred to in Section 10(a)(3)
of the Act, will furnish to you or mail to your order copies of the Registration
Statement, the Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents (other than periodic filings under the
Exchange Act) in each case as soon as available and in such quantities as you
may reasonably request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Shares for sale under (or obtain exemptions from the
application of) the Blue Sky laws of such jurisdictions as you designate and
Canadian securities laws, will comply with such
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laws and will continue such qualifications, registrations and exemptions in
effect so long as reasonably required for the distribution 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
presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise you promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Shares
for offering, sale or trading in any jurisdiction or any initiation or threat of
any proceeding for any such purpose, and in the event of the issuance of any
order suspending such qualification, registration or exemption, the Company,
with your cooperation, will use its best efforts to obtain the withdrawal
thereof.
(g) During the period of five years hereafter, the Company will furnish
to the Representatives: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and statements of income,
shareholders' equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other
report filed by the Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any report or communication
of the Company mailed generally to holders of its Common Stock.
(h) During the period of 90 days after the first date that any of the
Shares are released by you for sale to the public, without the prior written
consent of Goldman, Sachs & Co., as a Representative of the Underwriters, or
each of the Representatives (which consent may be withheld at the sole
discretion of any of the Representatives), the Company will not issue, offer,
sell, grant options to purchase or otherwise dispose of any of the Company's
equity securities or any other securities convertible into or exchangeable with
its Common Stock or other equity security; provided, however, that the Company
may (i) issue shares of Common Stock upon the exercise of stock options and
warrants outstanding on the date hereof, as described in the Prospectus (it
being agreed that the Company shall not accelerate the exercisability of any
such options or grant any waiver or acceleration under the terms of the Stock
Restriction Agreement to be entered into by the optionee upon the exercise of
such options), and (ii) grant options and issue shares of Common Stock in
accordance with its Amended and Restated Stock Option Plan, Stock Incentive Plan
or Employee Stock Purchase Plan, as described in the Prospectus or in materials
incorporated by reference in the Prospectus.
(i) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain exemptions
from the application of) the Blue Sky laws of the State of California (and
thereby permit market making transactions and secondary trading in the Company's
Common Stock in California), will comply with such Blue Sky laws and will
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(j) The Company will cause its counsel to promptly prepare a reasonable
number of copies of bound closing volumes for the Representatives and their
counsel.
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You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions contemplated
hereunder are consummated or this Agreement becomes effective or is terminated,
the Selling Shareholders and the Company together agree to pay all costs, fees
and expenses incurred in connection with the performance of the obligations of
the Company or the Selling Shareholders hereunder, including without limiting
the generality of the foregoing, (i) all expenses incident to the delivery of
the Shares (including all printing, copying, and engraving costs), (ii) all fees
and expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary transfer and other stamp taxes in connection with the transfer and
sale of the Common Shares and the Warrants to the Underwriters and the sale of
Shares to the Underwriters upon exercise of the Warrants, (iv) all fees and
expenses of the Company's counsel and the Company's independent accountants, (v)
all costs and expenses incurred in connection with the preparation, printing,
copying, filing, shipping and distribution of the Registration Statement, each
Preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement, the
Underwriters' Questionnaire and the Blue Sky memorandum, (vi) all filing fees,
attorneys' fees and expenses incurred by the Company or the Underwriters in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Shares for offer and
sale under the Blue Sky laws and Canadian securities laws (provided that such
fees and expenses shall not exceed $12,000), (vii) the filing fee of the NASD,
and (viii) all other fees, costs and expenses referred to in Item 14 of the
Registration Statement. Nothing in this Section 7 shall be construed to modify
any agreement among the Company and the Selling Shareholders with respect to the
allocation of such expenses among them. Except as provided in this Section 7,
Section 9 and Section 11 hereof, the Underwriters shall pay all of their own
expenses, including the fees and disbursements of their counsel (excluding those
relating to qualification, registration or exemption under the Blue Sky laws and
Canadian securities laws and the Blue Sky memorandum referred to above).
SECTION 8. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Firm Common Shares and the
Warrants on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Shareholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M. (or, in the case of a registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations relating to the Shares, not later than
10:00 P.M.), Washington, D.C. Time, on the date of this Agreement, or at such
later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period
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required by Rule 424(b) of the Rules and Regulations; and prior to such Closing
Date, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company or you, shall
be contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or otherwise,
shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock of the Company (other than
as contemplated by Section 6(h) above) or any of its subsidiaries or any
material change in the indebtedness (other than in the ordinary course of
business) of the Company or any of its subsidiaries, (ii) except as set forth in
or contemplated by the Registration Statement or the Prospectus, no material
verbal or written agreement or other transaction shall have been entered into by
the Company or any of its subsidiaries, which is not in the ordinary course of
business, (iii) no loss or damage (whether or not insured) to the property of
the Company or any of its subsidiaries shall have been sustained which
materially and adversely affects the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries, taken as a whole, (iv) no legal or governmental action, suit or
proceeding affecting the Company or any of its subsidiaries which is material to
the Company and its subsidiaries, taken as a whole, or which affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material change
in the condition (financial or otherwise), business, management, results of
operations or prospects of the Company and its subsidiaries, taken as a whole,
which makes it impractical or inadvisable in the judgment of the Representatives
to proceed with the public offering of the Shares or the purchase the Common
Shares and Warrants as contemplated hereby.
(c) There shall have been furnished to you, as Representatives of the
Underwriters, on each Closing Date, in form and substance satisfactory to you,
except as otherwise expressly provided below:
(i) An opinion of Hofheimer Nusbaum, P.C., counsel for the Company
and the Selling Shareholders identified as the "Virginia Selling
Shareholders" on Schedule B hereto (the "Virginia Selling Shareholders"),
addressed to the Underwriters and dated the First Closing Date, or the
Second Closing Date, as the case may be, in the form attached as EXHIBIT
A.
(ii) An opinion of Ropes & Gray, special counsel for the Selling
Shareholders identified as the "New York Selling Shareholders" on Schedule
B hereto (the "New York Selling Shareholders"), addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date,
as the case may be, in the form attached as EXHIBIT B.
(iii) An opinion of Fox, Rothschild, O'Brien & Frankel, LLP, special
counsel for the Selling Shareholders identified as the "Pennsylvania
Selling Shareholders" on Schedule B hereto (the "Pennsylvania Selling
Shareholders"), addressed to the
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Underwriters and dated the First Closing Date, or the Second Closing Date,
as the case may be, in the form attached as EXHIBIT C.
(iv) An opinion of Pepper Hamilton LLP, special counsel for the
Selling Shareholders identified as the "Advent Selling Shareholders" on
Schedule B hereto (the "Advent Selling Shareholders"), addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date,
as the case may be, in the form attached as EXHIBIT D.
(v) Such opinion or opinions of Hale and Dorr LLP, counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as
the case may be, with respect to the incorporation of the Company, the
sufficiency of all corporate proceedings and other legal matters relating
to this Agreement, the validity of the Shares, the Registration Statement
and the Prospectus and other related matters as you may reasonably
require, and the Company and the Selling Shareholders shall have furnished
to such counsel such documents and shall have exhibited to them such
papers and records as they may reasonably request for the purpose of
enabling them to pass upon such matters. In connection with such opinions,
such counsel may rely on representations or certificates of officers of
the Company and governmental officials.
(vi) A certificate of the Company executed by the Chairman of the
Board or President and the chief financial or accounting officer of the
Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of the
date of this Agreement and as of the First Closing Date or the
Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied on or prior to such Closing
Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus on
behalf of the Company; the Registration Statement and the Prospectus
and any amendments or supplements thereto contain all statements
required to be stated therein regarding the Company and its
subsidiaries; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading;
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(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction or
event has occurred which should have been set forth in an amendment
to the Registration Statement or in a supplement to or amendment of
any prospectus which has not been disclosed in such a supplement or
amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except
as disclosed in or contemplated by the Prospectus, there has not
been any material adverse change or a development involving a
material adverse change in the condition (financial or otherwise),
business, properties, results of operations, management or prospects
of the Company and its subsidiaries, taken as a whole; and no legal
or governmental action, suit or proceeding is pending or threatened
against the Company or any of its subsidiaries which is material to
the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, or
which may adversely affect the transactions contemplated by this
Agreement; since such dates and except as so disclosed, neither the
Company nor any of its subsidiaries has entered into any verbal or
written agreement or other transaction that is material to the
Company and its subsidiaries, taken as a whole, which is not in the
ordinary course of business or incurred any material liability or
obligation, direct, contingent or indirect, made any change in its
capital stock, made any material change in its short-term debt or
funded debt or repurchased or otherwise acquired any of the
Company's capital stock; and the Company has not declared or paid
any dividend, or made any other distribution, upon its outstanding
capital stock payable to shareholders of record on a date prior to
the First Closing Date or Second Closing Date, as the case may be;
and
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except as
disclosed in or contemplated by the Prospectus, the Company and its
subsidiaries have not sustained a material loss or damage by strike,
fire, flood, windstorm, accident or other calamity (whether or not
insured).
(vii) On the First Closing Date or the Second Closing Date, as the
case may be, a certificate, dated such Closing Date and addressed to you,
signed by or on behalf of each of the Selling Shareholders to the effect
that the representations and warranties of such Selling Shareholder in
this Agreement are true and correct, as if made at and as of the First
Closing Date or the Second Closing Date, as the case may be, and such
Selling Shareholder has complied with all the agreements and satisfied all
the conditions on his part to be performed or satisfied prior to the First
Closing Date or the Second Closing Date, as the case may be.
(viii) On the date this Agreement is executed and also on the First
Closing Date and the Second Closing Date, letters addressed to you, as
Representatives of the
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Underwriters, from KPMG LLP, independent accountants, the first of each to
be dated the date of this Agreement, the second of each to be dated the
First Closing Date and the third of each (in the event of a Second
Closing) to be dated the Second Closing Date, in form and substance
satisfactory to you.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you
and to Hale and Dorr LLP, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any
certificate signed by any officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you as Representatives to the
Company and the Selling Shareholders without liability on the part of any
Underwriter or the Company except for the expenses to be paid or reimbursed by
the Company and the Selling Shareholders pursuant to Sections 7 and 9 hereof and
except to the extent provided in Section 11 hereof.
SECTION 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. Notwithstanding any other
provisions hereof, if the sale to the Underwriters of the Common Shares and the
Warrants at the First Closing is not consummated because of any refusal,
inability or failure on the part of the Company or any Selling Shareholder to
perform any agreement herein or to comply with any provision hereof, the Company
agrees to reimburse you and the other Underwriters upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by you and them
in connection with the proposed purchase and the sale of the Common Shares and
the Warrants, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, telegraph charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
SECTION 10. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the Company and the
Selling Shareholders will use your and its best efforts to cause the
Registration Statement to become effective, to prevent the issuance of any stop
order suspending the effectiveness of the Registration Statement and, if such
stop order be issued, to obtain as soon as possible the lifting thereof.
SECTION 11. INDEMNIFICATION. (a) The Company (in furtherance of its agreements,
including that certain agreement set forth in Section 22 of that certain
Underwriting Agreement, dated March 18, 1998, among the Company, certain of the
Company's shareholders and the Representatives of the underwriters identified in
such agreement) and each of the Selling Shareholders, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Exchange Act, or other federal
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or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of them
not misleading; and will reimburse each Underwriter and each such controlling
person for any legal and other expenses as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, that neither the Company nor any Selling
Shareholder shall be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto (i) in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof or (ii) in
reliance upon and in conformity with information furnished to the Company by a
Selling Shareholder with respect to such Selling Shareholder (except that the
Selling Shareholder furnishing such information shall not be so relieved of
liability); PROVIDED FURTHER, that no Selling Shareholder shall be liable under
this Section 11(a) for an amount in excess of the Maximum Indemnity Amount (as
defined in SCHEDULE C) of such Selling Shareholder; PROVIDED FURTHER that no
Selling Shareholder shall be required to provide indemnification hereunder
unless (1) the Representatives shall have first made demand for payment on the
Company with respect to any such loss, claim, damage, liability or expense, (2)
the Representatives shall thereafter have used all reasonable efforts to obtain
such payment from the Company, including active pursuit in a court of law of any
rights hereunder to indemnity or contribution for such loss, claim, damage,
liability or expense, and (3) the Company shall have failed to make such payment
within one year after receipt of the notice described in clause (1); and
PROVIDED FURTHER that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such loss, claim, damage, liability or expenses
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or expense. The
Company and the Selling Shareholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to their
respective amounts of such liability for which they each shall be responsible.
In addition to their other obligations under this Section 11(a), the Company and
the Selling Shareholders agree that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding arising out of
or based upon any statement or omission, or any alleged statement or omission,
all as described in this Section 11(a), they will reimburse each Underwriter on
a quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding. To the extent that any such interim
reimbursement
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payment is so held to have been improper, each Underwriter shall promptly return
it to the Company or the Selling Shareholders, as applicable, together with
interest, compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by The Chase Manhattan Bank, New York, New York (the "Prime
Rate"). Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request. This indemnity agreement will be
in addition to any liability which the Company or the Selling Shareholders may
otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, each Selling Shareholder and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of the Act, against any
losses, claims, damages, liabilities or expenses to which the Company, or any
such director, officer or controlling person may become subject, under the Act,
the Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; and will reimburse the
Company, or any such director, officer, Selling Shareholder or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer, Selling Shareholder or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. In addition to its other
obligations under this Section 11(b), each Underwriter severally agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 11(b)
which relates to information furnished to the Company pursuant to Section 4
hereof, it will reimburse the Company (and, to the extent applicable, each
officer, director, Selling Shareholder or controlling person) on a quarterly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company (and, to the extent applicable, each officer, director, Selling
Shareholder or controlling person) for such expenses and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent applicable, each
officer, director, Selling Shareholder or controlling person) shall promptly
return it to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date
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of such request. This indemnity agreement will be in addition to any liability
which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of paragraph (a),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party. The
indemnifying party shall not be liable for any settlement of such action
effected without its written consent, which shall not be unreasonably withheld
or delayed, but if settled with such consent, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement.
(d) If the indemnification provided for in this Section 11 is required
by its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party (subject to the limits set
forth in subparagraph (a) of this Section 11) shall contribute to the amount
paid or payable by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Selling Shareholders and the Underwriters from the offering of the
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Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Selling Shareholders and the Underwriters in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits received by the Company, the Selling Shareholders and the
Underwriters shall be deemed to be in the same proportion, in the case of the
Company and the Selling Shareholders on the one hand, as the total Adjusted
Offering Proceeds (as defined in SCHEDULE C) with respect to the Common Shares
and Warrants sold by them to the Underwriters, and in the case of the
Underwriters, on the other hand, as the underwriting commission as set forth on
the cover page of the Prospectus received by them, bears to the sum of the total
Adjusted Offering Proceeds of the Common Shares and Warrants sold hereunder plus
the amounts received by the Underwriters as underwriting commissions. The
relative fault of the Company, the Selling Shareholders and the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, the
Selling Shareholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subparagraph (c) of
this Section 11, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (c) of this Section 11 with respect to
notice of commencement of any action shall apply if a claim for contribution is
to be made under this subparagraph (d); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
given under subparagraph (c) for purposes of indemnification. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined solely by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this paragraph. Notwithstanding
the provisions of this Section 11, no Underwriter shall be required to
contribute any amount in excess of the amount of the total underwriting
commissions set forth on the cover of the Prospectus received by such
Underwriter in connection with the Shares underwritten by it and distributed to
the public. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 11 are several in proportion
to their respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 11(a) and 11(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an
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arbitration tribunal in such demand or notice, then the party responding to said
demand or notice is authorized to do so.
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to this Agreement
and the obligation of the Selling Shareholders to sell and deliver the Common
Shares and Warrants hereunder, and of each Underwriter to purchase the Common
Shares and Warrants in the manner as described herein, that, except as
hereinafter in this paragraph provided, each of the Underwriters shall purchase
and pay for all the Common Shares and Warrants agreed to be purchased by such
Underwriter hereunder upon tender to the Representatives of all such shares in
accordance with the terms hereof. If any Underwriter or Underwriters default in
their obligations to purchase Common Shares and Warrants hereunder on either the
First or Second Closing Date and the aggregate number of Common Shares and
Warrants which such defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares and Shares issuable upon exercise of Warrants which the Underwriters are
obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares and Warrants which such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of Common Shares
and Shares issuable upon exercise of Warrants with respect to which such default
occurs is more than the above percentage and arrangements satisfactory to the
Representatives and the Company for the purchase of such Common Shares and
Warrants by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Company or the Selling Shareholders except for the expenses to
be paid by the Selling Shareholders pursuant to Section 7 hereof and except to
the extent provided in Section 11 hereof.
In the event that Common Shares and Warrants to which a default relates are to
be purchased by the non-defaulting Underwriters or by another party or parties,
the Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. EFFECTIVE DATE. This Agreement shall become effective immediately as
to Sections 7, 9, 11, 14 and 15 and, as to all other provisions, (i) if at the
time of execution of this Agreement the Registration Statement has not become
effective, at 10:00 A.M., New York time, on the first full business day
following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 10:00 A.M., New York time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Shares for sale to the public. For the purposes of
this Section 13, 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
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(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 Shareholders or by you by notice to the Company and
the Selling Shareholders at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination
shall be without liability on the part of the Company or any Selling
Shareholder to any Underwriter (except for the expenses to be paid or
reimbursed by the Company and the Selling Shareholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof) or of any Underwriter to the Company or any Selling Shareholder
(except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company and the Selling Shareholders
(i) if additional material governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been
generally established on the New York Stock Exchange or on the American
Stock Exchange or in the over the counter market by the NASD, or trading
in securities generally shall have been suspended on either such Exchange
or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
international calamity or any substantial change in political, financial
or economic conditions shall have occurred or shall have accelerated or
escalated to such an extent, as, in the judgment of the Representatives,
to affect adversely the marketability of the Shares, (iii) if any adverse
event shall have occurred or shall exist which makes untrue or incorrect
in any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained therein not
misleading in any material respect, or (iv) if there shall be any action,
suit or proceeding pending or threatened, or there shall have been any
development or prospective development involving particularly the business
or properties of the Company or any of its subsidiaries, which, in the
reasonable judgment of the Representatives, makes it impracticable or
inadvisable to offer or sell the Shares. Any termination pursuant to this
subparagraph (b) shall be without liability on the part of any Underwriter
to the Company or any Selling Shareholder or on the part of the Company or
any Selling Shareholder to any Underwriter (except for expenses to be paid
or reimbursed by the Selling Shareholders pursuant to Section 7 hereof and
except to the extent provided in Section 11 hereof.
SECTION 15. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers, of the Selling Shareholders and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation
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made by or on behalf of any Underwriter, the Company or any Selling Shareholder
or any of its or their partners, officers or directors or any controlling
person, as the case may be, and will survive delivery of and payment for the
Common Shares and Warrants sold hereunder and any termination of this Agreement.
SECTION 16. NOTICES. All communications hereunder shall be in writing and, if
sent to the Representatives shall be mailed, delivered or telecopied to you at
85 Broad Street New York, NY 10004, Attention: ______________, with a copy to
Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004,
Attention: Brent B. Siler, Esq.; if sent to the Company, shall be mailed,
delivered or telecopied to the Company, at 500 Volvo Parkway, Chesapeake,
Virginia 23330 with a copy to Hofheimer Nusbaum, P.C., 1700 Dominion Tower, 999
Waterside Drive, Norfolk, Virginia 23510, Attention: William A. Old, Esq.; if
sent to any Virginia Selling Shareholder, shall be mailed, delivered or
telecopied to the Selling Shareholder c/o the Company at 500 Volvo Parkway,
Chesapeake, Virginia 23330 with a copy to Hofheimer Nusbaum, P.C., 1700 Dominion
Tower, 999 Waterside Drive, Norfolk, Virginia 23510, Attention: William A. Old,
Esq.; if sent to any of the New York Selling Shareholders, to the New York
Selling Shareholder c/o Saunders, Karp & Megrue, 262 Harbor Drive, Stamford,
Connecticut 06902 with a copy to Ropes & Gray, One International Place, Boston,
Massachusetts 02110, Attention: _____________; if sent to any of the
Pennsylvania Selling Shareholders, to the Pennsylvania Selling Shareholders
c/o__________________ with a copy to Fox, Rothschild, O'Brien & Frankel, LLP,
2000 Market Street, 10th Floor, Philadelphia, Pennsylvania 19103, Attention:
Ramon Obod, Esq.; and if sent to any of the Advent Selling Shareholders, to the
Advent Selling Shareholders c/o________________________ with a copy to Pepper
Hamilton LLP, 3000 Two Logan Square, Eighteenth and Arch Streets, Philadelphia,
Pennsylvania 19103, Attention: Cary S. Levinson, Esq. The Company, the Selling
Shareholders or you may change the address for receipt of communications
hereunder by giving notice to the others.
SECTION 17. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 12 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 11, and in each case their respective
successors, personal representatives and assigns, and no other person will have
any right or obligation hereunder. No such assignment shall relieve any party of
its obligations hereunder. The term "successors" shall not include any purchaser
of the Shares as such from any of the Underwriters merely by reason of such
purchase.
SECTION 18. REPRESENTATION OF UNDERWRITERS. You will act as Representatives for
the several Underwriters in connection with all dealings hereunder, and any
action under or in respect of this Agreement taken by you jointly or by Goldman
Sachs & Co., as Representatives, will be binding upon all the Underwriters.
SECTION 19. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
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SECTION 20. NO AGENCY. This Agreement is not intended to create an agency
relationship between the Underwriters, on the one hand, and the Company or
the Selling Stockholders, on the other.
SECTION 21. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the laws pertaining to conflicts of
laws) of the State of New York; provided, however, any closing hereunder shall
be deemed to take place in the Commonwealth of Virginia, and the law of the
Commonwealth of Virginia shall govern the matters described in Section
8.8A-110(a) of the Code of Virginia.
SECTION 22. GENERAL. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the singular
and the plural include one another. The section headings in this Agreement are
for the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified, and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company, the Selling Shareholders (to the extent such amendment
affects them) and you.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
DOLLAR TREE STORES, INC.
By:_______________________
Name:
Title:
THE SELLING SHAREHOLDERS IDENTIFIED ON SCHEDULE B
By:________________________
Name:
Attorney-in-Fact acting on
behalf of each such Selling
Shareholder
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in New York, New York as of
the date first above written.
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
FIRST UNION SECURITIES, INC.
SALOMON SMITH BARNEY INC.
U.S. BANCORP PIPER JAFFRAY INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: GOLDMAN, SACHS & CO.
By:_________________________
Name:
Title:
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SCHEDULE A
Number of Firm Number of
Common Shares Warrants to be
Name of Underwriter to be Purchased Purchased
------------------- --------------- ---------
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SCHEDULE B
Number of Firm Number of Number of Optional
Common Shares Warrants Common Shares
Name of Selling Shareholders to be Sold to be Sold to be Sold*
---------------------------- ---------- ---------- ----------
J. Douglas Perry(1) 382,630 0 0
H. Ray Compton & Jean T. 30,311 0 0
Compton, Joint Tenants1
The S.K. Equity Fund, L.P.(2) 573,160 4,166,811 822,395
Joan P. Brock1 840,992 0 525,000
Patricia W. Perry(1) 383,404 0 0
Jean T. Compton(1) 84,375 0 0
Macon F. Brock & Robert C. 564,840 0 0
Miller, Trustees of the
Brock 1997 Grantor
Retained Annuity Trust(1)
Joan P. Brock & Robert C. 94,168 0 0
Miller, Trustees of the
Brock 1999 Grantor
Retained Annuity Trust(1)
J. Douglas Perry & Robert 1,683,966 0 0
C. Miller, Trustees of the
Patricia W. Perry Grantor
Retained Annuity Trust(1)
James P. Compton, Trustee 0 70,314 0
of the Brymar Descendants
Trust(1)
James P. Compton, Trustee 30,000 0 0
of the Bryan Compton Trust(1)
James P Compton, Trustee 30,000 0 0
of the Mark Alan Compton
Trust(1)
Allan W. Karp(2) 0 6,832 1,185
Christopher K. Reilly(2) 0 1,365 236
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<PAGE>
Melanie K. Berman, 0 3,415 593
Custodian for Kyle
Galbreath Megrue(2)
Melanie K. Berman, Custodian 0 3,415 593
for Christopher Galbreath
Megrue(2)
Bernard Spain(3) 1,413,841 0 266,650
Murray Spain(3) 1,404,681 0 264,922
Bernard Spain Family 186,159 0 35,109
Limited Partnership(3)
Murray Spain Family 195,319 0 36,837
Limited Partnership(3)
Global Private Equity III 2,256,805 0 238,965
Limited Partnership(4)
Advent PGGM Global Limited 345,828 0 36,618
Partnership(4)
Advent Partners GPE III 34,075 0 3,608
Limited Partnership(4)
Advent Partners Limited 14,812 0 1,568
Partnership(4)
Advent Partners (NA) GPE 10,079 0 1,067
III Limited Partnership(4)
Guayacan Private Equity 79,996 0 8,470
Fund Limited Partnership(4)
Dollar Express Investment 58,407 0 6,184
LLC(4)
The Patricia & Douglas 50,000 0 0
Perry Foundation(1)
----------
* Includes an aggregate of 438,597 Escrow Shares, attributable to certain of the
Selling Shareholders as follows:
Bernard Spain 125,427
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<PAGE>
Bernard Spain Family Limited Partnership 16,542
Murray Spain 124,472
Murray Spain Family Limited Partnership 17,332
Global Private Equity III Limited Partnership 124,788
Advent PGGM Global Limited Partnership 19,122
Advent Partners GPE III Limited Partnership 1,884
Advent Partners Limited Partnership 819
Advent Partners (NA) GPE III Limited 558
Partnership
Guayacan Private Equity Fund Limited 4,424
Partnership
Dollar Express Investment LLC 3,229
(1) Virginia Selling Shareholder
(2) New York Selling Shareholder
(3) Pennsylvania Selling Shareholder
(4) Advent Selling Shareholder
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<PAGE>
SCHEDULE C
CERTAIN DEFINITIONS
For purposes of this Agreement:
1. The "Maximum Indemnity Amount" of a Selling Shareholder shall mean the
Adjusted Offering Proceeds (as defined below) with respect to the Common Shares
or Warrants sold by such Selling Shareholder hereunder, reduced to reflect (i)
the amount of any taxes paid or payable by such Selling Shareholder (or, in the
case of a Selling Shareholder that is a pass-through entity for tax purposes, by
the persons taxable on the income of such Selling Shareholder) by virtue of the
sale of such Common Shares or Warrants and (ii) the value of any tax benefit
realized or realizable (taking into account the probability that any such tax
benefit will be realized) by such Selling Shareholder (or, in the case of a
Selling Shareholder that is a pass-through entity for tax purposes, by the
persons taxable on the income of such Selling Shareholder) by virtue of the
payment of amounts in regard to a breach of the representation of such Selling
Shareholder set forth in Section 3(a)(vii) of this Agreement or the payment of
amounts under Section 11 of this Agreement.
2. "Adjusted Offering Proceeds" means (i) with respect to Common Shares sold
by a Selling Shareholder hereunder, the total price paid to such Selling
Shareholder for such Common Shares (net of underwriting commissions but before
deducting expenses) and (ii) with respect to Warrants sold by a Selling
Shareholder hereunder, the total price paid to such Selling Shareholder for such
Warrants (net of underwriting commissions but before deducting expenses) plus
the aggregate exercise price paid to the Company by the Underwriters to exercise
the Warrants.
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