ENCORE CAPITAL GROUP, INC.
3,084,574 Shares
Common Stock
Underwriting Agreement
January 20, 2005
▇▇▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The stockholders of Encore Capital Group, Inc. (the "Company") listed on
Schedule I hereto (the "Selling Stockholders") propose to sell to Jefferies &
Company, Inc. (the "Underwriter") an aggregate of 3,084,574 shares (the
"Shares") of common stock, par value $.01 per share (the "Common Stock") of the
Company.
You have advised us that, subject to the terms and conditions herein
contained, you desire to purchase the Shares and that you propose to make a
public offering of the Shares as soon as you deem advisable after the
Registration Statement referred to below becomes effective.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-115551) under the
Securities Act of 1933, as amended (the "1933 Act"), for the registration of
resale of Common Stock, as amended by Amendment Nos. 1, 2 and 3 thereto, which
registration statement, as amended, has been declared effective by the
Commission and copies of which have heretofore been delivered to you. Such
registration statement, in the form in which it was declared effective, as
amended through the date hereof, including all documents incorporated or deemed
to be incorporated by reference therein through the date hereof pursuant to Item
12 of Form S-3 under the 1933 Act (the "Incorporated Documents"), is hereinafter
referred to as the "Original Registration Statement." Any registration statement
filed pursuant to Rule 462(b) of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations") is herein referred to as the
"Rule 462(b) Registration Statement." The Original Registration Statement,
together with any Rule 462(b) Registration Statement, is hereinafter referred to
as the "Registration Statement." The Company proposes to file with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations a prospectus
supplement dated January 20, 2005 relating to the Shares (the "Prospectus
Supplement") and the prospectus dated December 23, 2004 (the "Base Prospectus")
relating to the Registered Securities, and has previously advised you of all
further information (financial and other) with respect to the Company set forth
therein. The Base Prospectus together with the Prospectus Supplement, in their
respective forms on the date hereof (being the forms in which they are to be
filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations),
including the Incorporated Documents, are hereinafter referred to as,
collectively, the "Prospectus," except that if any revised prospectus or
prospectus supplement shall be provided to the Underwriter by the Company for
use in connection with the offering and sale of the Securities which differs
from the Prospectus (whether or not such revised prospectus or prospectus
supplement is required to be filed by the Company pursuant to Rule 424(b) of the
1933 Act Regulations), the term "Prospectus" shall refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the time
it is first provided to the Underwriter for such use. Unless the context
otherwise requires, all references in this Agreement to documents, financial
statements and schedules and other information which is "contained", "included",
"stated", "described in" or "referred to" in the Registration Statement or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such documents, financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement or
the Prospectus shall be deemed to mean and include the filing of any document
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), after
the date of this Agreement which is or is deemed to be incorporated by reference
in the Registration Statement or the Prospectus, as the case may be.
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Underwriter and each of the Selling Stockholders as of the date hereof (such
date being referred to as the "Representation Date"), as follows:
(i) The Company meets the requirements for use of Form S-3 under the 1933 Act
and the 1933 Act Regulations. Each of the Original Registration Statement
and any Rule 462(b) Registration Statement and the Base Prospectus, at the
respective times the Original Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and as of the Representation Date, complied and comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations (including Rule 415(a) of the 1933 Act Regulations), and did
not as of the date hereof and at any Closing Date do not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. No stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. The
Prospectus, at the date hereof (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriter by the Company for
use in connection with the offering of the Shares which differs from the
Prospectus filed with the Commission pursuant to Rule 424(b) of the 1933
Act Regulations, in which case at the time it is first provided to the
Underwriter for such use) and at any Closing Date, does not and will 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 the light of the
circumstances under which they were made, not misleading. All references to
the Registration Statement, any post-effective amendments thereto and the
Prospectus shall be deemed to include, without limitation, any
electronically transmitted copies thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis, and Retrieval system
("▇▇▇▇▇").
(ii) The Incorporated Documents, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together
and with the other information in the Prospectus, at the respective times
the Registration Statement and any amendments thereto became effective, at
the date hereof and at any Closing Date, did not, do not and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(iii)Neither the Commission nor any "blue sky" or securities authority of any
jurisdiction in which the Shares have been offered has issued any order
preventing or suspending the use of the Prospectus or any amendment or
supplement thereto. On the Effective Date, the Registration Statement did
or will, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on each Closing Date, the Prospectus will, comply with
the applicable requirements of the Act and the Act Regulations; on the
Effective Date, the Registration Statement did not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; on the Effective Date if not filed pursuant to Rule 424(b), and
on the date of any filing pursuant to Rule 424(b) and each Closing Date,
the Prospectus did not and will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and the Prospectus delivered to the Underwriter
for use in connection with the Offering will, at the time of such delivery,
be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T under the Act. Notwithstanding anything to the contrary in
this Agreement, the Company makes no representations or warranties as to
the information contained in or omitted from the Registration Statement,
the Prospectus in accordance with information provided in writing to the
Company by or on behalf of the Underwriter expressly for use in the
Registration Statement or the Prospectus, and the Company agrees that the
only information provided in writing by or on behalf of Underwriter to the
Company expressly for use in the Registration Statement or the Prospectus
is (1) that information contained in the fourth paragraph under the caption
"Underwriting" and (2) that information on the cover page of the Prospectus
stating that the Underwriter expects to deliver the Shares to purchasers on
or about January 25, 2005 (collectively, the "Underwriter's Information").
In addition, notwithstanding anything to the contrary in this Agreement,
the Company makes no representations or warranties to the Selling
Stockholders as to the information contained in or omitted from the
Registration Statement, the Prospectus in reliance upon and in conformity
with information provided in writing to the Company by or on behalf of the
Selling Stockholders expressly for use therein (collectively, the "Selling
Stockholder Information").
(iv) Each document filed with, or furnished to, the Commission by the Company
since January 1, 2001, when it became effective, or was filed with, or
furnished to, the Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as applicable,
and the Exchange Act Rules and Regulations, and none of such documents
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.
(v) The Company has been duly organized and is validly existing and in good
standing under the laws of the State of Delaware, with all requisite power
(corporate and other) and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus, and is duly qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature or
location of its properties (owned, leased or managed) or the conduct of its
business requires such qualification, except where the failure so to
qualify would not, individually or in the aggregate, have an adverse effect
on the condition (financial or other), business, properties, assets,
rights, operations or results of operations of the Company or any of the
Subsidiaries (as hereinafter defined) that is or would be, material to the
Company and the Subsidiaries, taken as a whole, whether or not occurring in
the ordinary course of business (a "Material Adverse Effect").
(vi) The only subsidiaries of the Company that are significant subsidiaries
within the meaning of Rule 405 under the Act and Rule 1-02(w) of Regulation
S-X (individually, a "Subsidiary" and collectively, the "Subsidiaries") are
listed in Schedule 1(a)(v) to this Agreement. Each of the Subsidiaries is a
corporation duly organized, validly existing and in good standing in the
jurisdiction of its incorporation with all requisite power (corporate or
other) and authority to own, lease, manage and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature or location of its
properties (owned, leased or managed) or the conduct of its business
requires such qualification, except where the failure to so qualify would
not, individually or in the aggregate, have a Material Adverse Effect.
(vii)Each of the Company and each Subsidiary possesses all authorizations,
approvals, orders, licenses, certificates, franchises and permits of and
from, and has made all declarations and filings with, all regulatory or
governmental officials, bodies and tribunals ("Permits") that are material
to the ownership, leasing, management or operation of their respective
properties and to the conduct of the business of the Company and its
Subsidiaries as described in the Registration Statement and the Prospectus,
except where the failure to have obtained or made the same would not have a
Material Adverse Effect. None of the Company or any of the Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Permits where the failure to be so licensed or
approved or the Company's becoming subject to an unfavorable decision,
ruling or finding, would have a Material Adverse Effect. Except as
described in the Registration Statement and Prospectus, each of the Company
and each Subsidiary has fulfilled and performed all its current material
obligations with respect to such Permits and no event has occurred that
allows, or after notice or lapse of time, or both, would allow, revocation
or termination thereof or result in any other material impairment of the
rights of the holder of any such Permit, except where such non-fulfillment,
failure to perform, revocation, termination or impairment would not result
in a Material Adverse Effect. The Company and each of the Subsidiaries are,
in all material respects, in compliance with all federal, state, local and
foreign laws, rules, regulations, orders and consents of any governmental
agency or body or court and, to the knowledge of the Company, except as set
forth in the Registration Statement and Prospectus, no prospective change
in any such federal, state, local or foreign laws, rules, regulations,
orders or consents has been adopted or is proposed which, when made
effective, would have a Material Adverse Effect. The property and business
of the Company and the Subsidiaries conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(viii) All of the Company's issued and outstanding capital stock has been duly
authorized, validly issued and is fully paid and nonassessable, and the
Company's outstanding classes of capital stock, including, without
limitation, the Common Stock, and the capitalization (authorized and
outstanding) of the Company conform in all material respects to the
descriptions thereof and the statements made with respect thereto in the
Registration Statement and the Prospectus as of the date set forth therein
under the captions "Capitalization" and "Description of Capital Stock."
None of the issued and outstanding shares of the Company's capital stock
including, without limitation, the Common Stock, have been issued in
violation of any preemptive or other rights to subscribe for or purchase
shares of capital stock of the Company. Except as set forth in the
Registration Statement and the Prospectus, there are no outstanding
securities convertible into or exchangeable for, and no outstanding
options, warrants or other rights to purchase, any shares of the capital
stock of the Company, nor any agreements or commitments to issue any of the
same, and there are no preemptive or other rights to subscribe for or to
purchase, and no restrictions upon the voting or transfer of, any capital
stock of the Company pursuant to the Company's certificate of incorporation
or bylaws or any agreement or other instrument to which the Company is a
party. All offers and sales of the Company's capital stock prior to the
date hereof were at all relevant times duly registered or exempt from the
registration requirements of the Act, and were duly registered or the
subject of an available exemption from the registration requirements of the
applicable state securities or blue sky laws. The form of certificates for
the Shares complies with the corporate laws of the State of Delaware.
(ix) All the outstanding shares of capital stock or other equity interests of
each Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable, and all outstanding shares of capital stock and
other equity interests of such Subsidiaries are owned of record and
beneficially by the Company, either directly or through one of the other
Subsidiaries, free and clear of any security interests, liens,
encumbrances, equities or other claims. Except as set forth in the
Registration Statement and the Prospectus, there are no outstanding rights,
warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
any Subsidiary.
(x) Each of the Company and each Subsidiary has good and marketable title to,
and possesses, each property (whether real or personal), right, interest or
estate constituting the properties and assets described in the Registration
Statement and the Prospectus as owned by it or reflected in the Financial
Statements (as defined below), free and clear of all liens, charges,
security interests, pledges, encumbrances and restrictions and other
claims, except such as are described in the Registration Statement and the
Prospectus or such as would not have a Material Adverse Effect. Each of the
Company and each Subsidiary has valid, subsisting and enforceable leases
for the properties described in the Registration Statement and the
Prospectus as leased by it with only such exceptions as are described in
the Registration Statement and the Prospectus or that in the aggregate
would not have a Material Adverse Effect.
(xi) No Subsidiary is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution with
respect to such Subsidiary's capital stock or other equity interests to the
Company or a Subsidiary, as the case may be, from repaying to the Company
or a Subsidiary any loans or advances to such Subsidiary from the Company
or a Subsidiary or from transferring any of such Subsidiary's property or
assets to the Company or any Subsidiary, except as described in the
Registration Statement and the Prospectus.
(xii)The Company has all corporate power, authority, authorizations, approvals,
orders, licenses, certificates and permits to enter into this Agreement and
to carry out the provisions and conditions hereof, including, but not
limited to, the issuance and delivery of the Shares to the Underwriter as
provided herein. This Agreement has been duly and validly authorized by the
Company and duly executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company.
(xiii) The Company and each Subsidiary owns, or possesses adequate rights to
use, all patents, patent rights, licenses, inventions, trademarks, service
marks, trade names, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information or
procedures) and other rights necessary for the conduct of its business as
described in the Registration Statement and the Prospectus, and except as
described in the Registration Statement and the Prospectus, none of the
Company or any of the Subsidiaries has received a notice, or knows of any
basis, of any infringement or other conflict with the asserted rights of
others in any such respect that could reasonably be expected to have a
Material Adverse Effect.
(xiv)The Shares to be sold by such Selling Stockholders to the Underwriter have
been duly authorized and are validly issued, fully paid and non-assessable.
The Shares conform in all material respects to the description of the
Common Stock set forth in the Registration Statement and the Prospectus
under the caption "Description of Common Stock."
(xv) To the Company's knowledge, BDO ▇▇▇▇▇▇▇, LLP, whose report is included in
the Registration Statement and who has certified certain of the Financial
Statements, are independent certified public accountants with respect to
the Company and the Subsidiaries, under the meaning of and as required by
the Act and the Act Regulations. To the Company's knowledge, BDO ▇▇▇▇▇▇▇,
LLP is not in violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") with respect to the
Company.
(xvi)The consolidated financial statements and related schedules and notes
included or incorporated by reference in the Registration Statement and the
Prospectus (the "Financial Statements") present fairly the financial
position of the Company and its Subsidiaries, on the basis stated in the
Registration Statement or the Incorporated Documents, as of the respective
dates thereof, and the results of operations and cash flows of the Company
and its Subsidiaries, for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Registration Statement and the Prospectus and all
adjustments necessary for a fair presentation of results for such periods
have been made. The selected consolidated financial information included
under the caption "Selected Financial Consolidated Data" in the Company's
Form 10-K for the year ended December 31, 2003 present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited consolidated financial statements of the Company
included therein. No other financial statements, schedules or data of the
Company and its Subsidiaries are required by the Act or the Act Regulations
to be included or incorporated by reference in the Registration Statement
or Prospectus.
(xvii) The Company and each Subsidiary maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions
are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (C) access to
assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xviii) The Company and each Subsidiary maintains insurance issued by insurers
of nationally recognized financial responsibility and covering its
properties, operations, personnel and businesses. Such insurance insures
against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. None of the Company or any Subsidiary has been refused any
insurance coverage sought or applied for; and none of the Company or any
Subsidiary has reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers, as may be necessary to continue its
business at a cost that could not reasonably be expected to have a Material
Adverse Effect. All such insurance is outstanding and duly in force on the
date hereof.
(xix)Except as set forth in the Registration Statement and the Prospectus, the
Company and the Subsidiaries are in compliance in all material respects
with all federal, state, local or foreign laws or regulations relating to
pollution or protection of human health and safety, the environment or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"). Except as set forth in the Registration Statement and the
Prospectus, none of the Company or any of the Subsidiaries has authorized,
conducted or has knowledge of the generation, transportation, storage, use,
treatment, disposal or release of any hazardous substance, hazardous waste,
hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, petroleum product, natural gas, liquefied gas or synthetic
gas, defined or regulated under any Environmental Law on, in or under any
property in violation of any applicable law, other than such that would not
have a Material Adverse Effect. Except as set forth in the Registration
Statement and the Prospectus, there is no pending or, to the Company's
knowledge, threatened claim, action, litigation or any administrative
agency proceeding involving the Company or any of the Subsidiaries or their
respective properties, nor has the Company or any of the Subsidiaries
received any written notice, or any oral notice to any executive officer of
the Company or any other employee responsible for receipt of any such
notice, from any governmental entity or third party, that (A) alleges a
violation of any Environmental Laws by the Company or any of the
Subsidiaries or any person or entity whose liability for a violation of an
Environmental Law the Company or any Subsidiary has retained or assumed
either contractually or by operation of law; (B) alleges the Company or any
of the Subsidiaries is a liable party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., or
any state superfund law; (C) alleges possible contamination of the
environment by the Company or any of the Subsidiaries; or (D) alleges
possible contamination of any of the Company's or the Subsidiaries'
properties.
(xx) Each of the Company and each Subsidiary (A) is in compliance, in all
material respects, with any and all applicable foreign, federal, state and
local laws, rules, regulations, treaties, statutes and codes promulgated by
any and all governmental authorities (including pursuant to the
Occupational Health and Safety Act) relating to the protection of human
health and safety in the workplace ("Occupational Laws"); (B) has received
all material permits, licenses or other approvals required of it under
applicable Occupational Laws to conduct its business as currently
conducted; and (C) is in compliance, in all material respects, with all
terms and conditions of such permit, license or approval, and the Company
does not have knowledge of any facts, circumstances or developments
relating to its operations or cost accounting practices that could
reasonably be expected to form the basis for or give rise to such actions,
suits, investigations or proceedings. No action, proceeding, revocation
proceeding, writ, injunction or claim is pending or, to the Company's
knowledge, threatened against the Company or any Subsidiary relating to
Occupational Laws.
(xxi)There is (A) no material unfair labor practice complaint pending against
the Company or any of its Subsidiaries or, to the Company's knowledge,
threatened against it or any of its Subsidiaries before the National Labor
Relations Board or any state or local labor relations board, and no
material grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any of
its Subsidiaries or, to its knowledge, threatened against it or any of its
Subsidiaries, (B) no labor dispute in which the Company or any of its
Subsidiaries is involved nor is any labor dispute imminent, other than
routine disciplinary and grievance matters, and (C) no union representation
question existing with respect to the employees of the Company or any of
its Subsidiaries and no union organizing activities are taking place.
Neither the Company nor any of its Subsidiaries has received any written
notice that (i) any executive, key employee or significant group of
employees of the Company or any of its Subsidiaries plans to terminate
employment with the Company or any of its Subsidiaries or (ii) any such
executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company or
any of its Subsidiaries.
(xxii) Each of the Company and each Subsidiary (A) is in compliance, in all
material respects, with any and all applicable foreign, federal, state and
local laws, rules, regulations, treaties, statutes and codes promulgated by
any and all governmental authorities relating to debt collection and
financial organizations, including without limitation, any applicable
provisions of the Fair Debt Collections Practices Act, the Truth-In-Lending
Act, the Fair Credit Billing Act, the Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Electronic Funds Transfer Act, the U.S.
Bankruptcy Code, the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and comparable state statutes,
guidelines and procedures.
(xxiii) Neither the Company nor any of the Subsidiaries is in violation of its
respective charter or bylaws or other organizational documents. Neither the
Company nor any Subsidiary is, nor with the passage of time or the giving
of notice or both would be, in violation of any federal, state, local or
foreign law, statute, ordinance, administrative or governmental rule,
regulation or code applicable to the Company or any of the Subsidiaries,
including, without limitation, the Federal Acquisitions Regulations and
supplements and the Truth in Negotiations Act, or of any judgment, order or
decree of any court or governmental agency or body or of any arbitrator
having jurisdiction over the Company or any of the Subsidiaries, or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any mortgage, loan agreement,
note, bond, debenture, credit agreement or any other evidence of
indebtedness or in any agreement, contract, indenture, lease, deed of trust
or other instrument to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries is bound, or to
which any of the property or assets of the Company or any of the
Subsidiaries is subject, other than (i) as described in the Registration
Statement and the Prospectus, or (ii) any violation of, or default with
respect to, any of the foregoing that would not have a Material Adverse
Effect.
(xxiv) There is no legal or governmental action, suit, investigation or
proceeding before or by any court, arbitrator or governmental agency or
body pending or, to the Company's knowledge, threatened, against the
Company or any of the Subsidiaries, or to which any of their respective
properties, officers or personnel is subject, nor does the Company have
knowledge of any facts, circumstances or developments relating to its or
its Subsidiaries' operations or cost accounting practices that could
reasonably be expected to form the basis for or give rise to such actions,
suits, investigations or proceedings (A) that are required to be described
in the Registration Statement or the Prospectus but are not described as
required, (B) except as disclosed in the Prospectus that, if adversely
determined, could reasonably be expected to have a Material Adverse Effect,
(C) that could prevent or adversely affect the transactions contemplated by
this Agreement or (D) that could result in the suspension of the
effectiveness of the Registration Statement and/or prevent or suspend the
use of the Prospectus in any jurisdiction. The Company is not a party to or
subject to the provisions of any injunction, judgment, decree or order of
any court, regulatory body or other governmental agency or body, other than
(x) as described in the Registration Statement or Prospectus or (y) any
judgment that would not be material to the Company. To the Company's
knowledge, neither the Company nor any of its Subsidiaries nor any of their
respective directors or officers has been subject to any investigations or
proceedings by the Commission.
(xxv)Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein, (A) none of the Company or any of the Subsidiaries (1) has issued
or granted any securities or interests or rights to acquire capital stock
other than in connection with the exercise or conversion of any outstanding
options, preferred stock or warrants which are reflected in the
Registration Statement and the Prospectus, (2) incurred any material
liability or obligation, direct, indirect or contingent, other than
liabilities and contingencies which were incurred in the ordinary course of
business, (3) entered into any transaction, not in the ordinary course of
business, that is material to the Company and the Subsidiaries taken as a
whole, (4) entered into any transaction with an affiliate of the Company
(as the term "affiliate" is defined in Rule 405 promulgated by the
Commission pursuant to the Act), which would otherwise be required to be
disclosed in the Registration Statement and the Prospectus or (5) declared
or paid any dividend on its capital stock or made any other distribution to
its equity holders other than the Company or another Subsidiary, (B) there
has not been any material change in the capital stock or other equity
interests, or material increase in the short-term debt or long-term debt,
of the Company or any of the Subsidiaries and (C) there has been no change
or development with respect to the condition (financial or otherwise),
business, properties, assets, rights, operations, management, net worth or
results of operations of the Company or any of the Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
(xxvi) Neither the execution, delivery or performance of this Agreement, the
offer, sale or delivery of the Shares, nor the consummation of the other
transactions contemplated hereby and by the Registration Statement and the
Prospectus (A) requires the consent, approval, authorization or order of or
provision by the Company to any court or governmental agency or body
applicable to the Company or any Subsidiary, except such as have been
obtained under the Act and such as may be required under the blue sky laws
of any jurisdiction in connection with the purchase and distribution of the
Shares by the Underwriter or such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") and such other
approvals as have been obtained, (B) will conflict with, result in a breach
or violation of, or constitute a default under the terms of any agreement,
contract, indenture, loan agreement, note, lease, deed of trust or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, (C)
will conflict with or violate any provision of the charter, bylaws or other
organizational documents of the Company or any Subsidiary, (D) will result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries or an
acceleration of indebtedness pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be
bound or to which any of the property or assets of any of them is subject,
or (E) will conflict with or violate any federal, state, local or foreign
law, statute or regulation, or any judgment, order, consent, decree or
memorandum of understanding applicable to the Company or any Subsidiary of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of the Subsidiaries
or their respective properties.
(xxvii) The Company has not distributed and, prior to the later to occur of the
Closing Date or completion of the distribution of the Shares, will not
distribute without the prior consent of ▇▇▇▇▇▇▇▇▇ & Company, Inc.
("Jefferies") any offering material in connection with the Offering other
than the Registration Statement, the Prospectus or other materials, if any,
permitted by the Act and the Act Regulations and the use of which has been
approved in advance by Jefferies.
(xxviii) None of the Company or any Subsidiary nor, to the Company's knowledge,
any officer, director, employee or agent of the Company or any Subsidiary
has made any payment of funds of the Company or any Subsidiary, or received
or retained any funds, in violation of any law, rule or regulation, or
which payment, receipt or retention of funds is of a character required to
be disclosed in the Registration Statement or the Prospectus.
(xxix) The Company (including all predecessors of the Company) and each of the
Subsidiaries have filed (or have obtained extensions thereto) all federal,
state, local and foreign tax returns that are required to be filed (other
than returns with respect to which failure to so file could not be expected
to have a Material Adverse Effect), which returns are complete and correct
in all material respects, and have paid all taxes shown on such returns and
all assessments received by them with respect thereto to the extent that
the same have become due, except those taxes that are being contested or
protested in good faith by the Company or its Subsidiaries and as to which
any reserves required under generally accepted accounting principles have
been established; and there is no tax deficiency that has been or, to the
knowledge of the Company, could reasonably be expected to be asserted or
threatened against the Company or any Subsidiary or any of their respective
assets or properties which could reasonably be expected to have a Material
Adverse Effect.
(xxx)Except for the shares of capital stock or other equity interests of each
of the Subsidiaries, neither the Company nor any of the Subsidiaries owns
any share of stock or any other securities of any corporation or has any
equity interest in any firm, partnership, association, limited liability
company, joint venture or other entity other than as reflected in the
consolidated financial statements included in the Registration Statement
and the Prospectus.
(xxxi) No holder of any security of the Company has the right (other than a
right which has been waived or complied with) to have any security owned by
such holder included in the Registration Statement and, except as described
in the Registration Statement and the Prospectus, no holder of any security
of the Company has the right to demand registration of any security owned
by such holder during the period ending 12 months after the date of the
Prospectus.
(xxxii) Neither the Company nor any Subsidiary or their respective officers,
directors, employees or agents on behalf of the Company or any Subsidiary
have (A) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares, or (B) since
the filing of the Registration Statement (1) sold, bid for, purchased or
paid anyone any compensation for soliciting purchases of the Shares or (2)
paid or agreed to pay any person any compensation for soliciting another to
purchase any securities of the Company.
(xxxiii) As of the date of the Prospectus, neither the Company nor any of the
Subsidiaries is currently planning any probable acquisitions for which
disclosure of pro forma financial information would be required by the Act
or the Act Regulations.
(xxxiv) The Shares have been approved for quotation by the Nasdaq National
Market upon official notice of issuance.
(xxxv) Neither the Company nor any Subsidiary is, and, upon consummation of the
Offering contemplated by the Prospectus, the Company will not be, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
thereunder, and is not subject to registration under such act.
(xxxvi) To the Company's knowledge, no officer, director or beneficial owner of
5% or more of the Common Stock of the Company has any affiliation or
association with the NASD or any member thereof.
(xxxvii) There are no contracts, agreements or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Act or by the Act Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement as required by the Act Regulations. The contracts so described or
otherwise described in the Prospectus or filed as exhibits to the
Registration Statement are in full force and effect on the date hereof, and
neither the Company or any Subsidiary nor, to the Company's knowledge, any
other party is in material breach of or default under any of such
contracts. The Company has not received any written notice of such default
or breach. The descriptions of such contracts in the Prospectus and the
Registration Statement are true summaries thereof and fairly present, in
all material respects, the information purported to be summarized. All such
agreements to which the Company or any of its Subsidiaries is a party have
been duly authorized, executed and delivered by the Company or a
Subsidiary, constitute valid and binding agreements of the Company or a
Subsidiary, and are enforceable against the Company or a Subsidiary in
accordance with the terms thereof, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally, or
by general equitable principles.
(xxxviii) No relationship, direct or indirect, exists between or among the
Company or any Subsidiary on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any Subsidiary (or
any partner, affiliate or associate of any of the foregoing persons or
entities) on the other hand, which is required to be described in the
Prospectus which is not so described.
(xxxix) The Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does
not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified
in all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(xl) There are no claims, payments, issuances, arrangements or understandings,
whether oral or written, for services in the nature of a finder's,
consulting or origination fee with respect to the sale of the Shares
hereunder or any other arrangements, agreements, understandings, payments
or issuances with respect to the Company or any Subsidiary, or any of their
respective officers, directors, stockholders, partners, employees or
affiliates on behalf of the Company or any Subsidiary that may affect the
Underwriter's compensation, as determined by the NASD, other than as
described in the Prospectus.
(xli)Except as set forth on Schedule 1(a)(xl)(A), the Company has obtained
written agreements and delivered such agreements to the Underwriter as of
the date hereof ("Lock-Up Agreements") to the effect and in substantially
the form attached hereto as Schedule 1(a)(xl)(B) from each of its
directors, director nominees, executive officers, each of the stockholders
holding over 5% of the Company's outstanding Common Stock, and each of the
stockholders listed on Schedule 1(a)(xl)(C).
(xlii) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee or agent's
commission in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(xliii) There is and has been no failure on the part of the Company or any of
the Company's directors or officers, in their capacities as such, to comply
with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated in connection therewith, including Section 402
related to loans and Sections 302 and 906 related to certifications.
(xliv) Nothing has come to the attention of the Company that has caused the
Company to believe that the statistical and market-related data included in
the Registration Statement and the Prospectus is not based on or derived
from sources that are reliable and accurate in all material respects.
(xlx)Any certificate signed by any officer of the Company delivered to the
Underwriter or to counsel for the Underwriter pursuant to the terms of this
Agreement shall be deemed a representation and warranty by the Company to
the Underwriter as to the matters covered thereby.
2. Representations and Warranties of the Selling Stockholders.
(a) Each Selling Stockholder, severally and not jointly, represents and
warrants to, and agrees with, the Company and the Underwriter as of the
Representation Date, as follows:
(i) Such Selling Stockholder is, or upon the exercise of options or warrants
will be, the lawful owner of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement and has (or upon the exercise of
options will have), and on each Closing Date, as applicable, will have,
good, valid and clear title to such Shares, free of any and all
restrictions on transfer, liens, encumbrances, security interests,
equities, claims and other defects whatsoever, except for such restrictions
on transfer as do not restrict the sale of the Shares to the Underwriter
hereunder.
(ii) Such Selling Stockholder has, and on each Closing Date, as applicable, will
have, full legal right, power and authority, and all authorizations and
approvals required by law, to enter into this Agreement and to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Stockholder in the manner provided herein.
(iii)This Agreement has been duly executed and delivered by or on behalf of
such Selling Stockholder and is a legal, valid and binding agreement of
such Selling Stockholder, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or public
policy underlying such laws, and except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and by equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
(iv) Upon delivery of and payment for the Shares to be sold by such Selling
Stockholder pursuant to this Agreement, assuming that the Underwriter shall
have purchased the Shares for value in good faith and without notice of any
adverse claim (within the meaning of the Uniform Commercial Code as adopted
in the State of New York), good, valid and clear title to such Shares will
pass to the Underwriter, free and clear of all restrictions on transfer,
liens, encumbrances, security interests, equities, claims and defects
whatsoever.
(v) The execution, delivery and performance of this Agreement by such Selling
Stockholder, the compliance by such Selling Stockholder with all the
provisions hereof and the consummation by such Selling Stockholder of the
transactions contemplated hereby will not (A) require such Selling
Stockholder to obtain any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except
as such may be required under the Act and the Exchange Act or the
securities or blue sky laws of the various states or as have been or will
be obtained), (B) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, any indenture, loan agreement,
mortgage, deed of trust, lease, license or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder or any property of such Selling Stockholder is bound, except
for such as would not adversely affect such Selling Stockholder's ability
to perform its obligations hereunder, or (C) to his or its knowledge,
violate or conflict with any applicable federal, state, local or foreign
law, statute, rule, regulation or judgment, order or decree of any court or
any governmental body or agency having jurisdiction over such Selling
Stockholder or any property of such Selling Stockholder.
(vi) The information in the Registration Statement and the Prospectus under the
captions "Selling Stockholders" which specifically relates to such Selling
Stockholder does not, and will not on any Closing Date, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and such
Selling Stockholder has agreed to immediately notify the Company, if, at
any time during the period when a Prospectus is required by law to be
delivered in connection with sales of Common Stock by an Underwriter or a
dealer, there is any material change in such information.
(vii)Such Selling Stockholder has not taken, and will not take, directly or
indirectly, any action designed to, or which might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
pursuant to the distribution contemplated by this Agreement, and, other
than as permitted by the Act, such Selling Stockholder has not distributed
and will not distribute any prospectus or other offering material in
connection with the Offering.
(viii) Such Selling Stockholder has duly authorized, executed and delivered a
Custody Agreement and Irrevocable Power of Attorney ("Custody Agreement"),
which Custody Agreement is a legal, valid and binding agreement of such
Selling Stockholder, except as rights to indemnity and contribution
thereunder may be limited by federal or state securities laws or public
policy underlying such laws, and except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and by equitable
principles (whether enforcement is sought by proceedings in equity or at
law); pursuant to the Custody Agreement, such Selling Stockholder has
placed in custody with American Stock Transfer & Trust Company, as
Custodian (the "Custodian"), for delivery under this Agreement,
certificates or securities entitlements in respect of shares held in
"street name" representing the Shares to be sold by such Selling
Stockholder.
(ix) Such Selling Stockholder has duly authorized, executed and delivered to the
Custodian a Custody Agreement containing an irrevocable power of attorney
(a "Power of Attorney") authorizing and directing the Attorneys-in-Fact
designated in the Custody Agreement, or any of them, to effect the sale and
delivery of the Shares being sold by such Selling Stockholder, to enter
into this Agreement and to take all such other action as may be necessary
hereunder.
(x) Any certificate signed by or on behalf of such Selling Stockholder and
delivered to the Underwriter or counsel of the Underwriter on or after the
date hereof shall be deemed to be a representation and warranty by such
Selling Stockholder to the Underwriter as to the matters covered thereby.
3. Sale and Delivery to the Underwriter; Closing.
(a) Subject to the terms and conditions and in reliance upon the
representations, warranties, covenants and agreements herein set forth, each
Selling Stockholder agrees, severally and not jointly, to sell to the
Underwriter, and the Underwriter agrees to purchase from such Selling
Stockholder, at a purchase price of $19.65 per share (the "Purchase Price"), the
Shares.
(b) Payment of the purchase price for, and delivery of, the Shares to be
purchased by the Underwriter shall be made at the offices of ▇▇▇▇▇▇▇▇▇ &
Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Underwriter and the Company at
10:00 A.M., New York City time, on the third (fourth, if the pricing occurred
after 4:30 P.M., New York City time, on any given day) business day after the
date of this Agreement, or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriter and the Company (such
time and date of payment and delivery being herein called the "Closing Date").
Payment shall be made to such Selling Stockholders by wire transfer and payable
in immediately available funds to the order of such Selling Stockholders against
delivery to the Underwriter of the Shares.
(c) The Shares shall be in such denominations and registered in such names
as the Underwriter may request in writing at least two business days before the
Closing Date. The Shares will be made available for examination and packaging by
the Underwriter not later than 1:00 P.M., New York City time, on the last
business day prior to the Closing Date at such place as is reasonably designated
by the Underwriter. If the Underwriter so elects, delivery of the Shares may be
made by credit through full FAST transfer to the accounts of The Depository
Trust Company designated by the Underwriter.
4. Covenants of the Company.
(a) The Company covenants with the Underwriter as follows:
(i) The Company will notify the Underwriter immediately, and confirm the notice
in writing, (i) of the effectiveness of any post-effective amendment to the
Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of the Prospectus or any amendment to the
Registration Statement or amendment or supplement to the Prospectus or any
document to be filed pursuant to the 1934 Act during any period when the
Prospectus is required to be delivered under the 1933 Act, (iii) of the
receipt of any comments or inquiries from the Commission relating to the
Registration Statement or Prospectus, (iv) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceeding for that
purpose, and (vi) of the issuance by any state securities commission or
other regulatory authority of any order suspending the qualification or the
exemption from qualification of the Securities under state securities or
Blue Sky laws or the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance by the
Commission of any stop order and, if any such stop order is issued, to
obtain the lifting thereof at the earliest possible moment. The Company
will provide the Underwriter with copies of the form of Prospectus, in such
number as the Underwriter may reasonably request, and file or transmit for
filing with the Commission such Prospectus in accordance with Rule 424(b)
of the 1933 Act Regulations by the close of business in New York on the
second business day immediately succeeding the date hereof.
(ii) At any time when a Prospectus is required to be delivered under the 1933
Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations in
connection with sales of the Securities, the Company will give the
Underwriter notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)) or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Company proposes for use by the Underwriter in connection with
the offering of the Securities that differs from the prospectus filed with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, whether
or not such revised prospectus is required to be filed pursuant to Rule
424(b) of the 1933 Act Regulations), will furnish the Underwriter 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 the
Underwriter or counsel for the Underwriter shall reasonably object.
(iii)If, at any time when a prospectus relating to the Shares is required to be
delivered under the Act or the Act Regulations in connection with the
Offering of the Shares, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or amend or supplement the Prospectus to comply
with the Act or the Act Regulations, the Company promptly will prepare and
file with the Commission, at the Company's expense, an amendment or
supplement which will correct such statement or omission or effect such
compliance and will use its reasonable best efforts to cause the same to
become effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after such time, the Company upon request,
but at the expense of the Underwriter, will promptly prepare such amendment
or amendments to the Registration Statement and such Prospectus or
Prospectuses as may be necessary to permit compliance with the requirements
of the Act and the Act Regulations. Neither your consent to, nor your
delivery of, any such amendment or supplement shall constitute a waiver of
any of the conditions set forth in Section 7.
(iv) During such period when a prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, the Company, at its
expense, will furnish to the Underwriter or mail to its order copies of the
Registration Statement, the Prospectus and all amendments and supplements
to any such documents in each case as soon as available and in such
quantities as the Underwriter may reasonably request, for the purposes
contemplated by the Act.
(v) The Company consents to the use of the Prospectus in accordance with the
provisions of the Act and with the securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriter and by all
dealers to whom Shares may be sold, both in connection with the Offering
and for such period of time thereafter as the Prospectus is required by the
Act to be delivered in connection with the sales by any Underwriter or
dealer. The Company will comply with all requirements imposed upon it by
the Act as the same may be amended so far as necessary to permit the
continuance of sales of or dealing in the Shares in accordance with the
provisions hereof and the Prospectus.
(vi) As soon as practicable, the Company will make generally available to its
security holders and to the Underwriter a consolidated earnings statement
or statements of the Company and the Subsidiaries covering a twelve-month
period beginning with the first full calendar quarter following the
Effective Date which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 thereunder (it being understood that such delivery
requirements shall be deemed met by the Company's compliance with the
Company's reporting requirements pursuant to the Exchange Act and the
Exchange Rules and Regulations).
(vii)The Company will (A) on or before the Closing Date, deliver to the
Underwriter manually signed copies of the Registration Statement as
originally filed and of each amendment thereto filed prior to the time the
Registration Statement becomes effective and, promptly upon the filing
thereof, manually signed copies of each post-effective amendment, if any,
to the Registration Statement (together with, in each case, all exhibits
thereto unless previously furnished to you) and will also deliver to you,
for distribution to the Underwriter, a sufficient number of additional
conformed copies of each of the foregoing (but without exhibits) so that
one copy of each may be distributed to the Underwriter, (B) as promptly as
possible deliver to you and send to the Underwriter, at such office or
offices as you may designate, as many copies of the Prospectus as you may
reasonably request and (C) thereafter from time to time during the period
in which a prospectus is required by law to be delivered by the Underwriter
or any dealer, likewise send to the Underwriter as many additional copies
of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended Prospectus, filed by the Company with the Commission, as
you may reasonably request for the purposes contemplated by the Act.
(viii)The Company will cooperate with the Underwriter and its counsel in
connection with endeavoring to obtain and maintain the qualification or
registration, or exemption from qualification, of the Shares for offer and
sale under the applicable securities laws of such states of the United
States and other jurisdictions as the Underwriter may designate; provided,
that in no event shall the Company be obligated to qualify to do business
in any jurisdiction where it is not now so qualified or to take any action
which would subject it to taxation or general service of process in any
jurisdiction where it is not now so subject.
(ix) The Company will not, and will not permit any Subsidiary to, at any time,
directly or indirectly (A) take any action designed to cause or result in,
or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Shares or (B)
(1) sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of the Shares or (2) pay or agree to pay any person any
compensation for soliciting another to purchase any other securities of the
Company.
(x) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(xi) Except for options, granted prior to the date hereof, that become
exercisable pursuant to their terms as in effect as of the date hereof, the
Company will not for a period of 45 days following the date of the
Prospectus, without the prior written consent of Jefferies, (A) directly or
indirectly, offer, 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, lend, pledge, hypothecate or otherwise dispose
of or transfer or enter into any transaction which is designed, or might
reasonably be expected, to result in the disposition of any shares of
capital stock of the Company or any securities convertible into or
exercisable or exchangeable for or repayable with shares of capital stock
of the Company (other than (1) the Shares, (2) shares of capital stock of
the Company or securities convertible into or exercisable or exchangeable
for shares of capital stock of the Company which are issued, sold or
awarded pursuant to the Company's 1999 Equity Participation Plan as
contemplated by and described in the Registration Statement and Prospectus)
or (3) pursuant to currently outstanding options or rights (which are
described in the Registration Statement and Prospectus), or enter into any
swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of shares of
such capital stock of the Company or securities convertible into or
exercisable or exchangeable for shares of capital stock of the Company
whether any such transaction is to be settled by delivery of capital stock,
or other securities, in cash or otherwise or (B) file (or participate in
the filing of) a registration statement with the Commission in respect of
any shares of capital stock of the Company or securities convertible into
or exercisable or exchangeable for such capital stock (except for a
registration statement on Form S-8) or (C) publicly announce any intention
to effect any transaction described in clause (A) or clause (B) during the
45 days following the date of the Prospectus, other than the transactions
that are specifically permitted by clause (A) and clause (B). In addition,
during the 45 days following the date of the Prospectus, the Company will
not, without the prior written consent of Jefferies, (x) release any
executive officer, director or security holder of the Company from their
obligations under any similar agreement with the Company not to sell,
transfer or dispose of securities of the Company for the 45-day period
following the date of the Prospectus and (y) waive compliance with any
prohibitions on trading which may be in effect during such 45-day period
under the Company's trading policy as previously provided to the
Underwriter and in effect on the date hereof.
(xii)The Company shall use its reasonable best efforts to maintain the
quotation of the Shares on the Nasdaq National Market while the Shares are
outstanding for a period of 365 days following the Closing Date; provided,
however, that during the 365-day period, the Company may apply to list the
securities on a national securities exchange in lieu of being included for
quotation on the Nasdaq National Market.
(xiii)The Company has not taken and will not take, directly or indirectly, any
action designed to or which might reasonably be expected to cause or result
in, or which has constituted, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares, and has not effected any sales of Common Stock which are
required to be disclosed in response to Item 701 of Regulation S-K under
the Act which have not been so disclosed in the Registration Statement.
(b) The Company agrees to use its reasonable best efforts to appoint such
number of additional independent directors as may be necessary for the Company
to remain in compliance with applicable SEC rules and regulations and the Nasdaq
National Market listing standards.
5. Covenants of the Selling Stockholders.
(a) Each Selling Stockholder covenants with the Underwriter as follows:
(i) Such Selling Stockholder will advise the Underwriter promptly upon such
Selling Stockholder obtaining actual knowledge of any event during any
period in which a prospectus relating to the Shares is required to be
delivered under the Act which, in the judgment of such Selling Stockholder,
would require the making of any change in the Selling Stockholder
Information relating to such Selling Stockholder so that the Prospectus
would not include an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(ii) Such Selling Stockholder will pay all federal and other taxes, if any, on
the transfer and sale of the Shares being sold by such Selling Stockholder
to the Underwriter. The Selling Stockholder will deliver to Jefferies on or
prior to the first Closing Date a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form in lieu
thereof).
(b) The Shares to be sold by such Selling Stockholder, represented by the
certificates on deposit with the Custodian pursuant to the Custody Agreement of
such Selling Stockholder, are subject to the interest of the Underwriter and for
the purpose of completing the transaction contemplated by the Agreement; the
arrangements made for such custody are, except as specifically provided in the
Custody Agreement, irrevocable; and the obligations of such Selling Stockholder
hereunder shall not be terminated, except as provided in this Agreement or in
the Custody Agreement, by any act of such Selling Stockholder, by operation of
law, whether by the liquidation, dissolution or merger of such Selling
Stockholder, by the death of such Selling Stockholder, or by the occurrence of
any other event. If any Selling Stockholder should liquidate, dissolve or be a
party to a merger or if any other such event should occur before the delivery of
the Shares hereunder, certificates for the Shares deposited with the Custodian
shall be delivered by the Custodian in accordance with the terms and conditions
of this Agreement as if such liquidation, dissolution, merger or other event had
not occurred, whether or not the Custodian shall have received notice thereof.
(c) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
6. Payment of Expenses.
(a) The Company shall, regardless of whether the Offering contemplated by
this Agreement and the Prospectus is consummated, be responsible for and shall
pay all costs, fees and expenses incurred in connection with or incident to the
proposed Offering, including, without limitation, (A) all expenses incident to
the registration of the Shares under the Act, (B) all costs of preparing stock
certificates, including printing and engraving costs, (C) all fees and expenses
of the registrar and transfer agent of the Shares, (D) all fees and expenses of
the Company's counsel, the Company's independent accountants and any other
experts retained by or on behalf of the Company in connection with the Offering,
(E) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement, the
Prospectus, including all exhibits and financial statements, and all amendments
and supplements provided for herein, including, without limitation, any
post-effective amendments, the blue sky memoranda and this Agreement, (F) the
filing fees and expenses incurred by the Company or the Underwriter in
connection with exemptions from qualifying or registering (or obtaining
qualification or registration of) all or any part of the Shares for offer and
sale and determination of eligibility for investment under the blue sky or other
securities laws of such jurisdictions as the Underwriter may designate, (G) all
travel and lodging fees and expenses incurred by or on behalf of officers and
representatives of the Company in connection with presentations to prospective
purchasers of the Shares, (H) all word processing charges, messenger and
duplicating services, facsimile expenses and other customary expenses of the
Company related to the proposed Offering, (I) the costs and expenses relating to
preparation and delivery to the Underwriter of five closing binders, (J) all
applicable listing or other fees relating to the Shares, including, without
limitation, the fees relating to quotation of the Common Stock on the Nasdaq
National Market and (K) all other costs and expenses incident to the performance
by the Company and such Selling Stockholders of their obligations under this
Agreement; provided, however, that except as provided in this Section 6 and in
Section 11, the Underwriter shall pay its own costs and expenses, including the
costs and expenses of its counsel.
(b) The Company will pay, either directly or by reimbursement, all fees and
expenses incident to the performance of such Selling Stockholders' obligations
under this Agreement, which are not otherwise specifically provided for herein,
including but not limited to the fees and expenses of the Selling Stockholders'
counsel and any fees payable to the Custodian, provided, however, that (i) in no
event shall such fees and expenses include the underwriting discounts and
commissions applicable to such Selling Stockholder's Shares; and (ii) the
provisions of this Section 6(b) shall not affect any agreement which the Company
and such Selling Stockholders may make for the allocation or sharing of such
expenses and costs.
7. Conditions of the Underwriter's Obligation.
The obligations of the Underwriter to purchase the Shares hereunder are
subject to the accuracy of the representations and warranties of the Company and
the Selling Stockholders herein contained as of the date hereof and on each
Closing Date, to the accuracy of the statements of the Company and such Selling
Stockholders made in any certificate or certificates pursuant to the provisions
hereof as of the date of thereof and on each Closing Date and to the performance
by the Company and such Selling Stockholders of their obligations hereunder, and
to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective not later than 5:30 P.M. (New York time)
and at any Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission. The Prospectus (including
the Prospectus Supplement) shall have been filed or transmitted for filing with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations within the
prescribed time period, and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Underwriter of such timely filing or
transmittal.
(b) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as set forth in or
contemplated in the Prospectus, there shall not have occurred (i) any change in
or affecting the business (including, without limitation, a change in management
or control of the Company), properties, condition (financial or other), or
results of operations of the Company or the Subsidiaries, taken as a whole, or
adverse change in the capital stock, short-term debt or long-term debt of the
Company which, in the good faith judgment of the Underwriter, materially
adversely affects the market for the Shares or otherwise makes it impracticable
or inadvisable to proceed with the Offering or to purchase the Shares as
contemplated by this Agreement or (ii) any material loss or interference with
the business or properties of the Company or any of the Subsidiaries from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute, (iii) any development involving any court or legislative or
other governmental or administrative action, order or decree, which would have a
Material Adverse Effect, if in the judgment of the Underwriter any such
development makes it impracticable or inadvisable to proceed with completion of
the Offering and the sale of and payment for the Shares, or (iv) any development
involving any governmental investigation involving the Company or any Subsidiary
if in the judgment of the Underwriter any such development makes it
impracticable or inadvisable to proceed with completion of the Offering and the
sale and payment for the Shares.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation,
investigation or other proceeding instituted against the Company or any of the
Subsidiaries or any of their respective officers, directors or senior management
personnel, before or by any federal, state, local or foreign court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, or arbitrator, in which such litigation, investigation or proceeding,
an unfavorable ruling, decision or finding would result in a Material Adverse
Effect or may affect the Company's or such Selling Stockholders' ability to
perform their respective obligations under this Agreement.
(d) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby and by the Registration
Statement and Prospectus shall be reasonably satisfactory in all material
respects to counsel for the Underwriter, and the Company and such Selling
Stockholders shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(e) ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, shall have furnished to the Underwriter their
opinion, reasonably satisfactory in form and substance to counsel for the
Underwriter, dated each Closing Date and substantially to the effect as set
forth in Exhibit A hereto.
(f) Debevoise & ▇▇▇▇▇▇▇▇ LLP, counsel for the Selling Stockholders other
than ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, shall have furnished to the Underwriter its opinion,
reasonably satisfactory in form and substance to counsel for the Underwriter,
dated each Closing Date and substantially to the effect as set forth in Exhibit
B-1 hereto; ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, shall have
furnished to the Underwriter its opinion, reasonably satisfactory in form and
substance to counsel for the Underwriter, dated each Closing Date and
substantially to the effect as set forth in Exhibit B-2 hereto;
(g) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Underwriter, shall have furnished
to the Underwriter an opinion with respect to such matters as may be reasonably
requested by the Underwriter, dated each Closing Date.
(h) The following conditions contained in clauses (A) through (C) of this
Section 7(h) shall have been satisfied on and as of each Closing Date and the
Company shall have furnished to the Underwriter and the Selling Stockholders a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated such
Closing Date, to the effect that the signers of such certificate have examined
the Registration Statement, the Prospectus, any supplement or amendment to the
Prospectus and this Agreement and that:
(A) the representations and warranties of the Company in this Agreement
are true and correct on and as of such Closing Date, with the same
effect as if made on such Closing Date; and the Company has complied
with all the agreements and satisfied all the conditions under this
Agreement on its part to be performed or satisfied at or prior to such
Closing Date;
(B) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or, to the knowledge of the Company, threatened; and
(C) since the date of the most recent financial statements included in the
Prospectus, there has been no change, with respect to the business,
financial condition or results of operations of the Company or the
Subsidiaries, taken as a whole, that could reasonably be expected to
have a Material Adverse Effect.
(i) There shall have been furnished to the Underwriter a certificate or
certificates dated as of such Closing Date and addressed to the Underwriter,
signed by each of the Selling Stockholders or any of such Selling Stockholder's
Attorneys-in-Fact to the effect that the representations and warranties of such
Selling Stockholder contained in this Agreement are true and correct as if made
at and as of such Closing Date, and that such Selling Stockholder has complied
with all the agreements and satisfied all the conditions on such Selling
Stockholder's part to be performed or satisfied at or prior to such Closing
Date.
(j) At the Effective Date, and at each Closing Date, the Underwriter shall
have received from BDO ▇▇▇▇▇▇▇, LLP a letter, in form and substance satisfactory
to the Underwriter, addressed to the Underwriter and dated the respective dates
set forth above stating, as of the date thereof (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date thereof), the conclusions and finding of
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings. The letter from BDO ▇▇▇▇▇▇▇, LLP shall also confirm
they are independent public accountants within the meaning of the Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission. At the
Effective Date, and at each Closing Date, the Underwriter shall have received
from BDO ▇▇▇▇▇▇▇, LLP a letter, in form and substance satisfactory to the
Underwriter, addressed to the Underwriter and dated the respective dates set
forth above stating, as of the date thereof, certain agreed upon procedures that
such firm has performed in connection with specified disclosures in the
Prospectus.
(k) The Nasdaq National Market has approved the Shares for inclusion,
subject to official notice of issuance and evidence of satisfactory
distribution.
(l) At each Closing Date, counsel for the Underwriter shall have been
furnished with such information, certificates and documents as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated herein and related proceedings, or to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained, or otherwise in
connection with the Offering contemplated hereby; and all opinions and
certificates mentioned above or elsewhere in this Agreement shall be reasonably
satisfactory in form and substance to the Underwriter and counsel for the
Underwriter.
(m) The Underwriter shall have received the Lock-Up Agreements referenced
in Section 1(a)(xli).
8. Indemnification and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless, the
Underwriter, each Selling Stockholder, the directors, officers, employees and
agents of the Underwriter and each Selling Stockholder and each person who
controls the Underwriter or any Selling Stockholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the fullest extent
lawful from and against any losses, expenses, claims, damages or liabilities
(including any and all investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), which, jointly or severally, any of
them may become subject under the Act, the Exchange Act, or any other federal,
state, local or foreign statute or regulation, at common law or otherwise
insofar as such losses, expenses, claims, damages or liabilities arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in (A) the Registration Statement, the Prospectus, or in
any amendment thereof or supplement thereto, or (B) any blue sky application or
other document executed by the Company specifically for that purpose or based
upon information furnished by the Company in writing filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof or filed with the Commission or any securities association or
securities exchange (each, an "Application"), or (C) in any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the Offering, including any roadshow or
investor presentations made to investors by the Company (whether in person or
electronically), or (ii) the omission or alleged omission to state (with respect
to (A), (B) or (C) above) therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, expense,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with the Underwriter's Information;
provided further, that the Company will not be liable to any Selling Stockholder
to the extent that any such loss, expense, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with the Selling Stockholder Information relating to such Selling Stockholder;
and, provided further, that with respect to any untrue statement or omission or
alleged untrue statement or omission made in the Prospectus, the indemnity
contained in this Section 8(a) shall not inure to the benefit any such
indemnified Selling Stockholder or Underwriter or its respective officers,
employees, directors, agents and control persons, and the Company shall not be
liable to any such indemnified Selling Stockholder or Underwriter or their
respective officers, employees, directors, agents, and control persons, from
whom the person asserting any such losses, claims, expense, damage, or
liabilities purchased the Shares concerned, to the extent that any such loss,
claim, expense, damage or liability of such indemnified Selling Stockholder or
Underwriter or their respective officers, employees, directors, agents and
control persons results from the fact that there was not sent or given to such
person at or prior to the written confirmation of the sale of such shares to
such person, a copy of the Prospectus, as the same may be amended or
supplemented, and the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact in such the
Prospectus was corrected in the Prospectus and the Company had previously
furnished copies thereof to such indemnified Underwriter on a timely basis to
permit the Prospectus (as the same may be amended or supplemented) to be sent or
given. The foregoing indemnity agreement shall be in addition to any liability
that the Company may otherwise have.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, the Underwriter, the
directors, officers, employees and agents of the Underwriter and each person who
controls the Underwriter or the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, to the fullest extent lawful from and
against any losses, expenses, claims, damages or liabilities (including any and
all investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), which, jointly or severally, any of them may become subject
under the Act, the Exchange Act, or any other federal, state, local or foreign
statute or regulation, at common law or otherwise, as such expenses are
incurred, insofar as such losses, expenses, claims, damages or liabilities arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained (A) in the Selling Stockholder Information that
relates to such Selling Stockholder, or (B) in any Application executed by such
Selling Stockholder for that purpose or based upon information furnished in
writing by such Selling Stockholder specifically for inclusion in any
Application, or (ii) the omission or alleged omission to state therein with
respect to either (A) or (B) a material fact required to be stated therein or
necessary to make the statements relating to such Selling Stockholder therein
not misleading; provided, however, that such Selling Stockholder will not be
liable in any such case to the extent that any such loss, expense, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with the Underwriter's Information; and, provided further,
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in the Prospectus, the indemnity contained in this
Section 8(b) shall not inure to the benefit any such indemnified Underwriter or
its respective officers, employees, directors, agents and control persons, and
such Selling Stockholders shall not be liable to any such indemnified
Underwriter or its respective officers, employees, directors, agents, and
control persons, from whom the person asserting any such losses, claims,
expense, damage, or liabilities purchased the Shares concerned, to the extent
that any such loss, claim, expense, damage or liability of such indemnified
Underwriter or its respective officers, employees, directors, agents and control
persons results from the fact that there was not sent or given to such person at
or prior to the written confirmation of the sale of such shares to such person,
a copy of the Prospectus, as the same may be amended or supplemented, and the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact in the Prospectus was corrected in the
Prospectus and the Company had previously furnished copies thereof to such
indemnified Underwriter on a timely basis to permit the Prospectus (as the same
may be amended or supplemented) to be sent or given. The Underwriter and the
Company agree that the only information provided in writing by or on behalf of
such Selling Stockholders expressly for use in the Registration Statement is
that information contained in the sections of the Prospectus entitled "Selling
Stockholders." The foregoing indemnity agreement shall be in addition to any
liability that such Selling Stockholders may otherwise have.
(c) The Underwriter agrees to indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, each director of the Company and each
officer who signs the Registration Statement, and each Selling Stockholder, to
the same extent as the foregoing indemnities from the Company and each Selling
Stockholder to the Underwriter, the directors, officers, employees, and agents
of the Underwriter and any person controlling the Underwriter, but only insofar
as such loss, expense, claim, damage or liability arises out of or is based upon
any untrue statement or omission or alleged untrue statement or omission made in
reliance on or in conformity with the Underwriter's Information. This indemnity
agreement will be in addition to any liability that any Underwriter may
otherwise have.
(d) If any action is brought against an indemnified party under this
Section 8, the indemnified party or parties shall promptly notify the
indemnifying party in writing of the institution of such action (provided that
the failure to give such notice shall not relieve the indemnifying party of any
liability which it may have pursuant to this Agreement, unless and to the extent
the indemnifying party did not otherwise learn of such action and such failure
has resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the indemnifying party shall assume the defense of such
action, including the employment of counsel and payment of reasonable expenses.
The indemnified party or parties shall have the right to employ separate counsel
(including local counsel) in any such case and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to take charge of the
defense of such action within a reasonable time after notice of the institution
of such action, or (iii) the defendants in any such action include both the
indemnified party and the indemnifying party and such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them that are different from or additional to those available to the
indemnifying party or the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest that would make it inappropriate for the same counsel to represent both
of them (in which case the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the indemnifying
party and paid as incurred; provided that the indemnifying party shall only be
responsible for the reasonable fees and expenses of one firm of attorneys
together with appropriate local counsel for the indemnified party or parties
hereunder. Anything in this paragraph to the contrary notwithstanding, the
indemnifying party shall not be liable for any settlement of any such claim or
action effected without its written consent, which consent shall not be
unreasonably withheld. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
involves only the payment of monetary damages and includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(e) If the indemnification provided for in this Section 8 is unavailable to
an indemnified party under subsections (a), (b) or (c) of this Section 8 or is
insufficient to hold harmless a party indemnified thereunder, in respect of any
losses, expenses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party shall contribute to the amount paid in settlement
of any action, suit or proceeding or any claims asserted, but after deducting
any contribution received by an applicable indemnified party from persons who
may also be liable for contribution, including persons who control the
indemnified party within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, in such proportion as is appropriate to reflect the relative
benefits received by the Company or such Selling Stockholders on the one hand,
and the Underwriter on the other hand, from the Offering or, if, but only if,
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company or such Selling Stockholders on the one hand,
and the Underwriter on the other hand, in connection with the statements or
alleged statements or omissions or alleged omissions which resulted in such
losses, expenses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Company or such
Selling Stockholders on the one hand, and the Underwriter on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
Offering (net of underwriting discounts but before deducting expenses) received
by the Company and such Selling Stockholder bear to the total underwriting
discounts and commissions received by the Underwriter, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault of the
Company or such Selling Stockholders on the one hand, and the Underwriter on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, such Selling Stockholders or the Underwriter 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, expenses, claims and liabilities referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any claim or action. The Company,
such Selling Stockholder and the Underwriter agree that it would not be just and
equitable if contribution pursuant hereto were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8(e), the Underwriter shall not be required to contribute any
amount in excess of the underwriting discount received by it by reason of such
untrue statement or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(f) The Company and such Selling Stockholders may agree, as between
themselves and without limiting the rights of the Underwriter under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
(g) The liability of each Selling Stockholder under the indemnity and
contribution agreements contained in this Section 8 shall be limited to an
amount equal to the aggregate net sales price for the Shares sold by such
Selling Stockholder to the Underwriter.
9. Survival.
The respective indemnity and contribution agreements contained in Section 8
hereof and the covenants, warranties and other representations of the Company
and such Selling Stockholders contained in this Agreement or contained in
certificates of officers of the Company or such Selling Stockholders submitted
pursuant hereto, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter, or any of its respective
officers, employees, directors, stockholders or persons who control the
Underwriter within the meaning of Section 15 of the Act, or by or on behalf of
the Company or any of its directors, officers, employees or any person who
controls the Company within the meaning of Section 15 of the Act or any Selling
Stockholder or any controlling persons thereof, and shall survive delivery of
and payment for the Shares.
10. Termination of Agreement.
(a) The Underwriter may terminate this Agreement, by written notice to the
Company and the Attorneys-in-Fact for such Selling Stockholders prior to the
Closing Date (i) if there shall occur any failure, refusal or inability of the
Company or any Selling Stockholder to satisfy any of the conditions contained in
Section 7 hereof or (ii) if, since the date of this Agreement and prior to the
Closing Date, (A) there has occurred any material adverse change in the
financial markets of the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation of
hostilities or any other insurrection or armed conflict or declaration by the
United States of a national emergency or war or other calamity or crisis, the
effect of which on the financial securities markets of the United States is such
as to make it, in the judgment of the Underwriter, impracticable or inadvisable
to market the Shares on the terms and in the manner contemplated by the
Prospectus, (B) trading in any of the securities of the Company has been
suspended by the Commission, or trading generally on the New York Stock Exchange
or the Nasdaq National Market has been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by the New York Stock Exchange or the Nasdaq National Market or
by order of the Commission or any other governmental authority or (C) a banking
moratorium has been declared by any of the federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section 10 or any
other provision of this Agreement, such termination shall be without liability
of any party to any other party except the provisions of Sections 6, 8 and 10(c)
shall remain in full force and effect.
(c) Notwithstanding any other provisions hereof, (i) if this Agreement
shall be terminated by the Underwriter under Section 10, the Company will bear
and pay the expenses to be paid by the Company pursuant to Section 6 hereof and
(ii) if this Agreement shall be terminated by the Underwriter under Section
10(a)(i), in addition to its obligations pursuant to Section 8 and Section
10(c)(i) hereof, the Company will reimburse the reasonable out-of-pocket
expenses of the Underwriter (including reasonable fees and disbursements of
counsel for the Underwriter) incurred in connection with this Agreement and the
proposed purchase and Offering of the Shares, and promptly upon demand the
Company will pay such amounts to the Underwriter.
11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed, delivered or
transmitted by facsimile or telegraphed and confirmed. Notices to the
Underwriter shall be directed to ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, attention of General Counsel, with a copy
to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.; notices to the Company,
any Selling Stockholders and the Attorneys-in-Fact shall be directed to Encore
Capital Group, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention
of ▇▇▇▇▇ ▇▇▇▇▇▇, with a copies to ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and Debevoise &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇.
12. Parties. This Agreement shall inure to the benefit of and be binding
upon the Underwriter, the Company, the Selling Stockholders and their respective
successors and legal representatives and controlling persons and officers,
employees, directors and stockholders referred to in Sections 8 and 9 and their
respective heirs and legal representatives. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to provide any person, firm or
corporation, other than the Underwriter, the Company, such Selling Stockholders
and their respective successors and legal representatives and the controlling
persons and officers, employees, directors and stockholders referred to in
Sections 8 and 9 and their respective heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriter,
the Company, such Selling Stockholders and their respective successors and legal
representatives, and said controlling persons, stockholders, officers and
directors and their respective heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Shares from the
Underwriter shall be deemed to be a successor by reason merely of such purchase.
13. Construction; Choice of Law. This Agreement incorporates the entire
understanding of the parties and supersedes all previous agreements relating to
the subject matter hereof should they exist. This Agreement and any issue
arising out of or relating to the parties' relationship hereunder shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to the principles of conflicts of law thereof.
14. Jurisdiction and Venue. Each party hereto consents specifically to the
exclusive jurisdiction of the federal courts of the United States sitting in the
Southern District of New York, or if such federal court declines to exercise
jurisdiction over any action filed pursuant to this Agreement, the courts of the
State of New York in the County of New York, and any court to which an appeal
may be taken in connection with any action filed pursuant to this Agreement, for
purposes of all legal proceedings arising out of or relating to this Agreement.
In connection with the foregoing consent, each party irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the court's exercise of personal jurisdiction over each party to this
Agreement or the laying of venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. Each party further irrevocably waives its right to a
trial by jury and consents that service of process may be effected in any manner
permitted under the laws of the State of New York.
15. Counterparts. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
16. Partial Unenforceability. The invalidity or unenforceability of any
section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph or provision hereof. If any
section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
17. General. In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by or on behalf of the Company, the Selling
Stockholders and the Underwriter.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Selling Stockholders a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Underwriter, the Company and the Selling
Stockholders in accordance with its terms.
Very truly yours,
ENCORE CAPITAL GROUP, INC.
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: Chief Executive Officer
SELLING STOCKHOLDERS OTHER THAN
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-Fact for all Selling
Stockholders Other Than
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-Fact for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
Schedule I
Selling Stockholders
Number of Shares to be
Name Sold
1. C.P. International Investments Limited 1,200,000
2. ▇▇▇▇▇▇ ▇▇▇▇▇ Children's Trust 581,310
3. ▇▇▇▇▇ Family Limited Partnership 964
4. Madison West Associates Corp. 604,790
5. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 200,000
6. ▇▇▇▇▇▇▇▇ ▇. May 1998 Trust 145,569
7. ▇▇▇▇▇▇ ▇. May 1998 Trust 145,569
8. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 50,000
9. ▇▇▇▇▇▇ ▇. Garden 57,385
10. ▇▇▇▇. ▇. ▇▇▇▇▇ 98,987
Total 3,084,574