PRISM FINANCIAL CORPORATION
2,500,000 Shares of Common Stock (1)
FORM OF UNDERWRITING AGREEMENT
May [ ], 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
ABN AMRO Incorporated
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As Representatives of the Several
Underwriters Named in Schedule A
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Prism Financial Corporation, a Delaware
corporation (the "Company"), as of the First Closing Date (hereinafter
defined), will have an authorized capital stock consisting of 10,000,000
shares of Preferred Stock, $.01 par value, of which no shares will be
outstanding as of such date and 100,000,000 shares of Common Stock, $.01 par
value ("Common Stock"), of which 12,168,047 shares will be outstanding as of
such date (excluding the shares of Common Stock to be issued and sold
hereunder). The Company proposes to issue and sell 2,500,000 shares of its
authorized but unissued Common Stock to the several underwriters
("Underwriters") named in Schedule A, as it may be amended by the Pricing
Agreement (hereinafter defined), who are acting severally and not jointly.
Such total of 2,500,000 shares of Common Stock proposed to be sold by the
Company is hereinafter referred to as the "Firm Shares." In addition,
certain stockholders of the Company (collectively referred to as the "Selling
Stockholders" and named in Schedule B) propose to grant to the Underwriters
an option to purchase up to an aggregate of 375,000 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."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions
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
----------------------------
(1) Plus an option to acquire up to 375,000 additional shares from the Selling
Stockholders to cover over-allotments.
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 the Underwriters agree that up to 250,000 Shares to be
purchased by the Underwriters ("Reserved Shares") shall be reserved for sale
by the Underwriters to certain eligible employees of the Company and other
persons, subject to the terms of this Agreement, the Pricing Agreement, the
applicable rules, regulations and interpretations of the National Association
of Securities Dealers, Inc. ("NASD") and all other applicable laws, rules and
regulations. To the extent that such Reserved Shares are not orally
confirmed for purchase by such eligible employees and other persons by the
end of the first business day after the date of this Agreement, such Reserved
Shares may be offered to the public as part of the public offering
contemplated hereby.
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, and agrees with, the several Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-74883)
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 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 ▇▇▇▇ ▇▇▇); 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, if requested by you, three signed copies of such registration
statement and amendments, three copies of each exhibit filed therewith,
and conformed copies of such registration statement and amendments (but
without exhibits) and copies of the related preliminary prospectus or
prospectuses and final forms of prospectus for each of the Underwriters.
Such registration statement (as amended, if applicable)
at the time it becomes effective and the prospectus constituting a part
thereof at such time (including the information, if any, deemed to be
part thereof pursuant to Rule 430A(b) and/or Rule 434), 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
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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 ("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."
(b) The Company has not received any order of the Commission
preventing or suspending the use of any preliminary prospectus, and has
not received any notice that proceedings for that purpose are pending or
contemplated by the Commission, and the preliminary prospectus dated
April 29, 1999 conformed in all material respects with the requirements
of the 1933 Act and, as of its date, did not include an untrue statement
of a material fact or omit 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, except for information relating to
the terms of the Offering; and when the Registration Statement became or
becomes effective, and at the First Closing Date or the Second Closing
Date (as such terms are 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, in all material respects conformed or will in all
material respects conform to the requirements of the 1933 Act, and the
Registration Statement did not include or will not include any untrue
statement of a material fact and did not omit or will not omit to state
a material fact required to be stated therein or necessary in order to
make the statements therein not misleading and the Prospectus did not
include an untrue statement of a material fact or omit 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;
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 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.
(c)(i) The Company and each of its "significant subsidiaries" (as
such term is defined in Rule 1-02 of Regulation S-X) (the
"Subsidiaries") have been duly incorporated and are
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validly existing as corporations in good standing under the laws of
their respective places of incorporation, with corporate power and
authority to own their properties and conduct their business as
described in the Prospectus; the Company and each of the Subsidiaries
are duly qualified to do business as foreign corporations under the
corporation law 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 business or financial condition of the Company and the
Subsidiaries taken as a whole ("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.
(ii) The Share Exchange Agreement dated as of March 19, 1999,
among the Company, Prism Mortgage and the stockholders of Prism Mortgage
(the "Share Exchange Agreement") has been duly authorized, executed and
delivered by the Company and its Subsidiaries, and constitutes the
legal, valid and binding obligations of the Company and Prism Mortgage
and has been consummated in all material respects in accordance with its
terms.
(d) Except as disclosed in the Registration Statement, the
Company owns directly or indirectly 100 percent of the issued and
outstanding capital stock of each of the Subsidiaries, free and clear of
any claims, liens, encumbrances or security interests and all of such
capital stock has been duly authorized and validly issued and is fully
paid and nonassessable. The Company does not, directly or indirectly,
own any capital stock or other equity securities or interests in any
entity other than those described in Exhibit 21.1 to the Registration
Statement.
(e) The issued and outstanding shares of each class of capital
stock of the Company prior to the issuance of the Shares to be sold by
the Company have been duly authorized and validly issued, are fully paid
and nonassessable, and conform to the description thereof contained in
the Prospectus, and, except as disclosed in the Prospectus, there are no
options, rights or warrants for the purchase from the Company of Common
Stock, or securities convertible into Common Stock, and there are no
agreements to which the Company is a party with respect thereto.
(f) The Shares to be sold by the Company have been duly
authorized and when issued and delivered by the Company and paid for by
the Underwriters 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 execution, delivery and performance by the Company of
this Agreement and the Pricing Agreement have been duly authorized by
all necessary corporate action and will not violate any provision of the
Company's amended and restated charter or amended and
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restated bylaws, in each case as filed as an exhibit to the Registration
Statement, and will not conflict with, constitute a breach of, or
default under, or violate any provision of any material 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 or any Subsidiary is bound or to which their respective
properties or assets is subject, or any statute, law, rule, regulation,
ruling, judgment, injunction, order or decree applicable to the Company
or any Subsidiary or to their respective properties or assets. No
consent, approval, authorization or other order of, or filing or
registration with, any court, regulatory body, administrative agency or
other governmental body is required for the execution and delivery of
this Agreement or the Pricing Agreement by the Company or the
consummation by the Company of the transactions contemplated herein or
therein, 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 and except as
would not have a Material Adverse Effect. This Agreement has been duly
executed and delivered by the Company.
(h) Each of the accountants who have expressed their respective
opinions with respect to certain of the financial statements included in
the Registration Statement are independent accountants as required by
the 1933 Act.
(i) (i) The consolidated financial statements of the Company
included in the Registration Statement present fairly, in all material
respects, the consolidated financial position of the Company as of the
respective dates of such financial statements, and the consolidated
statements of income, changes in stockholders' equity 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 Financial Data" presents fairly on the basis stated in the
Prospectus, the information set forth therein.
(ii) The financial statements of Mortgage Market, Inc. ("MMI")
included in the Registration Statement present fairly, in all material
respects, the financial position of MMI as of the respective dates of
such financial statements, and the statement of income, changes in
stockholders' equity and cash flows of MMI 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.
(iii) The financial statements of Pacific Guarantee Mortgage
Corporation ("PGM") included in the Registration Statement present
fairly, in all material respects, the financial position of PGM as of
the respective dates of such financial statements, and the statements of
operations and retained earnings and cash flows of PGM 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.
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(iv) The pro forma financial statements and other pro forma
information included in the Prospectus present fairly the information
shown therein, have been prepared in accordance with generally accepted
accounting principles and the Commission's rules and guidelines with
respect to pro forma financial statements and other pro forma
information to the extent applicable, have 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 charter 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 to the Company's knowledge, 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 defaults which neither singly
nor in the aggregate would have a Material Adverse Effect.
(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 a party or of which material property owned or
leased by the Company or any Subsidiary is or may be the subject, 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
(i) preemptive rights to purchase Common Stock or (ii) except as
disclosed in the Prospectus, registration rights.
(m) The Company and each Subsidiary have good and marketable
title to all the properties and assets which are material to the
operation of the business of the Company and its Subsidiaries taken as
whole, in each case reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no
claim, 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 would not have a Material Adverse Effect. The
Company and each Subsidiary hold their respective leased properties
which are material to the Company and each Subsidiary, taken as a whole,
under valid and binding leases with such exceptions as are not material
and do not materially interfere with the use made of such property and
buildings by the Company and its Subsidiaries.
(n) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, 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
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Registration Statement and Prospectus, and except as contemplated by the
Prospectus, the Company and the 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
change in their capital stock or material change in their short-term
debt or long-term debt.
(p) For a period of 180 days after the date of this
Agreement, the Company agrees not to (i) except with respect to the
Company's 1999 Omnibus Stock Incentive Plan, 1999 Employee Stock
Purchase Plan, the Prism Equity Value Plan-I, effective as of August 31,
1998, the Prism Equity Value Plan-II, dated as of September 30, 1998,
the Agreement for the Purchase and Sale of the Capital Stock of Mortgage
Market, Inc., dated as of September 30, 1998 and the Additional
Compensation Agreements, dated as of September 30, 1998, by and among
the Company and certain employees of Mortgage Market, Inc., the Purchase
and Sale Agreement, dated as of March 22, 1999, by and among the
Company, First City Corp. and D.L. Day, Jr., or in connection with
acquired businesses, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of, or otherwise dispose
of or transfer any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, or file any
registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any
such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C. The Company has obtained
similar agreements from each of its executive officers, directors and
security-holders. For a period of 180 days after the date of this
Agreement, the Company agrees that, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company L.L.C., the Company will not take any action to
accelerate or waive the vesting schedule applicable to any options,
rights or warrants to purchase shares of Common Stock.
(q) There is no 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.
(r) No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company, on the other hand,
which is required to be described in the Prospectus that is not so
described.
(s) The Company, together with the 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 the
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Subsidiaries, taken as a whole. Neither the Company nor any Subsidiary
has received any notice of infringement, misappropriation or conflict
from any third party as to any such material Trade Rights which has not
been resolved or disposed of and to the knowledge of the Company neither
the Company nor any Subsidiary has infringed, misappropriated or
otherwise conflicted with material Trade Rights of any third party,
which infringement, misappropriation or conflict would have a Material
Adverse Effect.
(t) The conduct of the business of the Company and each
Subsidiary is in compliance in all respects with applicable federal,
state, local and foreign laws and regulations, including, without
limitation, the Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Reporting Act of 1970, the Real Estate Settlement
Procedures Act, the Fair Debt Collection Practices Act, federal and
state statutes and regulations of the Department of Housing and Urban
Development pursuant to the Home Mortgage Disclosure Act, state usury
laws and state licensing laws, except where the failure to be in
compliance would not have a Material Adverse Effect.
(u) All offers and sales of the securities of either Company
or any Subsidiary prior to the date hereof were at all relevant times
exempt from the registration requirements of the 1933 Act and were duly
registered with or the subject of an available exemption from the
registration requirements of the applicable state securities or blue sky
laws.
(v) Each of the Company and its Subsidiaries has filed all
necessary federal and state income and franchise tax returns, and has
paid all material 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 Subsidiaries or any of their
respective properties or assets that would have a Material Adverse
Effect.
(w) The Company has filed a registration statement pursuant
to Section 12(g) of the Exchange Act to register the Common Stock
thereunder, has filed an application to list the Common Stock (including
the Shares) on the Nasdaq National Market, and has received notification
that the listing has been approved, subject to notice of issuance or
sale of the Shares, as the case may be.
(x) 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 several
Underwriters that:
(i) Upon consummation of the transactions
contemplated by the Share
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Exchange Agreement, such Selling Stockholder will have, and on the
Second Closing Date (as hereinafter defined), will have, valid
title to the Option Shares proposed to be sold by such Selling
Stockholder hereunder on such date and full right, power and
authority to enter into this Agreement and the Pricing Agreement
and to sell, assign, transfer and deliver such Option Shares
hereunder, free and clear of all voting trust arrangements,
stockholder agreements, liens, security interests, encumbrances of
any kind, equities, claims and, if applicable, community property
rights; and upon delivery by such Selling Stockholder of and
payment by the Underwriters for such Option Shares hereunder, the
Underwriters will acquire valid title thereto, free and clear of
all voting trust arrangements, stockholder agreements, liens,
security interests, encumbrances of any kind, equities, claims and,
if applicable, community property rights.
(ii) Such Selling Stockholder has not taken and will
not take, 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) Such Selling Stockholder has duly executed and
delivered a Power of Attorney ("Power of Attorney") among the
Selling Stockholder and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. Filler (the
"Agents"), naming the Agents as such Selling Stockholder's
attorneys-in-fact (and, by the execution by any Agent of this
Agreement, such Agent hereby represents and warrants that he has
been duly appointed as attorney-in-fact by the Selling Stockholders
pursuant to the Power of Attorney) for the purpose of entering into
and carrying out this Agreement and the Pricing Agreement, and the
Power of Attorney has been duly executed by such Selling
Stockholder and a copy thereof has been delivered to you.
(iv) Such Selling Stockholder has duly executed and
delivered a Custody Agreement ("Custody Agreement") with the
Company, as custodian ("Custodian"), and upon consummation of the
transactions contemplated by the Share Exchange Agreement, will
deposit in custody under the Custody Agreement certificates in
negotiable form for the Option Shares that may be sold hereunder by
such Selling Stockholder, for the purpose of further delivery
pursuant to this Agreement. Such Selling Stockholder agrees that
the Option Shares that may be sold by such Selling Stockholder that
will be on deposit with the Custodian are subject to the interests
of the Company, the Underwriters and the other Selling
Stockholders, that the arrangements made for such custody, and the
appointment of the Agents pursuant to the Power of Attorney, are to
that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder and under the Power of Attorney and the
Custody Agreement shall not be terminated (except as provided in
this Agreement, the Power of Attorney or the Custody Agreement) by
any act of such Selling Stockholder, by operation of law, whether,
in the case of an individual Selling Stockholder, by the
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death or incapacity of such Selling Stockholder or, in the case of
a trust or estate, by the death of the trustee or trustees or the
executor or executors or the termination of such trust or estate,
or, in the case of a partnership or corporation, by the
dissolution, winding-up or other event affecting the legal life of
such entity, or by the occurrence of any other event. If any
individual Selling Stockholder, trustee or executor should die or
become incapacitated, or any such trust, estate, partnership or
corporation should be terminated, or if any other event should
occur before the delivery of the Option Shares hereunder, the
documents evidencing Option Shares then on deposit with the
Custodian shall be delivered by the Custodian in accordance with
the terms and conditions of this Agreement as if such death,
incapacity, termination or other event had not occurred, regardless
of whether or not the Custodian shall have received notice thereof.
Each Agent has been authorized by such Selling Stockholder to
execute and deliver this Agreement and the Pricing Agreement and
the Custodian has been authorized to receive and acknowledge
receipt of the proceeds of sale of the Option Shares that may be
sold by such Selling Stockholder against delivery thereof and
otherwise act on behalf of such Selling Stockholder. A copy of the
Custody Agreement has been delivered to you.
(v) The execution, delivery and performance by or
on behalf of such Selling Stockholder of this Agreement, the
Pricing Agreement, the Power of Attorney and the Custody Agreement
will not conflict with, constitute a breach of, or default under,
or violate any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust, or other instrument to which
such Selling Stockholder is a party or by which such Selling
Stockholder is or may be bound or to which any of such Selling
Stockholder's property or assets is subject, or any statute, law,
rule, regulation, ruling, judgment, injunction, order or decree
applicable to such Selling Stockholder or to any property or assets
of such Selling Stockholder, except in each case as would not
materially impair the ability of such Selling Stockholder to
perform its obligations under this Agreement, the Pricing
Agreement, the Power of Attorney or the Custody Agreement. No
consent, approval, authorization or other order of, or filing or
registration with, any court, regulatory body, administrative
agency or other governmental body is required for the execution and
delivery of this Agreement, the Pricing Agreement, the Power of
Attorney or the Custody Agreement by or on behalf of such Selling
Stockholder or the consummation by or on behalf of such Selling
Stockholder of the transactions contemplated herein or therein,
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 and
except where the failure to so make or obtain would not materially
impair the ability of such Selling Stockholder to perform its
obligations under this Agreement, the Pricing Agreement, the Power
of Attorney or the Custody Agreement. This Agreement has been duly
executed and delivered by or on behalf of such Selling Stockholder.
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(vi) The preliminary prospectus dated April 29, 1999,
insofar as it has related to such Selling Stockholder, as of its date
did not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading; and when the Registration Statement became or becomes
effective, and up to the First Closing Date and the Second Closing
Date, such Registration Statement, as it relates to such Selling
Stockholder, did not include or will not include any untrue statement
of a material fact and did not omit or will not omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as relates to
such Selling Stockholder, did not include an untrue statement of a
material fact or omit 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; provided that this Section 3(a)(vi)
shall not have any effect if information has been given by such
Selling Stockholder to the Company in writing which would eliminate or
remedy any such untrue statement or omission.
(b) For a period of 180 days after the date of this Agreement,
such Selling Stockholder will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., directly or indirectly, except with
respect to certain agreements of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. Filler and ▇▇▇▇▇
▇. ▇▇▇▇▇▇ with GEM Value/Prism LLC, dated as of December 31, 1998, (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant for the sale of, or otherwise dispose of or transfer any shares
of Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by
such Selling Stockholder or with respect to which such Selling Stockholder
has or hereafter acquires the power of disposition, or request the filing
of any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
(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 Second
Closing Date 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 paragraphs 1, 2, 3, 4, 5, 9, 10 and
11
12 under "Underwriting" in the Prospectus 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 Company agrees to sell to
the Underwriters named in Schedule A hereto, and the Underwriters agree,
severally and not jointly, to purchase from the Company 2,500,000 Firm Shares
from the Company at the price per share set forth in the Pricing Agreement.
The obligation of each Underwriter to the Company shall be to purchase from
the Company that number of Shares set forth opposite the name of such
Underwriter in Schedule A hereto. The initial 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 hereof), 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 Company 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 the Company, 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 at the Company's
expense for checking and packaging 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 Company.
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
375,000 Option Shares, at the same purchase price per share to be paid for
the Firm Shares, for use solely in covering any over-allotments 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 initial public offering upon notice by
you to the Company and the Agents 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
12
(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 the number of shares set forth opposite the name of such Selling
Stockholder under "Number of Option Shares to be Sold" in Schedule B hereto.
If less than all Option Shares are to be purchased, the number of Option
Shares to be purchased from the Selling Stockholders shall be reduced pro
rata. 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). Certificates for the Option Shares will be made available at the
Company's expense for checking and packaging 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, except that delivery of the
Option Shares to you will be made by and payment of the purchase price
therefor will be paid to the Custodian.
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.
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 any amendment to or supplement of the
Registration Statement, any preliminary prospectus or 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,
13
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) 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.
(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 in order to make
the statements therein, in the light of the circumstances in 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 the 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 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.
(f) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the effective date
of the Registration Statement, 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 months beginning after the effective date
of the Registration Statement, which will satisfy the provisions of the
last paragraph of
14
Section 11(a) of the 1933 Act.
(g) 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.
(h) The Company 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.
(i) During the period of five years hereafter, the Company
will furnish you and each of the other Underwriters with a copy, upon
request by you, (i) as soon as reasonably practicable after the filing
thereof, of each report filed by the Company with the Commission, any
securities exchange or the NASD; (ii) as soon as reasonably practicable
after the release thereof, of each material press release in respect of
the Company; and (iii) as soon as reasonably available, of each report
of the Company mailed to stockholders.
(j) The Company will use the net proceeds received by it from
the sale of the Shares being sold by it in the manner specified in the
Prospectus.
(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 ensure that the Reserved Shares will be
restricted to the extent required by the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three months
following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the
request of the Underwriters, the Company will direct the transfer agent
to place a stop transfer restriction
15
upon such shares for such period of time. Should the Company release,
or seek to release, from such restrictions any of the Reserved Shares,
the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
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 and all
fees and expenses incurred in connection with the listing of the Shares on
the Nasdaq National Market; (ii) all costs, fees and expenses (including
legal fees not to exceed $7,500 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 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
16
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 initial 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
and to the extent required by this Agreement.
(c) 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.
(d) 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, 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.
(e) The NASD shall have confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(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) An opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ (Illinois), counsel for the Company and the Selling Stockholders,
addressed to the Underwriters and dated the First Closing Date or the
Second Closing Date, as the case may be in the form attached hereto as
Exhibit C.
(ii) If the Underwriters elect to exercise their
option to purchase the
17
Option Shares as set forth in Section 5 of this Agreement, an opinion
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), counsel for the
Selling Stockholders, addressed to the Underwriters and dated the
Second Closing Date, to the effect that:
(1) each of the Power of Attorney and Custody Agreement has
been duly authorized, executed and delivered by or on behalf of
each Selling Stockholder who is a natural person and constitutes
a legal, valid and binding agreement of such Selling Stockholder
enforceable in accordance with its terms;
(2) each of this Agreement and the Pricing Agreement has
been duly authorized, executed and delivered by or on behalf of
each Selling Stockholder who is a natural person;
(3) the compliance by each Selling Stockholder with the
terms and provisions of the Underwriting Agreement and the
Pricing Agreement will not, except as would not materially impair
the ability of such Selling Stockholder to perform its
obligations under the Underwriting Agreement and the Pricing
Agreement, contravene any provision of any Applicable Laws or
Applicable Orders, PROVIDED that in rendering such opinion, such
counsel need not express any opinion with respect to (x) any
securities or blue Sky laws of the various states or the
securities laws of foreign jurisdictions or (y) the information
contained, in, or the accuracy, completeness or correctness of,
the Prospectus or the Registration Statement or the compliance
thereof as to form with the 1933 Act and the rules and
regulations promulgated thereunder; and no Government Approval,
which has not been obtained or taken and is not in full force and
effect, is required for the execution, delivery and performance
of the Underwriting Agreement and the Pricing Agreement by such
Selling Stockholder, compliance by such Selling Stockholder with
all the provisions thereof and the consummation of the
transactions contemplated thereby, PROVIDED that in rendering
such opinion, such counsel need not express any opinion with
respect to (x) any securities or Blue Sky laws of the various
states of the securities laws of foreign jurisdictions, or (y)
the rules and regulations of the NASD; and
(4) upon transfer of the Option Shares to the Underwriters,
the Underwriters will acquire all of the Selling Stockholders'
rights in such Option Shares free of all adverse claims.
"Transfer" of the Option Shares to the Underwriters will occur
upon the making by The Depository Trust Company of appropriate
entries transferring the Options Shares on its books and records
to the account of the Underwriters at The Depository Trust
Company.
In rendering such opinion, such counsel may state that they
are relying, as to
18
factual matters, on certificates of the Selling Stockholders, in
which case their opinion is to state that they are so doing and
copies of said certificates are to be attached to the opinion
unless said certificates (or the information therein) have been
furnished to the Representatives in other form.
(iii) Such opinion or opinions of Sidley & Austin,
counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares to be issued
and 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 reasonably
request for the purpose of enabling them to pass upon such matters.
(iv) 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 in all material respects 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 Company has not received any order of the
Commission preventing or suspending the use of the Prospectus or
any preliminary prospectus filed as a part of the Registration
Statement or any amendment thereto; to the knowledge of the
Company, no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the knowledge of
the agent for service of process or the Company, no proceedings
for that purpose have been instituted or are pending or
contemplated under the 1933 Act.
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.
(v) If the Underwriters elect to exercise their option
to purchase the Option Shares as set forth in Section 5 of this
Agreement, a certificate of each Selling Stockholder dated the Second
Closing Date to the effect that the representations and warranties of
such Selling Stockholder set forth in Section 3 of this Agreement are
19
true and correct as of such date and the Selling Stockholder has
complied in all material respects 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.
(vi) 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
each of PriceWaterhouseCoopers LLP, McGladrey & ▇▇▇▇▇▇, LLP,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
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 form and
substance reasonably satisfactory to counsel for the
Underwriters. There shall not have been any change or decrease
specified in the letter of PriceWaterhouseCoopers LLP 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.
(vii) A lock-up agreement substantially in the form of
Exhibit B signed by each of the persons listed on Schedule C.
(viii) 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 & Austin, 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 any Selling Stockholder, 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 Selling Stockholder 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) that shall have been reasonably incurred by you and
20
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 and the
Company will use all reasonable 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 and, to the extent the overallotment option is
exercised and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. Filler and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Management Selling Stockholders") sell Shares hereunder, each Management
Selling Stockholder, severally and not jointly, agree 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 such Management Selling
Stockholders, as the case may be), 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 in order to make the statements therein not misleading, and
will reimburse each Underwriter and each such controlling person for all
reasonable legal and other expenses 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 Management Selling Stockholder 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 prospectus,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use therein; 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
21
obligations under this Section 11(a), the Company and the
Management 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 the Management 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 Management Selling Stockholders may otherwise have.
Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of an Underwriter
or who controls any Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the Exchange Act and who, at the date of this Agreement, is a
director or officer of the Company or controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the Exchange Act, such indemnity
agreement is subject to the undertaking of the Company in the Registration
Statement under Item 17 thereof.
Without limiting the full extent of the Company's agreement to indemnify
each Underwriter as herein provided, no Management Selling Stockholder shall be
liable in any such case in respect of any such losses, claims, damages,
liabilities or expenses unless the Underwriter or controlling person who has the
right to indemnification hereunder and is seeking indemnification from such
Management Selling Stockholder shall have previously sought indemnification from
the Company in respect thereof and the Company shall have failed to honor and
pay such Underwriter's or controlling person's claim for indemnification within
180 calendar days of the date such indemnification is first properly sought
against the Company (except that the foregoing condition precedent requiring an
Underwriter or a controlling person to so seek indemnification from the Company
(i) shall not be applicable if an Underwriter or controlling person has
previously sought indemnification from the Company with respect to such matters
or if such Underwriter or controlling person is prohibited from being
indemnified by the Company (or from seeking such indemnification) by the effect
of any order, decree, stay, injunction, statute, legal process or other matter
of law and (ii) shall not limit the right of an Underwriter or controlling
person at any time to notify a Management Selling Stockholder of a claim for
indemnification or otherwise initiate a claim or proceeding against a Management
Selling Stockholder for indemnification prior to the expiration of such 180
calendar days, but only and solely to the extent necessary to prevent any
applicable statute of limitations from expiring).
(b) Each of the other Selling Stockholders (the "Non-Management
Selling Stockholders") 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 litigation if such settlement is
22
effected with the written consent of the Company and/or such Non-Management
Selling Stockholder), 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 in order 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
specifically relates to such Non-Management Selling Stockholder, 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 as such expenses are incurred; provided, however,
that such Non-Management Selling Stockholder shall be not 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 prospectus, the Prospectus or any such amendment or supplement
thereto in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives expressly for use
therein; 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(b),
each Non-Management Selling Stockholder agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 11(b) relating to such
Non-Management Selling Stockholder, such Non-Management Selling Stockholder
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 Non-Management 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
Non-Management Selling Stockholders may otherwise have.
(c) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each Selling Stockholder and each person,
if any, who controls the Company or any of the Selling Stockholders 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
23
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 (including any prospectus
wrapper), 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 in
order 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 Section 4 of this
Agreement or any other written information furnished to the Company by such
Underwriter through the Representatives specifically for use in the preparation
thereof; 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(c), 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(c), they will reimburse the
Company and the Selling Stockholders 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 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.
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party 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 reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be 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
24
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defense in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to any local counsel), approved by the Representatives in the case of
paragraph (a)(i) or (b)(i) 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 reasonably 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.
(e) If the indemnification provided for in this Section is
unavailable to an indemnified party under paragraphs (a), (b) or (c) 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 Company
and 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 Company and 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
25
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 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 first
paragraph of this subsection (e). Notwithstanding the provisions of this
Section, 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 ▇▇▇▇ ▇▇▇) 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 are several in proportion to their
respective underwriting commitments and not joint. In no event shall the
liability of a Selling Stockholder under this Section 11(e) exceed the amount
that such Selling Stockholder would have been required to pay under
Section 11(a) (with respect to a Management Selling Stockholder) or
Section 11(b) (with respect to a Non-Management Selling Stockholder) had such
indemnification held to be available thereunder.
(f) In connection with the offer and sale of the Reserved Shares,
the Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of
recipients of Reserved Shares to pay for and accept delivery thereof which, by
the end of the first business day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase; PROVIDED however, that
the Company shall not be responsible to the extent that any such losses,
liabilities, claims, damages or expenses so incurred are finally judicially
determined to have resulted from the bad faith or gross negligence of the
Underwriters.
(g) Without limiting the full extent of (i) the Company's agreement
to indemnify each Underwriter and to contribute to amounts required to be paid
by any Underwriter, as herein provided, (ii) the liability of the Company with
respect to any breach by the Company of any representation or the inaccuracy of
any warranty contained in this Agreement or in any certificate of the Company
delivered pursuant to Section 8 hereof or (iii) the liability of any Selling
Stockholder in respect of any breach by such Selling Stockholder of any
representation or the inaccuracy of any warranty contained in Section 3 of this
Agreement or in any certificate of such Selling Stockholder, no Selling
Stockholder shall be liable under the indemnity contained in paragraphs (a) or
(b), as the case may be, and the contribution agreements contained in paragraph
(e) of this Section 11, in the aggregate, for an amount in excess of the
aggregate net proceeds (i.e. after deducting the underwriting discount) actually
received by such Selling Stockholder from the sale of Shares by such Selling
Stockholder hereunder.
(h) The provisions of this Section shall survive any termination of
this Agreement.
26
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to
the agreement and obligation of the Company and the Selling Stockholders to
sell and deliver the Shares hereunder, and of each Underwriter to purchase the
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 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
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 hereof 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
27
to any other provision hereof:
(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 canceled at any time prior to the Second Closing Date,
if (i) trading in securities on the Nasdaq National Market or the New
York Stock Exchange shall have been suspended or minimum prices shall
have been established on such exchange, or (ii) a banking moratorium
shall have been declared by Illinois, New York, or United States
authorities, or (iii) there shall have been any material and adverse
change in financial markets or in political, economic or financial
conditions which, in the reasonable 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 which in the opinion of the
Representatives makes it impractical or inadvisable to offer or sell the
Shares, PROVIDED however that the level and nature of hostilities
involving United States forces on the date hereof shall not give rise to
a termination right. Any termination pursuant to this paragraph (b)
shall be without liability on the part of any Underwriter to the Company
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, the Company or the Selling Stockholders or any of its
or their respective partners, principals, members, officers or directors or any
controlling person 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopy (312)
853-7036; if sent to the Company will be mailed, delivered or telecopied and
confirmed to the Company at its corporate headquarters with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois),
28
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopy (312)
407-0411; and if sent to the Selling Stockholders will be mailed, delivered or
telecopied and confirmed to the Agents and the Custodian at such address as
they have previously furnished to the Company and the Representatives, with
copies to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois),
at the address and telecopy number above.
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.
SECTION 21. COUNTERPARTS. The Agreement may be signed in two or
more counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
29
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, the Selling Stockholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
PRISM FINANCIAL CORPORATION
By_________________________________________
Chief Executive Officer
The Selling Stockholders named in Schedule B
hereto, in their individual capacities
By_________________________________________
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
ABN AMRO Rothschild, L.L.C.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
Acting as Representatives of the
several Underwriters named in
Schedule A.
By ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
By________________________________
Principal
30
SCHEDULE A
Number of
Firm Shares
Underwriter to be Purchased
----------- ---------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
ABN AMRO Rothschild, L.L.C.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
TOTAL
31
SCHEDULE B
Number of Number of
Firm Shares Option Shares
to be Sold to be Sold
---------- ----------
Company 2,500,000 0
SELLING STOCKHOLDERS:
▇▇▇▇▇ ▇▇▇▇▇▇ 0 [ ]
▇▇▇▇▇ ▇▇▇▇▇▇ 0 [ ]
▇▇▇▇ ▇▇▇▇▇▇ 0 [ ]
▇▇▇▇ ▇▇▇▇▇▇▇ 0 [ ]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0 [ ]
▇▇▇▇▇ ▇▇▇▇▇▇▇ 0 [ ]
CTC Trust 0 [ ]
▇▇▇ ▇▇▇▇ Trust 0 [ ]
JBR Trust #4 0 [ ]
T&M Children's Trust 0 [ ]
GEM/Prism, LLC 0 [ ]
▇▇▇▇▇▇ Capital Trust 0 [ ]
TOTAL
32
SCHEDULE C
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
CTC Trust
▇▇▇ ▇▇▇▇ Trust
JBR Trust #4
T&M Children's Trust
GEM/Prism, LLC
▇▇▇▇▇▇ Capital Trust
33
Exhibit A
PRISM FINANCIAL CORPORATION
2,500,000 Shares Common Stock (2)
PRICING AGREEMENT
[___________], 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
ABN AMRO Rothschild, L.L.C.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As Representatives of the Several
Underwriters
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated [_______________],
1999 (the "Underwriting Agreement") relating to the sale by the Company and the
Selling Stockholders and the purchase by the several Underwriters for whom
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., ABN AMRO Rothschild, L.L.C. and U.S. Bancorp
▇▇▇▇▇ ▇▇▇▇▇▇▇ 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
each of the Selling Stockholders agree with the Representatives as follows:
1. The initial 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
initial public offering price set forth above less $[____________] per share.
This Pricing Agreement may be signed in two or more counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
---------------------
(2) Plus an option to acquire up to 375,000 additional shares to cover
over-allotments
34
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, the Selling
Stockholders and the several Underwriters, including you, all in accordance with
its terms.
Very truly yours,
PRISM FINANCIAL CORPORATION
By_______________________________
Chief Executive Officer
The Selling Stockholders named in
Schedule B to the Underwriting Agreement,
in their individual capacities
By_______________________________
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY, L.L.C.
ABN AMRO ROTHSCHILD, L.L.C.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
Acting as Representatives of the
several Underwriters
By ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
By___________________________________
Principal
35
Exhibit B
PRISM FINANCIAL CORPORATION
LOCK-UP AGREEMENT
May [ ], 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
ABN AMRO Rothschild, L.L.C.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As Representatives of the Several
Underwriters
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: PROPOSED PUBLIC OFFERING BY PRISM FINANCIAL CORPORATION
Ladies and Gentlemen:
The undersigned, a securityholder of Prism Financial Corporation, a
Delaware corporation (the "Company"), understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company,
L.L.C. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ABM AMRO Rothschild, L.L.C. and U.S. Bancorp ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc. propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with the Company and certain stockholders of the Company providing
for the public offering of shares (the "Securities") of the Company's common
stock, par value $.01 per share (the "Common Stock"). In recognition of the
benefit that such an offering will confer upon the undersigned as a
securityholder of the Company, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the undersigned
agrees with each underwriter to be named in the Underwriting Agreement that,
during a period of 180 days from the date of the Underwriting Agreement (the
"Lock-Up Period"), the undersigned will not, without the prior written consent
of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, except with respect to certain
agreements of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. Filler and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with GEM
Value/Prism, L.L.C., dated as of December 31, 1998, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition (the
"Lock-Up Shares"), or request the filing of any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock,
36
whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Notwithstanding the foregoing, the undersigned may transfer any or all
of the Lock-Up Shares (i) as a bona fide gift or gifts or (ii) as a distribution
to limited partners, beneficiaries or shareholders of such person; provided,
however, that in any such case it shall be a condition to the transfer that the
transferee execute an agreement stating that the transferee is receiving and
holding the Lock-Up Shares subject to the provisions of this letter agreement.
The transferor shall notify ▇▇▇▇▇▇▇ ▇▇▇▇▇ in writing prior to the transfer and
there shall be no further transfer of such Lock-Up Shares except in accordance
with this letter agreement. Following expiration of the Lock-Up Period, it is
understood that the undersigned may dispose of Lock-Up Shares free of any
contractual obligation hereunder.
It is understood that, if the Underwriting Agreement is not executed by
July 30, 1999 or if the Underwriting Agreement shall terminate or be terminated
prior to payment for and delivery of the Securities, you will release the
undersigned from the obligations under this letter agreement.
Very truly yours,
Signature:
Print Name:
37
Exhibit C
FORM OF OPINION OF COMPANY COUNSEL
1. The Company has been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware with the corporate power
and corporate authority to own or lease its properties and conduct its
business as described in the Prospectus (with such exceptions as would not
have a Material Adverse Effect); and the Company is qualified to do
business and is in good standing as a foreign corporation under the laws of
the State of Illinois.
2. Prism Mortgage is validly existing and in good standing under the laws of
the State of Illinois.
3. Solely upon a review of "good standing" certificates of such states, Prism
Mortgage is qualified to do business and in good standing as a foreign
corporation under the laws of the states set forth on Exhibit A to this
opinion.
4. The execution and delivery of the Share Exchange Agreement and the
consummation by the Company and Prism Mortgage of the transactions
contemplated thereby has been duly authorized by all requisite corporate
action on the part of the Company and Prism Mortgage under the laws of the
State of Delaware and Illinois, respectively. The Share Exchange Agreement
has been duly executed and delivered by each of the Company and Prism
Mortgage. The Share Exchange Agreement constitutes the valid and binding
obligation of the Company and Prism Mortgage enforceable against the
Company and Prism Mortgage in accordance with its terms under the laws of
the State of Delaware, except to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity
or at law). The execution and delivery and the performance by the Company
and Prism Mortgage or their respective obligations under the Share Exchange
Agreement, in accordance with its terms does not, (i) conflict with the
certificate or incorporation and by-laws of the Company and Prism Mortgage
as in effect on the date hereof or (ii) constitute a violation of, or a
default under, any agreement or instrument set forth as an exhibit to the
Registration Statement (except for such violations or breaches which have
been waived or would not materially impair the performance of the Company
and Prism Mortgage of their respective obligations under the Share Exchange
Agreement).
5. All of the issued and outstanding shares of capital stock of Prism Mortgage
have been duly authorized, validly issued and to such counsel's knowledge
are fully paid and nonassessable and are owned of record by the Company or
Prism Mortgage.
6. The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $.01 par value, and 10,000,000 shares of Preferred Stock,
$.01 par value, and conforms in all material respects as to legal matters
to the description thereof in the Registration Statement and Prospectus
under the heading "Description of Capital Stock".
7. The outstanding shares of capital stock of the Company immediately prior to
the issuing of the Firm Shares have been duly authorized and validly issued
and are fully paid and nonassessable.
8. The issuance and sale of the Firm Shares have been duly authorized by the
Company for sale to the Underwriters under the Underwriting Agreement and
the Pricing Agreement and such Firm Shares, when delivered to and paid for
by the Underwriters in accordance with the Underwriting Agreement and the
Pricing Agreement, will be validly issued, fully paid and nonassessable,
and the issuance of the Firm Shares will not, to such counsel's knowledge,
be subject to any preemptive or similar rights to subscribe for or purchase
such Firm Shares.
9. Such counsel shall state the Registration Statement has become effective
under the 1933 Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
2
and no proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.
10. The Registration Statement, as of the effective date, (including the
Prospectus as of its date (except for the financial statements and other
statistical or financial data included therein as to which such counsel
need express no opinion) appeared on their face to be appropriately
responsive in all material respects with the requirements of the 1933 Act;
and such counsel does not know of any (1) legal or governmental proceedings
pending or threatened to which the Company or any of its Subsidiaries is a
party that are required to be described in the Prospectus which are not so
described or (2) any contracts on other documents that are 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.
11. The statement in the Prospectus under "Management - Employment
Arrangements," "Certain Transactions," "Description of Capital Stock" and
"Shares Eligible for Future Sale" in so far as they purport to describe or
summarize certain provisions of specific agreements, statutes and
regulations referred to therein , fairly describe or summarize such
provisions in all material respects.
12. The execution and delivery of this Agreement and the Pricing Agreement and
the consummation by the Company of the transactions contemplated hereby
have been duly authorized by all requisite corporate actions on the part of
the Company under the laws of the State of Delaware. This Agreement and
the Pricing Agreement have been executed and delivered by the Company under
the laws of the State of Delaware; and (A) the compliance by the Company
with the terms and provisions of the Underwriting Agreement and the Pricing
Agreement will not contravene any provision of any Applicable Laws or
Applicable Orders (it being understood that, for purposes of such opinion,
(1) the term "Applicable Laws" means those laws, rules and regulations of
the State of Illinois and the United States of America that, in our
experience, are normally applicable to transactions of the type
contemplated by the Underwriting Agreement and the Pricing Agreement
(without having made any special investigation as to the applicability of
any specific law, rule or regulation and which are not the subject of a
specific opinion herein expressly to a particular law or laws), as of the
date hereof; (2) the term "Applicable Orders" means those judgments, orders
or decrees of Governmental Authorities (as such term is hereinafter
defined) by which the Company or any of the
3
Subsidiaries is bound, the existence of which is known to such counsel
(without having made any special investigation) or has been specifically
disclosed to such counsel in writing by the Company; and (3) the term
"Governmental Authorities" means any Illinois or federal executive,
legislative, judicial, administrative or regulatory body established under
Applicable Laws), PROVIDED that, in rendering such opinions, such counsel
need not express any opinion with respect to (x) any securities or Blue Sky
laws of the various states or the securities laws of foreign jurisdictions
or (y) the information contained in or the accuracy, completeness or
correctness of, the Prospectus or the Registration Statement or the
compliance thereof as to form with the 1933 Act and the rules and
regulations promulgated thereunder; and (B) no Governmental Approval, which
has not been obtained or taken and, not in full force and effect, is
required to authorize or is required in connection with the execution,
delivery and enforceability of the Underwriting Agreement and Pricing
Agreement by the Company (it being understood that, for purposes of such
opinion, the term "Governmental Approval" means any consent, approval,
license, authorization or validation of; or filing, recording or
registration with any Governmental Authority pursuant to Applicable Laws),
PROVIDED that, in rendering such opinions, such counsel need not express
any opinion with respect to (x) any securities or Blue Sky laws of the
various states or the securities laws of foreign jurisdictions, or (y) the
rules and regulations of the NASD. Further, such counsel need not express
any opinion with respect to the contravention of any Applicable Law or
Applicable Order or the requirement of any Governmental Approval in
connection with the completion of the transactions contemplated by the
Share Exchange Agreement.
13. The execution and delivery by the Company of the Underwriting Agreement and
the Pricing Agreement and the performance by the Company of its obligations
thereunder, in accordance with its terms, do not (i) conflict with the
amended and restated certificate of incorporation and amended by-laws of
the Company or (ii) constitute a violation of, or default under, any
agreement or instrument set forth as an exhibit to the Registration
Statement (except for such violations or breaches which have been waived or
would not materially impair the performance of the Company of its
obligations under the Underwriting Agreement and the Pricing Agreement).
14. The Company is not an "investment company" or a person "controlled by" an
"investment company" within the meaning of the Investment Company Act.
4
In addition, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) shall state
that it has participated in conferences with officers and other representatives
of the Company and the Selling Stockholders, representatives of the independent
public accountants of the Company, the underwriters and the underwriters'
counsel at which the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although it is not passing upon, and
does not assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus and
has made no independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's attention that have led such
counsel to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its date and the
First Closing Date, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to the financial statements, schedules and other financial and
statistical information included therein or excluded therefrom or the exhibits
to the Registration Statement. Such counsel may also rely upon the opinions of
other competent counsel and, as to factual matters, on certificates of officers
of the Company and of state officials, in which cas 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.
5
