Exhibit 1
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UNION ACCEPTANCE CORPORATION
Class A Common Stock
STANDBY PLACEMENT AGREEMENT
May 8, 2001
Castle Creek Financial LLC
0000 Xx Xxxxx
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Dear Sirs:
The undersigned, Union Acceptance Corporation, an Indiana corporation
(the "Company"), hereby confirms its agreement with you (the "Placement Agent"),
as follows:
1. The Offering.
(a) The Company is commencing a shareholder rights and standby
purchaser offering (the "Offering") of 16 million shares of Class A common
stock, without par value, of the Company ("Class A common stock"), subject to
the Company's right to increase the size of the Offering to 17.6 million shares
of Class A common stock, at a price expected to be $5.00 per share. The Offering
is being made to the Company's existing shareholders who will have a basic
subscription right plus an oversubscription right if there are shares remaining
available.
(b) As part of the Offering, if and when the Registration Statement (as
defined below) becomes effective, the Company will offer to standby purchasers,
consisting of certain institutional investors and high net worth individuals
(the "Standby Purchasers") the opportunity to purchase up to 9.6 million shares
of Class A common stock, if available, after exercise of the basic subscription
rights and oversubscription rights by shareholders; provided, however, that the
Company will sell to such Standby Purchasers, if requested by the Standby
Purchasers, up to at least 4 million shares of Class A common stock in the
aggregate. The Standby Purchasers will acquire shares of Class A common stock at
the same price per share offered to the shareholders.
(c) In connection with the Offering, the Company filed a Registration
Statement on Form S-2 with the Securities and Exchange Commission (the
"Commission") on April 6, 2001 (Commission File No. 333-58396) (the "Initial
Registration Statement") covering those shares offered to the shareholders and
the Standby Purchasers.
(d) The shareholder rights portion of the Offering and sale of
underlying securities will be conducted solely by the Company and its officers
without additional compensation for such selling activities. The Standby
Purchaser portion of the Offering and sale of underlying securities will be
offered exclusively by the Placement Agent on a best efforts basis in accordance
with the terms of this Agreement.
(e) The Placement Agent will act as the Company's financial advisor
regarding the structure of the rights offering. The Company will pay the
Placement Agent $250,000 for its advisory services. The Placement Agent will use
its best efforts to identify potential Standby Purchasers and will assist the
Company in negotiating standby purchase agreements with such Standby Purchasers,
all as contemplated by the Prospectus (as defined below); provided, however,
that no offers or sales will be made until the Registration Statement (as
defined below) has become effective. For effecting arrangements with Standby
Purchasers, the Company shall pay the Placement Agent a fee of 4% of the
aggregate purchase price of the Class A common stock sold to Standby Purchasers
in the Offering. Total advisory and other fees payable to the Placement Agent in
this Offering are limited to $1 million.
(f) The closing of the sale of Class A common stock to the Standby
Purchasers (the "Closing") will occur at the same time as the closing of the
sale of the Class A common stock in connection with the shareholder rights
portion of the Offering, all at the place, date and time for delivery of payment
and shares as provided in the Registration Statement ("Closing Date").
(g) The public offering price of the Class A common stock will be
determined by the board of directors of the Company.
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with the
Placement Agent that:
(i) The Company is eligible to use a registration statement on
Form S-2 for the Offering under the Securities Act of 1933, as amended
(the "Act"). The Company will deliver to you any amendment(s) to the
Registration Statement filed with the Commission (the initial
Registration Statement and all amendments and supplements thereto and
all financial statements, schedules, exhibits and all other documents
incorporated by reference therein or filed as a part thereof are
hereinafter collectively referred to as the "Registration Statement").
The term "preliminary prospectus" means any preliminary prospectus
included at any time as part of the Registration Statement. The
prospectus, in the form filed with the Commission pursuant to Rule
424(b) of the General Rules and Regulations (the "Regulations") of the
Commission under the Act is herein referred to as the "Prospectus."
Reference made herein to any preliminary prospectus or to the
Prospectus shall be deemed to include any document attached as an
exhibit or supplement thereto or incorporated by reference therein, as
of the date of such preliminary prospectus or the Prospectus, as the
case may be.
(ii) At the time of filing thereof and on the Effective Date,
the Registration Statement did or will, and when the Prospectus is
first filed (if required) in accordance with Rule 424(b) and on the
Closing Date, the Registration Statement and Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Regulations and will contain
all contracts and other documents required to be filed as exhibits; at
the time of filing thereof and on the Effective Date and Closing Date,
the Registration Statement did not or will 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; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus (together with any supplement hereto) will
not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in the Registration
Statement or the Prospectus (or any supplement thereto) relating to the
Placement Agent in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Placement
Agent specifically for inclusion in the Registration Statement or the
Prospectus (or any supplement thereto).
(iii) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction have issued an order ("Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement refusing to permit the effectiveness of the
Registration Statement, or suspending the registration or qualification
of the Common stock, nor has any of such authorities instituted or
threatened to institute any proceedings with respect to a Stop Order.
(iv) The only subsidiaries (as defined in the Regulations) of
the Company are those listed in Exhibit 21 of the Company's Form 10-K
for the year ended June 30, 2000 (the "Subsidiaries"). The Company and
the Subsidiaries are corporations, limited liability companies, or
other entities duly organized, validly existing, and, where applicable,
in good standing under the laws of their respective jurisdictions of
incorporation formation, or organization. The Company and the
Subsidiaries are each duly qualified to do business and are, where
applicable, in good standing in every jurisdiction in which their
ownership, leasing, licensing, or use of property and assets or the
conduct of their business makes such qualification necessary.
(v) The authorized capital stock of the Company consists of
(1) 30,000,000 shares of Class A common stock, without par value; (2)
20,000,000 shares of Class B common stock without par value ("Class B
common stock"); and (3) 10,000,000 shares of preferred stock, without
par value (the "Preferred Stock"). As of March 31, 2001, there were
5,833,048 shares of Class A common stock outstanding held of record by
87 persons, 7,461,608 shares of Class B common stock outstanding held
of record by 6 persons, and no shares of Preferred Stock outstanding.
Each outstanding share of capital stock of the Company and each
outstanding share of capital stock of the Subsidiaries is validly
authorized, validly issued, fully paid, and nonassessable, has not been
issued and is not owned or held in violation of any preemptive rights
of stockholders, and in the case of the Subsidiaries are owned of
record and beneficially by the Company free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts, except as otherwise disclosed in the
Prospectus. There are currently no outstanding options, warrants, or
other rights calling for the issuance of, any shares of capital stock
of the Company or of the Subsidiaries or any security or other
instrument which by their terms are convertible into, exercisable for,
or exchangeable for capital stock of the Company, except options issued
under the 1994 and 1999 Incentive Stock Plans or as may be properly
described in the Prospectus or documents incorporated by reference
therein.
(vi) The consolidated financial statements (audited) of the
Company and notes thereto, included in the Registration Statement and
the Prospectus fairly present with respect to the Company and the
Subsidiaries the consolidated financial position, the consolidated
results of operations, and the other information purported to be shown
therein at the respective dates and for the respective periods to which
they apply. Such consolidated financial statements have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as
otherwise noted therein), are correct and complete, and are in
accordance with the books and records of the Company and the
Subsidiaries. The consolidated condensed financial statements
(unaudited) of the Company and notes thereto as of and for the periods
ended December 31, 2000 and June 30, 2000 (audited) included in the
Registration Statement and the Prospectus fairly present with respect
to the Company and the Subsidiaries the consolidated financial
position, the consolidated results of operations, and the other
information purported to be shown therein at the respective dates and
for the respective periods to which they apply. Such consolidated
condensed financial statements have been prepared in accordance with
generally accepted accounting principals consistently applied
throughout the periods involved, are correct and complete, and are in
accordance with the books and records of the Company and the
Subsidiaries. The accountants whose reports on the audited financial
statements are filed with the Commission as a part of the Registration
Statement are, and during the periods covered by their reports included
in the Registration Statement and the Prospectus were, independent
certified public accountants with respect to the Company and the
Subsidiaries within the meaning of the Act and the Regulations. Except
for the consolidated financial statements of the Company and the
consolidated condensed financial statements of the Company, no other
financial statements are required by Form S-2 or otherwise to be
included in the Registration Statement or the Prospectus.
(vii) There is no litigation, arbitration or other
governmental proceeding (formal or informal), or investigation pending
or threatened in writing, with respect to the Company, the
Subsidiaries, or any of their respective operations, businesses,
properties, or assets, except as described in the Prospectus and except
for proceedings or investigations as would not have any adverse
material effect on the Company and Subsidiaries taken as a whole.
Neither the Company nor the Subsidiaries is in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, or
decree except as described in the Prospectus and except for any
violation or default as would not have any material adverse effect on
the Company and Subsidiaries taken as a whole.
(viii) Neither the Company nor the Subsidiaries has received
any notice that the Company, the Subsidiaries or any other party is in
violation or breach of, or in default with respect to, complying with
any material provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to the Company
and the Subsidiaries taken as a whole, and each such contract,
agreement, instrument, lease, license, arrangement, and understanding
is in full force and is the legal, valid, and binding obligation of the
parties thereto. Neither the Company nor the Subsidiaries is in
violation or breach of, or in default with respect to, any term of its
articles of incorporation (or other charter document) or by laws.
(ix) Except as set forth in the Prospectus, all patents,
patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, franchises, and other intangible properties
and assets (all of the foregoing herein referred to as "Intangibles")
that the Company or the Subsidiaries owns or has pending, or under
which it is licensed and which are material to the Company and the
Subsidiaries taken as a whole, are in good standing and to the
knowledge of the Company uncontested. Neither the Company nor the
Subsidiaries is aware that they have infringed, are infringing, or have
received notice of infringement with respect to asserted Intangibles of
others. To the knowledge of the Company or the Subsidiaries there is no
infringement by others of Intangibles of the Company or of the
Subsidiaries.
(x) The Company has all requisite power and authority to
execute, deliver, and perform this Standby Placement Agreement (the
"Agreement"). All necessary corporate proceedings of the Company have
been duly taken to authorize the execution, delivery, and performance
of this Agreement by the Company. This Agreement has been duly
authorized, executed, and delivered by the Company, is the legal,
valid, and binding obligation of the Company, and is enforceable as to
the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or affecting creditors' rights generally, and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). No consent,
authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required
by the Company for the execution, delivery, or performance of this
Agreement by the Company (except filings under the Act and filings of
consents to service of process as may be required by applicable blue
sky laws, which have been or will be made before the Closing). Except
where the failure would not have a material adverse effect on the
Company and the Subsidiaries taken as a whole: (a) no consent of any
party to any contract, agreement, instrument, lease, license,
arrangement to which the Company is a party, or to which any of its
properties or assets are subject, is required for the execution,
delivery, or performance of this Agreement and (b) the execution,
delivery, and performance of this Agreement will not violate, result in
a breach of, conflict with any material provision of or (with or
without the giving of notice or the passage of time or both), entitle
any party to terminate or call a default under any contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate
or result in a breach of any term of the articles of incorporation (or
other charter document) or by-laws of the Company or the Subsidiaries
or violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or the
Subsidiaries or to which any of their respective operations,
businesses, properties, or assets are subject.
(xi) The common stock to be offered by the Prospectus (and any
supplement) is validly authorized and, when issued and delivered in
accordance with the Prospectus (and any supplement), will be validly
issued, fully paid, and nonassessable and will not be issued in
violation of any preemptive rights of shareholders. The common stock
conforms to all statements relating thereto contained in the
Registration Statement or the Prospectus.
(xii) Neither the Company nor any of its officers, directors,
or affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, any action designed to stabilize or manipulate
the price of any security of the Company, or which has caused or
resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of the common
stock hereunder.
(xiv) The Company and Subsidiaries have filed all federal,
state, and local tax returns required to be filed by them and paid all
taxes shown due on such returns as well as all other material taxes,
assessments and governmental charges which have become due; no material
deficiency with respect to any such return has been assessed or
proposed.
(xv) For at least 90 calendar days immediately proceeding the
filing of the Registration Statement, the Class A common stock (A) has
been listed on and is in compliance with the requirements for continued
listing on The Nasdaq Stock Market and has had at least two bona fide
independent market makers (as defined in the National Association of
Securities Dealers, Inc. ("NASD") Rule 2720 of (b)(4)) for a period of
at least 30 trading days immediately preceding the filing of the
Registration Statement and the Effective Date of the Offering.
(xvi) Neither the Company nor the Subsidiaries, nor, to the
Company's knowledge, any officer, director, agent, employee or other
person associated with the Company or the Subsidiaries, acting on
behalf of the Company or the Subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic governmental official or
employee from corporate funds, violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
made any bribe, rebate, payoff, influence payment, kick back or other
unlawful payment.
(xvii) No transaction has occurred between or among the
Company or the Subsidiaries or any of their officers, directors or
affiliates or shareholders that is required to be described in and is
not described in the Prospectus.
(xviii) The Company has filed all reports, proxy statements
and other information, and all amendments to previously filed reports,
proxy statements and other information, required to be filed by and
pursuant to Sections 13, 14 or 15(d) of the Exchange Act of 1934, as
amended (the "Exchange Act").
3. Covenants of the Company.
The Company covenants that it will:
(i) Use its best efforts to cause the Registration Statement to become
effective as promptly as possible and notify you immediately, and confirm such
notice in writing, (A) when the Registration Statement and any post-effective
amendment thereto become effective, (B) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any jurisdiction
regarding the Registration Statement, any post-effective amendment thereto, the
Prospectus, or any amendment or supplement thereto, and (C) of the receipt of
any notification with respect to a Stop Order or the initiation or threatening
of any proceeding with respect to a Stop Order. The Company will use its best
efforts to prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
(ii) During the time when a prospectus relating to the common stock is
required to be delivered hereunder or under the Act or the Regulations, the
Company shall comply with all requirements imposed upon it by the Act, as now
existing and as hereafter amended, and by the Regulations, as from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the common stock in accordance with the provisions hereof and the Prospectus.
If, at any time when a prospectus relating to the common stock is required to be
delivered hereunder or under the Act or the Regulations, any event shall have
occurred as a result of which, in the reasonable opinion of counsel for the
Company or counsel for the Placement Agent, the Registration Statement or the
Prospectus as then amended or supplemented contains 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, or if, in the
opinion of such counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the
Regulations, the Company will promptly prepare and file with the Commission an
appropriate amendment or supplement (in form and substance reasonably
satisfactory to the Placement Agent) which will correct such statement or
omission or which will effect such compliance and will use its best efforts to
have any such amendment declared effective as soon as possible.
(iii) Deliver without charge to the Placement Agent, as soon as the
Registration Statement, or any amendment thereto, becomes effective or a
supplement is filed, such number of copies of the Prospectus, the Registration
Statement, and exhibits, amendments and supplements thereto, if any, as the
Placement Agent may request for the purposes contemplated by this Agreement.
(iv) If required by applicable law, endeavor in good faith, in
cooperation with the Placement Agent, at or prior to the time the Registration
Statement becomes effective, to qualify the common stock for offering and sale
under the "blue sky" or securities laws of such jurisdictions as you may
designate subject to the Company's prior approval; provided, however, that no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction to which
it is not then subject. In each jurisdiction where such qualification shall be
effected, the Company will, unless you agree in writing that such action is not
at the time necessary or advisable, file and make such statements or reports at
such times as are or may be required by the laws of such jurisdiction.
(v) File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the effective date of the
Registration Statement, unless such filing shall comply with the Act and the
Regulations and unless the Placement Agent shall previously have been furnished
with a copy thereof and not reasonably objected in writing to the filing
thereof.
(vi) Comply with all provisions of all undertakings contained in the
Registration Statement.
(vii) If the principal stockholders, officers, or directors of the
Company are required by the "blue sky" or securities authority of any
jurisdiction requested by the Placement Agent pursuant to Section 3(a)(iv) or by
the NASD to escrow or agree to restrict the sale of any security of the Company
owned by them for the Company to qualify or register the common stock for sale
under the "blue sky" or securities laws of any such jurisdiction, cause each
such person to escrow or restrict the sale of such security on the terms and
conditions and in the form specified by the securities administrator of such
jurisdiction.
(viii) Cause its accountants on the Effective Date and Closing Date to
issue to you a "comfort letter" in a form reasonably acceptable to you, dated as
of the Effective Date and as of the Closing Date, respectively.
(ix) Promptly advise the Placement Agent of any inquiry the Company may
receive from a potential Standby Purchaser regarding the Offering so that the
Placement Agent could evaluate such a prospective party and its interest and
assist the Company in any resulting negotiations.
(x) For a period of five years from the Effective Date, furnish its
shareholders annual audited consolidated financial statements with respect to
the Company, including balance sheets and income statements.
(xi) Apply the net proceeds of the Offering in the manner set forth in
the Prospectus.
(xii) For a period of three years from the Effective Date, (A) timely
file with the Commission, all reports and other documents required by the
Exchange Act and not seek suspension of the duty to file such reports and (B)
prepare and file a proxy statement and annual report conforming to the
requirements of Commission Regulation 14A and distribute such proxy statement
and annual report to record and beneficial owners in the manner required by such
Regulation.
4. Payment of Expenses. The Company agrees to pay all expenses in
connection with (a) the preparation, printing and filing of the Registration
Statement, any preliminary prospectus, and the Prospectus, including the cost of
all copies and any amendments or supplements thereto supplied to the Placement
Agent in quantities as hereinabove stated, (b) the issuance, sale, transfer, and
delivery of the common stock, including any transfer or other taxes payable
thereon, (c) subject to the Company's prior approval, the qualification of the
common stock under state or foreign "blue sky" or securities laws, including the
costs of printing the preliminary and final "Blue Sky Survey, " and (d) the
filing fees payable to the Commission, the NASD, and the jurisdictions in which
such qualification is sought. The Company shall pay all costs and expenses
related to any opinion and related due diligence incurred by a "qualified
independent underwriter", within the meaning of Rule 2720 of the NASD if one is
required by the rules of the NASD. Regardless of whether the Offering is
completed, the Company will reimburse the Placement Agent, upon its demand, for
all reasonable out-of pocket expenses (including due diligence expenses, travel
expenses and fees and disbursements of counsel retained by the Placement Agent
in connection with this Agreement) properly documented and presented to the
Company in an itemized billing statement not to exceed $150,000 in the
aggregate. In addition to professional fees, the Placement Agent's billing
statements will include reimbursable expenses normally incurred in the conduct
of its work. The reimbursable expenses will include a flat ten percent of the
Placement Agent's documented costs for data services, telephone, fax, postage
and general office expenses which will be categorized by the Placement Agent as
indirect expenses. These expenses exclude any allocation for general overhead,
salaries, supplies, or similar expenses of the Placement Agent incurred in the
normal conduct of business.
5. Conditions of the Placement Agents' Obligations. The obligation of
the Placement Agent to offer and sell the Common stock to Standby Purchasers as
exclusive limited placement agent for the Company on a best efforts basis, as
provided herein after the Registration Statement has become effective, shall be
subject, in its discretion, to the continuing accuracy of the representations
and warranties of the Company contained herein and in each certificate and
document contemplated under this Agreement to be delivered to the Placement
Agent, as of the date hereof and as of the Closing Date, to the performance by
the Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective not later
than 6:00 P.M., Eastern Time, within five business days after execution of this
Agreement or such other date and time as shall be consented to in writing by the
Placement Agent.
(b) At the Closing, you shall have received the favorable opinion of
Xxxxxx & Xxxxxxxxx, counsel for the Company, dated the date of delivery,
addressed to the Placement Agent, to the effect that:
(i) The Company is a corporation duly organized and validly
existing under the laws of the State of Indiana. The Company is duly
qualified to do business and is in good standing in each jurisdiction
identified by the Company to such counsel as a jurisdiction in which
its ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary;
(ii) The authorized capital stock of the Company consists of
(1) 30,000,000 shares of Class A common stock; (2) 20,000,000 shares of
Class B common stock; and (3) 10,000,000 of Preferred Stock. Each
outstanding share of Class A common stock and Class B common stock is
validly authorized, validly issued, fully paid, and nonassessable.
Except as disclosed in the Prospectus, to the knowledge of such
counsel, there is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Company, except options issued
under the 1994 and 1999 Incentive Stock Plans or as may be properly
described in the Prospectus or documents incorporated by reference
therein;
(iii) To the knowledge of counsel, the Company is not in
violation or breach of, or in default with respect to, any material
provision of its articles of incorporation or bylaws;
(iv) The Company has all requisite corporate power and
authority to execute, deliver, and perform this Agreement. All
necessary corporate proceedings of the Company have been taken to
authorize the execution, delivery, and performance of this Agreement by
the Company. This Agreement has been duly authorized, executed, and
delivered by the Company, is the legal, valid, and binding obligation
of the Company, and (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or affecting
creditors' rights generally, and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)) is enforceable as to the Company in
accordance with its terms;
(v) The common stock sold by the Company in this Offering will
be validly authorized and, when issued and delivered in accordance with
this Agreement, will be validly issued, fully paid, and nonassessable
and will not be issued in violation of any preemptive rights of
shareholders;
(vi) The capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained
in the Prospectus;
(vii) To the knowledge of such counsel, the Company has no
directly or indirectly held subsidiary other than the Subsidiaries;
(viii) The certificates representing the shares to be sold in
the Offering are in the form approved by the board of directors of the
Company, comply with the bylaws and articles of incorporation of the
Company and comply as to form and in all other respects with applicable
legal requirements;
(ix) To the knowledge of such counsel, there are: (A) no
contracts or other documents which are required to be filed as exhibits
to the Registration Statement other than those filed as exhibits
thereto; (B) no legal or governmental proceedings pending or threatened
against the Company, the outcome of which would have a material adverse
effect on the Company and the Subsidiaries taken as a whole; and (C) no
statutes or regulations applicable to the Company or certificates,
permits, grants or other consents, approvals, orders, licenses, or
authorizations from regulatory officials or bodies, which are required
to be obtained or maintained by the Company or the Subsidiaries, which
are of a character required to be disclosed in the Registration
Statement and Prospectus and which have not been so disclosed;
(x) The statements in the Prospectus (excluding statements
incorporated by reference therein), insofar as they are descriptions of
articles of incorporation, bylaws, stock option plans, contracts, or
agreements or descriptions of laws, regulations, or regulatory
requirements, or refer to compliance with law or to statements of law
or legal conclusions, are correct in all material respects.
(xi) To the knowledge of such counsel, the execution, delivery
and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the compliance with the terms and
provisions of this Agreement by the Company will not give rise to a
right to terminate or accelerate the due date of any payment due under,
or violate or result in a breach of any of the terms or provisions 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 under, or result in the execution or imposition of any lien,
charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of any lease, indenture, mortgage, note
or other arrangement or instrument included as an exhibit to the
Registration Statement or otherwise identified by the Company for such
counsel, to which the Company is a party or by which it or its
properties or business is or may be bound or affected, nor will such
action result in any violation of the provisions of the articles of
incorporation or bylaws of the Company or any statute, rule, or
regulation applicable to the Company or any order identified by the
Company for such counsel as material, the effect of which, in any such
case, would be expected to be materially adverse to the Company;
(xii) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body,
domestic or foreign, is required to be obtained by the Company in
connection with the execution and delivery of this Agreement or the
sale of the common stock as contemplated by this Agreement, except
those which have been obtained and except for the filing of consents of
service of process as may be required under applicable blue sky laws;
(xiii) The Registration Statement and the Prospectus and any
amendments or supplements thereto (other than financial statements and
other financial or statistical information as to which no opinion need
be rendered) comply as to form with the requirements of the Act and the
Regulations in all material respects; and
(xiv) The Registration Statement shall have become effective
under the Act. To the knowledge of such counsel, no Stop Order has been
issued and no proceedings for that purpose have been instituted or
threatened in writing.
Such opinions may contain such qualifications, exceptions, and
assumptions and may rely upon such matters or other opinions as may be
agreed upon by the Placement Agents and the counsel rendering the
opinion. In addition, such counsel shall state that they have
participated in conferences with officers of the Company at which the
contents of the Registration Statement and Prospectus and related
matters were discussed and although such counsel did not independently
verify the accuracy or completeness of the statements made in the
Registration Statement and Prospectus, on the basis of the foregoing,
nothing has come to the attention of such counsel that would lead them
to believe that the Registration or Prospectus, as amended or
supplemented, if amended or supplemented, contains any untrue statement
of a material fact or omits a material fact required to be stated
therein necessary to make the statements therein not misleading; except
that such statement may exclude financial statements, financial data,
and statistical information included in the Registration Statement and
Prospectus.
(c) At the Closing Date, you shall have received a certificate of the
Chief Executive Officer and of the Chief Financial Officer of the Company, dated
the Closing Date, to the effect that as of the Closing Date, the representations
and warranties of the Company contained herein were and are accurate, and that
as of the Closing Date the obligations to be performed by the Company hereunder
on or prior thereto have been fully performed.
(d) All proceedings taken in connection with the issuance, sale,
transfer and delivery of the common stock shall be satisfactory in form and
substance in the reasonable judgment of the Placement Agent.
(e) The NASD, upon review of the terms of the public offering of the
common stock, shall not have objected to the Placement Agent's participation in
such offering.
(f) Prior to the Closing Date, there shall have been no material
adverse change in the condition or prospects, financial or otherwise, of the
Company and there shall not have been any material transaction, not in the
ordinary course of business, entered into by the Company except as set forth in
the Prospectus.
(g) On the Effective Date and on the Closing Date, you shall have
received a comfort letter from the Company's accountants in a form reasonably
acceptable to you, dated as of the Effective Date and as of the Closing Date,
respectively.
Any certificate or other document signed by any officer of the Company
and delivered to the Placement Agent or its counsel shall be deemed a
representation and warranty by the Company hereunder to the Placement Agent as
to the statements made therein.
If any condition to the Placement Agents' obligations hereunder to be
fulfilled prior to or at the Closing Date is not so fulfilled, the Placement
Agent may terminate this Agreement or, if the Placement Agent so elects, in
writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold you harmless, any
affiliates and the respective officers, directors, members, representatives and
agents and any other persons controlling you or any of your affiliates (you and
each such other person or entity each being referred to as an "Indemnified
Person"), to the fullest extent lawful, from and against all claims,
liabilities, losses, damages, and expenses, (including without limitation and as
incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing, or defending any such claim or action, including reasonable fees and
expenses of counsel to the Indemnified Person, whether or not arising out of
pending litigation, governmental investigation, arbitration or other alternative
dispute resolution, or other action or proceeding or threatened litigation,
governmental investigation, arbitration or other alternative dispute resolution,
or other action or proceeding) directly or indirectly related to or arising out
of, or in connection with (i) actions taken or omitted to be taken by the
Company, its affiliates, employees, directors, partners, representatives or
agents in connection with the Offering or activities contemplated by this
Agreement; (ii) actions taken or omitted to be taken by any Indemnified Person
pursuant to the terms of, or in connection with services rendered pursuant to,
this Agreement, provided that in the case of this subsection (ii), the Company
shall not be responsible for any claim, liability, loss, damage or expense
arising primarily out of or based primarily upon the willful misconduct or gross
negligence (as determined by the judgment of a court of competent jurisdiction,
no longer subject to appeal or further review) of or by such Indemnified Person;
and (iii) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, Prospectus or any offering materials of
the Company or any other information provided to you by the Company under this
Agreement or any omission or alleged omission to state a material fact necessary
to make the statements therein not misleading (other than untrue statements or
alleged untrue statements in, or omissions or alleged omissions from,
information relating to an Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use by the Company). If multiple
claims are brought against an Indemnified Person in an arbitration with respect
to at least one of which indemnification is permitted under applicable law and
provided for under this Agreement, the Company agrees that any arbitration award
shall be conclusively deemed to be based on claims as to which indemnification
is permitted and provided for, except to the extent that the arbitration award
expressly states that the award, or any portion thereof, is based solely on a
claim as to which indemnification is not available.
(b) If the indemnification provided for herein is unavailable to an
Indemnified Person in respect of any claims, liabilities, losses, damages or
expenses, then the Company, in lieu of indemnifying such Indemnified Person,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such claims, liabilities, losses, damages or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Indemnified Person on the other, as well as any
other relevant equitable considerations. Notwithstanding the foregoing, no
contributions as set forth above shall be available with respect to any claim,
liability, loss, damage or expense arising primarily out of or based primarily
upon the willful misconduct or gross negligence of or by such Indemnified
Person. It is further agreed that the relative benefits to the Company on the
one hand and you on the other hand with respect to the services rendered under
this Agreement shall be deemed to be in the same proportion as (i) the aggregate
Offering bears to (ii) the fees actually paid to you with respect to the
services provided pursuant to this Agreement in connection with the Offering.
The Company also agrees that no Indemnified Person shall have any liability to
the Company for or in connection with this Agreement and the engagement of you
hereunder, except for such claims, liabilities, losses, damages, or expenses
incurred by the Company to the extent they are appropriately judicially
determined (without possibility of appeal or review) to have resulted primarily
from such Indemnified Person's willful misconduct or gross negligence, and the
Company agrees that in no event shall the Indemnified Persons be required to
contribute an amount in the aggregate greater than the fees actually received by
you for its services performed under this Agreement.
(c) If indemnification is to be sought hereunder by an Indemnified
Person, then such Indemnified Person shall notify the Company of the
commencement of any action or proceeding in respect thereof; provided, however,
the failure to so notify the Company shall not relieve the Company of any
liability that it may have to such Indemnified Person pursuant to this Agreement
except to the extent the Company has been prejudiced in any material respect by
such failure or from any liability it may have to such Indemnified Person other
than pursuant to this Agreement. Notwithstanding the above, following such
notification, the Company may elect in writing to assume the defense of such
action or proceeding, and upon such election, it shall not be liable for any
legal costs subsequently incurred by such Indemnified Person (other than
reasonable costs of investigation or providing evidence) in connection
therewith, unless; (i) the Company has failed to provide counsel reasonably
satisfactory to such Indemnified Person in a timely manner (ii) counsel which
has been provided by the Company reasonably determines that its representation
of such Indemnified Person would present it with a conflict of interest; or
(iii) the Indemnified Person reasonably has determined that there may be legal
defense available to it which are different from or in addition to those
available to the Company. In connection with any one action or proceeding, the
Company shall not be responsible for the fees and expenses of more than one
separate law firm in any one jurisdiction for all Indemnified Persons. In the
event the Company does not assume the defense of such action as provided above,
the Company shall not be liable for the settlement of any litigation or
proceeding effected without its prior written consent, anything herein to the
contrary notwithstanding. The Company agrees that it will not, without the prior
written consent of you, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by your engagement (whether or not any Indemnified
Person is a party thereto) unless such settlement, compromise or consent
includes an unconditional release of you and each other Indemnified Person from
all liability arising or that may arise out of such claim, action, or
proceeding.
(d) The Company hereby consents to personal jurisdiction, service and
venue in any court in which any claim which is subject to this Agreement is
brought against you or any other Indemnified Person.
(e) You agree to indemnify and hold harmless the Company, any
affiliates and the respective officers, directors, partners, representatives and
agents and any other persons controlling the Company or any of its affiliates
(the Company and each such other person or entity each being referred to as a
"Company Indemnified Person"), to the fullest extent lawful, from and against
all claims, liabilities, losses, damages, and expenses, (including without
limitation and as incurred, reimbursement of all costs of investigating,
preparing, pursuing, or defending any such claim or action, including fees and
expenses of counsel to, the Company Indemnified Person, whether or not arising
out of pending litigation, governmental investigation, arbitration or other
alternative dispute resolution, or other action or proceeding or threatened
litigation, governmental investigation, arbitration or other alternative dispute
resolution, or other action or proceeding) arising primarily out of or based
primarily upon the willful misconduct or gross negligence (as determined by the
judgement of a court of competent jurisdiction, no longer subject to appeal or
further review) of or by you, including its officers, directors, members,
representatives and agents.
(f) If indemnification is to be sought hereunder by any Company
Indemnified Person, then such Company Indemnified Person shall notify you of the
commencement of any action or proceeding in respect thereof; provided, however,
the failure to so notify you shall not relieve you of any liability that it may
have to such Company Indemnified Person pursuant to this Agreement except to the
extent you has been prejudiced in any material respect by such failure or from
any liability it may have to such Company Indemnified Person other than pursuant
to this Agreement. Notwithstanding the above, following such notification, you
may elect in writing to assume the defense of such action or proceeding, and
upon such election, it shall not be liable for any legal costs subsequently
incurred by such Company Indemnified Person (other than reasonable costs of
investigation or providing evidence) in connection therewith, unless: (i) you
have failed to provide counsel reasonably satisfactory to such Company
Indemnified Person in a timely manner; (ii) counsel which has been provided by
you reasonably determines that its representation of such Company Indemnified
Person would represent it with a conflict of interest; or (iii) the Company
Indemnified Person reasonably has determined that there may be legal defense
available to it which are different from or in addition to those available to
you. In connection with any one action or proceeding, you shall not be
responsible for the fees and expenses of more than one separate law firm in any
one jurisdiction for all Company Indemnified Persons. In the event you do not
assume the defense of such action as provided above, you shall not be liable for
the settlement of any litigation or proceeding effected without its prior
written consent, anything herein to the contrary notwithstanding.
(g) It is understood that, in addition to your engagement pursuant to
this Agreement, you may also be engaged to act for the Company in one or more
additional capacities, and that the terms of such additional engagements may be
embodied in one or more separate written agreements. The provisions of this
Agreement shall apply only with respect to the Offering and not to any such
separate agreements or engagements. The provisions of this Agreement shall
remain in full force and effect following the completion, expiration or
termination of this Agreement or modifications thereof.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date, and such representations, warranties. covenants,
and agreements of the Placement Agent and the Company, including the indemnity
and contribution agreements contained in Section 6, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Placement Agent or any indemnified person, or by or on behalf of the
Company, or any person or entity which is entitled to be indemnified under
Section 6, and shall survive termination of this Agreement or the delivery of
the common stock to the purchasers thereof.
8. Termination.
(a) The Placement Agent shall have the right to terminate this
Agreement at any time prior to the Closing Date by giving notice to the Company
if any domestic or international event, act, or occurrence has materially
disrupted, or in the opinion of the Placement Agent will in the immediate future
materially disrupt, the securities markets; or if there shall have been a
general suspension of, or a general limitation on prices for, trading in
securities on The Nasdaq Stock Market; or if there shall have been an outbreak
of major hostilities or other national or international calamity; or if a
banking moratorium has been declared by a state or federal authority; or if a
moratorium in foreign exchange trading by major international banks or persons
has been declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States; or if the
Company shall have sustained a material or substantial loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage, or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
opinion of the Placement Agent, make it inadvisable to proceed with the
offering; or if there shall have been such change in the market for the
Company's securities or securities in general or in political, financial, or
economic conditions as in the judgment of the Placement Agent makes it
inadvisable to proceed with the public offering on the terms contemplated by the
Prospectus.
(b) If the services of the Placement Agent are terminated, the
Placement Agent will remain entitled to any fees payable pursuant to this
Agreement in the event that the Company completes an offering on which the
Placement Agent provided advice or participated in discussions with potential
Standby Purchasers who invest in such offering, provided that such offering is
completed within 18 months following such termination. In addition, the
Placement Agent will remain entitled to the reimbursement of expenses under the
terms and conditions described above.
9. Information; Confidentiality. In connection with the Offering, the
Company will furnish the Placement Agent with such relevant material regarding
the business and financial condition of the Company as the Placement Agent
reasonably requests, all of which will be accurate and complete in all material
respects at the time furnished. The Company will also use its reasonable efforts
to make available its personnel, consultants, experts, attorneys and accountants
to the Placement Agent upon the Placement Agent's reasonable request in
connection with services provided or to be provided by the Placement Agent. The
Placement Agent agrees to keep any non-public information confidential so long
as it remains non-public, unless disclosure is required by law or requested by
any governmental or regulatory agency or body, and the Placement Agent will not
make any use thereof, except in connection with our services hereunder for the
Company.
10. No Offset. Except as expressly provided herein, no fee paid or
payable to the Placement Agent or any of its affiliates would be used as an
offset or credit against any other fee paid or payable by the Company to the
Placement Agent or any of its affiliates for any services not relating to the
Offering.
11. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to you shall be
mailed, certified mail, return receipt requested, delivered personally or by
messenger, or via facsimile with fax confirmation of receipt or if by letter, to
you at Castle Creek Financial LLC, 6051 El Tordo, X.X. Xxx 0000, Xxxxxx Xxxxx
Xx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxx; with a copy to Xxxxxx Xxxxxxxx
& Xxxx LLP, Attention: Xxxxxx X. Xxxxx, 000 Xxxx Xxxxxx X.X., Xxx. 000, Xxxxx
Xxxxxx, Xxxxxxxx 00000 or if sent to the Company at Union Acceptance
Corporation, Attn: Xxxx Xxxxx, 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx, 00000, with a copy to: Xxxx Xxx, Xxxxxx & Xxxxxxxxx, 00 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000. Either party hereto may change its address
by written notice to the other party
12. Third Parties. The Company expressly acknowledges that the
Placement Agent is retained as an advisor to the Company, and not as an advisor
to or agent of any other person, and that the Company's engagement of the
Placement Agent is not intended to confer rights upon any persons not a party
hereto (including shareholders, employees or creditors of the Company) as
against the Placement Agent, the Placement Agent's affiliates or their
respective directors, officers, agents and employees. Any advice provided to the
Company by the Placement Agent pursuant to the this Agreement is solely for the
information and assistance of the Board of Directors of the Company. Except as
may be shared with the Company's advisors, such advice shall be treated as
confidential information, shall not be disclosed publicly in any manner without
the Placement Agent's prior written approval and shall not be relied upon by the
Company's shareholders or any third party. Any reference to the Placement Agent
or to any affiliate of the Placement Agent in any release or communication to
any party outside the Company and its representatives is subject to the
Placement Agent's prior written approval, which approval shall not be
unreasonably withheld or delayed. If this Agreement is terminated prior to any
release or communication, no reference shall be made to the Placement Agent
without the Placement Agent's prior written approval. Each reference to the
Placement Agent in the Registration Statement is hereby approved.
13. Advertisements. After closing the Offering, the Placement Agent
will have the right to place advertisements in financial and other newspapers
and journals at its own expense describing its services to the Company, provided
that the Placement Agent shall have submitted a copy of any such proposed
advertisements to the Company for its prior approval, which approval prior to
publication would not be unreasonably withheld or delayed.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
Union Acceptance Corporation
By /s/ Xxxx X. Xxxxx
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Its Chief Financial Officer
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Accepted as of the date first above written.
Castle Creek Financial LLC
By /s/ Xxxxxxx X. Xxx
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Its Executive Vice President
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