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EXHIBIT 1.1
1,500,000 Shares
CITI TRENDS, INC.
Common Stock
UNDERWRITING AGREEMENT
January , 2006
CIBC World Markets Corp.
Wachovia Capital Markets, LLC
SG Cowen & Co., LLC
Piper Jaffray & Co.
as
Representatives of the several
Underwriters
named in Schedule I hereto
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York
10017
Ladies and Gentlemen:
The persons listed on Schedule II hereto (each, a "Selling
Stockholder," and together, the "Selling Stockholders"), propose,
subject to the
terms and conditions contained herein, to sell to you and the other
underwriters
named on Schedule I to this Agreement (the "Underwriters"), for
whom you are
acting as Representatives (the "Representatives"), an aggregate of
1,500,000
shares (the "Firm Shares") of common stock, $0.01 par value per
share (the
"Common Stock") of Citi Trends, Inc., a Delaware corporation (the
"Company").
The respective amounts of the Firm Shares to be purchased by each
of the several
Underwriters are set forth opposite their names on Schedule I
hereto. In
addition, the Selling Stockholders (each in the amount set forth on
Schedule II
hereto) propose to grant to the Underwriters an option to purchase
up to an
additional 225,000 shares (the "Option Shares") of Common Stock,
for the purpose
of covering over-allotments, if any, in connection with the sale of
the Firm
Shares. The Firm Shares and the Option Shares are collectively
called the
"Shares."
The Company has prepared and filed in conformity, in all
material
respects, with the applicable requirements of the Securities Act of
1933, as
amended (the "Securities Act"), and the published rules and
regulations
thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the
"Commission") a Registration Statement (as hereinafter defined) on
Form S-1 (No.
333-130863), including a preliminary prospectus relating to the
Shares, and such
amendments thereof as may have been required to the date of this
Agreement.
Copies of such Registration Statement and of the related
Preliminary Prospectus
(as hereinafter defined) have heretofore been delivered by the
Company to you.
The term "Preliminary Prospectus" means any preliminary prospectus
included at
any time as a part of the Registration Statement or filed
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with the Commission by the Company pursuant to Rule 424(a) of the
Rules. The
term "Registration Statement" as used in this Agreement means the
initial
registration statement (including all exhibits and financial
schedules) as
amended at the time and on the date it becomes effective (the
"Effective Date"),
including the information (if any) contained in the form of final
prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and
deemed to be
part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If
the Company has filed an abbreviated registration statement to
register
additional Shares pursuant to Rule 462(b) under the Rules (the
"462(b)
Registration Statement"), then any reference herein to the
Registration
Statement shall also be deemed to include such 462(b) Registration
Statement.
The term "Prospectus" as used in this Agreement means the
prospectus in the form
included in the Registration Statement at the time of effectiveness
or, if Rule
430A of the Rules is relied on, the term Prospectus shall also
include the final
prospectus filed with the Commission pursuant to and within the
time limits
described in Rule 424(b) of the Rules and any amendments thereof
and supplements
thereto.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Shares, as
set forth in
and pursuant to the Statutory Prospectus (as hereinafter defined)
and the
Prospectus, as soon after the Effective Date and the date of this
Agreement as
the Representatives deem advisable. The Company and the Selling
Stockholders
hereby confirm that the Underwriters and dealers have been
authorized to
distribute or cause to be distributed each Preliminary Prospectus,
each Issuer
Free Writing Prospectus (as hereinafter defined), if any, and are
authorized to
distribute the Prospectus (as from time to time amended or
supplemented if the
Company furnishes amendments or supplements thereto to the
Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares.
On the
basis of the representations, warranties and agreements contained
in, and
subject to the terms and conditions of, this Agreement:
(a) The Selling Stockholders agree to sell to each of the
Underwriters the number of Shares set forth opposite the name of
such
Selling
Stockholder on Schedule II hereto, subject to adjustment in
accordance
with Section 9 hereof, and each of the Underwriters agrees,
severally
and not jointly, to purchase from the Selling Stockholders, at
a
purchase
price of $_______ per share (the "Initial Price"), the number
of
Firm
Shares set forth opposite the name of such Underwriter under
the
column
"Number of Firm Shares to be Purchased from the Selling
Stockholders" on Schedule I to this Agreement, subject to
adjustment in
accordance
with Section 9 hereof.
(b) The Selling Stockholders hereby grant to the several
Underwriters an option to purchase, severally and not jointly, all
or any
part of
the Option Shares at the Initial Price. The number of Option
Shares to
be sold by each Selling Stockholder is set forth opposite the
name of
each such Selling Stockholder on Schedule II hereto. The number
of
Option
Shares to be purchased by each Underwriter shall be the same
percentage
(adjusted by the Representatives to eliminate fractions) of the
total
number of Option Shares to be purchased by the Underwriters as
such
Underwriter is purchasing of the Firm Shares. Such option may be
exercised
only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any
time
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on or
before 12:00 noon, New York City time, on the business day
before
the Firm
Shares Closing Date (as defined below), and from time to time
thereafter
within 30 days after the date of this Agreement, in each case
upon
written, facsimile or telegraphic notice, or verbal or
telephonic
notice
confirmed by written, facsimile or telegraphic notice, by the
Representatives to the Company no later than 12:00 noon, New York
City
time, on
the business day before the Firm Shares Closing Date or at
least
two
business days before the Option Shares Closing Date (as defined
below), as
the case may be, setting forth the number of Option Shares to
be
purchased and the time and date (if other than the Firm Shares
Closing
Date) of
such purchase.
(c) Payment of the purchase price for, and delivery of
certificates
for, the
Firm Shares shall be made at the offices of DLA Piper Rudnick
Gray Cary
US LLP, 6225 Smith Avenue, Baltimore, MD 21209, at 10:00 a.m.,
local
time, on the fourth business day following the date of this
Agreement
or at such time on such other date, not later than ten (10)
business
days after the date of this Agreement, as shall be agreed upon
by
the
Company and the Representatives (such time and date of delivery
and
payment
are called the "Firm Shares Closing Date"). In addition, in the
event that
any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price, and delivery of
the
certificates, for such Option Shares shall be made at the
above-mentioned
offices,
or at such other place as shall be agreed upon by the
Representatives and the Company, on each date of delivery as
specified in
the notice
from the Representatives to the Company (such time and date of
delivery
and payment are called the "Option Shares Closing Date"). The
Firm
Shares Closing Date and any Option Shares Closing Date are
called,
individually, a "Closing Date" and, together, the "Closing
Dates."
(d) Payment shall be made to the Selling Stockholders by wire
transfer
of immediately available funds or by certified or official bank
check or
checks payable in New York Clearing House (same day) funds to
the
order of
the Selling Stockholders, against delivery of the respective
certificates to the Representatives for the respective accounts of
the
Underwriters of certificates for the Shares to be purchased by
them.
(e) Certificates evidencing the Shares shall be registered in
such
names and
shall be in such denominations as the Representatives shall
request at
least two full business days before the Firm Shares Closing
Date or,
in the case of Option Shares, on the day of notice of exercise
of
the option
as described in Section 1(b) and shall be delivered by or on
behalf of
the Company to the Representatives through the facilities of
the
Depository
Trust Company ("DTC") for the account of such Underwriter. The
Company
will cause the certificates representing the Shares to be made
available
for checking and packaging, at such place as is designated by
the
Representatives, on the full business day before the Firm
Shares
Closing
Date (or the Option Shares Closing Date in the case of the
Option
Shares).
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof,
as of the
Firm Shares Closing Date and as of each Option Shares Closing Date
(if any), as
follows:
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(a) On the Effective Date, the Registration Statement complied,
and
on the
date of the Prospectus, the date any post-effective amendment
to
the
Registration Statement becomes effective, the date any supplement
or
amendment
to the Prospectus is filed with the Commission and each Closing
Date (each
such date referred to in this sentence, a "Determination
Date"),
the Registration Statement and the Prospectus (and any
amendment
thereof or
supplement thereto) will comply, in all material respects, with
the
applicable requirements of the Securities Act and the Rules and
the
Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the
published
rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date and the
date of
the
Prospectus, and will not, as of any other Determination Date,
contain
any untrue
statement of a material fact or omit to state any material fact
required
to be stated therein or necessary in order to make the
statements
therein
not misleading; and the Prospectus did not, as of its date or
the
Effective
Date, and will not, as of any other Determination Date contain
any untrue
statement of a material fact or omit to state any material fact
necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. When any
related
preliminary prospectus was first filed with the Commission (whether
filed
as part of
the Registration Statement or any amendment thereto or pursuant
to Rule
424(a) of the Rules) and when any amendment thereof or
supplement
thereto
was first filed with the Commission, such preliminary
prospectus
as amended
or supplemented complied in all material respects with the
applicable
provisions of the Securities Act and the Rules and did not
contain
any untrue statement of a material fact or omit to state any
material
fact required to be stated therein or necessary in order to
make
the
statements therein not misleading. If applicable, each
Preliminary
Prospectus
and the Prospectus delivered to the Underwriters for use in
connection
with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
EDGAR,
except to
the extent permitted by Regulation S-T. Notwithstanding the
foregoing,
none of the representations and warranties in this Section 2(a)
shall
apply to statements in, or omissions from, the Registration
Statement
or the Prospectus made in reliance upon, and in conformity
with,
information furnished in writing by the Representatives on behalf
of the
several
Underwriters for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company
acknowledges that the only information furnished in writing by
the
Representatives on behalf of the several Underwriters for use in
the
Registration Statement or the Prospectus is the statements
contained in
the third,
fourth, fifth and sixth sentences of the fourth paragraph, and
the
eleventh, thirteenth, fourteenth and seventeenth paragraphs under
the
caption
"Underwriting" in the Statutory Prospectus and the Prospectus
(collectively, the "Underwriter Information").
(b) As of the Applicable Time (as defined below), neither (i)
the
Issuer
Free Writing Prospectus(es) (as defined below) issued at or
prior
to the
Applicable Time, and the Statutory Prospectus (as defined
below),
all
considered together (collectively, the "General Disclosure
Package"),
nor (ii)
any individual Issuer Free Writing Prospectus when considered
together
with the General Disclosure Package included any untrue
statement
of a
material fact or omitted to state any material fact required to
be
stated
therein or necessary in order to make the statements therein,
in
the light
of the circumstances under which they were made, not
misleading;
provided,
however, that this representation and warranty shall not apply
to
statements in or omissions from any
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prospectus
included in the General Disclosure Package made in reliance
upon and
in conformity with the Underwriter Information.
Each Issuer Free Writing Prospectus, including any electronic
road
show
(including without limitation any "bona fide electronic road show"
as
defined in
Rule 433(h)(5) under the Securities Act) (each, a "Road Show")
(i) is
identified in Schedule V hereto and (ii) complied when issued,
and
complies,
in all material respects with the requirements of the
Securities
Act and
the Rules and the Exchange Act and the rules and regulations of
the
Commission thereunder. Except for the free writing prospectuses,
if
any,
identified in Schedule V hereto, the Company has not prepared,
used
or
referred to, and will not, without the prior consent of the
Representatives, prepare, use or refer to, any Issuer Free
Writing
Prospectus.
As used in this Section and elsewhere in this Agreement:
"Applicable Time" means ___:00 [a/p]m (Eastern time) on the date of
this
Underwriting Agreement.
"Statutory
Prospectus" as of any time means the Preliminary Prospectus
relating
to the Shares that is included in the Registration Statement
immediately prior to the Applicable Time. For purposes of this
definition,
information contained in a form of prospectus that is deemed
retroactively
to be a
part of the Registration Statement pursuant to Rule 430A of the
Rules
shall be considered to be included in the Statutory Prospectus as
of
the actual
time that form of prospectus is filed with the Commission
pursuant
to Rule 424(b).
"Issuer
Free Writing Prospectus" means each "free writing prospectus"
(as
defined in
Rule 405 of the Rules), if any, prepared by or on behalf of the
Company or
used or referred to by the Company in connection with the
offering
of the Shares.
(c) The Registration Statement is effective under the Securities
Act
and no
stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of
any
Preliminary Prospectus, the Prospectus or any "free writing
prospectus"
(as
defined in Rule 405 of the Rules) has been issued by the
Commission
and, to
the Company's knowledge, no proceedings for that purpose have
been
instituted
or are threatened under the Securities Act. Any required filing
of the
Prospectus and any supplement thereto pursuant to Rule 424(b)
of
the Rules
has been or will be made in the manner and within the time
period
required by such Rule 424(b). Any material required to be filed
by
the
Company pursuant to Rule 433(d) or Rule 163(b)(2) of the Rules
has
been or
will be made in the manner and within the time periods required
by
such
Rules.
(d) Each Issuer Free Writing Prospectus, as of its issue date and
at
all
subsequent times through the completion of the public offer and
sale
of the
Shares or until any earlier date that the Company notified or
notifies
the Representatives as described in the next sentence, did not,
does not
and will not include any information that conflicted, conflicts
or will
conflict with the information contained in the Registration
Statement, the
Statutory Prospectus or the Prospectus. If at any time
following
issuance of an Issuer
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Free
Writing Prospectus there occurred or occurs an event or
development
as a
result of which such Issuer Free Writing Prospectus conflicted
or
would
conflict with the information contained in the Registration
Statement,
the Statutory Prospectus or the Prospectus or included or would
include an
untrue statement of a material fact or omitted or would omit to
state a
material fact required to be stated therein or necessary in
order
to make
the statements therein, in the light of the circumstances
prevailing
at the subsequent time, not misleading, the Company has
promptly
notified or will promptly notify the Representatives and has
promptly
amended or will promptly amend or supplement, at its own
expense,
such
Issuer Free Writing Prospectus to eliminate or correct such
conflict,
untrue
statement or omission.
(e) The financial statements of the Company (including all notes
and
schedules
thereto) included in the Registration Statement, the Statutory
Prospectus
and the Prospectus present fairly the financial position of the
Company at
the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company for the
periods
specified;
and such financial statements and related schedules and notes
thereto,
and the unaudited financial information included as part of the
Registration Statement, have been prepared in conformity with
generally
accepted
accounting principles, consistently applied throughout the
periods
involved. The summary and selected financial data included in
the
Registration Statement, the Statutory Prospectus and the
Prospectus
present
fairly the information shown therein as at the respective dates
and for
the respective periods specified and have been presented on a
basis
consistent with the consolidated financial statements set forth
in
the
Registration Statement, the Statutory Prospectus and the
Prospectus.
(f) KPMG LLP, whose reports are filed with the Commission as a
part
of the
Registration Statement, are and, during the periods covered by
their
reports, were an independent registered public accounting firm
as
required
by the Securities Act and the Rules. The Company has not had
any
"disagreements" (as that term is defined in Item 304 of Regulation
S-K
promulgated under the Securities Act) with its current or
former
independent auditors on any matter of accounting principles or
practices,
financial
statement disclosure, or auditing scope or procedure and none
of
the events
listed in Item 304(a)(1)(v)(A) through (D) of Regulation S-K
promulgated under the Securities Act have occurred during the
immediately
preceding
five fiscal years.
(g) The Company has been duly incorporated and is validly
existing
and in
good standing under the laws of the State of Delaware. The
Company
has no
subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture,
association or
other
business organization. The Company is duly qualified to do
business
and is in
good standing as a foreign corporation in each jurisdiction in
which the
nature of the business conducted by it or location of the
assets
or properties
owned, leased or licensed by it requires such qualification
(which
jurisdictions are listed on Schedule III hereto), except for
such
jurisdictions where the failure to so qualify, individually or in
the
aggregate,
could not reasonably be expected to have a material adverse
effect on
the assets, properties, condition, financial or otherwise, or
in
the
results of operations, business affairs or business prospects of
the
Company (a
"Material Adverse Effect"); and to the Company's knowledge, no
proceeding
has been instituted in
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any such
jurisdiction revoking, limiting or curtailing, or seeking to
revoke,
limit or curtail, such power and authority or qualification.
The
Company
does not own, lease or license any asset or property or conduct
any
business outside the United States of America.
(h) The Company has all requisite corporate power and authority,
and
all
necessary authorizations, approvals, consents, orders,
licenses,
certificates and permits of and from all governmental or regulatory
bodies
(collectively, the "Permits"), to own, lease and license its assets
and
properties
and conduct its business, all of which are valid and in full
force and
effect, except where the lack of such Permits, individually or
in the
aggregate, could not reasonably be expected to have a Material
Adverse
Effect. The Company has fulfilled and performed in all material
respects
all of its obligations with respect to such Permits and; to the
Company's
knowledge, no event has occurred that allows, or after notice
or
lapse of
time would allow, revocation or termination thereof or results
in
any other
material impairment of the rights of the Company thereunder.
Except as
may be required under the Securities Act and state and foreign
blue sky
laws, no other Permits are required to enter into, deliver and
perform
this Agreement and to issue and sell the Shares.
(i) At the time of filing the Registration Statement and at the
date
hereof,
the Company was not and is not an "ineligible issuer," as
defined
in Rule
405 of the Rules.
(j) (i) To the best of the Company's knowledge, the Company owns
or
possesses
legally enforceable rights to use all patents, patent rights,
inventions, trademarks, trademark applications, trade names,
service
marks,
copyrights, copyright applications, licenses, know-how and
other
similar
rights and proprietary knowledge (collectively, "Intangibles")
currently
used in or necessary for the conduct of its business, and (ii)
to the
best of the Company's knowledge, the Company has not knowingly
infringed
upon or misappropriated the intellectual property rights of any
third-parties, and (iii) no claims in connection with any of the
items in
clause
(ii) are pending or, to the Company's knowledge, threatened, and
to
the
Company's knowledge there are no bases for such claims. To the best
of
the
Company's knowledge, none of the Intangibles currently used in
connection
with its business is currently being infringed by a third-party
and the
Company has not made any claims that a third-party has violated
or
infringed
any of the Company's rights in such Intangibles.
(k) The Company has good and marketable title in fee simple to
all
real
property, and good and marketable title to all other property
owned
by it, in
each case free and clear of all liens, encumbrances, claims,
security
interests and defects, except such as are described in the
Registration Statement and Prospectus and which could not
reasonably be
expected
to have a Material Adverse Effect. All property held under
lease
by the
Company is held by it under valid, existing and enforceable
leases,
free and
clear of all liens, encumbrances, claims, security interests
and
defects,
except such as are described in the Registration Statement and
Prospectus
and which could not reasonably be expected to have a Material
Adverse
Effect. Subsequent to the respective dates as of which
information
is given
in the Registration Statement and the Prospectus, (i) there has
not been
any Material Adverse Effect and (ii) the Company has not
sustained
any loss or
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interference with its assets, businesses or properties (whether
owned or
leased)
from fire, explosion, earthquake, flood or other calamity,
whether
or not
covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which
could
reasonably
be expected to have a Material Adverse Effect. Since the date
of the
latest balance sheet included in the Registration Statement and
the
Prospectus, the Company has not (A) issued any securities or
incurred any
liability
or obligation, direct or contingent, for borrowed money, except
such
liabilities or obligations incurred in the ordinary course of
business,
(B) entered into any transaction not in the ordinary course of
business
or (C) declared or paid any dividend or made any distribution
on
any shares
of its stock or redeemed, purchased or otherwise acquired or
agreed to
redeem, purchase or otherwise acquire any shares of its capital
stock.
(l) There is no document, contract or other agreement required to
be
described
in the Registration Statement, the Statutory Prospectus or the
Prospectus
or to be filed as an exhibit to the Registration Statement
which is
not described or filed, as applicable, as required by the
Securities
Act or Rules. Each description of a contract, document,
agreement
or instrument in the Registration Statement, the Statutory
Prospectus
or the Prospectus accurately reflects in all respects the
material
terms of the underlying contract, document, agreement or
instrument. Each contract, document or other agreement described in
the
Registration Statement, the Statutory Prospectus or the Prospectus
or
listed in
the Exhibits to the Registration Statement is in full force and
effect and
is valid and enforceable by and against the Company, as the
case may
be, in accordance with its terms, except as such enforceability
may be
limited by applicable bankruptcy, insolvency, fraudulent
conveyance,
reorganization, moratorium and other similar laws affecting
the
enforcement of creditors' rights generally and by general
equitable
principles. Neither the Company nor, to the Company's knowledge,
any other
party is
in default in the observance or performance of any term or
obligation
to be performed by it under any such contract, document,
agreement
or instrument, and, to the Company's knowledge, no event has
occurred
which with notice or lapse of time or both would constitute
such
a default.
No default exists, and no event has occurred which with notice
or lapse
of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by
the
Company of any
other contract, document, agreement or instrument to which
the
Company is a party or by which Company or its properties or
business
may be
bound or affected which default or event, individually or in
the
aggregate,
could reasonably be expected to have a Material Adverse Effect.
(m) The statistical and market related data included in the
Registration Statement, the Statutory Prospectus and the Prospectus
are
based on
or derived from sources that the Company believes to be
reliable
and
accurate.
(n) The Company is not in violation of any term or provision of
its
certificate of incorporation or by-laws, each as amended through
the date
hereof and
each Closing Date (respectively, the "Charter" and "Bylaws"),
or of any
franchise, license, permit, judgment, decree, order, statute,
rule or
regulation, where the consequences of such violation,
individually
or in the
aggregate, could reasonably be expected to have a Material
Adverse
Effect.
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(o) Neither the execution, delivery and performance of this
Agreement
by the Company nor the consummation of any of the transactions
contemplated hereby will give rise to a right to terminate or
accelerate
the due
date of any payment due under, or conflict with or result in
the
breach of
any term or provision of, or constitute a default (or an event
which with
notice or lapse of time or both would constitute a default)
under, or
require any consent or waiver under, or result in the execution
or
imposition of any lien, charge or encumbrance upon any properties
or
assets of
the Company pursuant to the terms of, any indenture, mortgage,
deed of
trust or other contract, document, agreement or instrument to
which the
Company is a party or by which the Company or any of its
properties
or businesses is bound, or any franchise, license, permit,
judgment,
decree, order, statute, rule or regulation applicable to the
Company or
violate any provision of the Charter or Bylaws, except for such
consents
or waivers which have already been obtained and are in full
force
and
effect.
(p)
The Company has authorized and outstanding capital stock as set
forth
under the caption "Capitalization" in the Statutory Prospectus
and
the
Prospectus. All of the issued and outstanding shares of Common
Stock
have been
duly and validly issued and are fully paid and nonassessable.
There are
no preemptive or other similar rights to subscribe for or to
purchase
or acquire any shares of Common Stock or any such rights
pursuant
to the
Charter or Bylaws or any contract, document, agreement or
instrument
to or by which the Company is a party or bound. The Shares are
duly and
validly issued, fully paid and nonassessable, except as
provided
in the
next sentence, and have not been issued in violation of any
preemptive
or other similar right. The Shares that are not issued and
outstanding as of the date hereof have been duly reserved and
authorized
by the
Company and, when issued and delivered upon exercise of the
applicable
Stock Options, as defined below, will be validly issued, fully
paid and
non-assessable. The Stock Options to be exercised by certain
Selling
Stockholders in connection with the transactions contemplated
by
the
Custody Agreements, the Powers of Attorney and this Agreement and
to
be
deposited with the Custodian in accordance with the Custody
Agreements
(collectively, the "Stock Options") have been duly granted to, are
fully
vested in
and may be exercised by, such relevant Selling Stockholder. The
Stock
Options were granted in accordance with the Company's Amended
and
Restated
1999 Stock Option Plan and/or 2005 Long-Term Incentive Plan
(the
"Plans").
(q) Except as disclosed in the Registration Statement, the
Statutory
Prospectus
and the Prospectus, there is no outstanding option, warrant or
other
right calling for the issuance of, and there is no commitment,
plan
or
arrangement to issue, any share of capital stock of the Company or
any
security
convertible into, or exercisable or exchangeable for, such
capital
stock. The Common Stock and the Shares conform in all material
respects
to all statements in relation thereto contained in the
Registration Statement, the Statutory Prospectus and the
Prospectus.
(r) No holder of any security of the Company has any right,
which
has not
been waived in writing, to have any security owned by such
holder
included
in the Registration Statement or to demand registration of any
security
owned by such holder for a period of 180 days after the date of
this
Agreement. Each director and executive officer of the Company
and
each
stockholder of the Company listed on Schedule IV has delivered
to
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<PAGE>
the
Representatives his enforceable written lock-up agreement in the
form
attached
to this Agreement as Exhibit A hereto ("Lock-Up Agreement").
(s) All necessary corporate action has been duly and validly
taken
by the
Company to authorize the execution, delivery and performance of
this
Agreement. This Agreement has been duly and validly authorized,
executed
and delivered by the Company and constitutes and will
constitute
the legal,
valid and binding obligation of the Company enforceable against
the
Company in accordance with its terms, except as the
enforceability
thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium
or other similar laws affecting the enforcement of creditors'
rights
generally and by general equitable principles.
(t) There is not pending or, to the knowledge of the Company,
threatened
any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, to which the Company is a party, or to
which
its
properties or assets are subject, before or brought by any
court,
arbitrator
or governmental agency or body.
(u) The Company is not involved in any labor dispute nor, to
the
knowledge
of the Company, is any such dispute threatened, which dispute
could
reasonably be expected to have a Material Adverse Effect. The
Company is
not aware of any existing or imminent labor disturbance by the
employees
of any of its principal suppliers or contractors which could
reasonably
be expected to have a Material Adverse Effect. The Company is
not aware
of any threatened or pending litigation between the Company and
any of its
officers, directors, employees or stockholders which, if
adversely
determined, could reasonably be expected to have a Material
Adverse
Effect and has no reason to believe that such officers will not
remain in
the employment of the Company.
(v) No transaction has occurred between or among the Company and
any
of its
officers, directors, employees or shareholders or any affiliate
or
affiliates
of any such officer or director or shareholder that is required
to be described
in and is not described in the Registration Statement, the
Statutory
Prospectus and the Prospectus.
(w) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected
to cause
or result in, or which has constituted or which might
reasonably
be
expected to constitute, the stabilization or manipulation of the
price
of the
Common Stock or any security of the Company to facilitate the
sale
or resale
of any of the Shares.
(x) The Company has filed all federal, state, local and foreign
tax
returns
which are required to be filed through the date hereof, which
returns
are true and correct in all material respects or has received
timely
extensions thereof, and has paid all taxes shown on such
returns
and all
assessments received by it to the extent that the same are
material
and have become due. There are no tax audits or investigations
pending, which if
adversely determined could reasonably be expected to
have a
Material Adverse Effect; nor are there any material proposed
additional
tax assessments against the Company.
10
<PAGE>
(y) The Company's Common Stock is listed on the National
Association
of
Securities Dealers Automated Quotation National Market System
("Nasdaq"). The Company is in compliance with all applicable
corporate
governance
requirements set forth in the Nasdaq Marketplace Rules that are
in effect
with respect to it and is actively taking steps to ensure that
it will be
in compliance with other applicable corporate governance
requirements set forth in the Nasdaq Marketplace Rules which will
in the
future
become applicable to it.
(z) The Company has taken no action designed to, or likely to
have
the effect
of, terminating the registration of the Common Stock under the
Exchange
Act or the quotation of the Common Stock on the Nasdaq National
Market,
nor has the Company received any notification that the
Commission
or the
Nasdaq National Market is contemplating terminating such
registration or quotation.
(aa) The books, records and accounts of the Company accurately
and
fairly
reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of,
the
Company.
The Company maintains a system of internal accounting controls
sufficient
to provide reasonable assurances that (i) transactions are
executed
in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit
preparation of financial statements in accordance with generally
accepted
accounting
principles and to maintain asset accountability, (iii) access
to assets
is permitted only in accordance with management's general or
specific
authorization and (iv) the recorded accountability for assets
is
compared
with the existing assets at reasonable intervals and
appropriate
action is
taken with respect to any differences; the chief executive
officer
and the chief financial officer of the Company have made all
certifications required by the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act") and any related rules and regulations
promulgated by
the
Commission, and the statements contained in any such certification
are
complete
and correct; the Company maintains "disclosure controls and
procedures" (as defined in Rule 13a-15(e) under the Exchange
Act).
(bb) Based on the evaluation of its internal control over
financial
reporting,
the Company is not aware of (i) any significant deficiency or
material
weakness in the design or operation of internal control over
financial
reporting which are reasonably likely to adversely affect the
Company's
ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that
involves
management
or other employees who have a significant role in the Company's
internal
control over financial reporting.
(cc) Except as described in the Statutory Prospectus and the
Prospectus
and as preapproved in accordance with the requirements set
forth in
Section 10A of the Exchange Act, KPMG LLP has not been engaged
by
the
Company to perform any "prohibited activities" (as defined in
Section
10A of the
Exchange Act).
(dd) The Company's Board of Directors has validly appointed an
audit
committee
whose composition satisfies the requirements of Rule 4350(d)(2)
of the
Rules of the National Association of Securities Dealers (the
"NASD
Rules")
and the Board of
11
<PAGE>
Directors
and/or the audit committee has adopted a charter that satisfies
the
requirements of Rule 4350(d)(1) of the NASD Rules. The audit
committee
has
reviewed the adequacy of its charter within the past twelve
months.
(ee) The Company is actively taking steps to ensure that it will
be
in
compliance with all other applicable provisions of the
Sarbanes-Oxley
Act and
any related rules and regulations promulgated by the Commission
and
corporate governance requirements under the NASD Rules upon the
effectiveness of such provisions and has no reason to believe that
it will
not be
able to comply with such provisions at the time of
effectiveness.
(ff) There are no material off-balance sheet arrangements (as
defined in
Regulation S-K Item 303(a)(4)(ii) promulgated under the
Securities
Act) that may have a material current or future effect on the
assets,
properties, condition, financial or otherwise, or in the
results
of
operations, business affairs or business prospects of the
Company.
(gg) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are
customary
in the businesses in which they are engaged or propose to
engage
after
giving effect to the transactions described in the Statutory
Prospectus
and the Prospectus; all policies of insurance and fidelity or
surety
bonds insuring the Company or the Company's businesses, assets,
employees,
officers and directors are in full force and effect; the
Company is
in compliance with the terms of such policies and instruments
in all
material respects; and the Company has no reason to believe that
it
will not
be able to renew its existing insurance coverage as and when
such
coverage
expires or to obtain similar coverage from similar insurers as
may be
necessary to continue its business at a cost that is not
materially
greater
than the current cost. Except as disclosed in the Registration
Statement,
the Statutory Prospectus and the Prospectus, the Company has
not been
denied any insurance coverage which it has sought or for which
it
has
applied.
(hh) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative
or
other
governmental body necessary in connection with the execution
and
delivery
by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or
performed by
the
Company (except such additional steps as may be required by the
National
Association of Securities Dealers, Inc. (the "NASD") or may be
necessary
to qualify the Shares for public offering by the Underwriters
under the
state securities or blue sky laws) has been obtained or made
and
is in full
force and effect.
(ii) There are no affiliations with the NASD among the
Company's
officers
or directors or, to the knowledge of the Company, any
stockholder
of the
Company, except as set forth in the Registration Statement.
(jj) (i) The Company is in compliance in all material respects
with
all rules,
laws and regulation relating to the use, treatment, storage and
disposal
of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to
12
<PAGE>
its
business; (ii) the Company has not received any notice from any
governmental authority or third party of an asserted claim
under
Environmental Laws; (iii) the Company has received all permits,
licenses
or other
approvals required of it under applicable Environmental Laws to
conduct
its business and is in compliance with all terms and conditions
of
any such
permit, license or approval; (iv) to the Company's knowledge,
no
facts
currently exist that will require the Company to make future
material
capital expenditures to comply with Environmental Laws; and (v)
no
property which is or has been owned or, to the best of the
Company's
knowledge
after due inquiry, leased or occupied by the Company has been
designated
as a Superfund site pursuant to the Comprehensive Environmental
Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C.
Section
9601, et. seq.) ("CERCLA") or otherwise designated as a
contaminated site under applicable state or local law. The Company
has not
been named
as a "potentially responsible party" under CERCLA.
(kk) In
