EXHIBIT 1.1
7,000,000 Shares of Common Stock
ASSET ACCEPTANCE CAPITAL CORP.
UNDERWRITING AGREEMENT
*, 2004
BEAR, XXXXXXX & CO. INC.
XXXXXXX XXXXX & COMPANY, L.L.C.
CIBC WORLD MARKETS CORP.
SUNTRUST CAPITAL MARKETS, INC.
As Representatives of the
several Underwriters named in
Schedule I attached hereto (the "Representatives")
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies/Gentlemen:
Asset Acceptance Capital Corp., a corporation organized and
existing under the laws of Delaware (the "Company"), proposes, subject to the
terms and conditions stated herein, to issue and sell to the several
underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
7,000,000 shares (the "Firm Shares") of the Company's common stock, par value
$0.01 per share (the "Common Stock") and for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, at the option of
the Underwriters, the Xxxxx X. Xxxxxxx, Xx., Revocable Living Trust, as amended
(Xxxxx X. Xxxxxxx, Xx., sole trustee) (the "Selling Stockholder") proposes to
sell to the Underwriters up to an additional 1,050,000 shares of Common Stock
(the "Additional Shares"). The Firm Shares and any Additional Shares purchased
by the Underwriters are referred to herein as the "Shares". The Shares are more
fully described in the Registration Statement and Prospectus referred to below.
Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx") is acting as lead manager (the "Lead
Manager") in connection with the offering and sale of the Shares contemplated
herein (the "Offering").
The Company is a recently organized Delaware corporation. The
Company has entered into the Share Exchange Agreement (the "Share Exchange
Agreement"), dated as of October 24, 2003, by and among the Company, RBR Holding
Corp., AAC Investors, Inc., the shareholders of RBR Holding Corp., and the
shareholder of AAC Investors, Inc. pursuant to which, prior to the Closing Date
(as defined herein), the Company will issue shares of its common stock to the
shareholders of RBR Holding Corp. and the shareholder of AAC
Investors, Inc. in exchange for all of the issued and outstanding shares of
capital stock of RBR Holding Corp. and AAC Investors, Inc. The Reorganization
(as defined in the Prospectus) will occur prior to the closing of the sale of
the Firm Shares to the Underwriters.
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each
of the Underwriters as of the date hereof, the Closing Date and any Additional
Closing Date, that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(Registration No. 333-109987), and amendments thereto, and related preliminary
prospectuses for the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of the Shares which registration statement, as so
amended, has been declared effective by the Commission and copies of which have
heretofore been delivered to the Underwriters. The registration statement, as
amended at the time it became effective, including the prospectus, financial
statements, schedules, exhibits and other information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
or 434(d) under the Securities Act, is hereinafter referred to as the
"Registration Statement." If the Company has filed or is required pursuant to
the terms hereof to file a registration statement pursuant to Rule 462(b) under
the Securities Act registering additional shares of Common Stock (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference herein
to the term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission. All of the
Shares have been registered under the Securities Act pursuant to the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. No stop order suspending the effectiveness of
either the Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or to
the Company's knowledge threatened by the Commission. The Company, if required
by the Securities Act and the rules and regulations of the Commission (the
"Rules and Regulations"), proposes to file the Prospectus with the Commission
pursuant to Rule 424(b) under the Securities Act ("Rule 424(b)"). The
prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b), or, if the prospectus is not to be filed with the Commission
pursuant to Rule 424(b), the prospectus in the form included as part of the
Registration Statement at the time the Registration Statement became effective,
is hereinafter referred to as the "Prospectus," except that if any revised
prospectus or prospectus supplement shall be provided to the Underwriters by the
Company for use in connection with the Offering which differs from the
Prospectus (whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b)), the term
"Prospectus" shall also refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided to
the Underwriters for such use. Any preliminary prospectus or prospectus subject
to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 under the Securities Act is hereafter called a
"Preliminary Prospectus." All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a Preliminary Prospectus and
the Prospectus, or any amendments or supplements
2
to any of the foregoing shall be deemed to include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
(b) At the time of the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or the
effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 under the Securities Act ("Rule 434"), when any supplement to or
amendment of the Prospectus is filed with the Commission and at the Closing Date
and the Additional Closing Date, if any (as hereinafter respectively defined),
the Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Securities Act and the Rules and Regulations and
did not and will not contain an untrue statement of a material fact and did not
and will not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of the Prospectus or
any related Preliminary Prospectus in light of the circumstances under which
they were made, not misleading. When any Preliminary Prospectus was first filed
with the Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
under the Securities Act) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Securities Act and the Rules and
Regulations and did not contain an untrue statement of a material fact and did
not omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. No representation and warranty is made in
this subsection (b), however, with respect to any information contained in or
omitted from the Registration Statement or the Prospectus or any related
Preliminary Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Lead Manager specifically
for use therein. The parties acknowledge and agree that such information
provided by or on behalf of any Underwriter consists solely of the material
included in the table under the first paragraph under the caption "Underwriting"
in the Prospectus, the first paragraph under the subcaption "Commissions and
Discounts" and the table under the second paragraph under that subcaption, in
the first two paragraphs under the subcaption "Price Stabilization, Short
Positions," under the subcaption "Passive Market Making."
(c) Ernst & Young LLP, who have certified the
financial statements and supporting schedules and information of the Company and
its subsidiaries that are included in the Registration Statement, are
independent public accountants as required by the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the Rules and
Regulations.
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
disclosed in the Registration Statement and the Prospectus, the Company has not
declared, paid or made any dividends or other distributions of any kind on or in
respect of its capital stock and there has been no material adverse change or
any development which would have a prospective
3
material adverse change, whether or not arising from transactions in the
ordinary course of business, in or affecting (i) the business, condition
(financial or otherwise), results of operations, stockholders' equity or
properties of the Company and each subsidiary of the Company listed on Exhibit A
hereto (the "Subsidiaries"), individually or taken as a whole; (ii) the
long-term debt or capital stock of the Company or any of its Subsidiaries; or
(iii) the Offering or consummation of any of the other transactions contemplated
by this Agreement, the Registration Statement or the Prospectus (a "Material
Adverse Change"). Since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has incurred or undertaken any liabilities or obligations, whether
direct or indirect, liquidated or contingent, matured or unmatured, or entered
into any transactions, including any acquisition or disposition of any business
or asset, which are material to the Company and the Subsidiaries individually or
taken as a whole, except for liabilities, obligations and transactions which are
disclosed in the Registration Statement and the Prospectus.
(e) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus in the column headed
"Actual" under the caption "Capitalization" and, after giving effect to the
Reorganization and the other transactions contemplated by the Share Exchange
Agreement, will be as set for the in the column headed "Pro Forma" under the
caption "Capitalization" and, after giving effect to the Reorganization, the
Offering, and the other transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, will be as set forth in the column
headed "Pro Forma As Adjusted" under the caption "Capitalization". All of the
issued and outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable state, federal and foreign securities laws and
not in violation of or subject to any preemptive or similar right that does or
will entitle any person, upon the issuance or sale of any security, to acquire
from the Company or any Subsidiary any Common Stock or other security of the
Company or any Subsidiary or any security convertible into, or exercisable or
exchangeable for, Common Stock or any other such security (any "Relevant
Security"), except for such rights as may have been fully satisfied or waived
prior to the effectiveness of the Registration Statement.
(f) The Shares have been duly and validly authorized
and, when delivered in accordance with this Agreement, will be duly and validly
issued, fully paid and non-assessable, will have been issued in compliance with
all applicable state and federal securities laws and will not have been issued
in violation of or subject to any preemptive or similar right that does or will
entitle any person to acquire any Relevant Security from the Company or any
Subsidiary upon issuance or sale of Shares in the Offering. The Common Stock and
the Shares conform to the descriptions thereof contained in the Registration
Statement and the Prospectus. Except as disclosed in the Registration Statement
and the Prospectus, neither the Company nor any Subsidiary has outstanding
warrants, options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, or any contracts or commitments to issue or sell,
any Relevant Security.
(g) The Subsidiaries are the only subsidiaries of the
Company within the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity. All of the issued shares of capital stock of or other
ownership interests in each Subsidiary have been duly and validly
4
authorized and issued and are fully paid and non-assessable and are owned
directly or indirectly by the Company free and clear of any lien, charge,
mortgage, pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever (any
"Lien").
(h) Each of the Company and the Subsidiaries has been
duly organized and validly exists as a corporation, partnership or limited
liability company in good standing under the laws of its jurisdiction of
organization. Each of the Company and the Subsidiaries has all requisite power
and authority to carry on its business as it is currently being conducted and as
described in the Prospectus, and to own, lease and operate its respective
properties. Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation, partnership or
limited liability company in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or conduct
of its business makes such qualification necessary, except for those failures to
be so qualified or in good standing which (individually and in the aggregate)
would not have a material adverse effect on (i) the business, condition
(financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and the Subsidiaries, individually or
taken as a whole; (ii) the long-term debt or capital stock of the Company or any
Subsidiary; or (iii) the Offering or consummation of any of the other
transactions contemplated by this Agreement, the Registration Statement or the
Prospectus (any such effect being a "Material Adverse Effect").
(i) Each of the Company and the Subsidiaries has all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all judicial,
regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (collectively, the "Consents"), to own, lease and
operate its properties and conduct its business as it is now being conducted and
as disclosed in the Registration Statement and the Prospectus and to consummate
the Reorganization, and each such Consent is valid and in full force and effect,
and neither the Company nor any Subsidiary has received notice of any
investigation or proceedings which results in or, if decided adversely to the
Company or any Subsidiary, would result in, the revocation of, or imposition of
a materially burdensome restriction on, any Consent. Each of the Company and the
Subsidiaries is in compliance with all applicable laws, rules, regulations,
ordinances, directives, judgments, decrees and orders, foreign and domestic,
except where failure to be in compliance would not have a Material Adverse
Effect.
(j) The Company has full right, power and authority
to execute and deliver this Agreement and the Share Exchange Agreement, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated by this Agreement, the Share Exchange Agreement, the
Registration Statement and the Prospectus, and in connection with the
Reorganization. This Agreement and the Share Exchange Agreement and the
transactions contemplated by this Agreement, the Share Exchange Agreement, the
Registration Statement and the Prospectus, and in connection with the
Reorganization, have been duly and validly authorized by the Company. This
Agreement and the Share Exchange Agreement have been duly and validly executed
and delivered by the Company. The Share Exchange Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
5
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(k) The execution, delivery, and performance of this
Agreement and the Share Exchange Agreement and consummation of the transactions
contemplated by this Agreement, the Share Exchange Agreement, the Registration
Statement, the Prospectus and the Reorganization do not and will not (i)
conflict with, require consent under or result in a breach of any of the terms
and provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any Lien upon any property or assets of the Company or
any Subsidiary pursuant to any indenture, mortgage, deed of trust, loan
agreement or other agreement, instrument, franchise, license or permit to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or their respective properties, operations or assets may be bound,
(ii) violate or conflict with any provision of the certificate or articles of
incorporation, by-laws, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents of the
Company or any Subsidiary, or (iii) violate or conflict with any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign,
except (in the case of clauses (i) and (iii) above) as would not have a Material
Adverse Effect.
(l) No Consent of, with or from any judicial,
regulatory or other legal or governmental agency or body or any third party,
foreign or domestic, is required for the execution, delivery and performance of
this Agreement or the Share Exchange Agreement or consummation of the
transactions contemplated by this Agreement, the Share Exchange Agreement, the
Registration Statement, the Prospectus and the Reorganization, including the
issuance, sale and delivery of the Shares to be issued, sold and delivered
hereunder, except the registration under the Securities Act of the Shares, which
has become effective, and such Consents as may be required under state
securities or blue sky laws or the by-laws and rules of the National Association
of Securities Dealers, Inc. (the "NASD") or NASD Regulation, Inc. ("NASDR") in
connection with the purchase and distribution of the Shares by the Underwriters,
each of which has been obtained and is in full force and effect.
(m) The Company and its Subsidiaries are in
compliance in all material respects with all applicable federal, state and local
laws and regulations applicable to them, including, without limitation, the Fair
Debt Collection Practices Act, the Truth-In-Lending Act, the Fair Credit Billing
Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the
Electronic Funds Transfer Act, the Xxxxx-Xxxxx-Xxxxxx Act, and comparable
statues in states where debtors reside and/or where debt sellers are located,
and the respective rules and regulations thereunder, the failure to comply with
which would have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any agreement or memorandum of understanding with, or
a party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of any regulatory
authority which restricts materially the conduct of its business, nor has the
Company or any of its Subsidiaries been advised by any of the regulatory
authorities that it is contemplating issuing or requesting (or considering the
appropriateness of issuing or requesting) any of the foregoing.
6
(n) Except as disclosed in the Registration Statement
and the Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any Subsidiary, would have a Material Adverse Effect To the Company's
knowledge, no such proceeding, litigation or arbitration is threatened or
contemplated.
(o) The financial statements and pro forma data,
including the notes thereto, and the supporting schedules included in the
Registration Statement and the Prospectus present fairly in all material
respects the financial position as of the dates indicated and the cash flows and
results of operations for the periods specified of the Company and its
consolidated subsidiaries. Except as otherwise stated in the Registration
Statement and the Prospectus, said financial statements have been prepared in
conformity with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved. The supporting schedules
included in the Registration Statement and the Prospectus present fairly in all
material respects the information required to be stated therein. No other
financial statements or supporting schedules are required to be included in the
Registration Statement. The other financial and statistical information included
in the Registration Statement and the Prospectus present fairly the information
included therein and have been prepared on a basis consistent with that of the
financial statements that are included in the Registration Statement and the
Prospectus and the books and records of the respective entities presented
therein.
(p) There are no pro forma or as adjusted financial
statements which are required to be included in the Registration Statement and
the Prospectus in accordance with Regulation S-X which have not been included as
so required. The pro forma and pro forma as adjusted financial information
included in the Registration Statement and the Prospectus has been properly
compiled and prepared in accordance with the applicable requirements of the
Securities Act and the Rules and Regulations and includes all adjustments and
reconciliations necessary to present fairly in accordance with United States
generally accepted accounting principles the pro forma and as adjusted financial
position of the respective entity or entities presented therein at the
respective dates indicated and their cash flows and the results of operations
for the respective periods specified.
(q) The assumptions used in preparing the pro forma
and pro forma as adjusted financial information included in the Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein. The related adjustments made in the preparation of such pro
forma and pro forma as adjusted financial information give appropriate effect to
those assumptions. Such pro forma and pro forma as adjusted financial
information reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(r) The statistical, industry-related and
market-related data included in the Registration Statement and the Prospectus
are based on or derived from sources which the Company reasonably and in good
faith believes are reliable and accurate, and such data agree with the sources
from which they are derived.
7
(s) The Shares have been approved for quotation on
the NASDAQ (as defined herein) subject to notice of issuance and satisfactory
distribution. The Company has taken no action designed to terminate, or likely
to have the effect of terminating, the quotation of the Shares on NASDAQ, nor
has the Company received any notification that the NASDAQ is contemplating
terminating such quotation.
(t) The Company and the Subsidiaries maintain a
system of internal accounting and other 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 conformity with
United States generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accounting for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(u) Neither the Company nor any of its affiliates
(within the meaning of Rule 144 under the Securities Act) has taken, directly or
indirectly, any action which constitutes or is designed to cause or result in,
or which would constitute, cause or result in, the stabilization or manipulation
of the price of any security to facilitate the sale or resale of the Shares.
(v) Neither Company nor any of its affiliates has,
prior to the date hereof, made any offer or sale of any securities, whether
pursuant to the Reorganization or otherwise, which could be "integrated" for
purposes of the Securities Act or the Rules and Regulations with the offer and
sale of the Shares pursuant to the Registration Statement. Except as disclosed
in the Registration Statement and the Prospectus, neither Company nor any of its
affiliates has sold or issued any Relevant Security during the six-month period
preceding the date of the Prospectus, including but not limited to any sales
pursuant to Rule 144A or Regulation D or S under the Securities Act, other than
shares of Common Stock issued pursuant to employee benefit plans, qualified
stock option plans or the employee compensation plans or pursuant to outstanding
options, rights or warrants as described in the Registration Statement and the
Prospectus.
(w) Except as disclosed in the Registration Statement
and the Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
(x) The Company and each of the Subsidiaries is not
and, at all times up to and including consummation of the transactions
contemplated by this Agreement, the Registration Statement and the Prospectus,
and after giving effect to application of the net proceeds of the Offering, will
not be, subject to registration as an "investment company" under the Investment
Company Act of 1940, as amended, and is not and will not be an entity
"controlled" by an "investment company" within the meaning of such act.
8
(y) There are no contracts or other documents
(including, without limitation, any voting agreement), which are required to be
described in the Registration Statement and the Prospectus or filed as exhibits
to the Registration Statement by the Securities Act or the Rules and Regulations
and which have not been so described or filed.
(z) No relationship, direct or indirect, exists
between or among any of the Company or any affiliate of the Company, on the one
hand, and any director, officer, stockholder, customer or supplier of the
Company or any affiliate of the Company, on the other hand, which is required by
the Securities Act or the Rules and Regulations to be described in the
Registration Statement or the Prospectus which is not so described and described
as required. There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus. The Company has not,
in violation of the Xxxxxxxx-Xxxxx Act (the "S-O Act"), directly or indirectly,
including through a Subsidiary, extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer of the Company.
(aa) The Company and the Subsidiaries are in
compliance with all the applicable provisions of the S-O Act that are currently
in effect and require compliance on or before the date hereof. On the Closing
Date and any Additional Closing Date, as applicable, the Company and the
Subsidiaries will be in compliance with all applicable provisions of the S-O Act
that require compliance on or before such date. The Company and the Subsidiaries
are taking active steps to ensure that they will be in compliance with all
applicable provisions of the S-O Act that are not currently in effect upon and
at all times after the required compliance dates set forth in any such
provisions.
(bb) Except as disclosed in the Registration
Statement and the Prospectus, there are no contracts, agreements or
understandings between the Company and any person that would give rise to a
valid claim against the Company, any Subsidiary, the Selling Stockholder or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, shareholders, partners,
employees, Subsidiaries or affiliates that may affect the Underwriters'
compensation as determined by the NASD.
(cc) The Company and each Subsidiary own or lease all
such properties as are necessary to the conduct of its business as presently
operated and as proposed to be operated as described in the Registration
Statement and the Prospectus. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
Liens except such as are described in the Registration Statement and the
Prospectus or such as do not (individually or in the aggregate) materially
affect the value of such property or interfere with the use made or proposed to
be made of such property by the Company and the Subsidiaries. Any real property
and buildings held under lease or sublease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material to, and do not interfere with, the
9
use made and proposed to be made of such property and buildings by the Company
and the Subsidiaries. Neither the Company nor any Subsidiary has received any
written notice of any claim adverse to its ownership of any real or personal
property or of any claim against the continued possession of any real property,
whether owned or held under lease or sublease by the Company or any Subsidiary.
(dd) The Company and each Subsidiary (i) own or
possess adequate right to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx registrations,
copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures,
"Intellectual Property") necessary for the conduct of their respective
businesses as being conducted and as described in the Registration Statement and
Prospectus, and (ii) have no reason to believe that the conduct of their
respective businesses does or will conflict with, and have not received any
written notice of any claim of conflict with, any such right of others. Neither
the Company nor any Subsidiary has granted or assigned to any other person or
entity any right to manufacture, have manufactured, assemble or sell the current
products and services of the Company and its Subsidiaries or those products and
services described in the Registration Statement and Prospectus. To the
Company's knowledge, there is no infringement by third parties of any such
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's or any Subsidiary's rights in or to any such Intellectual
Property. There is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others that the Company or any Subsidiary infringes
or otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others.
(ee) The Company and the Subsidiaries maintain
insurance in such amounts and covering such risks as the Company reasonably
considers adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries, all of which insurance is in full force and effect, except
where the failure to maintain such insurance would not have a Material Adverse
Effect. There are no material claims by the Company or any Subsidiary under any
such policy or instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause. The Company reasonably
believes that it will be able to renew its existing insurance as and when such
coverage expires or will be able to obtain replacement insurance adequate for
the conduct of the business and the value of its properties at a cost that would
not have a Material Adverse Effect.
(ff) The Company has in effect insurance covering the
Company, its directors, officers and the Underwriters for liabilities or losses
arising in connection with this Offering, including, without limitation,
liabilities or losses arising under the Securities Act, the Exchange Act, the
Rules and Regulations and applicable foreign securities laws.
(gg) Each of the Company and the Subsidiaries has
accurately prepared and timely filed all federal, state, foreign and other tax
returns that are required to be filed by it and has paid or made provision for
the payment of all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the
Company or any Subsidiary is obligated to withhold from amounts
10
owing to employees, creditors and third parties, with respect to the periods
covered by such tax returns (whether or not such amounts are shown as due on any
tax return). No deficiency assessment with respect to a proposed adjustment of
the Company's or any Subsidiary' federal, state, local or foreign taxes is
pending or, to the Company's knowledge, threatened. The accruals and reserves on
the books and records of the Company and the Subsidiaries in respect of tax
liabilities for any taxable period not finally determined are adequate to meet
any assessments and related liabilities for any such period and, since December
31, 2002, the Company and the Subsidiaries have not incurred any liability for
taxes other than in the ordinary course of its business. There is no tax lien,
whether imposed by any federal, state, foreign or other taxing authority,
outstanding against the assets, properties or business of the Company or any
Subsidiary, except for liens for taxes which are not yet due and payable.
(hh) No labor disturbance by the employees of the
Company or any Subsidiary exists or, to the Company's knowledge, is imminent and
the Company is not aware of any existing or imminent labor disturbances by the
employees of any of its or any Subsidiary's principal suppliers, manufacturers',
customers or contractors, which, in the case of any of the foregoing
(individually or in the aggregate), would have a Material Adverse Effect.
(ii) No "prohibited transaction" (as defined in
either Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code")), "accumulated funding deficiency" (as defined in
Section 302 of ERISA) or other event of the kind described in Section 4043(b) of
ERISA (other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to any
employee benefit plan for which the Company or any Subsidiary would have any
liability. Each employee benefit plan for which the Company or any Subsidiary
would have any liability is in compliance in all material respects with
applicable law, including (without limitation) ERISA and the Code; the Company
has not incurred and does not expect to incur liability under Title IV of ERISA
with respect to the termination of, or withdrawal from any "pension plan." Each
plan for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(jj) There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission or other
release of any kind of toxic or other wastes or other hazardous substances by,
due to, or caused by the Company or any Subsidiary (or, to the Company's
knowledge, any other entity for whose acts or omissions the Company is or may be
liable) upon any other property now or previously owned or leased by the Company
or any Subsidiary, or upon any other property, which would be a violation of or
give rise to any liability under any applicable law, rule, regulation, order,
judgment, decree or permit relating to pollution or protection of human health
and the environment ("Environmental Law"). To the Company's knowledge, there has
been no disposal discharge, emission or other release of any kind onto such
property or into the environment surrounding such property of any toxic or other
wastes or other hazardous substances other than in compliance with applicable
laws and regulations. Neither the Company nor any Subsidiary has agreed to
assume, undertake or provide indemnification for any liability of any other
person under any Environmental Law, including any obligation for cleanup or
11
remedial action. There is no pending or, to the Company's knowledge, threatened
administrative, regulatory or judicial action, claim or notice of noncompliance
or violation, investigation or proceedings relating to any Environmental Law
against the Company or any Subsidiary.
(kk) Neither the Company, any Subsidiary nor, to the
best of the Company's knowledge, any of its employees or agents has at any time
during the last five years (i) made any unlawful contribution to any candidate
for foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States of
any jurisdiction thereof.
(ll) Neither the Company nor any Subsidiary (i) is in
violation of its certificate or articles of incorporation, by-laws, certificate
of formation, limited liability company agreement, partnership agreement or
other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute a default
under or result in the creation or imposition of any Lien upon any of its
property or assets pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject, or (iii) is in
violation in any respect of any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that would not (individually or in
the aggregate) have a Material Adverse Effect and except (in the case of clause
(ii) alone) for any Lien disclosed in the Registration Statement and the
Prospectus.
(mm) Except as disclosed in the Registration and the
Prospectus, there are no outstanding guarantees or other contingent obligations
of the Company or any Subsidiary that would have a Material Adverse Effect.
Any certificate signed by or on behalf of the Company and
delivered to the Representatives or to counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
2. Representations and Warranties of Selling Stockholder.
The Selling Stockholder represents and warrants to, and agrees
with each of the Underwriters as of the date hereof, the Closing Date and any
Additional Closing Date that:
(a) This Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the Selling Stockholder.
(b) The Custody Agreement and Powers of Attorney,
attached as Exhibit B hereto, ("Custody Agreement and Power of Attorney") signed
by (i) the Selling Stockholder, (ii) the Company, as custodian (in such
capacity, the "Custodian"), and (iii) Xxxxx X. Xxxxxxx, Xx., as the Selling
Stockholder's attorney-in-fact (in such capacity, the
12
"Attorney-In-Fact"), has been duly and validly authorized, executed and
delivered by the Selling Stockholder and is a valid and binding agreement of the
Selling Stockholder, enforceable against him or it in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(c) The Selling Stockholder agrees that the
Additional Shares, if any, to be sold by the Selling Stockholder on deposit with
the Custodian are subject to the interests of the Underwriters, that the
arrangements made for such custody are to that extent irrevocable, and that the
obligations of the Selling Stockholder hereunder shall not be terminated, except
as provided in this Agreement or in the Custody Agreement and Power of Attorney,
by any act of the Selling Stockholder, by operation of law or by the occurrence
of any other event. If the Attorney-In-Fact should die or become incapacitated,
or if any other event should occur, before the delivery of the Additional
Shares, if any, to be sold by the Selling Stockholder hereunder, the documents
evidencing the Additional Shares, if any, to be sold by the Selling Stockholder
then on deposit with the Custodian shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such death,
incapacity or other event had not occurred, regardless of whether or not the
Custodian shall have received notice thereof.
(d) The Selling Stockholder is the lawful owner of
the Additional Shares and upon sale and delivery of, and payment for, such
Additional Shares as provided herein, the Selling Stockholder will convey to the
Underwriters good and marketable title to the Additional Shares, free and clear
of all Liens. Certificates for all of the Additional Shares to be sold by the
Selling Stockholder pursuant to this Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment
in blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver such Shares to
the Underwriters pursuant to this Agreement.
(e) The Selling Stockholder has good and valid title
to all of the Additional Shares and has the legal right and power and capacity,
and all authorizations and approvals required by law to enter into this
Agreement and the applicable Custody Agreement and Power of Attorney, to sell,
transfer and deliver all of the Additional Shares and to comply with his or its
other obligations hereunder and thereunder. The Additional Shares to be sold by
the Selling Stockholder pursuant to this Agreement are certificated securities
in registered form and are not held by or through any securities intermediary
within the meaning of the Uniform Commercial Code as in effect in the State of
New York (the "NYUCC"). Upon delivery to the Lead Manager of the Additional
Share certificate (certificate number O registered in the name of the Selling
Stockholder and evidence of O shares of Common Stock of the Company) indorsed to
the Lead Manager or indorsed in blank by an effective indorsement, the Lead
Manager, on behalf of itself and the other Underwriters, will become a
"protected purchaser" of the Additional Shares (as defined in Section 8-303 of
the NYUCC) and acquire such certificate (and the shares represented thereby)
free of any adverse claims (as defined in Section 8-102(a)(1) of the NYUCC),
assuming that neither the Lead Manager nor any other Underwriter has notice of
any adverse claim.
13
(f) No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Selling Stockholder of this Agreement and the
consummation by the Selling Stockholder of the transactions contemplated herein,
except (i) such as may have been obtained under the Securities Act, (ii) such as
may be required under the state securities laws or the blue sky laws or any
jurisdiction in connection with the purchase and distribution of the Shares by
the Underwriters and (iii) such other approvals as have been obtained.
(g) There are no contracts, agreements or
understandings between the Selling Shareholder and any person that would give
rise to a valid claim against the Selling Shareholder, the Company, any
Subsidiary or any Underwriter for a brokerage commission, finder's fee or other
like payment in connection with this Offering.
(h) The execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by the Selling
Stockholder and the consummation by the Selling Stockholder of the transactions
contemplated hereby and thereby or the fulfillment of the terms hereof by the
Selling Stockholder will not conflict with, result in a breach or violation of,
or constitute a default under any law or the terms of any indenture or other
agreement or instrument to which the Selling Stockholder is party or bound, or
to which any of the property or assets of the Selling Stockholder is subject,
nor will such actions result in any violation of the provisions of the charter
or bylaws or certificate of formation or partnership agreement or the articles
of partnership or trust agreement, as applicable, of the Selling Stockholder or,
any judgment, order or decree applicable to the Selling Stockholder or any court
or regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Selling Stockholder.
(i) The Selling Stockholder does not have any
registration or other similar rights to have any equity or debt securities
registered for sale by the Company under the Registration Statement or included
in the offering of the Shares, except for such rights as have been waived or
which are described in the Registration Statement and the Prospectus.
(j) The Selling Stockholder does not have, or has
waived prior to the date hereof, any preemptive right, co-sale right or right of
first refusal or other similar right to purchase any of the Shares, if any, that
are to be sold by the Company to the Underwriters pursuant to this Agreement;
and the Selling Stockholder does not own any warrants, options or similar rights
to acquire, and does not have any right or arrangement to acquire, any capital
stock, right, warrants, options or other securities from the Company, other than
those described in the Registration Statement and the Prospectus.
(k) All information furnished by or on behalf of the
Selling Stockholder in writing for use in the Registration Statement and
Prospectus is true, correct, and complete in all material respects and does not
and will not contain any untrue statement of a material fact.
(l) The Selling Stockholder has no reason to believe
that the representations and warranties of the Company contained in Section 1
hereof are not true and correct, is familiar with the Registration Statement and
Prospectus and has no knowledge of any material fact, condition or information
not disclosed in the Registration Statement or
14
Prospectus which has had or would have a Material Adverse Effect on the Company
and its Subsidiaries, individually or taken as a whole, and is not prompted to
sell any of the Shares by any information concerning the Company which is not
set forth in the Registration Statement and the Prospectus.
(m) The Selling Stockholder has not taken and will
not take, directly or indirectly, any action which is designed to or which has
constituted or which would cause or result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares.
(n) The Selling Stockholder has not distributed and
will not distribute, prior to the later of the Additional Closing Date, if any,
and the completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares by the Selling
Stockholder other than a Preliminary Prospectus, the Prospectus or the
Registration Statement.
(o) The Selling Stockholder does not have any
knowledge or any reason to believe that the Registration Statement or Prospectus
(or any amendment of supplement thereto) contains any untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(p) Neither the Selling Stockholder nor any of its
affiliates directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the By-laws
of the National Association of Securities Dealers, Inc.), any member firm of the
National Association of Securities Dealers, Inc.
(q) The representations and warranties of the Selling
Stockholder in the Custody Agreement and Power of Attorney are and will be true
and correct.
Any certificate signed by any officer or other representative
of the Selling Stockholder and delivered to the Underwriters or to counsel for
the Underwriters pursuant to this Agreement shall be deemed to be a
representation and warranty by the Selling Stockholder to the Underwriters as to
the matters covered thereby.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter and
each Underwriter, severally and not jointly, agrees to purchase from the
Company, at a purchase price per share of $O, that proportion of the number of
Firm Shares set forth on Schedule II opposite the name of the Company, which the
number of Firm Shares set forth opposite the names of such Underwriter in
Schedule I hereto together with any additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Firm Shares.
(b) Payment of the purchase price for, and delivery
of certificates representing, the Firm Shares shall be made at the office of
Skadden, Arps, Slate, Xxxxxxx &
15
Xxxx LLP ("Underwriters' Counsel"), or at such other place as shall be agreed
upon by the Lead Manager and the Company, at 10:00 A.M., New York City time, on
the third or (as permitted under Rule 15c6-1 under the Exchange Act) fourth
business day (unless postponed in accordance with the provisions of Section 10
hereof) following the date of the effectiveness of the Registration Statement
or, if the Company has elected to rely upon Rule 430A under the Securities Act,
the third or (as permitted under Rule 15c6-1 under the Exchange Act) fourth
business day after the determination of the public offering price of the Shares,
or such other time not later than ten business days after such date as shall be
agreed upon by the Lead Manager and the Company (such time and date of payment
and delivery being herein called the "Closing Date").
Payment for the Firm Shares shall be made to or upon the order
of the Company, by wire transfer in Federal (same day) funds to the Company upon
delivery of certificates for the Shares to you through the facilities of The
Depository Trust Company for the respective accounts of the several Underwriters
against receipt therefor signed by you. Certificates for the Firm Shares shall
be registered in such name or names and shall be in such denominations as the
Lead Manager may request at least two business days before the Closing Date. The
Company will permit the Lead Manager to examine and package such certificates
for delivery at least one full business day prior to the Closing Date.
(c) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Selling Stockholder hereby grants to the
Underwriters, acting severally and not jointly, the option to purchase up to
1,050,000 Additional Shares at the same purchase price per share to be paid by
the Underwriters for the Firm Shares as set forth in Section 3(a) above, for the
sole purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters. This option may be exercised at any time and from time to time, in
whole or in part on one or more occasions, on or before the thirtieth day
following the date of the Prospectus, by written notice from the Lead Manager to
the Company and the Selling Stockholder. Such notice shall set forth the
aggregate number of Additional Shares as to which the option is being exercised
and the date and time, as reasonably determined by Bear Xxxxxxx, when the
Additional Shares are to be delivered (any such date and time being herein
sometimes referred to as the "Additional Closing Date"); provided, however, that
no Additional Closing Date shall occur earlier than the Closing Date or earlier
than the second full business day after the date on which the option shall have
been exercised nor later than the eighth full business day after the date on
which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 10 hereof). Upon any
exercise of the option as to all or any portion of the Additional Shares, each
Underwriter, acting severally and not jointly, agrees to purchase from the
Selling Stockholder the number of Additional Shares that bears the same
proportion of the total number of Additional Shares then being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number increased as set forth in Section 10 hereof)
bears to the total number of Firm Shares that the Underwriters have agreed to
purchased hereunder, subject, however, to such adjustments to eliminate
fractional shares as Bear Xxxxxxx in its sole discretion shall make.
(d) Payment of the purchase price for, and delivery
of certificates representing, the Additional Shares shall be made at the office
of Underwriters' Counsel, or at such other place as shall be agreed upon by the
Lead Manager and the Company, at 10:00
16
A.M., New York City time, on the Additional Closing Date (unless postponed in
accordance with the provisions of Section 10 hereof), or such other time as
shall be agreed upon by Bear Xxxxxxx and the Company.
Payment for the Additional Shares shall be made to or upon the
order of the Selling Stockholder by wire transfer in Federal (same day) funds to
the Selling Stockholder upon delivery of certificates for the Shares to you
through the facilities of The Depository Trust Company for the respective
accounts of the several Underwriters. Certificates for the Additional Shares
shall be registered in such name or names and shall be in such denominations as
the Lead Manager may request at least two business days before the Additional
Closing Date. The Custodian is authorized to deduct the amount payable by the
Selling Stockholder under Section 5(b)(iv) hereof from the proceeds to the
Selling Stockholder hereunder and to hold such amounts for the account of the
Selling Stockholder with the Custodian under the Custody Agreement and Power of
Attorney. The Company will permit the Lead Manager to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date.
4. Offering. Upon authorization of the release of the Firm
Shares by the Lead Manager, the Underwriters propose to offer the Shares for
sale to the public upon the terms and conditions set forth in the Prospectus.
5. Covenants of the Company and Selling Stockholder.
(a) The Company covenants and agrees with the
Underwriters that:
(i) The Registration Statement and any
amendments thereto have been declared effective, and if Rule 430A is used or the
filing of the Prospectus is otherwise required under Rule 424(b) or Rule 434,
the Company will file the Prospectus (properly completed if Rule 430A has been
used) pursuant to Rule 424(b) within the prescribed time period and will provide
evidence satisfactory to the Lead Manager of such timely filing. If the Company
elects to rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434, and the Prospectus shall not be
"materially different" (as such term is used in Rule 434) from the Prospectus
included in the Registration Statement at the time it became effective.
The Company will notify you immediately (and, if requested by
the Lead Manager, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the Company's
intention to file or prepare any supplement or amendment to the Registration
Statement or the Prospectus, (iv) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the
Securities Act, (v) after the Company receives notice of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or of the initiation, or the
threatening, of any proceedings therefor, it being understood that the Company
shall make every effort to avoid the issuance of any such stop order, (vi) of
the receipt of any comments from the Commission, and (vii) of the receipt
17
by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall propose
or enter a stop order at any time, the Company will make every reasonable effort
to prevent the issuance of any such stop order and, if issued, to obtain the
lifting of such order as soon as possible. The Company will not file any
amendment to the Registration Statement or any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to Rule
424(b) or Rule 434) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement to which the Lead Manager shall
reasonably object in writing after being timely furnished in advance a copy
thereof. The Company will provide the Lead Manager with copies of all such
amendments, filings and other documents a sufficient time prior to any filing or
other publication thereof to permit the Lead Manager a reasonable opportunity to
review and comment thereon.
(ii) The Company shall comply with the
Securities Act to permit completion of the distribution as contemplated in this
Agreement, the Registration Statement and the Prospectus. If at any time when a
prospectus relating to the Shares is required to be delivered under the
Securities Act in connection with the sales of Shares, any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances existing at the time of delivery to the purchaser, not misleading,
or if to comply with the Securities Act or the Rules and Regulations it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement the Company will notify you promptly and prepare and file with the
Commission, subject to Section 5(a) hereof, an appropriate amendment or
supplement (in form and substance reasonably satisfactory to the Lead Manager)
which will correct such statement or omission and will use its commercially
reasonable efforts to have any amendment to the Registration Statement declared
effective as soon as possible.
(iii) The Company will promptly deliver to
each of you and Underwriters' Counsel a signed copy of the Registration
Statement, as initially filed and all amendments thereto, including all consents
and exhibits filed therewith, and will maintain in the Company's files manually
signed copies of such documents for at least five years after the date of
filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any Preliminary Prospectus, the Prospectus, the Registration
Statement and all amendments of and supplements to such documents, if any as you
may reasonably request. Prior to 10:00 A.M., New York time, on the business day
next succeeding the date of this Agreement and from time to time thereafter, the
Company will furnish the Underwriters with copies of the Prospectus in New York
City in such quantities as you may reasonably request.
(iv) The Company consents to the use and
delivery of the Preliminary Prospectus by the Underwriters in accordance with
Rule 430 and Section 5(b) of the Securities Act.
(v) The Company will use its commercially
reasonable efforts, in cooperation with the Lead Manager, at or prior to the
time of effectiveness of the Registration Statement, to qualify the Shares for
offering and sale under the securities laws
18
relating to the offering or sale of the Shares of such jurisdictions, domestic
or foreign, as the Lead Manager may designate and to maintain such qualification
in effect for so long as required for the distribution thereof; except that in
no event shall the Company be obligated in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of process.
(vi) The Company will make generally
available to its security holders and to the Underwriters as soon as
practicable, but in any event not later than twelve months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the
Securities Act), an earnings statement of the Company and the Subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company, Rule
158).
(vii) During the period beginning on the
date of the Prospectus and ending 180 days after the date of the Prospectus,
without the prior written consent of the Lead Manager, the Company (i) except
pursuant to employee stock option plans in effect on the date hereof, will not,
directly or indirectly, issue, offer, sell, agree to issue, offer or sell,
solicit offers to purchase, grant any call option, warrant or other right to
purchase, purchase any put option or other right to sell, pledge, borrow or
otherwise dispose of any Relevant Security, or make any announcement of any of
the foregoing, (ii) will not establish or increase any "put equivalent position"
or liquidate or decrease any "call equivalent position" (in each case within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder) with respect to any Relevant Security, and (iii) will
not otherwise enter into any swap, derivative or other transaction or
arrangement that transfers to another, in whole or in part, any economic
consequence of ownership of a Relevant Security, whether or not such transaction
is to be settled by delivery of Relevant Securities, other securities, cash or
other consideration. The Company will obtain an undertaking in substantially the
form of Annex IV hereto of each of its officers and directors, its stockholders
listed on Schedule III attached hereto and the Selling Stockholder not to engage
in any of the aforementioned transactions on its own behalf, other than the sale
of Shares as contemplated by this Agreement and the Company's issuance of Common
Stock upon (i) the conversion or exchange of convertible or exchangeable
securities outstanding on the date hereof, (ii) the exercise of currently
outstanding options, and (iii) the grant and exercise of options under, or the
issuance and sale of shares pursuant to, employee stock option plans in effect
on the date hereof, each as described in the Registration Statement and the
Prospectus. During the period beginning on the date of the Prospectus and ending
180 days after the date of the Prospectus, the Company will not file a
registration statement under the Securities Act in connection with any
transaction by the Company or any security holder of the Company, except for
registration statements on Form S-8 relating to employee benefit plans.
Notwithstanding anything to the contrary contained in this Section 5(viii), the
Selling Stockholder is permitted to sell Additional Shares to the Underwriters
in accordance with this Agreement.
(viii) During the period beginning on the
effective date of the Registration Statement and ending on the fifth anniversary
of such date, the Company will furnish to you copies of all reports or other
communications (financial or other) furnished to security holders or from time
to time published or publicly disseminated by the Company, and will deliver to
you (i) as soon as they are available, copies of any reports, financial
statements and proxy or information statements furnished to or filed with the
19
Commission or any national securities exchange on which any class of securities
of the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to time
reasonably request (such financial information to be on a consolidated basis to
the extent the accounts of the Company and the Subsidiaries are consolidated in
reports furnished to its security holders generally or to the Commission).
(ix) The Company will apply the net proceeds
from the sale of the Shares as set forth under the caption "Use of Proceeds" in
the Prospectus.
(x) The Company will use its commercially
reasonable efforts to list the Shares for quotation on the NASDAQ and maintain
the listing of the shares on the NASDAQ.
(xi) The Company, during the period when the
Prospectus is required to be delivered under the Securities Act, will file all
documents required to be filed with the Commission pursuant to the Securities
Act and the Rules and Regulations within the time periods required thereby.
(xii) The Company will use its commercially
reasonable efforts to do and perform all things required to be done or performed
under this Agreement by the Company prior to the Closing Date or the Additional
Date, as the case may be, and to satisfy all conditions precedent to the
delivery of the Firm Shares and the Additional Shares.
(xiii) The Company will not take, and will
cause its affiliates (within the meaning of Rule 144 under the Securities Act)
not to take, directly or indirectly, any action which constitutes or is designed
to cause or result in, or which would constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
(b) The Selling Stockholder covenants and agrees with
each Underwriter to:
(i) Deliver to the Representatives prior to
the Closing Date, a properly completed and executed United States Treasury
Department Form W-8 (if the Selling Stockholder is a non-United States Person)
or Form W-9 (if the Selling Stockholder is a United States Person);
(ii) Promptly notify the Company and the
Lead Manager if, at any time prior to the date on which the distribution of the
Shares as contemplated herein and in the Prospectus has been completed, as
determined by the Lead Manager, the Selling Stockholder has knowledge of the
occurrence of any event as a result of which the Prospectus or the Registration
Statement, in each case as then amended or supplemented, would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(iii) Cooperate to the extent reasonably
necessary to cause the Registration Statement or any post-effective amendment
thereto to become effective at
20
the earliest possible time and to do and perform all things to be done and
performed under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares pursuant to this Agreement;
(iv) Pay or cause to be paid all transfer taxes, stamp duties
and other similar taxes with respect to the Shares, if any, to be sold by the
Selling Stockholder; and
(v) Deliver to Lead Manager on or prior to the date of this
Agreement the lock-up agreement referenced in Section 7(e) hereof.
6. Payment of ExpenseWhether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company and,
only to the extent expressly set forth below, the Selling Stockholder hereby
agree, except as otherwise provided in this Section 6, to pay all costs and
expenses incident to the performance of their respective obligations hereunder,
including the following: (i) all expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and any and all amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and the
Offering; (iii) the cost of producing this Agreement and any agreement among
Underwriters, blue sky survey, closing documents and other instruments,
agreements or documents (including any compilations thereof) in connection with
the Offering; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state or foreign securities or blue sky laws
as provided in Section 5(a)(v) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with any blue sky survey (which fees and disbursements shall not
exceed $[________]); (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the NASD of the terms of the Offering (which fees and
disbursements shall not exceed $[________]); (vi) all fees and expenses in
connection with listing the Shares on the NASDAQ; (vii) all travel expenses of
the Company's officers and employees and any other expense of the Company
incurred in connection with attending meetings with prospective purchasers of
the Shares, (viii) the fees of the Custodian and other fees and expenses related
to the offering of Shares by the Selling Stockholder. The Company also will pay
or cause to be paid: (i) the cost of preparing stock certificates for the
Shares; (ii) the cost and charges of any transfer agent or registrar for the
Shares; and (iii) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 6. It is understood, however, that except as provided in this
Section 6, and Sections 8, 9 and 12 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make. Notwithstanding anything to
the contrary in this Section 6, in the event that this Agreement is terminated
pursuant to Section 7 or 12(b) hereof, or subsequent to a Material Adverse
Change, the Company will pay all out-of pocket expenses of the Underwriters
incurred in connection
21
herewith. The Selling Stockholder shall pay all of its own fees and expenses
related to the offering of the Shares, including (i) the fees and disbursements
of his or its counsel, if any, and (ii) any applicable stock transfer or other
taxes related to the offering of his or its Shares. Notwithstanding the
foregoing, nothing herein shall affect any agreement that the Company and the
Selling Stockholder may make for the sharing or allocation of such costs and
expenses.
7. Conditions of Underwriters' Obligations.
The obligations of the Underwriters to purchase and pay for the Firm
Shares and the Additional Shares, as provided herein, shall be subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholder herein contained, as of the date hereof and as of the Closing Date
(for purposes of this Section 7 "Closing Date" shall refer to the Closing Date
for the Firm Shares and any Additional Closing Date, if different, for the
Additional Shares), to the absence from any certificates, opinions, written
statements or letters furnished to you or to Underwriters' Counsel pursuant to
this Section 7 of any misstatement or omission, to the performance by the
Company or the Selling Stockholder of their respective obligations hereunder,
and to each of the following additional conditions:
(a) The Registration Statement shall have become effective and
all necessary regulatory or stock exchange approvals shall have been received
not later than 5:30 P.M., New York time, on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by the Lead
Manager; if the Company shall have elected to rely upon Rule 430A or Rule 434
under the Securities Act, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 5(a) hereof and a form
of the Prospectus containing information relating to the description of the
Shares and the method of distribution and similar matters shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the written
opinion of Xxxxxx Xxxxxxx PLLC, counsel for the Company, dated the Closing Date
addressed to the Underwriters in the form attached hereto as Annex I.
(c) At the Closing Date you shall have received the written
opinion of Xxxxxxx & Xxxxxx, counsel for the Selling Stockholder, dated the
Closing Date addressed to the Underwriters in the form attached hereto as Annex
II.
(d) At the Closing Date you shall have received the written
opinion of Xxxxxxx Xxxxxxx, Compliance Attorney, of the Company, on behalf of
the Company, dated the Closing Date addressed to the Underwriters in the form
attached hereto as Annex III.
(e) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be reasonably
satisfactory in
22
form and substance to the Lead Manager and to Underwriters' Counsel, and the
Underwriters shall have received from Underwriters' Counsel a favorable written
opinion, dated as of the Closing Date, with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as the Lead Manager may reasonably require, and the Company shall have
furnished to Underwriters' Counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(f) The Company shall have received a duly executed lock-up
agreement from each person listed on Schedule III hereto substantially in the
form attached hereto as Annex IV.
(g) At the Closing Date you shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company, dated
the Closing Date to the effect that (i) the condition set forth in subsection
(a) of this Section 7 has been satisfied, (ii) as of the date hereof and as of
the Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company and the Subsidiaries have not sustained any loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding which would have a
Material Adverse Effect, (v) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof has been issued
and no proceedings therefor have been initiated or threatened by the Commission,
(vi) there are no pro forma or as adjusted financial statements that are
required to be included in the Registration Statement and the Prospectus
pursuant to the Rules and Regulations that have not been included as required,
and (vii) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus there has not been any material
adverse change or any development involving a prospective Material Adverse
Change, whether or not arising from transactions in the ordinary course of
business, in or affecting (x) the business, condition (financial or otherwise),
results of operations, stockholders' equity, properties or prospects of the
Company and the Subsidiaries, individually or taken as a whole, (y) the
long-term debt or capital stock of the Company or any of its Subsidiaries, or
(z) the Offering or consummation of any of the other transactions contemplated
by this Agreement, the Registration Statement and the Prospectus.
(h) At the time this Agreement is executed and at the Closing
Date, you shall have rceived a comfort letter, from Ernst & Young LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the Underwriters
and in form and substance reasonably satisfactory to the Underwriters and
Underwriters' Counsel.
(i) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter, from Ernst & Young LLP, dated,
respectively, as of the date of this Agreement and as of the Closing Date
addressed to the Underwriters and in form and substance reasonably satisfactory
to the Underwriters and Underwriters' Counsel, stating that nothing caused them
to believe that the audited pro forma information of the Company included in the
Registration Statement does not comply as to form with the applicable accounting
requirements of Rule 11-02 of Regulation S-X promulgated under the Securities
23
Act or that the pro forma adjustments have not been applied properly to the
historical amounts in the compilation of such statements.
(j) You shall have received from Ernst & Young LLP, a letter
stating that the Company's system of internal accounting controls taken as a
whole is sufficient to meet the broad objectives of internal accounting control
insofar as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the financial
statements of the Company and its subsidiaries.
(k) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any Subsidiary or any change or
development involving a change, whether or not arising from transactions in the
ordinary course of business, in the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or prospects
of the Company and the Subsidiaries, individually or taken as a whole, including
but not limited to the occurrence of any fire, flood, storm, explosion, accident
or other calamity at any of the properties owned or leased by the Company or any
of its Subsidiaries, the effect of which, in any such case described above, is,
in the judgment of the Lead Manager, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any supplement).
(l) No downgrading shall have occurred in the Company's
corporate credit rating or the rating accorded the Company's debt securities or
preferred stock by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Securities Act) and no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities, it being understood that, as of the date of this Agreement and
the Closing Date, that the Company has no such rating.
(m) At the Closing Date, the Shares shall have been approved
for quotation on the NASDAQ.
(n) At the Closing Date, the NASD shall have confirmed that it
has not raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(o) At the Closing Date, you shall have received a certificate
of the Selling Stockholder or an authorized representative thereof, dated the
Closing Date, to the effect that the representations and warranties of the
Selling Stockholder set forth in Section 2 hereof are accurate and that Selling
Shareholder has complied with all agreements and satisfied all conditions on his
or its part to be performed or satisfied hereunder at or prior to the Closing
Date.
(p) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the
Closing Date, prevent the issuance or sale of the Shares; and no injunction or
order of any federal, state or foreign court shall
24
have been issued that would, as of the Closing Date, prevent the issuance or
sale of the Shares.
(q) On or prior to the Closing Date, the Company shall have
received a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof) from the Selling Stockholder.
(r) At the time this Agreement is executed and at the Closing
Date, you shall have received from the Chief Financial Officer of the Company a
certificate in form and substance reasonably satisfactory to the Lead Manager
and Underwriters' Counsel as to the accuracies of certain numbers contained in
the Registration Statement.
(s) The Company and the Selling Stockholder shall have
furnished the Underwriters and Underwriters' Counsel with such other
certificates, opinions or other documents as they may have reasonably requested.
(t) The Reorganization shall have been consummated, as
contemplated by the Prospectus.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this Section 7 shall not be reasonably satisfactory in form
and substance to the Lead Manager and to Underwriters' Counsel, all obligations
of the Underwriters hereunder may be cancelled by the Lead Manager at, or at any
time prior to, the Closing Date and the obligations of the Underwriters to
purchase the Additional Shares may be cancelled by the Lead Manager at, or at
any time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone. Any such telephone
notice shall be confirmed promptly thereafter in writing.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to reasonable attorneys' fees and any and
all expenses incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in (A)
the Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Shares, including any road show or investor
presentations made to investors by the Company (whether in person or
electronically) ("Marketing
25
Materials"), or are based upon the omission or alleged omission to state in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, a material fact required to be stated therein or necessary
to make the statements therein (x) in the case of the Registration Statement,
not misleading, and (y) in the case of the Prospectus or any Preliminary
Prospectus in light of the circumstances under which they were made, not
misleading; provided, however, that (i) the Company will not be liable in any
such case to the extent but only to the extent that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Lead Manager expressly for use therein, and (ii) with respect to any untrue
statement or omission of material fact made in any Preliminary Prospectus, the
indemnity agreement contained in this section shall not inure to the benefit of
any Underwriter from whom the person asserting any such loss, claim, damage,
liability or action purchased the securities concerned, to the extent that any
such loss, claim, damage, liability or action of such Underwriter occurs under
the circumstance where it shall have been determined by a court of competent
jurisdiction in a decision not subject to further appeal that (A) the Company
had furnished copies of the Prospectus, as amended or supplemented, to the Lead
Manager in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the time at which written confirmation of the sale of
such securities was delivered by the Underwriter, (B) delivery of the
Prospectus, as amended or supplemented, was required by the Securities Act to be
made to such person at such time, (C) the untrue statement or omission of a
material fact contained in the Preliminary Prospectus was corrected in the
Prospectus as amended or supplemented, and (D) the Underwriter did not send or
give to such person, at or prior to the written confirmation of the sale of such
securities to such person, a copy of the Prospectus as amended or supplemented.
The parties agree that such information provided by or on behalf of any
Underwriter through the Lead Manager consists solely of the material referred to
in the last sentence of Section 1(b) hereof. This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including but
not limited to other liability under this Agreement.
(b) The Selling Stockholder shall indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to reasonable attorneys' fees
and any and all expenses incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact in
respect of the Selling Stockholder (A) contained in the Registration Statement,
as originally filed or any amendment thereof, or any related Preliminary
Prospectus or the Prospectus, or in any supplement thereto or amendment thereof,
or (B) in any Marketing Materials, or are based upon the omission or alleged
omission to state in the Registration Statement, as originally filed or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any supplement thereto or
26
amendment thereof, a material fact in respect of the Selling Stockholder
required to be stated therein or necessary to make the statements relating to
the Selling Stockholder therein (x) in the case of the Registration Statement,
not misleading, and (y) in the case of the Prospectus or any Preliminary
Prospectus in light of the circumstances under which they were made, not
misleading; provided, however, that (i) the Selling Stockholder will be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, made in reliance upon and in conformity with written
information furnished to the Company expressly for use therein, it being agreed
that the only such information is that which is included under the caption
"Principal and Selling Stockholders" which relates to the Selling Stockholder
(the "Selling Shareholder Information"), (ii) with respect to any untrue
statement or omission of material fact made in any Preliminary Prospectus made
in reliance upon and in conformity with the Selling Shareholder Information, the
indemnity agreement contained in this section shall not inure to the benefit of
any Underwriter from whom the person asserting any such loss, claim, damage,
liability or action purchased the securities concerned, to the extent that any
such loss, claim, damage, liability or action of such Underwriter occurs under
the circumstance where it shall have been determined by a court of competent
jurisdiction in a decision not subject to further appeal that (A) the Company
had furnished copies of the Prospectus, as amended or supplemented, to the Lead
Manager in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the time at which written confirmation of the sale of
such securities was delivered by the Underwriter, (B) delivery of the
Prospectus, as amended or supplemented, was required by the Securities Act to be
made to such person at such time, (C) the untrue statement or omission of a
material fact contained in the Preliminary Prospectus was corrected in the
Prospectus as amended or supplemented, and (D) the Underwriter did not send or
give to such person, at or prior to the written confirmation of the sale of such
securities to such person, a copy of the Prospectus as amended or supplemented,
and (iii) in no such case shall the Selling Stockholder be liable or responsible
for any amount in excess of the proceeds (net of the underwriting discount)
applicable to the Shares sold by the Selling Stockholder pursuant to the
transactions contemplated hereby. This indemnity agreement will be in addition
to any liability which the Selling Stockholder may otherwise have, including but
not limited to other liability under this Agreement.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Selling Stockholder, the Company, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, as originally filed or
any amendment thereof, or any related Preliminary Prospectus or the Prospectus,
or in any amendment thereof or
27
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Lead Manager specifically for use therein;
provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares to be purchased by such Underwriter hereunder. The parties agree that
such information provided by or on behalf of any Underwriter through the Lead
Manager consists solely of the material referred to in the last sentence of
Section 1(b) hereof. This indemnity will be in addition to any liability which
any Underwriter may otherwise have, including but not limited to other liability
under this Agreement.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of any claims or the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, promptly notify each
party against whom indemnification is to be sought in writing of the claim or
the commencement thereof (but the failure so to notify an indemnifying party
shall not relieve the indemnifying party from any liability which it may have
under this Section 8 to the extent that is it not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability that
such indemnifying party may have otherwise than on account of the indemnity
agreement hereunder). In case any such claim or action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate, at its own
expense in the defense of such action, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 8 or Section 9 hereof (whether or not the indemnified party is an actual
or potential party
28
thereto), unless (x) such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such claim, investigation, action or proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or any failure to act, by
or on behalf of the indemnified party, and (y) the indemnifying party confirms
in writing its indemnification obligations hereunder with respect to such
settlement, compromise or judgment.
9. Contribution.
(a) In order to provide for contribution in circumstances in
which the indemnification provided for in Section 8 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company, the Selling Stockholder
and the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company and the
Selling Stockholder, any contribution received by the Company and/or the Selling
Stockholder from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company and/or the Selling
Stockholder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company, the
Selling Stockholder and one or more of the Underwriters may be subject, in such
proportions as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholder and the Underwriters from the Offering or, if
such allocation is not permitted by applicable law, in such proportions as are
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company, the Selling Stockholder and the Underwriters
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.
(b) The relative benefits received by the Company, the Selling
Stockholder and the Underwriters shall be deemed to be in the same proportion as
(i) the total proceeds from the Offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
Selling Stockholder bear to (ii) the underwriting discount or commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus.
(c) The relative fault of each of the Company, the Selling
Stockholder and of the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholder or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(d) The Company, the Selling Stockholder and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for
29
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 9 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
(e) Notwithstanding the provisions of this Section 9, (i) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the discounts and commissions applicable to the Shares underwritten by
it and distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company and the Selling Stockholder, as
applicable, subject in each case to clauses (i) and (ii) of the immediately
preceding sentence. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 9 or otherwise to the extent that it is not
materially prejudiced as a result thereof. The obligations of the Underwriters
to contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares to be purchased by each of the Underwriters
hereunder and not joint.
10. Underwriter Default.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
(the "Default Shares") do not (after giving effect to arrangements, if any, made
by the Lead Manager pursuant to subsection (b) below) exceed in the aggregate
10% of the number of Firm Shares or Additional Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Company and the Selling Stockholder that number of Default Shares that bears the
same proportion of the total number of Default Shares then being purchased as
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto bears to the aggregate number of Firm Shares set forth
opposite the names of the non-defaulting Underwriters, subject, however, to such
adjustments to eliminate fractional shares as the Lead Manager in its sole
discretion shall make.
30
(b) In the event that the aggregate number of Default Shares
exceeds 10% of the number of Firm Shares or Additional Shares, as the case may
be, the Lead Manager may in its discretion arrange for itself or for another
party or parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase the Default Shares on the terms contained herein. In the
event that within five calendar days after such a default the Lead Manager does
not arrange for the purchase of the Default Shares as provided in this Section
10, this Agreement or, in the case of a default with respect to the Additional
Shares, the obligations of the Underwriters to purchase and of the Company to
sell the Additional Shares shall thereupon terminate, without liability on the
part of the Company with respect thereto (except in each case as provided in
Sections 6, 8, 9, 11 and 12) or the Underwriters, but nothing in this Agreement
shall relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that any Default Shares are to be purchased by
the non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, the Lead Manager or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may be for a
period, not exceeding five business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents and arrangements, and the Company agrees to file promptly
any amendment or supplement to the Registration Statement or the Prospectus
which, in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
11. Survival of Representations and Agreements.
All representations and warranties, covenants and agreements of the
Underwriters, the Company and the Selling Stockholder contained in this
Agreement or in certificates of officers of the Selling Stockholder, the Company
or any Subsidiary submitted pursuant hereto, including the agreements contained
in Section 6, the indemnity agreements contained in Section 8 and the
contribution agreements contained in Section 9, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person thereof or by or on behalf of the
Company or the Selling Stockholder, any of its officers and directors or any
controlling person thereof, and shall survive delivery of and payment for the
Shares to and by the Underwriters. The representations contained in Sections 1
and 2 and the agreements contained in Sections 6, 8, 9, 11 and 12 hereof shall
survive any termination of this Agreement, including termination pursuant to
Section 10 or 12 hereof.
12. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the execution
and delivery of this Agreement. Notwithstanding any termination of this
Agreement, the provisions of this Section 12 and of Sections 1, 2, 6, 8, 9, 11
and 13 through 18, inclusive, shall remain in full force and effect at all times
after the execution hereof.
31
(b) The Lead Manager shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Lead Manager will in the immediate future materially disrupt, the
market for the Company's securities or securities in general; or (ii) trading on
The New York Stock Exchange ("the NYSE") or The NASDAQ National Market (the
"NASDAQ") shall have been suspended or been made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the NYSE
or the NASDAQ or by order of the Commission or any other governmental authority
having jurisdiction; or (iii) a banking moratorium has been declared by any
state or federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred; or iv (A)
there shall have occurred any outbreak or escalation of hostilities or acts of
terrorism involving the United States or there is a declaration of a national
emergency or war by the United States or (B) there shall have been any other
calamity or crisis or any change in political, financial or economic conditions
if the effect of any such event in (A) or (B), in the judgment of the Lead
Manager, makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 12 shall
be in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than pursuant to (i) notification by the Lead
Manager as provided in Section 12(a) hereof or (ii) Section 10(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Lead Manager, reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and expenses of
their counsel), incurred by the Underwriters in connection herewith.
13. Notices.
All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co.
Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Parish,
Senior Managing Director, Equity Capital Markets, with a copy to Underwriter's
Counsel at Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxx X.
Xxxxx, III.
(b) If sent to the Selling Stockholder, shall be mailed,
delivered or faxed and confirmed in writing to the Selling Stockholder,
Attention: Xxxxx X. Xxxxxxx, Xx., with a copy to Xxxxxx Xxxxxxx PLLC, 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: J. Xxxxxxx Xxxxxxx;
32
(c) if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to the Company at the addresses set forth in the
Registration Statement, Attention: Xxxxxxxxx X. Xxxxxxx XX, with a copy to
Xxxxxx Xxxxxxx PLLC, 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
J. Xxxxxxx Xxxxxxx;
provided, however, that any notice to an Underwriter pursuant to Section 8 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to Bear Xxxxxxx, which address
will be supplied to any other party hereto by Bear Xxxxxxx upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
14. Parties.
This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Selling Stockholder and the Company and the
controlling persons, directors, officers, employees and agents referred to in
Sections 8 and 9 hereof, and their respective successors and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and said controlling persons and their respective successors, officers,
directors, heirs and legal representatives, and it is not for the benefit of any
other person, firm or corporation. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from any of the
Underwriters.
15. Governing Law and Jurisdiction; Waiver of Jury Trial.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. The Company and the Selling Stockholder each
irrevocably (a) submits to the jurisdiction of any court of the State of New
York or the United State District Court for the Southern District of the State
of New York for the purpose of any suit, action, or other proceeding arising out
of this Agreement, or any of the agreements or transactions contemplated by this
Agreement, the Registration Statement and the Prospectus (each, a "Proceeding"),
(b) agrees that all claims in respect of any Proceeding may be heard and
determined in any such court, (c) waives, to the fullest extent permitted by
law, any immunity from jurisdiction of any such court or from any legal process
therein, (d) agrees not to commence any Proceeding other than in such courts,
and (e) waives, to the fullest extent permitted by law, any claim that such
Proceeding is brought in an inconvenient forum. EACH OF THE COMPANY AND THE
SELLING STOCKHOLDER (ON BEHALF OF THEMSELVES AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF THEIR RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.
33
16. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. Delivery of a signed
counterpart of this Agreement by facsimile transmission shall constitute valid
and sufficient delivery thereof.
17. Headings.
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
18. Time is of the Essence.
Time shall be of the essence of this Agreement. As used herein, the term
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
[signature page follows]
34
If the foregoing correctly sets forth your understanding,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
ASSET ACCEPTANCE CAPITAL CORP.
By: ___________________________
Name:
Title:
SELLING STOCKHOLDER
Xxxxx X. Xxxxxxx, Xx., Revocable Living
Trust, as amended
By: ___________________________
Name: Xxxxx X. Xxxxxxx, Xx
Title: Attorney-in-Fact for Selling
Stockholder
BEAR, XXXXXXX & CO. INC.
XXXXXXX XXXXX & COMPANY, L.L.C.
CIBC WORLD MARKETS CORP.
SUNTRUST CAPITAL MARKETS, INC.
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
C/O BEAR, XXXXXXX & CO., INC.
By: BEAR, XXXXXXX & CO. INC.
By: ___________________________________
Name:
Title:
On behalf of itself and the other Underwriters named in Schedule I hereto.
SCHEDULE I
Number of Additional
Total Number of Firm Shares to be Purchased if
Underwriter Shares to be Purchased Option is Fully Exercised
----------- ---------------------- -------------------------
Bear, Xxxxxxx & Co. Inc.
Xxxxxxx Xxxxx & Company, L.L.C.
CIBC World Markets Corp.
SunTrust Capital Markets, Inc.
Total...........
===================== =========================
7,000,000 1,050,000
SCHEDULE II
Maximum Number of
Name Number of Firm Shares Additional Shares
---- --------------------- -----------------
Company 7,000,000 0
Selling Stockholder 0 1,050,000
SCHEDULE III
Xxxxx X. Xxxxxxx, Xx.
Xxxxxxxxx X. Xxxxxxx XX
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx X'Xxxxx
Xxxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
AAC Quad-C Investors LLC
Quad-C Management, Inc.
38
EXHIBIT A
Subsidiaries
Subsidiaries of Asset Acceptance Capital Corp.
NAME JURISDICTION
AAC Investors, Inc.* Virginia
Asset Acceptance Holdings LLC Delaware
Asset Acceptance, LLC Delaware
CFC Financial, LLC Delaware
Consumer Credit, LLC Delaware
Financial Credit, LLC Delaware
Med-Fi Acceptance, LLC Delaware
RBR Holding Corp.* Nevada
* AAC Investors, Inc. and RBR Holding Corp. will become subsidiaries of Asset
Acceptance Capital Corp. upon the effectiveness of the Reorganization (as
defined in the Prospectus).
EXHIBIT B
Custody Agreement and Power of Attorney
40
ANNEX I
Form of Opinion of Company Counsel
1. Each of the Company and its Subsidiaries has been duly
organized and validly exists as a corporation in good standing under the laws of
its jurisdiction of incorporation, with full power and authority to own its
properties and conduct its business as described in the Registration Statement
and the Prospectus. Each of the Company and its Subsidiaries is duly qualified
and in good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary.
2. The Company has an authorized capitalization as set forth
in the Registration Statement and the Prospectus. All of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are not in violation of or subject to any
preemptive or, to such counsel's knowledge, similar rights that entitle or will
entitle any person to acquire any Shares from the Company upon issuance or sale
thereof. The Shares to be delivered on the Closing Date and the Additional
Closing Date, if any, have been duly and validly authorized and, when delivered
in accordance with the Underwriting Agreement, will be duly and validly issued,
fully paid and non-assessable and will not have been issued in violation of or
subject to preemptive or, to such counsel's knowledge, similar rights that
entitle or will entitle any person to acquire any Shares from the Company upon
issuance or sale thereof. All of the issued shares of capital stock of each
Subsidiary of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of all Liens. The Common Stock, the Firm Shares and the
Additional Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus.
3. The Shares are duly authorized for quotation on the NASDAQ.
4. The Underwriting Agreement and the Share Exchange Agreement
have been duly and validly authorized, executed and delivered by the Company and
the Share Exchange Agreement constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5. To such counsel's knowledge and other than as set forth in
the Prospectus, there are no judicial, regulatory or other legal or governmental
proceedings pending to which the Company or any of its Subsidiaries is a party
or of which any property of the Company or any of its Subsidiaries is the
subject which, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect; and, to such counsel's knowledge, no such proceedings are threatened or
contemplated.
6. The execution, delivery, and performance of the
Underwriting Agreement and the Share Exchange Agreement and consummation of the
transactions contemplated by Underwriting Agreement, the Share Exchange
Agreement, the Registration Statement, the Prospectus and the Reorganization do
not and will not (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its Subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement or any other agreement, instrument, franchise,
license or permit known to such counsel to which the Company or any of its
Subsidiaries is a party or by which any of the Company or any of its
Subsidiaries or their respective properties or assets may be bound or (B)
violate or conflict with any provision of the certificate of incorporation or
by-laws of the Company or any of its Subsidiaries, or, to the best knowledge of
such counsel, any judgment, decree, order, statute, rule or regulation of any
court or any judicial, regulatory or other legal or governmental agency or body.
7. Each of the Company and its Subsidiaries has all Consents
as are necessary to own, lease, license and operate its respective properties
and to conduct its business as it is now being conducted and as described in the
Registration Statement and the Prospectus and to consummate the Reorganization,
except where the failure to have any such Consent would not have a Material
Adverse Effect; and to my knowledge, the Company is not in violation of any such
Consent, except for any violations which would not have a Material Adverse
Effect.
8. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any judicial,
regulatory or other legal or governmental agency or body is required for the
execution, delivery and performance of this Agreement or the Share Exchange
Agreement or consummation of the transactions contemplated by the Underwriting
Agreement, the Share Exchange Agreement, the Registration Statement, the
Prospectus and the Reorganization, except for (1) such as may be required under
state securities or blue sky laws in connection with the purchase and
distribution of the Shares by the Underwriters (as to which such counsel need
express no opinion), (2) such as have been made or obtained under the Securities
Act and (3) such as are required by the NASD.
9. The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial statements
and schedules and other financial data included or incorporated by reference
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Securities Act, the Exchange Act
and the Rules and Regulations.
10. The statements under the captions "Risk Factors -- Our
ability to recover on our charged-off consumer receivables may be limited under
federal and state laws", "Business -- Regulation and Legal Compliance",
"Management -- Limitation of Liability and Indemnification of Officers and
Directors", "Description of Capital Stock", "U.S. Federal Tax Considerations for
Non-U.S. Holders" and "Underwriting" in the Prospectus and Items 14 and 15 of
Part II of the Registration Statement, insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal matters,
documents and proceedings.
2
11. The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as
described in the Registration Statement and the Prospectus, will not be, an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
12. The Registration Statement is effective under the
Securities Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been
initiated or threatened by the Commission and all filings required by Rule
424(b) and Rule 430A under the Securities Act have been made.
13. The Company has full right, power and authority to execute
and deliver this Agreement and the Shares and to perform its obligations
hereunder, and all corporate action required to be taken for the due and proper
authorization, execution and delivery of this Agreement and the Shares and
consummation of the transactions contemplated by Underwriting Agreement, the
Registration Statement, the Prospectus, the Share Exchange Agreement and the
Reorganization and as described in the Registration Statement and the Prospectus
have been duly and validly taken.
14. To the best knowledge of such counsel, no contract or
agreement is required to be filed as an exhibit to the Registration Statement
that is not so filed.
15. Neither the Company nor any of its Subsidiaries is in
violation of its respective charter or by-laws and, to such counsel's knowledge
after due inquiry, neither the Company nor any of its Subsidiaries is in default
in the performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its Subsidiaries, individually or
taken as a whole, to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or their respective property is
bound.
In addition, such opinion shall also contain a statement that
such counsel has participated in conferences with officers and representatives
of the Company, representatives of the independent public accountants for the
Company and the Underwriters at which the contents and the Prospectus and
related matters were discussed and, no facts have come to the attention of such
counsel which would lead such counsel to believe that either the Registration
Statement, at the time it became effective (including the information deemed to
be part of the Registration Statement at the time of effectiveness pursuant to
Rule 430A(b) or Rule 434, if applicable), or any amendment thereof made prior to
the Closing Date, as of the date of such amendment, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date (or any amendment thereof or supplement
thereto made prior to the Closing Date as of the date of such amendment or
supplement) and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief or opinion with respect to
the financial statements and schedules and other financial data included or
incorporated by reference therein).
3
ANNEX II
Form of Opinion of Selling Stockholder's Counsel
1. The Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than any approval imposed by
the applicable state securities and Blue Sky laws), to enter into the
Underwriting Agreement, the Custody Agreement and the Power of Attorney executed
by him and to sell, assign, transfer and deliver the Additional Shares to be
sold by the Selling Stockholder in the manner provided in the Underwriting
Agreement.
2. The Selling Stockholder is the lawful owner of the
Additional Shares and has, and immediately prior to the Closing Date or any
Additional Closing Date, as applicable, will have good and marketable title to
the Additional Shares to be sold by the Selling Stockholder pursuant to the
Underwriting Agreement on such date, free and clear of all liens, charges,
encumbrances, equities or claims.
3. Assuming that neither the Lead Manager nor any other
Underwriter has notice of any adverse claims (as defined in Section 8-105 of the
Uniform Commercial Code as in effect on the date hereof in the Sate of New York
(the "NYUCC")) with respect to certificate number ___ registered in the name of
the Selling Stockholder and evidencing ___ shares of Common Stock of the Company
then, upon delivery to the Lead Manager of such certificate indorsed in blank by
an effective indorsement (within the meaning of Section 8-107 of the NYUCC) the
Lead Manager, on behalf of itself and the other Underwriters, will become a
"protected purchaser" of the Additional Shares (as defined in Section 8-303 of
the NYUCC) and acquire such certificate (and the shares represented thereby)
free of any adverse claims under Section 8-303 of the NYUCC.
4. The Underwriting Agreement has been duly and validly
authorized, executed and delivered by the Selling Stockholder.
5. The Custody Agreement and Power of Attorney appointing o as
the Custodian and o as the Selling Stockholder's Attorney-In-Fact, with regard
to the transactions contemplated hereby and by the Registration Statement, has
been duly authorized, executed and delivered by or on behalf of the Selling
Stockholder and is the valid and binding agreements of the Selling Stockholder,
enforceable in accordance with their terms, and pursuant to such power of
attorney, the Selling Stockholder has authorized such Attorney-In-Fact to
execute and deliver on the Selling Stockholder's behalf the Underwriting
Agreement and any other document necessary or desirable in connection with the
transactions contemplated thereby and to deliver the Additional Shares to be
sold by the Selling Stockholder pursuant to the Underwriting Agreement.
6. The execution, delivery and performance of the Underwriting
Agreement, the Custody Agreement and Power of Attorney by the Selling
Stockholder, compliance by the Selling Stockholder with all the provisions
hereof and thereof and the consummation of
4
the transactions contemplated hereby and thereby will not require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except such as may be required
under the Securities Act, state securities laws or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, any agreement, indenture or other instrument to which the Selling
Stockholder is a party or by which the Selling Stockholder or property of the
Selling Stockholder is bound, will not violate the charter, bylaws, certificate
of formation, partnership agreement, limited liability agreement or other
organizational documents of the Selling Stockholder and will not violate or
conflict with any law, statute, administrative regulation or ruling, or
judgment, order or decree of any court or government instrumentality or agency
applicable to the Selling Stockholder or property of the Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the extent
they deem proper, on certificates of the Selling Stockholder provided that
copies of any such statements or certificates shall be delivered, in advance, to
Underwriters' Counsel. The opinion of such counsel shall state that the opinion
of any such other counsel is in form satisfactory to such counsel and, in their
opinion, you and they are justified in relying thereon.
5
ANNEX III
Form of Opinion of Xxxxxxx Xxxxxxx, Compliance Attorney
1. The statements under the captions "Risk Factors -- Our
ability to recover on our charged-off consumer receivables may be limited under
federal and state laws" and "Business -- Regulation and Legal Compliance" in the
Prospectus, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings.
2. No consent, approval, authorization, clearance or order of
any entity described in "Business -- Regulation and Legal Compliance" or
administering the laws, statutes and regulations described in such section of
the Prospectus (a "Regulatory Agency") is required to be obtained by the Company
or any of its Subsidiaries in connection with the transactions contemplated by
the Underwriting Agreement, including the offer and sale of the Shares.
3. Neither the Company nor any of its Subsidiaries is in
violation of any of any of the laws, statutes and regulations described in
"Business -- Regulation and Legal Compliance" in the Prospectus (the
"Regulations"), except which would not have a Material Adverse Effect, and there
are no actions pending against the Company by any Regulatory Agency, and to my
knowledge, no such action is contemplated.
4. The Company and each Subsidiary have all necessary
licenses, certificates, permits and authorizations required by any Regulatory
Agency to operate the business as described or contemplated in the Prospectus,
except where failure to obtain or hold such license, certificate, permit or
authorization would not have a Material Adverse Effect, and none of the Company
or any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such license, certificate, permit or
authorization, which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
5. Neither the execution and delivery of the Underwriting
Agreement, nor the consummation of the transactions contemplated by the
Underwriting Agreement, including the offer and sale of the Shares, will
conflict with or result in a breach or violation of any of the Regulations.
6
ANNEX IV
Form of Lock-Up Agreement
-, 2004
Bear, Xxxxxxx & Co. Inc.
Xxxxxxx Xxxxx & Company, L.L.C.
CIBC World Markets Corp.
SunTrust Capital Markets, Inc.
As Representatives of the several
Underwriters referred to below
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
Asset Acceptance Capital Corp. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed
initial public offering (the "Offering") by Asset Acceptance Capital Corp., a
Delaware corporation (the "Company"), of its common stock, $.01 par value (the
"Stock").
In order to induce you and the other underwriters for which you act as
representatives (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, Xxxxxxx & Co.
Inc. ("Bear Xxxxxxx"), during the period from the date hereof until one hundred
eighty (180) days after the date of the final prospectus for the Offering (the
"Lock-Up Period"), the undersigned (a) will not, directly or indirectly, offer,
sell, agree to offer or sell, solicit offers to purchase, grant any call option
or purchase any put option with respect to, pledge, borrow or otherwise dispose
of any Relevant Security (as defined below), and (b) will not establish or
increase any "put equivalent position" or liquidate or decrease any "call
equivalent position" with respect to any Relevant Security (in each case within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder), or otherwise enter into
any swap, derivative or other transaction or arrangement that transfers to
another, in whole or in part, any economic consequence of ownership of a
Relevant Security, whether or not such transaction is to be settled by delivery
of Relevant Securities, other securities, cash or other consideration. As used
herein "Relevant Security" means the Stock, any other equity security of the
Company or any of its subsidiaries and any security convertible into, or
exercisable or exchangeable for, any Stock or other such equity security.
Notwithstanding the foregoing, the undersigned may sell or otherwise
transfer shares of Relevant Securities (i) as a bona fide gift or gifts,
provided that the undersigned provides prior written notice of such gift or
gifts to Bear Xxxxxxx and the applicable donee(s) agree in writing with and
satisfactory to Bear Xxxxxxx to be bound by the
restrictions set forth in this Agreement as if such donee(s) had been an
original party hereto, prior to such transfer, (ii) acquired in the public
market on or after the date of the final prospectus for the Offering, provided
that any such sale or other disposition fully complies with, and is not required
to be disclosed or reported under, applicable law (including but not limited to
Section 16 under the Securities Exchange Act of 1934 and the rules and
regulations thereunder), or (iii) if the undersigned is a partnership, limited
liability company or corporation, the undersigned may make a general
distribution of Relevant Securities to its partners, members or shareholders,
provided that the undersigned provides prior written notice of such transfer to
Bear Xxxxxxx and the applicable recipient(s) agrees in writing with and
satisfactory to Bear Xxxxxxx to be bound by the restrictions set forth in this
Agreement as if such recipient(s) had been an original party hereto, prior to
such transfer.
The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities, except as expressly
permitted by this Agreement, to decline to transfer, and to note stop transfer
restrictions on the stock register and other records relating to, Relevant
Securities for which the undersigned is the record holder and, in the case of
Relevant Securities for which the undersigned is the beneficial but not the
record holder, agrees during the Lock-Up Period to cause the record holder to
cause the relevant transfer agent to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to, such
Relevant Securities. The undersigned hereby further agrees that, without the
prior written consent of Bear Xxxxxxx, during the Lock-up Period the undersigned
(x) will not file or participate in the filing with the Securities and Exchange
Commission of any registration statement, or circulate or participate in the
circulation of any preliminary or final prospectus or other disclosure document
with respect to any proposed offering or sale of a Relevant Security, except in
the undersigned's capacity as an officer of the Company with respect to the
filing of a Registration Statement on Form S-8 relating to employee benefit
plans of the Company, and (y) will not exercise any rights the undersigned may
have to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _____________________________
Print Name: _______________________
8
