Exhibit 1.1
Portfolio Recovery Associates, Inc.
3,000,000 Shares Common Stock(1)
UNDERWRITING AGREEMENT
[________], 2003
Xxxxxxx Xxxxx & Company, L.L.C.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
As Representatives of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Section 1. Introductory. Portfolio Recovery Associates, Inc., a
Delaware corporation ("Company"), has an authorized capital stock consisting of
2,000,000 shares of Preferred Stock, $0.01 par value, of which no shares were
outstanding as of the date hereof and 30,000,000 shares of common stock, $0.01
par value ("Common Stock"), of which [________] shares will be outstanding
immediately prior to the closing of the offering of shares contemplated by this
Agreement. Certain stockholders of the Company (collectively referred to as the
"Selling Stockholders" and named in Schedule B) propose to sell in aggregate
3,000,000 shares (the "Firm Shares") of the Company's issued and outstanding
Common Stock(2) to the several underwriters named in Schedule A as it may be
amended by the Pricing Agreement hereinafter defined ("Underwriters"), who are
acting severally and not jointly. In addition, the Selling Stockholders propose
to grant to the Underwriters an option to purchase in aggregate up to 450,000
additional shares of Common Stock ("Option Shares") as provided in Section 5
hereof. The Firm Shares and, to the extent such option is exercised, the Option
Shares, are hereinafter collectively referred to as the "Shares." Xxxxxxx Xxxxx
& Company, L.L.C. has the authority, subject to the terms and conditions
contained herein, to act on behalf of the several Underwriters and the
Representatives hereunder.
(1) Plus an option to acquire up to 450,000 additional shares to cover
overallotments.
(2) Immediately prior to the closing of the offering of the shares contemplated
by this Agreement, the Selling Stockholders will exercise warrants (the
"Warrants") to purchase from the Company 1,835,000 shares of Common Stock,
930,000 of which will be sold in this offering (1,069,500 if the Underwriters'
over-allotment is exercised in full). The Selling Stockholders will deliver an
aggregate of _______ outstanding shares of Common Stock in satisfaction of the
aggregate exercise price of such Warrants. These transactions, including the
amendments to the Warrants to allow payment of the exercise price with shares of
Common Stock, are referred to herein, collectively, as the "Warrant Exercise
Transactions."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of the Shares as soon as you deem
advisable after the registration statement hereinafter referred to becomes
effective, if it has not yet become effective, and the Pricing Agreement
hereinafter defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, the Selling Stockholders and the Representatives,
acting on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto ("Pricing Agreement"). The Pricing
Agreement may take the form of an exchange of any standard form of written
telecommunication between the Company, the Selling Stockholders and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be deemed
to incorporate the Pricing Agreement.
The Company and each of the Selling Stockholders hereby confirm their
agreements with the Underwriters as follows:
Section 2. Representations and Warranties of the Company. The
Company represents and warrants to the several Underwriters and the Selling
Stockholders that:
(a) A registration statement on Form S-1 (File No. 333-[ ]) and a
related preliminary prospectus with respect to the Shares have been
prepared and filed with the Securities and Exchange Commission
("Commission") by the Company in conformity in all material respects with
the requirements of the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the "1933
Act;" unless indicated to the contrary, all references herein to specific
rules are rules promulgated under the 1933 Act, including, without
limitation, Regulation G); and the Company has so prepared and has filed
such amendments thereto, if any, and such amended preliminary prospectuses
as may have been required to the date hereof and will file such additional
amendments thereto and such amended prospectuses as may hereafter be
required. There have been or will promptly be delivered to you a signed
copy of such registration statement and amendments, a copy of each exhibit
filed therewith, and conformed copies of such registration statement and
amendments (but without exhibits) and of the related preliminary
prospectus or prospectuses and final forms of prospectus for each of the
Underwriters. For purposes of this Agreement, delivery or furnishing of
certain documents may take the form of access to such documents as filed
with the Commission using XXXXX and available on the Commission's website
at xxx.xxx.xxx.
Such registration statement (as amended, if applicable) at the time
it becomes effective and the prospectus constituting a part thereof
(including the information, if any, deemed to be part thereof pursuant to
Rule 430A(b) and/or Rule 434, and including any exhibits incorporated by
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reference therein), as from time to time amended or supplemented, are
hereinafter referred to as the "Registration Statement," and the
"Prospectus," respectively, except that if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Shares which differs from the Prospectus on file at the
Commission at the time the Registration Statement became or becomes
effective (whether or not such revised prospectus is required to be filed
by the Company pursuant to Rule 424(b)), the term Prospectus shall refer
to such revised prospectus from and after the time it was provided to the
Underwriters for such use. If the Company elects to rely on Rule 434 of
the 1933 Act, all references to "Prospectus" shall be deemed to include,
without limitation, the form of prospectus and the term sheet, taken
together, provided to the Underwriters by the Company in accordance with
Rule 434 of the 1933 Act ("Rule 434 Prospectus"). Any registration
statement (including any amendment or supplement thereto or information
which is deemed part thereof) filed by the Company under Rule 462(b)
("Rule 462(b) Registration Statement") shall be deemed to be part of the
"Registration Statement" as defined herein, and any prospectus (including
any amendment or supplement thereto or information which is deemed part
thereof) included in such registration statement shall be deemed to be
part of the "Prospectus", as defined herein, as appropriate. The
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder are hereinafter collectively referred to as
the "Exchange Act." Any document filed by the Company under the Exchange
Act prior to the date hereof or during the offering period, when such
document was or is filed with the Commission, conformed or will conform in
all material respects to the requirements of the Exchange Act and none of
such documents contained or will contain, as of the date such document was
or is filed with the Commission, any untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus, and each preliminary prospectus has
conformed in all material respects with the requirements of the 1933 Act
and, as of its date, has not included any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein not misleading; and when the Registration Statement became or
becomes effective, and at all times subsequent thereto, up to the First
Closing Date or the Second Closing Date hereinafter defined, as the case
may be, the Registration Statement, including the information deemed to be
part of the Registration Statement at the time of effectiveness pursuant
to Rule 430A(b), if applicable, and the Prospectus and any amendments or
supplements thereto, contained or will contain all statements that are
required to be stated therein in accordance with the 1933 Act and in all
material respects conformed or will in all material respects conform to
the requirements of the 1933 Act, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, included or
will include any untrue statement of a material fact or omitted or will
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes
no representation or warranty as to information contained in or omitted
from any preliminary prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon
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and in conformity with written information furnished to the Company by or
on behalf of any Underwriter through the Representatives specifically for
use in the preparation thereof or the Selling Stockholders expressly for
use in the preparation thereof.
(c) The Company and its subsidiaries have been duly incorporated or
formed and are validly existing as corporations or limited liability
companies in good standing under the laws of their respective places of
incorporation or formation, as the case may be, with requisite power and
authority to own their properties and conduct their business as described
in the Prospectus; the Company and each of its subsidiaries are duly
qualified to do business as foreign corporations or limited liability
companies under the laws of, and are in good standing as such in, each
jurisdiction in which they own or lease substantial properties, have an
office, or in which substantial business is conducted and such
qualification is required except in any such case where the failure to so
qualify or be in good standing would not have a material adverse effect
upon the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"); and no proceeding of which the Company has knowledge has
been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) The Company owns directly or indirectly 100 percent of the
issued and outstanding limited liability company interests of each of its
subsidiaries, free and clear of any claims, liens, encumbrances or
security interests, except as described in the Prospectus and the
Registration Statement, including the exhibits thereto, and all of such
limited liability company interests have been duly authorized and validly
issued and are fully paid and nonassessable.
(e) The issued and outstanding shares of capital stock of the
Company as set forth in the Prospectus have been duly authorized and
validly issued, are fully paid and nonassessable, and conform to the
description thereof contained in the Prospectus.
(f) The Shares to be sold by the Selling Stockholders have been duly
authorized and when issued (with respect to Shares delivered to the
Selling Stockholders in connection with the Warrant Exercise
Transactions), delivered and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and will conform to the
description thereof contained in the Prospectus.
(g) The making and performance by the Company of this Agreement and
the Pricing Agreement and, to the extent necessary, the consummation of
the Warrant Exercise Transactions have been duly authorized by all
necessary corporate action and will not violate any provision of the
Company's charter or bylaws and will not result in the breach, or be in
contravention, of any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust, or other instrument to which the
Company or any subsidiary is a party or by which the Company, any
subsidiary or the property of any of them may be bound or affected, or any
order, rule or regulation applicable to the Company or any subsidiary of
any
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court or regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any subsidiary or any of their
respective properties, or any order of any court or governmental agency or
authority entered in any proceeding to which the Company or any subsidiary
was or is now a party or by which it is bound, except for such violations,
breaches or defaults which would not have a Material Adverse Effect. No
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the Pricing Agreement or the
consummation of the transactions contemplated herein or therein or in
connection with the Warrant Exercise Transactions, except for compliance
with the 1933 Act and blue sky laws applicable to the public offering of
the Shares by the several Underwriters and clearance of such offering with
the National Association of Securities Dealers, Inc. ("NASD"). This
Agreement has been duly executed and delivered by the Company.
(h) The accountants who have expressed their opinions with respect
to certain of the financial statements included in the Registration
Statement are independent accountants as required by the 1933 Act.
(i) The consolidated financial statements of the Company included in
the Registration Statement present fairly the consolidated financial
position of the Company as of the respective dates of such financial
statements, and the consolidated statements of operations and cash flows
of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed in the
Prospectus. The financial information set forth in the Prospectus under
"Selected Consolidated Financial Data" presents fairly, on the basis
stated in the Prospectus, the information set forth therein.
The pro forma information included in the Prospectus presents
fairly the information shown therein, has been prepared in accordance
with generally accepted accounting principles and the Commission's
rules and guidelines with respect to pro forma information, has been
properly compiled on the pro forma basis described therein, and, in the
opinion of the Company, the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate under the
circumstances.
(j) Neither the Company nor any subsidiary is in violation of its
organizational documents or in default under any consent decree, or in
default with respect to any material provision of any lease, loan
agreement, franchise, license, permit or other contract obligation to
which it is a party; and there does not exist any state of facts which
constitutes an event of default as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of
default, in each case, except for violations or defaults which neither
singly nor in the aggregate would have a Material Adverse Effect.
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(k) There are no material legal or governmental proceedings pending,
or to the Company's knowledge, threatened to which the Company or any
subsidiary is or may be a party or of which material property owned or
leased by the Company or any subsidiary is or may be the subject, or
related to environmental or discrimination matters, in each case, which
are not disclosed in the Prospectus, or which question the validity of
this Agreement or the Pricing Agreement or any action taken or to be taken
pursuant hereto or thereto.
(l) There are no holders of securities of the Company having rights
to registration thereof or preemptive rights to purchase Common Stock.
(m) The Company and each of its subsidiaries have good and
marketable title to all the properties and assets reflected as owned in
the financial statements hereinabove described (or elsewhere in the
Prospectus), subject to no lien, mortgage, pledge, charge or encumbrance
of any kind except those, if any, reflected in such financial statements
(or elsewhere in the Prospectus) or which are not material to the Company
and its subsidiaries taken as a whole. The Company and each of its
subsidiaries hold their respective leased properties which are material to
the Company and its subsidiaries taken as a whole under valid and binding
leases.
(n) The Company has not taken and will not take during the offering
period (including any time after the effective date of the Registration
Statement during which the Underwriters are deemed to be making a public
offering), directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Shares.
(o) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as
contemplated by the Prospectus, the Company and its subsidiaries, taken as
a whole, have not incurred any material liabilities or obligations, direct
or contingent, nor entered into any material transactions not in the
ordinary course of business and there has not been any material adverse
change in their condition (financial or otherwise) or results of
operations nor any material change in their capital stock, short-term debt
or long-term debt.
(p) There is no material document of a character required to be
described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which is not described or
filed as required.
(q) The Company together with its subsidiaries owns and possesses
all right, title and interest in and to, or has duly licensed from third
parties, all patents, patent rights, trade secrets, inventions, know-how,
trademarks, trade names, copyrights, service marks and other proprietary
rights ("Trade Rights") material to the business of the Company and each
of its subsidiaries taken as a
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whole. Neither the Company nor any of its subsidiaries has received any
notice of infringement, misappropriation or conflict from any third party
as to such material Trade Rights which has not been resolved or disposed
of and neither the Company nor any of its subsidiaries has infringed,
misappropriated or otherwise conflicted with material Trade Rights of any
third parties, which infringement, misappropriation or conflict would have
a Material Adverse Effect.
(r) The conduct of the business of the Company and each of its
subsidiaries is in compliance in all respects with applicable federal,
state, local and foreign laws and regulations, except where the failure to
be in compliance would not have a Material Adverse Effect.
(s) All offers and sales of the Company's capital stock or
membership interests of its subsidiaries prior to the date hereof were
either (1) made pursuant to a registration statement filed by the Company
with the Commission under the 1933 Act or (2) at all relevant times exempt
from the registration requirements of the 1933 Act and, in each case, were
duly registered with or the subject of an available exemption from the
registration requirements of the applicable state securities or blue sky
laws.
(t) The Company has filed all necessary federal and state income and
franchise tax returns and has paid all taxes shown as due thereon, and
there is no tax deficiency that has been, or to the knowledge of the
Company might be, asserted against the Company or any of its properties or
assets that would or could be expected to have a Material Adverse Effect.
(u) A registration statement pursuant to Section 12(g) of the
Exchange Act to register the Common Stock thereunder has been declared
effective by the Commission pursuant to the Exchange Act, and the Common
Stock is duly registered thereunder. The Shares have been approved for
listing on the Nasdaq National Market, subject to notice of issuance or
sale of the Shares, as the case may be.
(v) The Company is not, and does not intend to conduct its business
in a manner in which it would become, an "investment company" as defined
in Section 3(a) of the Investment Company Act of 1940, as amended
("Investment Company Act").
Section 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Each Selling Stockholder severally, and not jointly, represents
and warrants to, and agrees with, the Company and the Underwriters that:
(i) Such Selling Stockholder (1) has valid marketable title to
the Shares proposed to be sold by such Selling Stockholder hereunder
(or Warrants which such Selling Stockholder will validly exercise
for such Shares prior to the offering of Shares contemplated
hereby), (2) on the First Closing Date or the Second Closing Date
hereinafter defined, as the
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case may be, will have, valid marketable title to the Shares
proposed to be sold by such Selling Stockholder hereunder on such
date and (3) has full right, power and authority to enter into this
Agreement, the Pricing Agreement and the Warrant Exercise
Transactions and to sell, assign, transfer and deliver such Shares
hereunder, free and clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property rights. Upon
delivery of and payment for such Shares hereunder, the Underwriters
will acquire valid marketable title thereto, free and clear of all
voting trust arrangements, liens, encumbrances, equities, claims and
community property rights.
(ii) Such Selling Stockholder has not taken and will not take
during the offering period (including any time after the effective
date of the Registration Statement during which the Underwriters are
deemed to be making a public offering), directly or indirectly, any
action designed to or which might be reasonably expected to cause or
result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(iii) The execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its
obligations under, this Agreement and the Pricing Agreement and the
consummation of the Warrant Exercise Transactions will not
contravene any provision of applicable law, or any material
agreement or other instrument binding upon such Selling Stockholder
or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Stockholder, and no
consent, approval, authorization or order of or qualification with
any governmental body or agency is required for the performance by
such Selling Stockholder of its obligations under this Agreement and
the Pricing Agreement and in connection with the Warrant Exercise
Transactions, except for compliance with the 1933 Act and blue sky
laws applicable to the public offering of the Shares by the several
Underwriters and clearance of such offering with the NASD.
(iv) Each preliminary prospectus, solely with respect to
information relating to such Selling Stockholder (it being
understood such information does not include information relating to
the operations of the Company) provided by such Selling Stockholder
for inclusion therein as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading; and the
Registration Statement at the time of effectiveness, and at all
times subsequent thereto, until the First Closing Date or the Second
Closing Date hereinafter defined, as the case may be, neither the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, solely with respect to information relating to
such Selling Stockholder (it being understood such information does
not include information relating to the operations of the Company)
provided by such Selling Stockholder for inclusion therein, included
or will
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include any untrue statement of a material fact or omitted or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(v) Such Selling Stockholder agrees with the Company and the
Underwriters not to (and to use its reasonable best efforts to cause
its affiliates (including any equity holders thereof, if applicable)
not to), directly or indirectly, (i) offer, sell (including "short"
selling), assign, transfer, encumber, pledge, contract to sell,
grant an option to purchase, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange
Act, or otherwise dispose of any shares of Common Stock or
securities convertible or exchangeable into, or exercisable for,
Common Stock held of record or beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act); or (ii) enter any
swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common
Stock in each case for a period of 180 days after this Agreement
becomes effective without the prior written consent of the Xxxxxxx
Xxxxx & Company, L.L.C.
In order to document the Underwriter's compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or on the First Closing Date, as
hereinafter defined, a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form of statement specified by
Treasury Department regulations in lieu thereof).
Section 4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and the Selling Stockholders that the information set forth (a) on
the cover page of the Prospectus with respect to price, underwriting discount
and terms of the offering and (b) in all paragraphs under "Underwriting" in the
Prospectus, except (i) the last sentence of paragraph 6 (expenses), (ii)
paragraph 12 (NASD affiliation of Selling Stockholder) (other than the last
sentence thereof) and (iii) paragraph 13, was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and is correct and complete in all material respects.
Section 5. Purchase, Sale and Delivery of Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Selling Stockholders, severally
and not jointly, agree to sell to the Underwriters named in Schedule A hereto,
and the Underwriters agree, severally and not jointly, to purchase from the
Selling Stockholders the respective number of Firm Shares set forth opposite the
names of the Selling Stockholders in Schedule B hereto at the price per share
set forth in the Pricing Agreement. The obligation of each Underwriter to each
Selling Stockholder shall be to purchase from such Selling Stockholder the
number of full shares which (as nearly as practicable, as determined by you)
bears to the number of Firm Shares set forth opposite the name of such Selling
Stockholder in Schedule B hereto, the same proportion as the number of Shares
set forth opposite the name of such Underwriter in Schedule A hereto bears to
the total number of Firm Shares to be purchased by all
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Underwriters under this Agreement. The public offering price and the purchase
price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted under
Rule 15c6-1 under the Exchange Act, (or the third business day if required under
Rule 15c6-1 under the Exchange Act or unless postponed in accordance with the
provisions of Section 12) following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon Rule 430A, the fourth
business day, if permitted under Rule 15c6-1 under the Exchange Act, (or the
third business day if required under Rule 15c6-1 under the Exchange Act) after
execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives and
the Company, the Selling Stockholders will deliver to you at the offices of
counsel for the Company or through the facilities of The Depository Trust
Company for the accounts of the several Underwriters, certificates representing
the Firm Shares to be sold by them, respectively, against payment of the
purchase price therefor by delivery of federal or other immediately available
funds, by wire transfer or otherwise, to the Company. Such time of delivery and
payment is herein referred to as the "First Closing Date." The certificates for
the Firm Shares so to be delivered will be in such denominations and registered
in such names as you request by notice to the Company prior to 10:00 A.M.,
Chicago Time, on the second business day preceding the First Closing Date, and
will be made available in New York City at the Company's expense for checking
and packaging in New York City by the Representatives at 10:00 A.M., Chicago
Time, on the business day preceding the First Closing Date. Payment for the Firm
Shares so to be delivered shall be made at the time and in the manner described
above at the offices of counsel for the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Selling Stockholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
450,000 Option Shares, at the same purchase price per share to be paid for the
Firm Shares, for use solely in covering any overallotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the date of the Prospectus upon notice by you to the Company and the
Selling Stockholders setting forth the aggregate number of Option Shares as to
which the Underwriters are exercising the option, the names and denominations in
which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date, shall not be earlier than three nor later than 10 full
business days after delivery of such notice of exercise. The number of Option
Shares to be purchased from each Selling Stockholder shall be as set forth on
Schedule B hereto. The number of Option Shares to be purchased by each
Underwriter shall be determined by multiplying the number of Option Shares to be
sold by the Selling Stockholders pursuant to such notice of exercise by a
fraction, the numerator of which is the number of Firm Shares to be purchased by
such Underwriter as set forth opposite its name in Schedule A and the
denominator of which is the total number of Firm Shares (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute
discretion may make).
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Certificates for the Option Shares will be made available at the Company's
expense for checking and packaging in New York City at 10:00 A.M., Chicago Time,
on the business day preceding the Second Closing Date. The manner of payment for
and delivery of the Option Shares shall be the same as for the Firm Shares as
specified in the preceding paragraph.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Shares, to make payment
and to receipt therefor. You, individually and not as the Representatives of the
Underwriters, may make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by you by the First Closing Date or the
Second Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any obligation
hereunder.
The Company hereby engages Xxxxxxx Xxxxx & Company, L.L.C. to act as a
"qualified independent underwriter" within the meaning of Rule 2720(b)(15) of
the Rules of Conduct of the National Association of Securities Dealers, Inc. in
connection with the pricing of the offering of the Shares.
Section 6. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will advise you and the Selling Stockholders
promptly of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the institution of
any proceedings for that purpose, or of any notification of the suspension
of qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceedings for that purpose, and will
also advise you and the Selling Stockholders promptly of any request of
the Commission for amendment or supplement of the Registration Statement,
of any preliminary prospectus or of the Prospectus, or for additional
information.
(b) The Company will give you and the Selling Stockholders notice of
its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any Rule 462(b)
Registration Statement or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by
the Underwriters in connection with the offering of the Shares which
differs from the prospectus on file at the Commission at the time the
Registration Statement became or becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) and any
term sheet as contemplated by Rule 434) and will furnish you and the
Selling Stockholders with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement or use any
such prospectus to which you or counsel for the Underwriters shall
reasonably object.
(c) If the Company elects to rely on Rule 434 of the 1933 Act, the
Company will prepare a term sheet that complies with the requirements of
Rule 434. If the Company elects not to rely on
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Rule 434, the Company will provide the Underwriters with copies of the
form of prospectus, in such numbers as the Underwriters may reasonably
request, and file with the Commission such prospectus in accordance with
Rule 424(b) of the 1933 Act by the close of business in New York City on
the second business day immediately succeeding the date of the Pricing
Agreement. If the Company elects to rely on Rule 434, the Company will
provide the Underwriters with copies of the form of Rule 434 Prospectus,
in such numbers as the Underwriters may reasonably request, by the close
of business in New York on the business day immediately succeeding the
date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any event occurs as a result
of which the Prospectus, including any amendments or supplements, would
include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements thereto and including
any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs
from the prospectus on file with the Commission at the time of
effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with
the 1933 Act, the Company promptly will advise you thereof and will
promptly prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance; and, in case any Underwriter is required to
deliver a prospectus nine months or more after the effective date of the
Registration Statement, the Company upon request, but at the expense of
such Underwriter, will prepare promptly such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section
10(a)(3) of the 1933 Act.
(e) Neither the Company nor any of its subsidiaries will, prior to
the earlier of the Second Closing Date or termination or expiration of the
related option, incur any liability or obligation, direct or contingent,
or enter into any material transaction, other than in the ordinary course
of business, except as contemplated by the Prospectus.
(f) Neither the Company nor any of its subsidiaries will acquire any
capital stock of the Company prior to the earlier of the Second Closing
Date or termination or expiration of the related option nor will the
Company declare or pay any dividend or make any other distribution upon
the Common Stock payable to stockholders of record on a date after the
date hereof and prior to the earlier of the Second Closing Date or
termination or expiration of the related option, except in either case as
contemplated by the Prospectus.
(g) Not later than August 15, 2004 the Company will make generally
available to its security holders an earnings statement (which need not be
audited) covering a period of at least 12
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months beginning after the effective date of the Registration Statement,
which will satisfy the provisions of the last paragraph of Section 11(a)
of the 1933 Act.
(h) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an
Underwriter or dealer, the Company will furnish to you at its expense,
subject to the provisions of subsection (d) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and
all amendments and supplements to any such documents in each case as soon
as available and in such quantities as you may reasonably request, for the
purposes contemplated by the 1933 Act.
(i) The Company and Selling Stockholders will cooperate with the
Underwriters in qualifying or registering the Shares for sale under the
blue sky laws of such jurisdictions as you designate, and will continue
such qualifications in effect so long as reasonably required for the
distribution of the Shares. The Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not currently qualified or
where it would be subject to taxation as a foreign corporation.
(j) During the period of five years hereafter, the Company will
furnish you and each of the other Underwriters with a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company
with the Commission, any securities exchange or the NASD; and (ii) as soon
as available, of each report of the Company mailed to stockholders.
(k) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule
430A and/or Rule 434, then immediately following the execution of the
Pricing Agreement, the Company will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A, Rule 424(b)
and/or Rule 434, copies of an amended Prospectus, or, if required by such
Rule 430A and/or Rule 434, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted. If required, the Company will prepare and file, or transmit for
filing, a Rule 462(b) Registration Statement not later than the date of
the execution of the Pricing Agreement. If a Rule 462(b) Registration
Statement is filed, the Company shall make payment of, or arrange for
payment of, the additional registration fee owing to the Commission
required by Rule 111.
(l) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the Nasdaq National Market.
(m) The Company agrees not to, directly or indirectly, (i) offer,
sell (including "short" selling), assign, transfer, encumber, pledge,
contract to sell, grant an option to purchase, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of any shares of Common Stock or
securities convertible or exchangeable into, or
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exercisable for, Common Stock held of record or beneficially owned (within
the meaning of Rule 13d-3 under the Exchange Act); or (ii) enter any swap
or other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Common Stock (except, in
each case, Common Stock issued pursuant to currently outstanding options,
warrants or convertible securities and except for options to be granted
under the 2002 Stock Option Plan in the ordinary course or as disclosed in
the Prospectus) for a period of 180 days after this Agreement becomes
effective without the prior written consent of the Representatives. The
Company has obtained similar agreements from each of its officers and
directors and any holder of at least 1% of its outstanding equity.
Section 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company's obligations hereunder,
including without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing and distribution of the Registration Statement, each
preliminary prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Pricing Agreement and the Blue Sky Memorandum, (ii) all costs,
fees and expenses (including legal fees, not to exceed $15,000, and
disbursements of counsel for the Underwriters) incurred by the Underwriters in
connection with qualifying or registering all or any part of the Shares for
offer and sale under blue sky laws, including the preparation of a blue sky
memorandum relating to the Shares and clearance of such offering with the NASD;
and (iii) all fees and expenses of the Company's transfer agent, printing of the
certificates for the Shares and all transfer taxes, if any, with respect to the
sale and delivery of the Shares to the several Underwriters.
The provisions of this Section shall not affect any agreement which the
Company and the Selling Stockholders may make for the allocation or sharing of
such expenses and costs.
Section 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company and the Selling Stockholders herein set forth as of the date hereof
and as of the First Closing Date or the Second Closing Date, as the case may be,
to the accuracy of the statements of officers of the Company made pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 1:00 P.M.,
Chicago Time, on the first full business day after the date of this
Agreement, or such later time as shall have been consented to by you but
in no event later
-14-
than 1:00 P.M., Chicago Time, on the third full business day following the
date hereof; and prior to the First Closing Date or the Second Closing
Date, as the case may be, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or shall be pending or, to the
knowledge of the Company, the Selling Stockholders or you, shall be
contemplated by the Commission. If the Company has elected to rely upon
Rule 430A and/or Rule 434, the information concerning the public offering
price of the Shares and price-related information shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within
the prescribed period and the Company will provide evidence satisfactory
to the Representatives of such timely filing (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rules 430A and 424(b)).
If a Rule 462(b) Registration Statement is required, such Registration
Statement shall have been transmitted to the Commission for filing and
become effective within the prescribed time period and, prior to the First
Closing Date, the Company shall have provided evidence of such filing and
effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the blue sky
laws of such states as shall have been specified by the Representatives.
(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder and of the Warrant
Exercise Transactions, the validity and form of the certificates
representing the Shares, the execution and delivery of this Agreement and
the Pricing Agreement, and all corporate proceedings and other legal
matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements) shall have been approved by
counsel for the Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of fact, which, in the opinion of counsel for
the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein
or necessary to make the statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or
properties of the Company or its subsidiaries not disclosed in the
Registration Statement, whether or not arising in the ordinary course of
business, which, in the judgment of the Representatives, makes it
impractical or inadvisable to proceed with the public offering or purchase
of the Shares as contemplated hereby.
-15-
(f) There shall have been furnished to you, as Representatives of
the Underwriters, on the First Closing Date or the Second Closing Date, as
the case may be, except as otherwise expressly provided below:
(i) Opinions of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, special
counsel for the Company and for the Selling Stockholders, and the
General Counsel of the Company, in each case addressed to the
Underwriters and dated the First Closing Date or the Second Closing
Date, as the case may be, to the collective effect that:
(1) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and
authority to own its properties and conduct its business as
described in the Prospectus; and the Company has been duly
qualified to do business as a foreign corporation under the
corporation law of, and is in good standing as such in, every
jurisdiction where the ownership or leasing of property, or
the conduct of its business requires such qualification except
where the failure so to qualify would not have a material
adverse effect upon the condition (financial or otherwise) or
results of operations of the Company and its subsidiaries
taken as a whole;
(2) an opinion to the same general effect as clause (1)
of this subparagraph (i) in respect of each subsidiary of the
Company named in Schedule C hereto (each a "Subsidiary");
(3) based solely on a review of the minute books,
operating agreements and equity records of each Subsidiary,
all of the issued and outstanding limited liability company
interests of each Subsidiary has been duly authorized, validly
issued and is fully paid and nonassessable, and the Company
owns directly or indirectly 100 percent of the outstanding
limited liability company interests of each Subsidiary, and to
the best knowledge of such counsel, such interests are owned
free and clear of any claims, liens, encumbrances or security
interests;
(4) the authorized capital stock of the Company, of
which there is outstanding the amount set forth in the
Registration Statement and Prospectus (except for subsequent
issuances, if any, pursuant to stock options or other rights
referred to in the Prospectus), conforms as to legal matters
in all material respects to the description thereof in the
Registration Statement and Prospectus;
(5) the issued and outstanding capital stock of the
Company has been duly authorized and validly issued and is
fully paid and nonassessable;
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(6) the certificates for the Shares to be delivered
hereunder are in due and proper form, and when duly
countersigned by the Company's transfer agent and delivered to
you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of
this Agreement and the Pricing Agreement, the Shares
represented thereby will be duly authorized and validly
issued, fully paid and nonassessable;
(7) to the best knowledge of such counsel, the
Registration Statement (including the information deemed to be
part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
applicable), the Prospectus and each amendment or supplement
thereto (except for the financial statements and other
statistical or financial data included therein as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act, and
the Registration Statement has become effective under the 1933
Act; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated under the 1933 Act, the Registration Statement
(including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant
to Rule 430A(b) and/or Rule 434, if applicable) and the
Prospectus, and the Registration Statement or the Prospectus
as amended or supplemented (except as aforesaid), as of their
respective effective or issue dates, did not contain any
untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances under which they were made; the statements in
the Registration Statement and the Prospectus summarizing
statutes, rules and regulations are accurate and fairly and
correctly present the information required to be presented by
the 1933 Act or the rules and regulations thereunder, in all
material respects and such counsel does not know of any
statutes, rules and regulations required to be described or
referred to in the Registration Statement or the Prospectus
that are not described or referred to therein as required; and
such counsel does not know of any legal or governmental
proceedings pending or threatened required to be described in
the Prospectus which are not described as required, nor of any
contracts or documents of a character required to be described
in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not described
or filed, as required;
(8) to the best knowledge of such counsel, all documents
that have been filed by the Company pursuant to the Exchange
Act (except for the financial statements and other statistical
or financial data included therein as to which such counsel
need express no opinion), when they were filed with the
Commission,
-17-
complied as to form in all material respects with the
requirements of the Exchange Act; and such counsel has no
reason to believe that any of such documents, when they were
so filed, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein not misleading in light of the
circumstances under which they were made when such documents
were so filed,;
(9) the statements under the captions "Management - 2002
Stock Option Plan," "Certain Relationships and Related
Transactions," "Description of Capital Stock" and "Shares
Eligible for Future Sale" in the Prospectus, insofar as such
statements constitute a summary of documents referred to
therein or matters of law, are accurate summaries and fairly
and correctly present, in all material respects, the
information called for with respect to such documents and
matters;
(10) this Agreement, the Pricing Agreement and, to the
extent necessary, the Warrant Exercise Transactions and the
performance of the Company's obligations hereunder and
thereunder have been duly authorized by all necessary
corporate action and this Agreement and the Pricing Agreement
have been duly executed and delivered by and on behalf of the
Company, and are legal, valid and binding agreements of the
Company, except as enforceability of the same may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights and by the exercise
of judicial discretion in accordance with general principles
applicable to equitable and similar remedies and except as to
those provisions relating to indemnities for liabilities
arising under the 1933 Act as to which no opinion need be
expressed; and no approval, authorization or consent of any
public board, agency, or instrumentality of the United States
or of any state or other jurisdiction is necessary in
connection with the issue or sale of the Shares by the Company
pursuant to the Warrant Exercise Transactions (other than
under the 1933 Act, applicable blue sky laws and the rules of
the NASD, as to which such counsel need express no opinion) or
the consummation by the Company of any other transactions
contemplated hereby (such opinion may assume that Illinois Law
is the same as New York Law for this purpose);
(11) the execution and performance of this Agreement and
the consummation of the Warrant Exercise Transactions will not
contravene any of the provisions of, or result in a default
under, any agreement set forth, or known to such counsel and
required to be set forth, as an exhibit to the Registration
Statement; or violate any of the provisions of the
organizational documents of the Company or any of its
subsidiaries or, so far as is known to such counsel, violate
any statute, order, rule or regulation of any regulatory or
governmental body having jurisdiction over
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the Company or any of its subsidiaries, except such
contraventions or defaults which would not have a Material
Adverse Effect;
(12) to such counsel's knowledge, based solely on a
review of the minute books and equity records of each
Subsidiary, all offers and sales of the Company's capital
stock or membership interests of any of the Company's
subsidiaries since April 30, 2000 were at all relevant times
exempt from the registration requirements of the 1933 Act and
were duly registered or the subject of an available exemption
from the registration requirements of the applicable state
securities or blue sky laws;
(13) to such counsel's knowledge, this Agreement and the
Pricing Agreement have been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders,
and the performance of this Agreement and the Pricing
Agreement and the consummation of the transactions herein
contemplated by each of the Selling Stockholders will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute
known to such counsel and applicable to transactions of the
type contemplated by this agreement or agreement set forth, or
known to such counsel and required to be set forth, as an
exhibit to the Registration Statement; and no consent,
approval, authorization or order of any court or governmental
agency or body is required for the consummation of the
transactions contemplated by this Agreement and the Pricing
Agreement in connection with the sale of Shares to be sold by
the Selling Stockholders hereunder (other than under the 1933
Act, applicable blue sky laws and the rules of the NASD, as to
which such counsel need express no opinion) (such opinion may
assume that Illinois Law is the same as New York Law for this
purpose);
(14) to such counsel's knowledge, each of the Selling
Stockholders has full right, power and authority to enter into
this Agreement and the Pricing Agreement and to sell, transfer
and deliver the Shares to be sold on the First Closing Date or
the Second Closing Date, as the case may be, by such Selling
Stockholder hereunder and good and marketable title to such
Shares so sold, free and clear of all voting trust
arrangements, liens, encumbrances, equities, claims and
community property rights whatsoever, has been transferred to
the Underwriters (who counsel may assume to be bona fide
purchasers) who have purchased such Shares hereunder; and
(15) this Agreement and the Pricing Agreement are legal,
valid and binding agreements of each of the Selling
Stockholders except as enforceability of the same may be
limited by bankruptcy, insolvency, reorganization, moratorium
or
-19-
other similar laws affecting creditors' rights and by the
exercise of judicial discretion in accordance with general
principles applicable to equitable and similar remedies and
except with respect to those provisions relating to
indemnities for liabilities arising under the 1933 Act, as to
which no opinion need be expressed.
(16) the Company is not an "investment company" or a
person "controlled by" an "investment company" within the
meaning of the Investment Company Act.
In rendering such opinion, such counsel may rely and
state that they are relying upon the certificate of Continental
Stock Transfer and Trust Company, the transfer agent for the Common
Stock, as to the number of shares of Common Stock at any time or
times outstanding, and that insofar as their opinion under clause
(7) above relates to the accuracy and completeness of the Prospectus
and Registration Statement, it is based upon a general review with
the Company's representatives and independent accountants of the
information contained therein, without independent verification by
such counsel of the accuracy or completeness of such information.
Such counsel may also rely upon the opinions of other competent
counsel and, as to factual matters, on certificates of the Selling
Stockholders and of officers of the Company and of state officials
including, but not limited to, certificates relating to the opinion
of such counsel under clause (1) above relating to the due
qualification and good standing of the Company, in which case their
opinion is to state that they are so doing and copies of said
opinions or certificates are to be attached to the opinion unless
said opinions or certificates (or, in the case of certificates, the
information therein) have been furnished to the Representatives in
other form.
Such counsel's opinion shall be limited to matters
governed by federal securities laws and by the General Corporation
Law of the State of Delaware and any opinion rendered by such
counsel with respect to the enforcement of this Agreement or the
Pricing Agreement shall assume that the laws of the State of
Illinois are the same as the laws of the State of New York. For
purposes of such opinions, no proceedings shall be deemed to be
pending, no order or stop order shall be deemed to be issued, and no
action shall be deemed to be instituted unless, in each case, a
director or executive officer of the Company shall have received a
copy of such proceedings, order, stop order or action. For purposes
of such opinion, no proceedings shall be deemed to be threatened
unless the potential litigant or government authority has manifested
in writing to the directors or management of the Company, or to
counsel thereof, a present intention to initiate such litigation or
proceedings. In addition, such opinion may be limited to present
statutes, regulations and judicial interpretations and to facts as
they presently exist as of the date of such opinion, In rendering
such opinion, such counsel need assume no obligation to revise or
supplement it should the present laws be changed by legislative or
regulatory action, judicial action or otherwise. Such
-20-
counsel may make certain customary assumptions relating to parties
other than the Company. In addition, in lieu of an opinion with
respect to the fourth clause of paragraph (7) above, such counsel
may confirm in writing that in connection with the preparation of
the Registration Statement, they have participated in conferences
with officers, employees and other representatives of the Company,
independent accountants of the Company, the Underwriters and counsel
for the Underwriters, at which the contents of the Registration
Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in
the Registration Statement or Prospectus, and has not made any
independent check or verification thereof, on the basis of the
foregoing (relying as to materiality to a large extent upon the
statements of officers, employees and other representatives of the
Company), such counsel have no reason to believe that either the
Registration Statement (including the information deemed to be part
of the Registration Statement at the time of effectiveness pursuant
to Rule 430A(b) and/or Rule 434, if applicable) or the Prospectus,
or the Registration Statement or the Prospectus as amended or
supplemented (except as aforesaid), as of their respective effective
dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading or that the Prospectus as
amended or supplemented, if applicable, as of the First Closing Date
or the Second Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made (it being understood
that, in each case, such counsel need express no view with respect
to the financial statements and other financial and statistical data
and schedules included in the Registration Statement or Prospectus
or the information from the Underwriters in the Prospectus as
described in Section).
In addition, such counsel shall confirm in writing that,
although such counsel need not pass upon, and need not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the
Prospectus and need not make any independent check or verification
thereof, during the course of such participation (relying as to
materiality to a large extent upon the Selling Stockholder
Questionnaire completed by the Selling Stockholders, the statements
of officers and other representatives of the Company), no facts have
come to such counsel's attention that causes such counsel to believe
either the Registration Statement (including the information deemed
to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
applicable) at the time it became effective, insofar as it relates
to the Selling Stockholders, contained any untrue statement of
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading or
that the Prospectus, as
-21-
amended or supplemented, if applicable, as of its date and as of the
First Closing Date or the Second Closing Date, as the case may be,
insofar as it relates to the Selling Stockholders, contained any
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(ii) Such opinion or opinions of Sidley Xxxxxx Xxxxx & Xxxx,
counsel for the Underwriters ("SABW"), dated the First Closing Date
or the Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares to be sold
by the Company, the Registration Statement and the Prospectus and
other related matters as you may reasonably require, and the Company
shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they request for the
purpose of enabling them to pass upon such matters.
(iii) A certificate of the chief executive officer and the
principal financial officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect
that:
(1) the representations and warranties of the Company
set forth in Section 2 of this Agreement are true and correct
as of the date of this Agreement and as of the First Closing
Date or the Second Closing Date, as the case may be, and the
Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to such Closing Date; and
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary
prospectus filed as a part of the Registration Statement or
any amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued;
and to the best knowledge of the respective signers, no
proceedings for that purpose have been instituted or are
pending or contemplated under the 0000 Xxx.
(3) subsequent to the date of the most recent financial
statements included in the Registration Statement and
Prospectus, and except as set forth or contemplated in the
Prospectus, (A) none of the Company and its subsidiaries has
incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in
the ordinary course of business, and (B) there has not been
any material adverse change in the condition (financial or
otherwise), business, assets or operations of the Company and
its subsidiaries, taken as a whole, or any change in the
capital stock or any material change in their short-term debt
or long-term debt.
-22-
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty
of the Company as to the facts required in the immediately foregoing
clauses (1) and (2) of this subparagraph to be set forth in said
certificate.
(iv) A certificate of each of the Selling Stockholders dated
the First Closing Date or the Second Closing Date, as the case may
be, to the effect that the representations and warranties of such
Selling Stockholder set forth in Section 3 of this Agreement are
true and correct as of such date and such Selling Stockholder has
complied with all the agreements and satisfied all the conditions on
the part of such Selling Stockholder to be performed or satisfied at
or prior to such date.
(v) At the time the Pricing Agreement is executed and also on
the First Closing Date or the Second Closing Date, as the case may
be, there shall be delivered to you a letter addressed to you, as
Representatives of the Underwriters, from PricewaterhouseCoopers
LLP. independent accountants, the first one to be dated the date of
the Pricing Agreement, the second one to be dated the First Closing
Date and the third one (in the event of a second closing) to be
dated the Second Closing Date, in such form reasonably satisfactory
to SABW, counsel to the Underwriters. There shall not have been any
change or decrease specified in the letters referred to in this
subparagraph which makes it impractical or inadvisable in the
judgment of the Representatives to proceed with the public offering
or purchase of the Shares as contemplated hereby.
(vi) A certificate of the chief executive officer and the
principal financial officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, verifying the
truth and accuracy of the specific statistical or financial figures
included in the Prospectus which has not been otherwise verified by
the letters referred to in clause (v) above, such verification to
include the provision of documentary evidence supporting any such
statistical or financial figure.
(vii) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Sidley Xxxxxx Xxxxx & Xxxx, counsel for the Underwriters, which approval
shall not be unreasonably withheld. The Company shall furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as you request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification to the Company and
the Selling Stockholders without liability on the part of any Underwriter or the
Company or the
-23-
Selling Stockholders, except for the expenses to be paid or reimbursed by the
Company pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof.
Section 9. Reimbursement of Underwriters' Expenses. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company or any
of the Selling Stockholders to perform any agreement herein or to comply with
any provision hereof, unless such failure to satisfy such condition or to comply
with any provision hereof is due to the default or omission of any Underwriter,
the Company agrees to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel not to exceed $15,000) that shall have been reasonably incurred by you
and them in connection with the proposed purchase and the sale of the Shares.
Any such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
Section 10. Effectiveness of Registration Statement. You, the Company and
the Selling Stockholders will use your, its and their reasonable best efforts to
cause the Registration Statement to become effective, if it has not yet become
effective, and to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
Section 11. Indemnification. (a) The Company agrees to indemnify and hold
harmless, and each Selling Stockholder severally (based upon the percentage that
the number of Shares sold hereunder by such Selling Stockholder bears to the
total number of Shares sold hereunder by the Selling Stockholders) and not
jointly agrees to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the 1933 Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company and/or the Selling Stockholders), insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, including the information deemed to be
part of the Registration Statement at the time of effectiveness pursuant to Rule
430A and/or Rule 434, if applicable, any preliminary prospectus, the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
will reimburse each Underwriter and each such controlling person for any legal
or other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that neither the Company nor any
of the Selling Stockholders will be liable in any such case to the extent that
(i) any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any preliminary
-24-
prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with the information with respect to which the
Underwriters have made representations and warranties in Section 4 of this
Agreement; or (ii) if such statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus and (1) any such loss,
claim, damage or liability suffered or incurred by any Underwriter (or any
person who controls any Underwriter) resulted from an action, claim or suit by
any person who purchased Shares which are the subject thereof from such
Underwriter in the offering and (2) such Underwriter failed to deliver or
provide a copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Shares in any case where such delivery is required by the
1933 Act. In addition to their other obligations under this Section 11(a), the
Company and the Selling Stockholders agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in this Section 11(a), they will reimburse the
Underwriters on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
and/or the Selling Stockholders' obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. This indemnity agreement
will be in addition to any liability which the Company and the Selling
Stockholders may otherwise have.
Without limiting the full extent of the Company's agreement to indemnify
the Underwriters, as herein provided, (i) each of Xxxxxx Xxxxxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxx shall be liable under the
indemnity agreements contained in paragraph (a) of this Section only for an
amount not exceeding the proceeds received by such Selling Stockholder from the
sale of Shares hereunder, net of taxes actually paid by such Selling Stockholder
as a result of the Warrant Exercise Transactions, and (ii) each other Selling
Stockholder shall be liable under the indemnity agreements contained in
paragraph (a) of this Section only for an amount not exceeding the proceeds
received by such Selling Stockholder from the sale of Shares hereunder.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers, and each of the Selling
Stockholders and each person, if any, who controls the Company within the
meaning of the 1933 Act or the Exchange Act, against any losses, claims, damages
or liabilities to which the Company, or any such director, officer, Selling
Stockholder or controlling person may become subject under the 1933 Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Underwriter), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto in reliance upon and in conformity with the
information with respect to which the Underwriters have made representations and
warranties in Section 4 of this Agreement; and will reimburse any legal or other
expenses reasonably incurred by the Company, or any such director, officer,
Selling Stockholder or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to
their other obligations under this Section 11(b), the Underwriters agree that,
as an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 11(b),
they will reimburse the Company and the Selling Stockholders on a monthly
-25-
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company and the Selling Stockholders for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 11
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 11, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 11 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defense in accordance with the proviso
to the immediately preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives (or the Company if none of the
indemnified parties is an Underwriter) in the case of paragraph (a) representing
all indemnified parties not having different or additional defenses or potential
conflicting interest among themselves who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability arising out of such proceeding.
-26-
(d) If the indemnification provided for in this Section 11 is unavailable
to an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Selling Stockholders and the Underwriters from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Selling Stockholders and the Underwriters in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling Stockholders
and the Underwriters shall be deemed to be in the same proportion in the case of
the Company and the Selling Stockholders, as the total price paid to the Selling
Stockholders for the Shares by the Underwriters (net of underwriting discount
but before deducting expenses), and in the case of the Underwriters as the
underwriting discount received by them bears to the total of such amounts paid
to the Selling Stockholders and received by the Underwriters as underwriting
discount in each case as contemplated by the Prospectus. The relative fault of
the Company and the Selling Stockholders and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or by the Selling Stockholders or
by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 11(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
11(d), no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 11 are several in proportion to their
respective underwriting commitments and not joint.
(e) The provisions of this Section shall survive any termination of this
Agreement.
Section 12. Default of Underwriters. It shall be a condition to the
agreement and obligation of the Selling Stockholders to sell and deliver the
Shares hereunder, and of each Underwriter to purchase the
-27-
Shares hereunder, that, except as hereinafter in this paragraph provided, each
of the Underwriters shall purchase and pay for all Shares agreed to be purchased
by such Underwriter hereunder upon tender to the Representatives of all such
Shares in accordance with the terms hereof. If any Underwriter or Underwriters
default in their obligations to purchase Shares hereunder on the First Closing
Date and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10 percent of the
total number of Shares which the Underwriters are obligated to purchase on the
First Closing Date, the Representatives may make arrangements satisfactory to
the Company and the Selling Stockholders for the purchase of such Shares by
other persons, including any of the Underwriters, but if no such arrangements
are made by such date the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Shares which such defaulting Underwriters agreed but failed to purchase on
such date. If any Underwriter or Underwriters so default and the aggregate
number of Shares with respect to which such default or defaults occur is more
than the above percentage and arrangements satisfactory to the Representatives
and the Company and the Selling Stockholders for the purchase of such Shares by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Company or the Selling Stockholders, except for the expenses to be paid by
the Company pursuant to Section 7 hereof and except to the extent provided in
Section 11 hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
Section 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 14 and as to all other provisions at
10:00 A.M., Chicago Time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday); but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company and the Selling Stockholders or by release of any Shares
for sale to the public. For the purposes of this Section, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by you of
telegrams (i) advising Underwriters that the Shares are released for public
offering, or (ii) offering the Shares for sale to securities dealers, whichever
may occur first.
Section 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
-28-
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling
Stockholders to any Underwriter (except for the expenses to be paid or
reimbursed pursuant to Section 7 hereof and except to the extent provided
in Section 11 hereof) or of any Underwriter to the Company or the Selling
Stockholders.
(b) This Agreement may also be terminated by you prior to the First
Closing Date, and the option referred to in Section 5, if exercised, may
be cancelled at any time prior to the Second Closing Date, if (i) trading
in securities on the New York Stock Exchange or the Nasdaq National Market
shall have been suspended or minimum prices shall have been established on
such exchange or market, or (ii) a banking moratorium shall have been
declared by Illinois, New York, or United States authorities, or (iii)
there shall have been any adverse change in financial markets or in
political, economic or financial conditions which, in the opinion of the
Representatives, either renders it impracticable or inadvisable to proceed
with the offering and sale of the Shares on the terms set forth in the
Prospectus or materially and adversely affects the market for the Shares,
or (iv) there shall have been an outbreak of major armed hostilities
between the United States and any foreign power or terrorist organization
which in the opinion of the Representatives makes it impractical or
inadvisable to offer or sell the Shares. Any termination pursuant to this
paragraph (b) shall be without liability on the part of any Underwriter to
the Company (except to the extent provided in Section 11 hereof) or the
Selling Stockholders or on the part of the Company to any Underwriter or
the Selling Stockholders (except for expenses to be paid or reimbursed
pursuant to Section 7 hereof and except to the extent provided in Section
11 hereof).
Section 15. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
principals, members, officers or directors or any controlling person, or the
Selling Stockholders as the case may be, and will survive delivery of and
payment for the Shares sold hereunder.
Section 16. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o Xxxxxxx Xxxxx & Company, L.L.C., 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, with a copy to Xxx X. Xxxxxx c/x Xxxxxx Xxxxxx Xxxxx &
Xxxx, Bank Xxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000; if sent to the Company will be
mailed, delivered or telegraphed and confirmed to the Company at its corporate
headquarters with a copy to Xxxxxxx X. Xxxxxxxx, Esq. c/x Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; if
sent to any of the Selling Stockholders, will be mailed, delivered or
telegraphed and confirmed to Xxxxx Xxxxxxx and Xxxxx Xxxxxxxxxxx at
such addresses as they have previously furnished
-29-
to the Company and the Representatives, with a copy to Xxxxxxx X. Xxxxxxxx, Esq.
c/x Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
Section 17. Successors. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 11,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any of
the Underwriters merely by reason of such purchase.
Section 18. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
Section 19. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
Section 20. Applicable Law. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois.
-30-
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, each of the
Selling Stockholders and the several Underwriters including you, all in
accordance with its terms.
Very truly yours,
PORTFOLIO RECOVERY ASSOCIATES, INC.
By:
-----------------------
Xxxx X. Xxxxx
Senior Vice President, General
Counsel and Secretary
PRA INVESTMENTS, L.L.C.
By: Xxxxxx, Xxxxxx & Co., L.P., its
Managing Member
By:
-----------------------
Name:
Title:
XXXXXX, XXXXXX & CO., L.P.
By:
-----------------------
---------------------------
Xxxxxx Xxxxxxxxxxxx
---------------------------
Xxxxx Xxxxxxxxx
---------------------------
Xxxxx Xxxxx
---------------------------
Xxxxxx Xxxxxx
---------------------------
Xxxxx Xxxxx
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
XXXXXXX XXXXX & COMPANY, L.L.C.
U.S. BANCORP XXXXX XXXXXXX, INC.
Acting as Representatives of the
several Underwriters named in
Schedule A.
By Xxxxxxx Xxxxx & Company, L.L.C.
By:
--------------------------
Principal
-31-
SCHEDULE A
Number of
Firm Shares
Underwriter to be Purchased
----------- ---------------
Xxxxxxx Xxxxx & Company, L.L.C.
U.S. Bancorp Xxxxx Xxxxxxx, Inc.
Total
SCHEDULE B
Number of Number of
Firm Shares Option Shares
to be Sold to be Sold
---------- ----------
PRA Investments, L.L.C. 1,339,612 200,942
Xxxxxx, Xxxxxx & Co., L.P. 730,388 109,558
Xxxxxx Xxxxxxxxxxx 322,893 48,980
Xxxxx Xxxxxxxxx 220,644 27,993
Xxxxx Xxxxx 156,027 21,549
Xxxxxx Xxxxxx 108,061 19,643
Xxxxx Xxxxx 122,375 21,335
---------- ----------
Total 3,000,000 450,000
SCHEDULE C
Subsidiaries
Portfolio Recovery Associates, L.L.C.
PRA Funding, LLC
PRA Holding I, LLC
PRA III, LLC
PRA Receivables Management, LLC
Exhibit A
PORTFOLIO RECOVERY ASSOCIATES, INC.
3,000,000 Shares Common Stock(3)
PRICING AGREEMENT
[_______], 2003
Xxxxxxx Xxxxx & Company, L.L.C.
U.S. Bancorp Xxxxx Xxxxxxx, Inc.
As Representatives of the Several
Underwriters
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated [________], 2003
(the "Underwriting Agreement") relating to the sale by the Selling Stockholders
and the purchase by the several Underwriters for whom Xxxxxxx Xxxxx & Company,
L.L.C. and U.S. Bancorp Xxxxx Xxxxxxx, Inc. are acting as representatives (the
"Representatives"), of the above Shares. All terms herein shall have the
definitions contained in the Underwriting Agreement except as otherwise defined
herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and the
Selling Stockholders agree with the Representatives as follows:
1. The public offering price per share for the Shares shall be $[ ].
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $[ ], being an amount equal to the public offering price
set forth above less $[ ] per share.
--------------------
(3) Plus an option to acquire up to 450,000 additional shares to cover
overallotments.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, each of the
Selling Stockholders and the several Underwriters, including you, all in
accordance with its terms.
Very truly yours,
PORTFOLIO RECOVERY ASSOCIATES, INC.
By:
----------------------------------
Xxxx X. Xxxxx
Senior Vice President, General
Counsel and Secretary
PRA INVESTMENTS, L.L.C.
By:
----------------------------------
XXXXXX, XXXXXX & CO., L.P.
The foregoing Agreement is hereby
confirmed and accepted as of the By:
date first above written. ----------------------------------
XXXXXXX XXXXX & COMPANY, L.L.C.
U.S. BANCORP XXXXX XXXXXXX, INC. --------------------------------------
Xxxxxx Xxxxxxxxxxx
Acting as Representatives of the
several Underwriters
--------------------------------------
By Xxxxxxx Xxxxx & Company, L.L.C. Xxxxx Xxxxxxxxx
By: --------------------------------------
--------------------------------- Xxxxx Xxxxx
Principal
--------------------------------------
Xxxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxx
